Key Changes and Implications for Providers

While we don’t specialise extensively in aged care, we recognise the significant impact this sector has on the lives of many Australians. Aged care touches most of us at some point, either personally or through our loved ones, so staying informed about developments in the industry is crucial.

The aged care sector has faced its share of challenges and negative media attention in recent years. However, in our experience, many providers are dedicated, hardworking, and often underpaid, despite the immense responsibility they shoulder. That’s why we took a keen interest in the recent introduction of the new Aged Care Act, which is set to bring sweeping changes to the industry, effective from 1 July 2025.

A Rights-Driven Approach

The new Aged Care Act is described as “rights driven,” emphasising the rights of those receiving care and aiming to overhaul the way care is provided, managed and administered. These changes will have a profound impact on providers, reshaping their operations in key areas. Here are some of the significant changes:

1. Statement of Rights

Providers will now be required to ensure their actions are guided by a Statement of Rights, placing a stronger focus on safeguarding the dignity and well being of individuals in care.

2. Financial and Prudential Standards

New and more detailed financial and prudential standards will be introduced, requiring providers to implement stricter financial reporting measures. This aims to increase transparency and accountability in the management of funds within aged care services.

3. Registration with the Aged Care Quality and Safety Commission (ACQSC)

Providers will need to register with the ACQSC, with transitional arrangements available for existing providers. Additionally, all residential care homes will need to undergo approval under the new guidelines.

4. Regulation of Commonwealth Home Supported Packages (CHSP)

Providers offering CHSP services will now be regulated under the new Act and overseen by the ACQSC, reinforcing oversight and compliance.

5. Workforce Screening Requirements

To enhance the quality and safety of care, providers will be required to ensure their workforce meets revised worker screening requirements, similar to those in place for the National Disability Insurance Scheme (NDIS).

6. Home Care Reforms

Beginning on 1 July 2025, the current Home Care Packages system will be replaced by Support at Home, introducing a new framework for delivering care to individuals in their homes.

7. New Classification System for Home Care

A new 8 level classification system will be introduced for ongoing home care, allowing for more tailored and individualized support for those receiving care.

8. Changes to Claiming and Budget Management

Providers will face new financial constraints, including:

  • Claiming in arrears and being paid no more than the limit set by the Independent Health and Aged Care Pricing Authority (IHACPA).
  • A cap of 10% on care management fees, limiting the fees that can be charged to individuals.
  • Providers will be required to manage quarterly individual budgets, with no more than 10% of an individual’s budget allowed to be carried forward.

Financial Challenges Ahead

As accountants, we see the final point – Changes to Claiming and Budget Management – as especially challenging for aged care providers. Compliance, financial reporting, budgeting, and governance already place significant pressure on providers, and these new reforms add further constraints – particularly regarding cash flow and fee management.

The cap on care management fees, combined with the requirement to claim in arrears, will likely put a strain on providers’ financial flexibility. Additionally, the increased reporting standards and individual budget management will require greater administrative oversight, adding to the operational burden many providers already face.

Preparing for the Future

For aged care providers, staying ahead of these changes will be essential. Ensuring compliance with the new standards, managing cash flow effectively, and adapting to revised workforce requirements will be critical for success in this evolving landscape. We’re here to help providers navigate these challenges, offering guidance in financial reporting, compliance and strategic planning.

While the road ahead may seem daunting, we believe that with the right support, aged care providers can continue to deliver the essential, compassionate care that makes such a difference in the lives of so many Australians.

If you’re a provider looking for assistance in managing these changes, don’t hesitate to reach out. Our team is ready to support you every step of the way.