Ms Lynda O Grady

THE HON MARK BUTLER MP

MINISTER FOR MENTAL HEALTH AND AGEING

MINISTER FOR HOUSING AND HOMELESSNESS

MINISTER ASSISTING THE PRIME MINISTER ON MENTAL HEALTH REFORMS

PARLIAMENT HOUSE

CANBERRA ACT 2600

Ms Lynda O’Grady

Chair
Aged Care Financing Authority
ACFA Secretariat
GPO Box 9848
CANBERRA ACT 2601

Dear Ms O’Grady
Thank you for your letter of 17 May 2013 and the advice from the Aged Care Financing Authority (the Authority) regarding the equivalence methodology to convert Daily Accommodation Payments (DAPs) to Refundable Accommodation Deposits (RADs).
I have carefully considered your advice on the methodology and have made the following decisions:

Recommendation 1:

That for a transition period until 1 July 2017, and subject to the outcome of the review described in recommendation 3, the equation using the MPIR as “conversion factor” be anchored in the RAD so that providers can determine a RAD price and then convert that to a DAP price based on the MPIR. The DAP price would then adjust each quarter with movements in the MPIR with the RAD price remaining constant. From 1 July 2017 the anchor point would change to the DAP with the RAD adjusting with movements in the MPIR, subject to the findings of the review. As already announced both RAD and DAP prices and combination options would need to be published by the provider.

Accepted.

Recommendation 2:

That consideration be given in the context of finalising the Accommodation Pricing Guidelines as to how anchoring in the RAD will affect the Level 3 pricing approval process.

Accepted.

Recommendation 3:

That Section 4(2)(e) of theLiving Longer Living Better (LLLB)Bill concerning a review of theLLLBpackage be modified to include a review of the appropriateness of continuing to anchor the equivalence formula in the RAD, taking into account the impact on consumers, providers and investment in the sector.

Supported, with implementation of the recommendation to be considered in the context of Parliamentary consideration of the Bills.

Recommendation 4:

That the consumers’ rights and total discretion as to selection of facility, choice of payment mode and the 28 day (after entry to a facility) choice of payment period based on the published pricing (both DAP and RAD) are explicitly and comprehensively communicated.
Accepted, noting my previously stated intention that a strong consumer protection framework will be put in place to ensure consumer choice is respected, prices are justified and communications are transparent.
Once again, I express my thanks to the Authority for its considered advice on this issue. I look forward to receiving the Authority’s advice on matters of aged care pricing and financing into the future.
Yours sincerely
Mark Butler