The ability to offer and charge for Additional Services has been available since 1997 with the commencement of the Aged Care Act. However, it was not until 2014 that the regulators accepted Additional Services as a way of increasing the choice available to all residents, in preference to the more exclusive Extra Services available to the wealthier few. Additional Services programs have become more popular and prevalent. The legal framework for these programs has been reasonably well settled for a while now, with some variations depending upon the approach of the regulators from time to time. It is pleasing to see that the Australian Aged Care Quality and Safety Commission (Commission) has now summarised its position on the legal framework in a Regulatory Bulletin released on 9 June 2023. The Bulletin does not contain any surprises. While the threshold for what care and services qualify as ‘additional’ may be debatable, overall the Bulletin aligns with the approach we have seen from the regulators over the last 4 years. The release of the Bulletin suggests that the review and consultation process commenced by the Department ‘pre-Covid’ is not going anywhere. It also suggests that providers can expect the Commission will be assessing any additional services program against the criteria in the Bulletin. Some key takeaways from the Bulletin are: The items and services Additional Services are those care and services that are either different from, or substantially better than, the specified care and services set out at Schedule 1 of the Quality of Care Principles 2014. Additional Services are items that providers are otherwise not required to provide under the legislation and with the subsidy provided by the Government. Providers can offer, and all residents can access, Additional Services for a fee that is agreed upon between provider and resident. RK Tip: If a provider is charging for a substantially better version of the specified care and services, the provider needs to keep records demonstrating this. For example, providers should keep a record of the cost of a basic care and service that is required to be provided in comparison to their higher quality Additional Service. Capacity to benefit The Bulletin confirms providers cannot charge residents for care and services that they cannot derive a benefit from. For example, a provider could not charge a resident who is bed-bound for yoga classes. It is asserted that providers must also have a system in place to determine if a person can derive a benefit and regularly review this (including upon entering the agreement and if care needs change). RK Tip: Providers should develop a form or checklist to use at each care plan review that sets out the Additional Services offerings to assess if the resident has capacity benefit from each. Pricing method and deductions As specified in the legislation, providers must not charge more than the amount agreed beforehand with the resident. While providers are able to bundle packages (eg have an ‘entertainment package’ which includes streaming services and in-house entertainers; or a “pampering package” which includes facials and hairdressing etc) which can be purchased as a whole, providers need to have clauses in their agreement which confirm the value of each individual care and service offered in their Additional Services program. That is, providers cannot just set out a price for the entire package or bundle in the agreement: to determine the value of each care and service, provides will need to have a pricing methodology that records why they value each item for the specified amount; and providers must provide the resident with an itemised account which includes each individual item. RK Tip: Providers can set out in the agreement that only the bundle will appear on the invoice. Pricing and capacity to benefit If a provider forms the view that a resident is unable to derive a benefit from an Additional Service, they cannot charge for it. As such, providers will need to have a clear system in place to “discount” Additional Services fees for each Additional Service that a resident cannot derive a benefit from. RK Tip: Providers should have this system clearly documented. In saying that, if the agreement specifies, providers may be able to substitute items that a resident cannot derive a benefit from for an Additional Service that they can. Commission’s powers The Commission has at its disposal the usual range of powers when it finds a provider has breached its legislative responsibilities. We have found that most issues concerning Additional Services have come through complaints to the Commission. A complaint about a single instance of breach can lead to a review of your entire program to all residents. This can prove costly if providers are directed to refund amounts not properly charged to residents. The Additional Services program is also subject to the Australian Consumer Law, including oversight of the ACCC which has powers to deal with non-compliances. How we can help With the release of the Bulletin, providers can now introduce an Additional Services program with greater certainty. It is also an opportune time to review the operation of your program to ensure it is compliant with the law. Russell Kennedy has supported many of its client in setting up or providing compliant Additional Services programs. We can assist with the following: providing advice in relation to the regulatory landscape and methodology to setting up a compliant program (including systems for reviewing capacity to benefit, pricing and discounting); reviewing your program for compliance; reviewing the Additional Services offered to ensure they are lawful; reviewing policies and agreements; and providing template clauses for agreements. Please contact Victor Harcourt, Anita Courtney or Solomon Miller for assistance. If you would like to keep up to date with Alerts, news and Insights from our Aged Care Team, you can subscribe to our mailing list here.