Preparing for the Financial Impacts of being a CDC Provider

Preparing for the Financial Impacts

of being a CDC Provider

Graeme Wickenden, CFO Villa MariaLeanne Bell, Finance Manager, Villa Maria

Tri-State Conference23rd to 25th February 2014

Agenda• Organisational Overview – Villa Maria• National Disability Insurance Scheme (NDIS)

–Overview• Consumer Directed Care (CDC)

–Overview–Trial Participation–Budgeting–Systems and Processes

• Villa Maria’s Experiences

Organisational Overview and Structure

• Celebrated 100 years in 2007• Catholic ethos and background• Supports over 5000 persons • About 1200 employees and over 300 volunteers• Delivers 60 programs in over 42 locations across Victoria• Main operating segments:

1. Disability Services2. Educational Services3. Residential Aged Care and Retirement Services4. Community Services5. Direct Care

Villa Maria – Disability Services OverviewIncludes:• Group Activities during the week, both centre based and in

the community• Individualised options to support people living in their

home with a disability or in the community• 12 Shared Supported Accommodation houses for adults• Purpose built state-wide facility for ten people with ABI

and complex medical needs• Five children’s respite houses• Flexible respite recreational activities – weekends, camps,

holiday after school care for both children and adults• Case Management

Total Annual Funding: $19m

Villa Maria – Community Care ServicesIncludes:

• Community Aged Care Packages (825)• Extended Aged Care in the Home (61)• Extended Aged Care in the Home – Dementia (37)• Assistance with Care and Housing for the Aged• Community Rehabilitation Centre• Dementia Specific Care• Carer Support Services• Respite programs, both day and overnight

Total Annual Funding: $25m

NDIS Overview• The NDIS is a once in a generation economic and social

reform which has been agreed to by all governments and will benefit all Australians

• Social insurance that will cover the cost of care and support for people with permanent and serious disabilities

• In 2011 Productivity Commission reported that the current disability system is “inequitable, underfunded, fragmented and inefficient”

• In 2009 the ABS reported that 45% of people with a disability in Australia live in or near poverty

NDIS Overview

Three key pillars underpin the NDIS design:

Insurance Approach

Choiceand

Control

Community and

Mainstream

NDIS Overview

• Will fund individual support for people with a disability that involves more choice and control and a life-time approach to a person’s needs through individualised funding

• The scheme will provide funding so people can get the care and support they need, based on their individual support needs, goals and aspirations.

• Administered by the National Disability Insurance Agency (NDIA) – an independent statutory agency established to implement the National Disability Insurance Scheme (NDIS)

NDIS Overview – Launch Sites & RolloutState Covers Initial

ParticipantsFull Scheme Participants

Full Scheme Roll out date

VIC Barwon Region 5,000 aged 0-65 100,000 July 2019

NSW Hunter Region 10,000 aged 0-65 150,000 July 2018

SA Entire State 5,000 aged 0-14 33,000 July 2018

TAS Entire State 950 aged 15-24 11,000 July 2019

WA Perth Hills Area 8,400 aged 0-65 TBA TBA

ACT Entire ACT 5,000 aged 0-65 5,000 July 2016

NT Barkley Region 100 aged 0-65 7,000 July 2019

QLD No detail ≈97,000 July 2019

NDIS – The Change

Government Agencies

Program 1

Program 2

Program 3

contracts

Funding and monitoring

NDIA

Plan and Budget

SupportSupport

Support

Support

Capped Funding Limited Choice Limited Control

OLD

Individualised Funding Choice & Control Supports, not programs

NEW

NDIS – Support Provided

Basic rules will define the types of supports funded:• Will fund “reasonable and necessary” supports• Reasonable and necessary supports should:

1. address the effect of an impairment on the individual’s capacity to undertake everyday activities, including participation in social and economic life

2. allow a person to achieve their goals, objectives and aspirations

• Funding available through the Practical Design Fund

NDIS – Financial Considerations

Financial Risk• Need to understand costs and set pricing accordingly• Move from payment in advance to payment in arrears,

with working capital implications• Greater focus on Balance Sheet management to

ensure solvency• The current regime of fixed maximum prices for NDIS

supports in trial sites will end in mid-2014


Financial Risk (cont.)• The NDIA will continue to set individualised budgets• Will allow greater flexibility for participants to

negotiate with providers about the quantity and type of supports they receive

• Cashflow planning essential• Rationalisation of service providers – growth

opportunities


Financial Risk (cont.)• Potential risk for reliance on a small number of high

value clients• Marketing essential – service providers now

competing against each other• Potential for acuity risk over time, with potential

profitability implications • Administrative processes and supporting IT systems

fundamental to success

NDIS – Systems and Processes

System considerations• Track that what was planned to be delivered was

delivered i.e. “buyer/seller” relationship• Participant’s plan and statement of support entered into

the NDIA system• Unlike in previous service models (e.g. Day Programs), no

obligation to provide planning for participants, nor manage the achievement of planned outcomes unless that’s what a provider has been engaged to do

