AGED CARE Alert: Aged Care Legislation Amendment (Increasing Consumer Choice Bill) 2016

29 February 2016


A number of significant amendments to the Aged Care Act 1997 (Cth) (AC Act) are either in the process of being enacted or have commenced already.

The Aged Care Legislation Amendment (Increasing Consumer Choice Bill) 2016 (Cth) (Bill) was introduced into the House of Representatives on 11 February 2016. The Bill seeks to amend the AC Act and the Aged Care (Transitional Provisions) Act 1997 (Cth) to make the way in which home care is delivered to older Australians more consumer friendly.

The Bill, which if enacted will take effect from February 2017, proposes three primary changes:

(a)   removing the need for approved providers to apply for places through the Aged Care Approvals Round and instead providing for funding to follow the consumer;

(b)   establishing a consistent approach to prioritisation of care recipients; and

(c)   reducing red tape associated with the approval of organisations as providers of home care.

The Aged Care Amendment (Red Tape Reduction in Places Management) Act 2015 (Cth) (Red Tape Reduction Amendment) commenced on 11 February 2016. It allows for the easier transfer of places between approved providers and an extension of the provisional allocation period in respect of all aged care types.

Set out below is a brief overview of these changes.

1              Increasing Consumer Choice Bill

Allocation of home care packages

Currently, home care can only be administered by approved providers who hold home care packages. Each year, the Commonwealth allocates a finite number of home care packages amongst approved providers via the Aged Care Approvals Round (ACAR). The application process is lengthy and supply is constrained: in 2015 a total of 527 approved providers submitted 126,826 applications in respect of only 6,045 available packages.

The Bill intends to remove the need for approved providers to receive home care package allocations before providing services to eligible care recipients. Instead, once a care recipient is notified through the My Aged Care website that he or she is eligible for home care, the care recipient will be able to choose from any provider with the capacity to meet his or her needs. Subsidies will then be granted to providers for each home care arrangement entered into between the provider and a care recipient.  

The onerous ACAR process will cease and, unlike the current system, in which a provider’s ability to supply home care services is restricted to the number of packages that the Commonwealth has decided to grant it, a provider will be able to expand its business in line with the number of eligible care recipients that wish to receive that organisation’s home care services.  

The changes will mean that providers that missed out on home care package allocations during ACAR, and which may instead have been providing sub-contracting services to providers that did attain allocations, can provide those services to care recipients directly.

The Bill also enhances a consumer’s ability to switch between approved providers in response to changing geographical, medical or social needs. It establishes that money received by an approved provider from either the Government or the consumer in order to meet the cost of home care, to the extent that it has not been spent at the time of the consumer’s departure, will (less administrative costs) move with the consumer to the next provider.

Prioritisation of consumers

The way in which eligible care recipients seeking home care services are prioritised will be streamlined if the Bill is passed. In the current system, it is at a provider’s discretion to whom to offer a package: there is not a systematic way of ensuring that those with the highest care needs are prioritised.

If amended, the AC Act will provide that, following an ACAT assessment, a person will be given a priority status. This status will be recorded in a centralised system. If a care recipient is considered appropriate for the level of care to which he or she is applying, he or she will be prioritised for that level of care. Approved providers may only claim subsidies in respect of prioritised recipients.

In considering whether to classify a person as prioritised for home care, the Bill provides that the Department of Health (Department) must consider:

  • the period of time that the person has been waiting to receive care;
  • the priority status that the person is given following the ACAT assessment; and
  • any other matters specified in the Prioritised Home Care Recipient Principles (the Secretary of the Department is empowered to make such principles under the Bill).

The My Aged Care website will aid prioritised consumers by making referrals to approved providers if requested.

Approval of providers

Finally, the Bill proposes to simplify the matters that the Secretary must consider when approving an entity as an approved provider.

There will be a greater focus on the capacity of the organisation to deliver the type of care for which approval is sought, and less scrutiny of the key personnel of the applicant. It will also be easier for residential and flexible care providers to begin providing home care.


Deregulation in this area of Aged Care will foster increased competition amongst providers by permitting the home care businesses of popular providers to expand beyond the number of home care places they have secured, and facilitating consumers moving to those providers that they consider provide a better service.  Providers will be able to create opportunities for their businesses to grow in a more competitive environment.

2              Red Tape Reduction Amendment

Following the Red Tape Reduction Amendment, where an approved provider wishes to transfer an allocated aged care place (whether residential, home, or flexible care) to another provider, the proposed transfer will be deemed to be approved by the Department after a notice regarding the proposed transfer has been submitted to the Secretary of the Department.  The approval is subject to the Secretary’s veto. The transfer notice must be given to the Department no later than 60 days before the proposed transfer day.

This change streamlines the transfer process for allocated care places. Prior to the Red Tape Reduction Amendment, approved providers had to wait for the Secretary to provide a notice approving an application to transfer of allocated places before the transfer took effect.  

The Red Tape Reduction Amendment also extends the time for which provisionally allocated places (again, for all types of aged care services) remain in force. Instead of two years, a provisionally allocated place can now remain valid for four years, even if it never crystallises into a subsidised care place. To prevent provisional places from remaining unused indefinitely, two 12 month extension periods are now available (with further extensions in exceptional circumstances) instead of the unlimited number of extensions that were available previously.

Lucinda Smith | Partner | +61 2 9020 5748 |

Alexandra Adams | Lawyer | +61 2 8248 3466 |

Daniel Zwi | Lawyer | +61 2 8248 5825 |