Red tape reduction and civil penalty provisions – the Budget Savings (Omnibus) Bill 2016: A mixed bag for aged care providers

8 September 2016


Amongst the political wrangling taking place on the second sitting day of the 45th Federal Parliament, the Budget Savings (Omnibus) Bill 2016 (Bill) was introduced, and progressed to its second reading speech.

As described by Scott Morrison MP in his second reading speech, the Bill contains 24 measures totalling more than $6 billion in savings across a range of portfolios – including aged care. With aged care operators already having suffered cuts to their bottom lines as a result of changes which came into effect earlier this year, and guidance released by the Department regarding capital refurbishment and similar fees, the changes to the Aged Care Act 1997 (Cth) (Act) proposed by the Bill are more regulatory than budgetary.

The Bill proposes a reduction in red tape for providers by removing the obligation to notify the Department of each change in its key personnel. The Bill instead proposes that a notification would only be required when the change in personnel would materially affect the provider’s suitability to be a provider of aged care.

However, the majority of the changes to the Act focus around resident classifications. The Bill proposes a significant increase in the Department’s enforcement powers in relation to resident classifications. It proposes the introduction of a civil penalty of up to 60 penalty units which can be imposed on approved providers if they give false, misleading or inaccurate information in connection with a resident appraisal on more than one occasion in a two year period. The penalty would apply in relation to each classification change based on false, misleading or inaccurate information.

Other disincentives for providers to provide false or incorrect resident classifications proposed by the Bill are:

  • the introduction of a fee for providers seeking to have the Department reconsider a classification downgrade; and
  • the introduction of the ability for the Department to recover overpayments of subsidy from the date that a care recipient was originally classified (currently, it is limited to six months before the reclassification).

The Government is no doubt hoping that the ‘stick’ of civil penalty provisions will reduce the level of incorrect ACFI claims from its cited number of one-in-eight.

The Bill has been referred to the Senate’s Economic Legislation Committee and a report is due to be provided on 13 September 2016.

Written by:
Lucinda Smith | Partner | +61 2 9020 5748 |
Alexandra Adams | Senior Associate | +61 2 8248 3466 |