On 25 November 2024, the Australian Federal Parliament passed the Aged Care Bill 2024, marking a significant milestone in transforming the aged care system.
The new Aged Care Act 2024 (“the Act”) was officially enacted on 2 December 2024 and will come into effect on 1 July 2025.
The Act, which was a key recommendation of the Royal Commission into Aged Care Quality and Safety, aims to prioritise the rights and needs of older Australians to ensure they receive quality care and respect, while enhancing service delivery at home, in communities, and in approved residential care facilities.
The Act will replace the Aged Care Act 1997 (opens a new window), the Aged Care (Transitional Provisions) Act 1997 (opens a new window) and the Aged Care Quality and Safety Commission Act 2018 (opens a new window).
The new Aged Care Rules, which will give instruction on how the Act will operate, are currently being drafted in stages with corresponding feedback periods.
In this article we will explore some of the key changes introduced by the Act for aged care service providers.
Key Changes for Registered Providers
1. Rights-based approach
The Act establishes a rights-based framework (opens a new window) for the delivery of aged care services, ensuring that the needs and rights of older people remain central to the system.
A new Statement of Rights (opens a new window) outlines the rights of older people when seeking or accessing aged care services and serves as a benchmark for evaluating providers' actions.
Compliance with the Statement of Rights will be a key factor in assessing a provider's actions, and adherence to these rights will be a condition for a provider’s registration.
2. New regulatory model
The Act, introduces a new regulatory model (opens a new window) that will change how providers enter the system, outlines their obligations, and expands the regulatory options available to the Aged Care Quality and Safety Commission (ACQSC).
Providers must register with the ACQSC and ensure that any residential care homes are approved.
The new model introduces six registration categories that group service types based on similar care complexity and risk. These categories are:
Home and Community Services
Assistive Technology and Home Modifications
Advisory and Support Services
Personal Care and Care Support in the Home or Community (including respite)
Nursing and Transition Care
Residential Care (including respite)
A deeming (opens a new window) process will transition all government-funded providers to the new system, ensuring continuity of care.
Providers of National Aboriginal and Torres Strait Islander Flexible Aged Care (NATSIFAC) and Commonwealth Home Support Programme (CHSP) services will also be registered and regulated by the ACQSC, integrating these specialised services into the broader framework.
3. Revised set of provider obligations
The Act introduces a revised set of provider obligations (opens a new window), replacing the current Quality of Care Principles and Accountability Principles.
The new obligations will be tailored to the specific services offered by each provider, ensuring they are relevant to the complexity and risk involved.
Each registration category will have specific obligations that providers must meet, and those offering multiple services must comply with the relevant obligations for each category.
Some conditions will apply universally, while others will be specific to each of the registration categories.
The Aged Care Quality and Safety Commission (ACQSC) is also able to apply additional conditions for individual providers to address specific risks or compliance issues.
The Department of Health and Aged Care advises providers to maintain their usual operations during the transition period and will provide guidance to help providers prepare for the new regulatory framework.
4. Strengthened aged care quality standards
The Act introduces strengthened Aged Care Quality Standards (opens a new window) aimed at enhancing the quality and safety of care.
The new quality standards, based on the Royal Commission's recommendations, aim to ensure services are delivered with dignity and respect.
Key features include a person-centred approach, requiring providers to engage with residents and ensure that care and services are designed for the individual’s ‘needs and preferences’.
5. Financial and prudential standards
The Act introduces updated financial and prudential standards (opens a new window) to ensure the financial stability of aged care providers.
These standards protect residents' interests and ensure providers have the necessary resources to deliver high-quality care.
Key features include demonstrating financial viability by maintaining adequate reserves and liquidity, complying with prudential standards for managing refundable deposits and bonds, and submitting regular financial reports to the Aged Care Quality and Safety Commission (ACQSC).
Providers must also implement robust financial risk management practices, establish strong governance structures, and undergo regular independent financial audits to ensure compliance and accuracy.
6. Enhanced worker screening
The Act introduces enhanced worker screening requirements (opens a new window) to protect the safety and wellbeing of individuals accessing aged care services.
These requirements ensure that only suitable individuals are employed in roles involving direct contact with older people.
Key features include the introduction of a new Aged Care Worker Screening Check for individuals in risk-assessed roles, which are defined as positions involving significant interaction with older people.
These roles include responsible persons (such as CEOs or Board Members), direct care workers, and positions with more than incidental contact with older people.
To work in a risk-assessed role, workers must obtain one of the following: an Aged Care Worker Screening Check, NDIS Worker Screening Check, or an AHPRA registration, which includes a comprehensive background check.
7. New statutory duties
The Act established two new statutory duties for both registered providers and ‘responsible persons’.
Registered Provider’s Duty: Registered aged care providers are required to ensure, as far as is reasonably practicable, that their conduct does not cause adverse effects on the health and safety of individuals in their care. This duty emphasises the importance of proactive risk management and the implementation of safe care practices.
Responsible Persons Duty: Certain individuals, defined as "responsible persons," must exercise due diligence to ensure that the registered provider complies with their statutory duties. Responsible persons are expected to take reasonable steps to ensure that the provider's actions do not negatively impact the health and safety of those receiving care. This includes understanding the risks associated with the services provided and ensuring that appropriate measures are in place to manage these risks.
Key differences from the previous exposure draft
In response to significant stakeholder concerns raised by the sector during the Exposure Draft consultation period, the statutory duties contained in the new Aged Care Bill were amended before the Bill was passed:
Reduced scope of ‘Responsible Persons’: The scope of individuals classified as 'responsible persons' has been reduced. The Act exempts those responsible for the day-to-day operations of the registered provider from the responsible persons duty. This change aims to clarify the roles and responsibilities within aged care organisations.
Statutory duties are no Longer strict liability offences: The Act has removed the classification of statutory duties as strict liability offences. This means that a breach of these duties will not automatically result in penalties without consideration of intent or negligence.
Removal of criminal sanctions: Previous versions of the new Aged Care Bill included criminal sanctions for responsible persons found guilty of the most serious offences. These criminal penalties have been removed in favour of civil penalties and a new compensatory pathway.
Reversal of burden of proof: The Act introduces a reversal of the burden of proof for statutory duties. This places the burden on the prosecution to prove that the conduct in question was a breach of the duties. This change is intended to ensure that providers and responsible persons are not unfairly penalised without sufficient evidence of wrongdoing.
8. Concept of Associated Providers
The Act introduces the concept of Associated Providers (opens a new window), redefining the relationship between registered providers and entities that deliver services on their behalf.
The use of entities that will be defined as Associated Providers is widespread in the aged care sector, encompassing entities such as those providing labour hire arrangements and contractors for essential services such as care, cleaning, catering, and laundry.
These types of providers play a crucial role in helping registered providers deliver high-quality care.
Under the Act, there will be two types of providers:
Registered Providers are those registered under the six provider registration categories as defined under the Act.
Associated Providers refers to entities that deliver services on behalf of a registered provider. These may include registered providers delivering specific services on behalf of another registered provider, or contractors and their subcontractors providing services.
Navigating Governance Risks Under the New Aged Care Act
In summary, the Act could potentially lead to significant governance risks that require careful management to avoid financial and operational repercussions.
During this period of change, it is crucial to partner with risk and insurance experts who possess a deep understanding and extensive experience in the aged care sector, as their expertise can help you navigate the complexities of the new Aged Care Act and manage risks effectively.
If you need assistance navigating the risk and insurance implications of the Act, please don't hesitate to get in touch.
The contents of this publication are provided for general information only. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. The contents of this publication are not intended as a legal commentary or advice and should not be relied on in that way. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.
