The CHSP Changes in Context

The CHSP changes in context: Aged care and other reform in the Community Sector in Tasmania

Summary This document discusses the changes affecting the community sector in Tasmania in general, and the changes affecting organisations providing Commonwealth Home Support Programme (CHSP) services in particular, with the aim of helping these organisations prepare for the future and make decisions about their continuing operations.

The next round of Aged Care Reforms impacting on CHSP are due to take effect from 1/7/18. TasCOSS expects that these changes will mean that: Block funding will probably end for most, if not all, providers;  Organisations will have to provide services prior to being paid/reimbursed for them;  Organisations will need to cost their services and charge clients realistically;  Organisations will need to market to, and compete for, clients;  Some CHSP providers may need to be accredited to continue to provide services post-1/7/18.

Introduction: What’s the background to these new changes?

For years community services have operated in a constant state of change. This has been driven partly by an increase in demand for services and in the complexity of concerns that people come to service providers with; and partly by economic and social changes. It has also been driven by changing government policies in relation to the funding and oversight of social services. Over the years, community service organisations have adapted, developed and rationalised their services to keep up with these pressures, while always trying to improve outcomes for service users and the communities they are a part of.

Here are some of recent significant changes in the conditions in which our services operate:  Government is changing arrangements for purchasing services from our sector, which in the long term could well mean that they are mainly delivered through prime providers and a chain of sub-contractors;  We are increasingly being asked to report on what we achieve (the outcomes of our work), rather than what we do (our activities or outputs)  Government is focused on consumer choice and consumer control, which is interpreted by governments as meaning competition and market-based approaches.

There are also general environmental issues such as funding constraints, increasing demand for services and consumers with multiple and complex needs.

These changes impact community organisations’ management and governance as well as service delivery. Organisations need to think about what the changes mean for them and whether they can remain viable in the new environment.

The most obvious example of these general trends is the impact of the National Disability Insurance Scheme (NDIS) on disability services. Community sector disability support organisations are now working in an environment in which block funding has been replaced with funding attached to individual consumers, the need to compete for customers, the need to market their services, and direct competition by the private sector.

A similar process, and similar trends, are now well underway in the aged care sector.

1. Consumer choice and Consumer-Directed Care Consumer choice ‘Consumer choice’ refers to consumers choosing which organisation will provide them with support and services. Under traditional funding agreements, governments selected organisations to provide services in particular locations. If only one provider was funded in a certain location, there was no other choice of provider for people who lived in that area.

More recently, governments have been designing funding models on the basis of consumer choice, where the consumer has as much freedom as possible to choose the organisations they prefer. The NDIS is the best-known Australian example of the consumer choice model.

Consumer-Directed Care, or CDC, refers to consumers deciding how supports and services are designed and provided. CDC theoretically allows a consumer (and their carers) to select and co-design services with the service provider, resulting in a service plan unique to that consumer. According to this model, services would become more responsive to individuals’ needs. This approach also has the potential to create innovation in meeting the unique needs of consumers.

The key component of CDC as it is being implemented in the NDIS and the current Aged Care Reforms is that the funding for services does not go to the provider of the service. Rather, it is attached to the consumer. This is based on the assumption that it will lead to consumers researching and choosing the organisation that best suits them, that they will be able to leave organisations they are not satisfied with, and that this will create incentives for providers to improve their services.

Consumer choice and CDC may enable community organisations to develop and change in response to consumer demand. Organisations that are successful in attracting, and retaining, high numbers of consumers (in effect, customers) will not be limited by block funding but will be able to expand their service to as many consumers as they can attract. Providers will not have to handle multiple funding agreements with government or reapply for funding when agreements end.

Competition CDC-based funding is intended to create greater competition between providers of community services.

Community sector organisations may not have the skills required to survive in a more competitive environment, such as marketing, unit costing, and financial forecasting. Small organisations may not have the economies of scale to compete with larger providers in winning consumers.

When an organisation’s revenue depends on consumer numbers rather than a pre-determined block funding amount, it becomes much more difficult to forecast revenue, to develop budgets or operational plans.

2. Environmental pressures Funding constraints The Australian Government continues to tighten expenditure on social services and has shifted responsibility for some expenditure to the states, putting further pressure on state government budgets.

As community sector funding declines in real terms, service providers seek alternative sources of revenue such as client fees, fundraising activities and social enterprises. While alternative sources of revenue can bring many benefits, organisations face increased uncertainty when relying on social enterprise for revenue. Similarly, introducing or increasing fees for service can adversely affect consumers. The degree to which service users can afford fee increases will vary. Any significant negative consequences will have to be managed by the provider.