• Focus is on, did the provider deliver what they were engaged to do

NDIS – Systems and Processes

System considerations (cont.)• The plan will specify agreed supports and funding

required• Providers will need to report at least monthly to NDIA

about the supports provided to each participant; whether they are fee-for-service or block or case-based funded

• Providers will submit reports and lodge claims for payment to NDIA through the online provider portal

NDIS – Launch Site Update

Some early data from the launch sites:• Average package costs about 30% higher than expected • Package costs were expected to be about $35,000 pa;

after 3 month’s operation about $45,000 pa• Expected more than 2,200 people to have completed

plans; to date less than a 1,000 have• These are early indicators only and need to be treated

with caution. As more information becomes available a clearer picture will develop.

NDIS – Launch Site Learnings

Common issues from launch sites:1. Provider anxiety on price setting2. Limited community understanding of the NDIS3. Operational issues – understanding the NDIS

registration process 4. Engagement of providers in the new process of

planning and understanding how providers work with the Agency

CDC Overview• Aims to provide a consumer led and directed aged care

service system• All new allocation required to be delivered on a CDC

basis from 1st August 2013• From July 2015 all packages will operate on a CDC basis• CDC allows consumers to have greater control and choice

on:– type of care they receive, and– who will deliver that care

• Consumers decide what level of involvement they wish to have in managing their package

CDC Overview

Department of Health’s guiding principles that underpin the operation and delivery of CDC packages:

1. Consumer choice and control2. Rights3. Respectful and balanced partnerships4. Participation5. Wellness and re-enablement6. Transparency

CDC – The Change

ACAT and Package

Allocation

Service delivery,

monitoring and

reassessment

Contracts

Care Plan on assessed needs

ACAT and Package

Allocation

Setting goals,

Care Planning

Capped Funding Limited Choice Limited Control

OLD

Individualised Funding Choice & Control Supports, not programsmyagedcare.gov.au

NEW

Moving or Exiting – ongoing

reassessment

Individual budget

developed with

consumer

Service delivery,

monitoring and

reassessment

Moving or Exiting – ongoing

reassessment

CDC OverviewKey considerations for providers:• Quantifying admin tasks and overheads• Communicating to consumers about available brokered

services and how to make choices that provide better quality of care and life

• Rationalising suppliers while still maintaining choice, and establishing Supplier Agreements with them

• Establishing operational structures and systems that are flexible enough to respond to consumer choice

• Determining the margin to be applied to packaged care• Management of budget allocations that is transparent

CDC Overview

• Funding still provided to the provider – not the consumer

• Home Care Provider administers the package on behalf of the consumer:– transparent– meet quality & accountability requirements

• Must have an individualised budget:– Consumer must be provided monthly Income &

Expenditure Statement– Must include balance of funds

CDC Overview – Client Agreement• An agreement must be offered before the package

commences• Must contain specific clauses covering:

– Date care started– Explanation of security of tenure and any variation

must be by mutual consent– Copy of consumer’s care plan and itemised fees

payable and how they are calculated– Right to, and how to, complain without fear of

reprisal, – Right to request copy of audited accounts

CDC Overview – Funding

New Package StructureLevel Description AmountLevel 1 New package providing basic care

needs$7,500

Level 2 Support for people with low level care needs. Equivalent to former CACP

$13,644

Level 3 New package providing intermediate care needs

$30,000

Level 4 Support for people with high care needs. Equivalent to former EACH

$45,607

Rates as at August 2013

CDC Overview – Income

OptionalFee for Service

Base Fee

Subject to Means Test where reduction and Income Tested Fee applies

Negotiated, maximum at 17.5% of the aged care pension plus 50% of other income

Subsidy

ITF

CDC Overview – Budget Details

• Format of the budget must be simple• If required, the provider must provide the budget in a

language other than English• Budget must breakdown income and expenditure• Must be based on the care planning process• Must be developed in partnership with the consumer• Time period determined by provider and consumer

(i.e. weekly, monthly, quarterly or annual)

CDC Overview – Budget Details• Income includes:

– All government subsidies, including supplements– Any consumer contribution (i.e. care fee)

• Expenditure includes:– Core advisory and Case Management services– Service and Support Provision and/or purchasing– Administrative Costs

