In-home aged care’s administration fees to be capped amid gouging fears

Administration fees for in-home aged care packages will be capped under new federal reforms, after concerns some providers are "gouging" clients with charges of up to 60%.

Aged care advocates have welcomed the change, saying some providers were overcharging or using inefficient practices, and that more transparency on pricing would further lower prices.

"The issue of those fees is one of the highest areas of complaint for consumers and families - it needed to be addressed," Ian Yates, chief executive of the Council on the Ageing, said.

"It's clear we have providers charging unacceptable levels, not being efficient, or setting a profit margin then working the rest out from there."

The aged care minister, Anika Wells, will announce on Thursday that the government intends to cap fees on home care at 20% for care management and 15% for package management. The government will also ban fees for recipients exiting or switching their package.

Providers will also be banned from charging separate brokerage and subcontracting fees. Wells said more than 37,000 people would now face no charges for changing service providers or exiting the program.

Wells said in August that a review into home care found fees varied widely, with some recipients paying 60% for care management, or 30% for package management. Some providers charged fees for recipients exiting their package or processing invoices.

A 2021 report from the Grattan Institute found about 25% of home care fees went to administration and management costs. Evidence to the aged care royal commission found fees could be up to 50%.

"This means more package funds will be available to meet the care needs of older Australians," Wells said of the new caps.

"A reduction in administration and management charges means more money in your package to pay for help around the house, personal and clinical care, assistive equipment and other supports to stay safe and independent at home."

The new caps will come into force from 1 January 2023. Wells said providers must review their current charges and discuss pricing changes with their clients before then, and obtain informed consent for changes.

Dr Sarah Russell, director of public health researcher Aged Care Matters, has conducted extensive research into the home care system. She said some providers charged excessive administration and case fees, as well as high hourly rates for support workers and excessive costs for equipment like wheelchairs.

"My fear is unscrupulous providers will charge the maximum case management fee irrespective of the amount of case management they receive," she told Guardian Australia.

"My research shows that some providers charge a fixed case management fee a month, irrespective of the amount of case management the recipient receives."

Russell said some home care recipients reported getting little or no case management for the fees they paid, recounting one case where a woman was charged $600 a month for case management for a period she did not have an assigned case manager.

Yates called the new caps "robust" but said most providers would not struggle to lower their fees or find enough efficiencies to meet the changes. However, he noted it would have an impact on unscrupulous providers, or those using outdated procedures.

"This is an attempt to deal with some of the significantly higher fee chargers, but some are just inefficient, frankly," Yates said. "We hear of some providers doing their care rostering by hand, or on an Excel spreadsheet."

He said he did not believe the changes would force providers to shut down or reduce their service.

"Providers not able to be more efficient have some serious questions to ask if they should be staying in the sector anyway," Yates said.

"It is about making the most efficient use of dollars you've got. People get varying levels of care from the same level of package. There's a lot of room for improvement."

Yates said more transparency about pricing would further lower costs, voicing concern about whether some providers may increase their fees in other areas to compensate.

"We would be wanting the government to keep a close eye on movements in those fees as they implement this."

Wells said the changes would give recipients better value for money and more power to "shop around" for packages.

"We will support providers to adjust their pricing and set reasonable and competitive charges," she said.

"I encourage providers to start planning for and talking to their care recipients about these changes now."