key takeaways
The new Aged Care Act 2024 (Cth) is set to commence from 1 July 2025.
The Act provides for revised provider obligations including conditions on registration as well as new prudential and financial standards.
Providers must ensure their actions meet the revised Aged Care Quality Standards, Code of Conduct and Statement of Rights.
Providers and key personnel will be subject to new statutory duties.
Providers will have to ensure their workforce meets revised worker screening requirements.
Preparing for the New Aged Care Act – What Operators need to know before 1 July 2025
Following the Royal Commission into Aged Care Quality and Safety and in response to the challenges faced by older people, aged care providers, workers, and the broader aged care sector, the Australian Government has introduced the Aged Care Act 2024 (Cth) (Act) which is set to commence on 1 July 2025.
The Act will replace the existing legislation, including the current Aged Care Act 1997 and the Aged Care Quality and Safety Commission Act 2018.
The Act aims to prioritise the rights and needs of older people, ensuring safe, high quality care and empowering them to live active, self-determined lives, while also increasing accountability and enhancing quality within the aged care system.
The range of new obligations are targeted at enhancing the quality, accountability and oversight of aged care providers. This article will provide an overview of the changes and how these changes will impact providers moving forward.
Key Changes for Aged Care Providers
1. Registration and Renewal
- funded aged care services need to be delivered by a service provider who is registered with the Aged Care Quality and Safety Commission (Commission) and transitional arrangements are in place for existing providers
- the Commission will assess providers’ suitability, capacity and capability against the Aged Care Quality Standards and register providers into one or more of the 6 registration categories that group service types based on similar care, complexity and risk
- providers will need to meet the revised provider obligations and conditions on registration, including supervision conditions based on the provider’s risk level
- registration will typically last three years, but shorter registration periods may apply if risks are identified
- the Commission may invite Providers to renew their registration up to 18 months before expiry.
2. Aged Care Quality Standards, Code of conduct and Statement of Rights
The new Act establishes a comprehensive framework to enhance aged care services, including a newly introduced Code of Conduct along with a Statement of Rights and updated and strengthened quality standards. These measures are designed to improve safety, quality and the rights of older people receiving care.
Providers are responsible for ensuring their actions and service delivery align with, and is guided by, these key requirements.
The Aged Care Quality Standards can be found
here The Statement of Rights is set out in section 23 of the Act
here
The Code of Conduct is set out at Part 2A of the Aged Care Quality and Safety Commission Rules 2019
here
3. New financial and prudential standards
Under the Act, new financial and prudential standards (Standards) will be implemented to establish minimum requirements for the good financial and prudential management of registered providers.
The updated Standards simplify the current framework by replacing the four current Standards (Liquidity, Governance, Records and Disclosure) with three revised Standards:
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Financial and Prudential Management Standard | This standard requires providers to have governance and systems in place to manage finances soundly and make sure financial and prudential decisions are fair, reasonable and in the best interest of people receiving care.
All providers who hold refundable deposits must have a governance framework to manage the deposits. | Registered providers in categories 4, 5 and 6 (excluding government entities and local government authorities), including: - providers delivering funded aged care services in residential care homes
- providers delivering funded aged care services in categories 4 and 5 in the community.
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| This standard requires providers to maintain sufficient “liquid” assets so they can meet financial obligations, refund deposits and manage risks effectively. This standard also includes an enforceable minimum liquidity amount to support financial resilience among providers. Providers will be required to calculate their minimum liquidity amount each quarter. | Registered providers that are providing funded aged care services in a residential care home (excluding government entities and local government authorities). |
| This standard ensures providers select, manage and monitor investments, including the investment of refundable deposits.
It requires providers to develop and follow a strong investment management strategy (IMS) so they can deliver, safe, high quality aged care services and protect refundable deposits. | Registered providers delivering funded aged care services in an approved residential care home (excluding government entities and local government authorities). |
Further details of the new Standards including the changes under the Act can be accessed here.
4. Revised worker screening requirements
The Department of Health and Aged Care is working to introduce a new Aged Care Worker Screening Check for risk assessed roles including:
- a responsible person (for example a CEO or board member)
- a person involved in the direct delivery of aged care services to old people
- a person who is likely to have ‘more than incidental contact’ with older people accessing aged care services as a normal part of their duties.
The new screening process will be similar to the NDIS Screen Check but will not be implemented by the Department before 2026.
5. Statutory duties
Registered Provider duty
The new statutory duty requires registered providers to ensure, so far as is reasonably practicable, that their conduct does not cause adverse effects to the health and safety of individuals to whom they are providing aged care services.
To meet the statutory duty, it is necessary to balance the risks of adverse effects against the resident’s right to take an informed risk. These duties do not override a resident’s rights, provided that the resident is fully informed, understand the potential consequences of the decision and have decision making capabilities. Proper documentation of discussions and risk assessments is essential to demonstrate compliance by the provider in providing information to the resident.
For example, for a resident who has a known risk of falls due to poor mobility, it would be reasonable for the registered provider to have undertaken a fall risk assessment by an appropriately experienced professional and to have documented risk mitigation strategies in the resident’s plans.
Responsible person duty
The new Act requires all ‘responsible persons’ of a registered provider to ‘exercise due diligence’ to ensure that the registered provider complies with the registered provider duty.
Breach of Duty
A registered provider and responsible person will be in breach of their duties if:
- the registered provider has a statutory duty under the Act; or
- if the responsible person and registered provider do not comply with the duty and does not have a reasonable excuse for not complying with the duty
- the conduct amounts to serious failure to comply with the duty; or
- the conduct amounts to a serious failure to comply with duty and the conduct results in the death of, or serious injury to or illness of an individual to whom the duty registered provider owes a duty.
Penalties
- serious failure is 150 penalty units ($49,500) for a responsible person (or a registered provider that is an individual) or 1,000 penalty units ($330,000) for a provider other than an individual.
- Death or serious injury or illness is 500 penalty units ($165,000) for a responsible person (or a registered provider that is an individual) or 4,800 penalty units ($1,584,000).
Conclusion
The Act introduces significant reforms to enhance quality, accountability and oversight in the aged care sector. With the 1 July 2025 commencement date fast approaching, providers must act now to ensure they have appropriate measures in place to comply with their obligations under the Act.
McInnes Wilson can assist you to prepare for the changes including:
- reviewing current governance frameworks
- conducting ‘health checks’ on incident management and complaint managements systems
- updating template agreements for the provision of aged care
- updating services and management agreements for providers who are subcontracting services connected with, or incidental to, the provision of aged care or the management of aged care services
- briefing senior management, boards and governing bodies of registered providers regarding the changes.
how can mcinnes wilson help?
We are ready to assist you to prepare for the changes. Please contact Taryn Hartley, Georgia McNamara or Morgan Gallagher if you’d like to hear about how we can assist you with progressively staging these and other preparatory steps over the coming months to ensure you are prepared for 1 July 2025.
