We know how that story goes…let’s think differently this time around.
Luke Benson
Why IPA (Improved Payment Arrangement) for Aged Care?
Australia’s federal government has reported A$1.4Billion of unspent fund sitting with Home Care providers, yet there is a waiting list of tens of thousands of elderly people waiting for services. The government working through Services Australia has chosen to move to a payment in arrears model (IPA) from this year, with option of returning unspent funds.
Readiness
Complying with the new IPA arrangements will require accounting decisions, enabled by system, process, and data upgrades. In 2015 we saw the rise of the “NDIS Ready” sticker on disability management software and CRMs across the sector – vendors touting that their software was now able to plug-into the NDIS eco-system. Unfortunately, it was a false summit. Actual “NDIS Readiness” took years to master, in the meantime there have been extreme examples of revenue leakage (horror stories in the order of $13m+ of providers ‘underwriting’ the NDIS), negative audit outcomes and difficult customer experiences in transition. We still see NDIS funded service providers who struggle to achieve positive operating margins, partly due to their lack of readiness across their back-office.
Issues
There is a danger that the Aged Care sector could suffer a similar experience as software vendors are now feverishly working on new functionality needed to hit the approaching August 30th deadline. The government’s introduction of the new Improved Payment Arrangement (IPA), applicable to the funding of the aged-care Home Care Package Program (not residential or other aged-care services), changes the way providers are paid. This change means that aged-care providers must calculate the Commonwealth portion of unspent funds that they hold for each care recipient and report this to Services Australia.
The technical challenge
The technology change to meet these requirements have been described as “just a few extra fields” by some, but the change is far more complex. ‘Reporting’ may sound simple, but in this context, it means reliable and timely client statements generated from multiple data sources (possibly aggregating data from the provider’s CRM, rostering and scheduling system, billing, and the provider portal).
Across the country, numerous software vendors are pausing development of other priority features to fit in this IPA upgrade into a very short time-frame as it is a mandatory change. Such a workload has a domino effect as other promised features will slip and internal project teams in Home Care providers are having to pause efforts on other initiatives to treat the IPA change as the #1 priority.
Is this really a ‘systems’ problem?
Our view is this challenge is 20% systems: 80% reporting. Meeting this challenge is highly dependent on ‘getting the data out’ of your core systems or augmenting them with temporary/tactical spreadsheets whilst the vendors catch up. Only then can you de-risk this new function.
Challenge for vendors
It is highly unlikely that “v1.0” of the “IPA Ready” version of your core systems will be able to answer those critical business questions. So, what can you do? The clock is already ticking. Be smart about how to de-risk the transition phase. It is likely to be at least 6-months, more likely 12-months of transition pain points. Look for innovative solutions to the new business problems that IPA presents. Is this a time to start seeing your ‘reporting requirements’ not bundled in with your ‘functional requirements’ for your systems – they are very different things that can be solved very differently.
Waiting for vendors is the first step – then comes rounds of testing, because this change will likely be ‘wedged in’ to a bundle of other planned improvements to the next release or upgrade. A new reporting capability such as required by IPA is difficult to test well – provider organisations will need to set up simulations for ‘what will happen on September first’ a tricky task, as there is a need for test data and test environments to be setup for that ‘dress rehearsal’.
Best-case
We know of a local provider organisation who has an in-house system, built organically over the past 6 years – they have quite high confidence in their ability to be “IPA Ready”. They are in this position fundamentally because they understand what needs to change and can re-align processes and systems at the same time. And it only needs to work for ‘one customer’ (themselves).
Stay tuned for our upcoming IPA blue-paper which takes a deeper dive into adapting to the changes arising from IPA.
Addendum
For further information on IPA and its implications for Aged Care providers, copy the following URL into your browser:
https://www.servicesaustralia.gov.au/sites/default/files/improved-payment-arrangements-claiming-change-summary.pdf
What will be new?
Services will need to enter a total (aggregated) invoice amount for each Care Recipient. This is the amount claimed.
Services will indicate whether they are opting in to return Commonwealth unspent amounts for each care recipient. Once opted in this can’t be changed.
Services will report Commonwealth unspent amounts for all Care Recipients as at 31 August, and continue to update these amounts each month (if not opted in). Services Australia will pre-populate this field from the previous month
A Care Recipient Home Care Account will be created (from 1 September). Each Care Recipient will have one.
What isn’t changing:
Services claim monthly in arrears
Services submit events for each care recipient (leave, entry and exit, and other supplements), and report unspent amounts on departure
Payment statement available as a CSV file
Claiming available via Aged Care Provider Portal & Web Services, and manually.
What this means for services providers:
Monitoring active consent process and opt-in/out on a client-by-client basis (your next new client after Sep 1 will be automatically ‘opted in’)
Having immediate line-of-sight on “Government Held” unspent funds vs existing unspent funds lenses and the ‘total funds available’ lens, by cash vs accrual – deficits are to be avoided now, more than ever
Monitoring the 70-day quarantined unspent funds of clients transferring between providers
Monitoring revenue leakage, Purchase Order linkages, income tested care fees being collected…the list goes on