The New Aged Care Act 2024: What to Expect for Providers, Buyers, and Sellers

By Tian Dorge, Maya Sathiamoorthy

In this newsletter, we explore the new Aged Care Act 2024 (Cth) (‘the Act’) and its implications for providers, buyers, and sellers. This article provides an overview of the key provisions and their impact on stakeholders in the aged care sector.

Introduction

With $5.6 billion in funding, this modern rights-based legislative framework represents a substantial overhaul of Australia’s aged care system. It introduces significant reforms aimed at improving the accessibility, sustainability, and quality of aged care services across the nation. The new Act repeals the Aged Care Act 1997 (Cth), the Aged Care (Transitional Provisions) Act 1997 (Cth) (‘the old Act’), and the Aged Care Quality and Safety Commission Act 2018 (Cth). This article explores the implications of this reform on aged care providers, workers, and businesses who seek to buy or sell aged are facilities.

Purpose of the Act

The Act’s object is to give effect to Australia’s obligations under the International Covenant on Economic, Social, and Cultural Rights and the Convention on the Rights of Persons with Disabilities. Additionally, it seeks to provide a forward-looking aged care system and enable those who access funded aged care to exercise choice and control free from mistreatment, neglect, and harm from poor quality or unsafe care.

The new Act establishes two statutory duties: (1) a registered provider’s duty to ensure their conduct does not result in adverse effects to the health and safety of individuals in their care, and (2) the ‘responsible persons’ duty for certain individuals to exercise due diligence to ensure the registered provider complies with the provider’s duty.

Registered Providers

Registered providers have key obligations, even when subcontracting services. To meet statutory duties and assess reasonable practicality, providers must balance the risk of adverse effects with the rights of those receiving care. Factors to consider include:

1. The likelihood of adverse effects occurring and the extent of harm if it were to occur
2. What does the registered provider know or ought to know about ways to prevent the adverse effects
3. The actionable steps available and suitable to prevent or mitigate adverse effects occurring
4. The rights of the person under the Statement of Rights that providers will need to follow as a condition of ongoing registration (particularly, the dignity of risk for persons receiving care)

A ‘serious failure’ under section 179(4) involves conduct that risks death or serious injury/illness and includes significant or systemic failures. The court must find both elements met. Civil penalties range from 150 penalty units ($49,500) to 1,000 units ($330,000) for provider contraventions and 500 units ($165,000) to 4,800 units ($1,584,000) if the failure results in death, serious injury, or illness.

Responsible Persons

A separate set of obligations applies to responsible persons of registered providers under section 12, replacing “key personnel” and “governing persons.” Responsible persons include employees and subcontractors in critical roles who influence culture, conduct, and accountability. They must exercise due diligence under section 179 to ensure compliance.

Due diligence under section 180(2) requires staying informed about regulatory requirements, understanding service risks, ensuring proper resources and processes for health and safety, and responding to incidents promptly. The duty excludes those managing daily operations. The Explanatory Memorandum clarifies that this duty is not intended to deter qualified individuals but targets key decision-makers. Civil penalties for serious breaches are 150 penalty units ($49,500) or 500 penalty units ($165,000) if harm occurs.

Approved providers should update policies and systems to meet new statutory duties, ensuring responsible persons receive relevant training in areas like regulatory compliance, incident and complaints management, privacy, and high-risk patterns. Processes should effectively mitigate risks to individuals’ health and safety, with regular evaluation of operations and risks. Providers must maintain records of discussions, risk assessments, and decisions to demonstrate compliance.

The Sale and Purchase of Residential Aged Care Homes

1. Approved Providers Will Become Registered Providers

There is no longer a requirement under the new Act for providers of residential aged care to be ‘approved providers.’ Rather, they will become ‘registered providers’ under one of the six registration categories.

Generally, approval of an entity as a registered provider is for a period of 3 years, unless the Commissioner of Aged Care Quality and Safety Commission (Commission’) appropriately determines otherwise. A provider’s registration is renewed at the end of each approval period.

2. Approval of Residential Care Homes

Under subsection 10(2), a residential care home is defined as a place of residence of persons who, due to sickness, have a continuing need for aged care services, including nursing services; and is fitted, furnished, and staffed for the purpose of providing such services. It includes a place within, or co-located with, a hospital or health service covered by the Commonwealth to deliver aged care services, a place within a retirement village in accordance with subsection 10(2), a place which is a complex of buildings, and any other place prescribed by the rules.

In circumstances where a provider is a registered provider or has submitted an application under section 104 for approval as a registered provider, it may apply to the Commission to approve a residential aged care home for the provider. Approval applications must abide by the approved form and be accompanied by the application fee prescribed by the Aged Care Rules. Currently, only Stage 3 Release of the Rules has been released and the finalised Rules will likely be provided in March 2025.

Applications must specify the total quantity of beds which will be covered by the approval (with a number not permitted to exceed the number of beds stated in the certificate of occupancy for the home). Section 227(5) of the Act concerning subsidies payable for individuals receiving care states a registered provider cannot claim subsidies, and subsidies will not be paid, in excess of the number of beds available as approved for the home.

If the Commissioner approves the home, it must give the provider notice of the decision within 14 days of making the decision. The approval of a residential care home commences on the day the decision is made to approve the home and ends on the day on which the approval is revoked; or the end of the day on which the home is no longer covered by the registration of any registered provider.

3. Transferring Residential Care Homes to a New Provider

According to section 124(1)(e), a registered provider acquiring or intending to acquire a residential care home from another registered provider must make an application for the variation of the provider’s registration. The variation would seek to include the residential care home against the registration of the acquiring registered provider.

Under section 124(1)(f), the registered provider divesting or intending to divest a residential care home to another registered provider must make an application for the variation of the provider’s registration. The variation would seek to remove the residential care home from the approved residential care homes covered by the registration.

If the Commission is required to register the acquiring provider in another category to facilitate the acquisition (e.g. if the provider is registered to provide homecare services only and wishes to now provide residential aged care services), then the Commission must be satisfied with all the matters listed under section 109 of the Act.

Contact Crisp Law for advice and information at:

Telephone: +61 2 8042 8701

Email: admin@crisplaw.com.au