Breaches of capped annual and lifetime costs have seen some elderly patients overcharged by tens of thousands of dollars

This article is more than 2 years old

This article is more than 2 years old

Labor has demanded the government reveal the full extent of “unacceptable” failings with a system that has wrongly charged residents of aged care homes tens of thousands of dollars.

But the human services minister, Michael Keenan, has accused Labor of “scaremongering”, saying the government acted quickly and transparently to refund the money and fix the problem.

Guardian Australia this week revealed basic errors in a system that calculates the means-tested care fee for residents of aged care homes. The fee is imposed on those individuals who are deemed able to pay more for the costs of their own care.

The fee is supposed to be capped – $63,759 for life and $26,566 per year – but the system failed to automatically detect when those caps were reached.

Aged care residents wrongly charged huge bills after government system fails Read more

That left it up to aged care residents, some of whom are highly vulnerable, to realise they were being wrongly charged.

In one case, a 94-year-old woman was overcharged $33,000 after the government kept imposing the fee 10 months later than it should have.

The shadow ageing minister, Julie Collins, became aware of the issue in the middle of last year. Collins wrote to the government in July, warning the system needed urgent review.

“One example supplied to me states the resident is owed around $16,000 in July, [2017] even though the department was advised that the lifetime cap would be reached in early 2017,” Collins wrote. “I’m sure you would agree that this is an unacceptable process whereby residents are still being charged even though they are reaching their annual or lifetime caps.”

She did not receive a reply for two months, when former human services minister Alan Tudge wrote to her and told her the issue had been resolved and only affected a small number of people.

The fee is calculated by the government but imposed on the resident through a convoluted and confusing reconciliation process involving the company that owns the aged care facility.

The companies, however, have no legal obligation to monitor residents’ progress towards their annual and lifetime caps.

That leaves it up to the government to recognise when an individual has paid the maximum amount. The government alerts the provider, who is then obliged to stop charging their residents the fee.

Tudge, in his letter to Collins, acknowledged that the department’s system’s were failing to recognise when people were reaching the cap.

“The department has systems in place to identify when annual and lifetime caps are reached,” he wrote.

“However, a system constraint has been identified that resulted in a small number of cases reaching the annual or lifetime cap without triggering the required fee reduction.

“The department is investigating options to improve the processes monitoring annual and lifetime caps, and will work closely with aged care providers.”

Collins has now urged the government to reveal the full extent of the problem. She wants to know how many people have been affected, and how much they were overcharged.

Collins also wants to know when the government first realised the system had failed.

“This is an unacceptable situation for older Australians who are paying the price for the Turnbull government’s mismanagement,” Collins said.



“The Turnbull government must reveal how many older Australians have been impacted by these failings. It is not good enough to say there has only been a ‘small number of cases’.”

Keenan criticised Labor for its comments. He said within two months of identifying the issue the government had written to the affected individuals and paid their aged care homes additional subsidies, which were then passed on as refunds to the residents. He said the system issue had been fixed.

“Labor needs to get its facts straight and stop scaremongering,” he said. “The government responded to this issue quickly and has been open and transparent with impacted individuals and Aged Care providers.”