Increasing demand Community service organisations consistently report that the number of people trying to access their services exceeds their capacity to deliver. Increasing demand, in the absence of additional resources, necessarily leads to rationing. This could be in the form of more stringent eligibility requirements, limits on what a service can provide, or longer waiting lists.

Consumers with multiple and complex needs Community organisations also report that an increasing proportion of their consumers are presenting with multiple and complex needs. These are people or families who are experiencing a combination of disadvantage or hardship, disability, mental health concerns, substance abuse, and other issues. Often those people will need support from several services or organisations.

Funding programmes have often developed to meet a narrow range of consumer needs. Where consumers have needs that are broader than those met by the service they have entered, they or the service need to also access or work with other organisations. Service providers may need to negotiate multiple funding streams and contractual requirements to meet the broader needs of consumers.

Meeting multiple and complex needs may involve significant costs that are not recognised by government contracts and funding.

Increasingly governments are recognising that the multiple and complex needs of consumers cannot be met by a single funding stream. In response, governments have sought to change service arrangements, with the stated aim of being more consumer-focused. This has included merging funding streams and a focus on client assessment, case management and case coordination. In the CHSP funding stream, this has taken the form of case coordination and case management functions being taken on by the Regional Assessment Services and Aged Care Assessment Teams coordinated by My Aged Care. To reflect this change, funding has been withdrawn from CHSP providers for case coordination and case management.

In fact, however, TasCOSS’ feedback from the CHSP sector is that these functions are still necessary at the inter- and intra-organisational levels.

3. Specific changes in CHSP The Commonwealth Government’s Aged Care Reforms commenced in 2013 and will be ongoing into the foreseeable future. Under the Reforms, it appears inevitable that the aged care services sector will move in a similar direction as the NDIS; there will be greater competition and marketization of organisations providing services. In Tasmania, the impact of these changes will be magnified by the particular economic and geographical conditions unique to our State.

So far, providers of residential aged care services and Home Care Packages (HCPs) have been affected the most by the Aged Care Reforms. Providers of Commonwealth Home Support Programme (CHSP) services have not yet been very significantly affected, despite the troubled introduction of the My Aged Care (MAC) gateway portal in 2015. Over the next few years CHSP providers are likely to undergo much more potentially disruptive reforms.

Most Tasmanian providers of CHSP services also receive funding from the Tasmanian Department of Health and Human Services (DHHS) to provide Home and Community Care (HACC) services to people with disabilities under the age of 65. Any major changes to the way organisations provide CHSP services will have a necessary impact on the delivery of HACC services also. In addition to this uncertainty, DHHS is considering carrying out a review of the funding and service delivery model for HACC services.

Consumer-Directed Care in Aged Care Under the current CHSP funding agreements, providers receive block funding, meaning they are paid ahead of time for delivering services in the period covered by the funding. Government has advised that from 1/7/18 the CHSP as a separate funding stream will cease. According to the Aged Care Roadmap1, from 1/7/18 CHSP and HCP funding will be merged into an “integrated care at home package” and CHSP as a separate funding programme will cease.

While the funding arrangements for what are currently thought of as CHSP services under the new arrangements have not yet been determined by Government, it appears unlikely that block funding will continue. Rather, individual consumers will be given ‘credit’ for a package of service which they can then ‘spend’ at a provider of their choice. Providers will be paid via claiming reimbursement from Government for services already provided under the terms of the package agreed with the consumer.

Aged care organisations will thus need to provide services to consumers before being paid for them. This means that organisations will need to hold a cash reserve to fund their activities while they are waiting for reimbursement.

1

The Aged Care Roadmap (2016) is a publication of the Aged Care Sector Committee. The Committee was established by the Australian Government in 2015 to recommend future reform directions for aged care. The Roadmap does not represent official Government policy. However it is probably indicative of the policy positions that the Government will adopt.

This may be a challenge for some providers. Research carried out by TasCOSS in 20152 found that nearly 80% of aged care services surveyed did not, or were unable to, maintain a cash reserve large enough to cover at least three months of expenses, and that small organisations were less likely than larger organisation to maintain such a reserve.

Competition and ‘marketisation’ The CDC-based approach to funding is expected to result in greater competition between community sector organisations. The Australian Government My Aged Care Fact Sheet Aged Care changes – the journey so far states: The Productivity Commission’s 2011 report Caring for Older Australians highlighted a number of weaknesses and challenges affecting consumers and service providers … The report identified a clear need to move towards a system that is fair, flexible and sustainable - a market driven system that will deliver efficient, effective, innovative and quality services for older Australians.

The government’s vision of increased efficiency in the aged care sector (both improved services and increased cost efficiency) is based on “a market driven system.”

The changes to the aged care regulatory environment are likely to lead to the entry of more private sector providers into the aged care “market.” On the mainland, private sector providers are well represented among residential care providers and to a lesser extent amount HCP providers, and some private sector providers are already delivering CHSP services. This has not happened to such an extent in Tasmania, probably due to the smaller concentrations of population and relative financial disadvantage.