• Budget may (but not essential) include a Contingency– Provide for emergencies and unplanned events– Increased care needs– As a guide, DSS say should be no more than 10% of the

total annual budget

CDC Overview – Budget DetailsDetermining the Contingency:• Amount to be held for each consumer for unforseen

circumstances (no greater than 10%)• A separate item should be set up for each consumer and

shown on their statement. • As expenditure is made against it then the balance should

be reported to the consumer• Cannot be pooled with other consumers

CDC Overview – Budget Details

• Any unspent funds (including contingency) must be carried forward into the next month, quarter, year

• Format can be negotiated e.g. hardcopy, email or web-based

CDC Overview – Setting the MarginDetermining the Margin:• Need to model scenarios to ensure an appropriate

margin is applied for future sustainability• Margin will form part of the overall admin expense

charged to the consumer• If the budgeted margin is not being maintained then the

admin rate will have to be reviewed to reflect a new cost structure

CDC Overview – Unspent FundsTreatment of unspent funds:• Remain with the consumer if moving to another package

with the same provider• Remain with the provider if the consumer moves to

another provider and can be used on other consumers or infrastructure purposes (unless otherwise negotiated)

• Remain with the provider if the consumer dies or moves into residential care

• Except, funds the consumer has contributed to the package must be returned to the consumer or their estate

CDC Overview – Building the Budget

Managing individualised budgets:• Budgets set by each consumer for the care needs

required based on the consultation process and their list of required services.

• Agree on the budget period, e.g. Weekly, monthly, quarterly or annually

• A separate consumer "ledger" should be kept which carries the consumer’s budget and records actual expenditure against each budget

CDC Overview – Building the Budget

Managing individualised budgets:• Monthly reporting of the actual expenditure against

the budget• Show any variations and provide explanations• Make any necessary amendments to the package at

next review date, with corresponding budget amendments

CDC – Systems and Processes

System Requirements• Need to provide individualise budgets with daily,

weekly and monthly views• Planned and Actual income tracking required• Statement reporting of client leave entitlements,

daily rates and episodes• Capacity to set-up and manage the DSS Planning

Regions and Special Need allocations

CDC – Villa Maria’s Preparation

• Previous dependency on brokerage model• Identified two years ago the need to change due to

Productivity Commission report then subsequent LLLB

• Have created Villa Maria Direct, our in-home service• Building up Fee for Service clients• Implementing systems to support this (CareLink+)• Steering Committee established to monitor and

resource the project

CDC – Villa Maria’s ExperienceParticipated in CDC Trial• Review of traditional case management model to

determine unit costs of activities• Individualised budget development• Supporting staff, consumers and service providers

about what consumer self management and coordination of services means

• Learning experience for staff about managing consumer expectations under CDC

• Learning experience for the consumers about what they can do under a CDC package


• Modeling management structures to identify most efficient and cost effective

• Shift from case management to service coordination• Developing standardised pricing for services• Undertaking costing analysis to identify breakdown

of costs• Identify the margin• Same process for NDIS and CDC


• Established two taskforces (NDIS and CDC) to oversee preparation

• Various staffing structures identified• Modeling in Calumo • Calumo is data repository we use for our

management reporting• Provides the ability to quickly develop various

scenarios

Villa Maria’s Systems Experience

• Key requirement to have an IT solution that addressed both the Disability and Home Care requirements

• Disability Services previously dependent on Excel spreadsheets in MS SharePoint– Inefficient– Open to human error

• Undertook a complete review of our Client Management System requirements


• Comprehensive Requirements Analysis completed• Reviewed various solutions and reference tested• Developed detailed Business Case for Board approval• Established a governance framework• Developed project plan identifying involvement

across various areas and resourced accordingly• Currently preparing for rollout concurrently across

Disability, Community and Home Care


• Commitment from all areas for a “vanilla” implementation to reduce timeframes, i.e. no customisations

• Key issue of developing interfaces to other systems:– payroll– financial– time & attendance/award interpretation


• Benefits:– Previous systems not sustainable under a CDC and

NDIS environment– Elimination of inefficiencies and duplications– Automation of manual processes– Improved reporting and monitoring– Integration with other systems– Improved receivables and cash flow management – Compliance to CDC and NDIS requirements

Our Conclusions

• Understanding of costs is critical• Identification of costs and correct allocation is

fundamental to establishing viable budgets• Development of a model to provide costs review

and margins • Need to ensure all costs are captured

– understanding the real cost of delivering care, – calculating appropriate labour rates, overhead

rates and margins

Our Conclusions

Key learning: how to adjust to CDC model Organisations can build internal capacity to adjust to the new policy and funding model by ensuring:• financial recording systems are in place• relevant staff understand the overall costs of providing

home care• regular reviews and evaluation of care levels are

undertaken• increased attention to and awareness of costing activities• staff are supported and guided in their transition to CDC

Questions?

Documents

Preparing for the Financial Impacts of being a CDC Provider