The federal government must urgently address an unintended consequence of its aged care funding model which could lead to providers avoiding residents most in need of care, an advocacy group warns.
The warning comes as the funding model’s lead designer accused some aged care providers and consultancy firms of trying to exploit the system for financial gain, and amid concern from the Greens of residents being treated as “commodities”.
But the consultancy firm that exposed the potential flaw, Mirus Australia, said helping aged care providers understand how the funding system works is crucial to the sector’s financial viability, and stressed its advice would never “negatively affect the provision of care”.
Last week, Guardian Australia reported Mirus had given providers a list of the most profitable older Australians based on the subsidies they generate and their care requirements, and advised providers to make strategic decisions “in a way that benefits the business”.
Under the recently introduced Australian National Aged Care Classification funding model, subsidies paid to providers are determined by the care needs of each resident.
Residents are independently placed into one of 13 categories depending on the level of care they require, and those who require more care generate larger subsidies. From October these subsidies will help providers deliver mandated care minutes for each resident. The minutes vary for each category of residents.
Mirus has warned providers that reclassifying residents to reflect their deteriorating health may not always make business sense because increased subsidies won’t always cover the increased cost of mandated care.
The company used the example of reclassifying a resident from class seven to nine, which would move them from assisted-mobility to a non-mobile category. This would increase the government subsidy by $10 a day and require an extra 11 minutes of care be provided. A registered nurse would need to provide seven of those minutes.
“The cost to the business to meet that new level of care that we are mandated to [provide] means that ultimately we are moving backwards in our sustainability,” the company told providers in a video briefing.
According to the analysis, a resident who is immobile and could be in respite care is the least profitable.
“Funding of Australia’s aged care system is complex, confusing for many, and can lead to poor resident outcomes for those who don’t understand how it works,” a Mirus Australia spokesperson said. “Funding varies according to need.”
The spokesperson added: “This helps explain why more than 1,000 aged care professionals recently attended our training courses, including representatives of the Independent Health and Aged Care Pricing Authority, the Australian Commission on Safety and Quality in Health Care and the Department of Health.”
‘The government needs to take action’
Bryan Keon-Cohen, a retired barrister and founder of Aged Care Justice, a not-for-profit that assists families access legal representation, called on the federal government to investigate the Mirus modelling.
“When a funding model creates disproportionate outcomes for aged care facilities by financially incentivising the admission of residents with less complex care needs than others, we are not putting the person first,” Keon-Cohen said.
“Australia needs a sustainable person-centred model to ensure that the aged care sector is supported to deliver quality care to every resident, regardless of their subsidy classification.
“Now that Mirus has identified the problem, the government needs to take action to ensure that the system works for all.”
Prof Kathy Eagar, who helped design the government’s funding model and is a former adviser to the aged care royal commission, said the new system made it harder for providers to “manipulate the assessment system to maximise income”.
“But aged care is big business and consultants make a fortune attempting to manipulate the system,” said Eagar, who is now an adjunct professor at the Queensland University of Technology.
“So called ‘cream skimming’ – selecting residents on the basis of who will be most profitable – has been big business in aged care for years.”
‘The elderly are not commodities’
The Greens senator Janet Rice was outraged by the categorisation of residents by profit margin and said she would raise the issue with government officials during Senate estimates.
“This is disgusting, deplorable behaviour from industry consultants, lobbyists and aged care providers, and shows exactly what happens when government puts public services in the hands of private companies,” Rice said
“People in aged care deserve care and support, not exploitation that maximises provider profits. The elderly are not commodities – they are people.”
Rice added: “The regulator must crack down on anyone who’s trying to game the system for financial gain.”
Mirus Australia has not broken any rules and did not respond directly to Rice’s comments regarding issues around the funding model. A company spokesperson said ensuring providers operate efficiently allows more funding to be directed to care rather than administration costs.
The federal government was contacted for comment.