However, once private sector providers find ways to deliver service not bound by geographical considerations, they can be expected to increase their penetration into Tasmania.

Funding is likely to continue to contract in real terms, and will be driven down by whichever organisation is able to offer the cheapest price. At the same time, service demands, and probably regulatory demands, will continue to increase. This means that providers will need to do some financial planning to identify the minimum number of consumers they require at any one time to remain financially viable under the new funding model.

Providers will also need to effectively market their services to potential consumers, in order to maintain or increase their market share.

Also, economies of scale will continue to be important. This is to the advantage of larger organisations.

Smaller organisations may consider partnership or sub-contracting arrangements.

Outcomes focus: Wellness and Re-ablement A key feature of the Aged Care Reforms is the emphasis on Wellness, Re-ablement and Restorative Care: that is, delivering services which result in a measurable improvement in consumers’ physical function.

2

Cortis, N., & Blaxland, M. (2016), The State of Tasmania’s Community Service Sector, 2015 (SPRC Report 02/16). Sydney: Social Policy Research Centre, UNSW Australia.

The Department of Health will increasingly require providers to aim for and report improvements in consumer wellbeing in relation to these concepts.

The ability to measure and report outcomes - the changes in the consumer as a result of receiving the service - is an important area for development.

In time, it is expected that all levels of government will require more outcomes-based measurements as part of the reports it requires from providers. The Data Exchange reporting system used by CHSP providers to report to the Commonwealth includes the ability to report on consumer outcomes. It includes the ability to record client outcomes via a tool called SCORE (Standard Client Outcomes Reporting), which allows service providers to rate consumers against a range of goals and track changes over time.

Accreditation CHSP providers do not currently (as of 2016) need to have any special level of approval to provide services, other than to meet the Grant Recipient Responsibilities in the Commonwealth Home Support Programme Manual.

However, providers of residential care and Home Care Packages (HCPs) are required to be “approved providers” under the Aged Care Act (Cwth) 1997. This means they have to meet certain standards of care set out in the Aged Care Standards and Principles in the Act and administered by the Australian Aged Care Quality Agency, specifically:  the Quality of Care Principles 2014 (incorporating the Home Care Common Standards);  the User Rights Principles 2014;  the Accountability Principles 2014; and  the Sanctions Principles 2014.

Approved providers must also be incorporated organisations.

Where organisations are already providers of HCPs and residential aged care, they will be able to elect to become approved providers of the new integrated packages. However, this is not the case for organisations which provide CHSP services but do not provide HCPs or residential care. TasCOSS has received advice from the Department of Health that CHSP-only providers will not be able to continue as providers of services post-1/7/18, but will need to go through the process of becoming an “approved” provider.

The process for how CHSP providers do this is not yet clear. The current process for becoming an approved provider of HCPs or residential care is complex and exacting. Potential providers need to be able to demonstrate an understanding of the legislation and it’s associated guidelines, including the Standards and Principles, and how they would deliver services based on the legislation and the guidelines (that is, what systems, policies and procedures will be in place to ensure services are delivered in accordance with these documents). Providers will also need to demonstrate how they would follow the principles of Consumer Directed Care. Finally, providers would also need to demonstrate they have good financial management practices, describe their accounting systems, their budgets development processes, how they monitor financial KPIs, and how they manage cash flow and ensure good financial governance.

It is possible that the approval process for CHSP services post 1/7/18 may be somewhat simpler; however, this would require amendments to the Aged Care Act 1997. Government instead may decide to make all providers of any type of aged care service accountable to the same standards as current approved providers.

TasCOSS recommends that CHSP-only providers use the time leading up to 1/7/18 to familiarise themselves with the current approval process, and plan for any changes which would be required to become an approved provider.

Sub-contracting The Department has stated that after 1/7/18, a home care package can only be delivered by a single provider.

This means that if a provider does not provide a particular service which a client needs, it is that provider’s responsibility to arrange for it to be provided. The consumer cannot split his or her package between providers.

The organisations which may be the most affected by this are those which specialise in a particular narrow type of CHSP service, such as face-to-face social support, respite care centres, transport, and home maintenance/modifications. It is not clear if such specialist providers would be able to successfully apply to become “approved providers” (see previous section). In the absence of this, they may only be able to go on providing CHSP services under sub-contracts to approved providers.

Even if services such as respite day centres are able to continue as sub-contractors, by definition this will make their services more expensive to the consumer (who at the moment is usually paying only a nominal fee). As important but less health-critical services, social support services are exactly the kinds of service which tend to get crowded out of care packages which have to address a wide range of needs.

And yet, for many older people, day respite centres or social activities might be the only social contact they receive.

Income and asset testing CHSP services are not at present income or asset tested, although some providers require a degree of co-payment. However Home Care Package entitlements are income and asset tested. It is possible that under the combined CHSP/Home Care Package model, that all entitlements will be income and asset tested in a similar way to Home Care Packages at present.

Consumer plans and statements At present, providers of HCPs and residential care need to create an individualised service plan with each new consumer. Package plans need to stay within the cost limits imposed by the funding attached to the type of package (or have the ‘’top-up’’ paid directly by the consumer). As part of the ongoing monitoring of the consumer’s plan, providers need to give the consumer an itemised statement each month detailing the costs of services received by the consumer that month, defrayed against the funding available in the consumer’s package.

From 1/7/18, when the CHSP and HCP funding streams are merged, it is possible (and in TasCOSS’s view likely) that organisations will need to create and provide similar statements in relation to CHSP services.

This means that CHSP providers will need to have a clear idea of the actual cost of providing these services (this is known as ‘unit costing’) and a consistent policy position on what it will charge consumers for them.

Unlike under the NDIS, the government will not set unit costs; rather, providers will need to determine the rate. You will need to decide what will attract consumers and compete with other providers.

Workforce changes One of the implications of the new funding model is that our workforce may change, because the skills required to work with consumers in a market-driven and competitive environment may be different, and because organisations may no longer be able to afford the same number of staff or the same number of permanent or full-time workers.

Organisations will need to strategically plan for their futures, and identify which services they will provide post-1/7/18. Based on this assessment they will need to identify the skills, qualifications and employment arrangements for the workforce which will best suit the new shape of the organisation.

National prioritisation queue From 1/2/17, when Home Care Package (HCP) funding becomes allocated to the consumer rather than the provider, the My Aged Care assessment process will be adding another step to Home Care Package: service prioritisation.

Once a consumer’s level of need is assessed by the MAC Contact Centre and the Regional Assessment Service and/or Aged Care Assessment Team, the consumer’s priority for service will be assessed separately by Departmental staff3. This is because the total number of care packages will be capped, so not all consumers assessed as in need of care will receive it. Consumers waiting for services will be allocated packages based on a national waiting list4.

Although no details have been provided by Government, TasCOSS assumes it is likely that from 1/7/18 when CHSP funding becomes combined with HCPs, consumers waiting for CHSP services will also be added to the national prioritisation queue.

At the moment, the MAC assessment process takes at least a few days to be completed. Presumably, the addition of the prioritisation assessment will add more time to the period a person needs to wait before being able to access services.

At present, delays in assessment, for both CHSP and HCPs, are dealt with by allowing CHSP providers to provide urgent services prior to MAC registration, or through the ‘back door’ by clients accessing CHSP services directly based on informal referrals or direct client approaches. Once the CHSP is merged with 3

TasCOSS has noted with concern with concern that is appears that administrative clerical staff, or a computer formula, will be tasked with this assessment, rather than aged care professionals.

4 The fact that the waiting list will be national may also have unintended consequences. The parameters for prioritisation have not been made public but apparently include urgency of need. Severity, if not urgency, is likely to be worse for people in more remote areas, poorer areas, and of course poorer states such as Tasmania. These are precisely the areas which already have the fewest services, and the services which are least likely to survive the changes.

the HCP programme, it will no longer be possible for providers to receive payment unless a client has entered their service via the MAC. Under these circumstances it is unclear what will happen to people who require urgent services.

Potential impact on HACC services The Home and Community Care (HACC) Programme of the State Department of Health and Human Services (DHHS) provides services designed to help people with disabilities under the age of 65 to be able to live at home and out of institutional care. HACC providers are usually the same organisations which also provide CHSP services. Where an organisation receives both CHSP and HACC funding, the proportion of CHSP funding is almost always much greater, usually in the realm of 4:1.

This means that if the aged care reforms threaten the viability of some CHSP providers, these providers may also no longer be in a position to continue to provide HACC services, as the proportion of their funding from HACC may not be sufficient to keep the service in operation.

In the longer term, the future of the HACC Programme depends on the final shape of the NDIS in Tasmania. Presumably there will be some continuing need for people with disabilities who do not fit the NDIS eligibility criteria to continue to receive some level of low-intensity or short-term home care.

However, these services are exactly the ones that are most threatened by the impact of the CHSP changes. The Tasmanian Government’s plans in relation to the future of these services are not yet known.

Consumer transition from non-continuing services Where organisations decide they are unwilling or unable to continue to offer services, or remain operational at all, they will need to develop a contingency plan for transferring current consumers to other services.

For further information and to find out how TasCOSS can support your organisation, contact us on 03 6169 9501 or admin@tascoss.org.au.