Governance changes in aged care – the significance of 1 December 2022 and tips for compliance

• Notification of changes: Suitability of Approved Provider and Key Personnel

  From 1 December 2022, in addition to notifying changes to key personnel, all providers must also notify the Aged Care Quality and Safety Commission (ACQSC):
  

  • of a change of circumstances that materially affect an approved provider’s suitability to provide aged care within 14 days after the change occurs; and
  • of a change in circumstances of an approved provider’s key personnel that relates to their suitability to continue to be key personnel within 14 days of the provider becoming aware of the change in circumstances.

  From 1 December 2022, individuals who are key personnel of an approved provider must notify the ACQSC of a change in their circumstances that affects their suitability to be involved in the provision of aged care 14 days after they become aware of the change of circumstances.

  Who are Key Personnel?

  Key personnel includes^[1]:

  • a member of the group of persons who are responsible for the executive decisions, for example, directors or other members of an entity’s governing body
  • any other person who has authority or responsibility for, or significant influence over, planning, directing or controlling the activities of the entity
  • any person employed or engaged by the provider who is responsible for the provision of nursing services and who holds a recognised qualification in nursing
  • any person employed or engaged by the provider who is responsible for the day-to-day operations of the service.

  Failure to notify within the 14-day timeframe is an offence under the Aged Care Act (30 penalty units).

  Tips for compliance:

  • Undertake an audit of current key personnel within the organisation: do you need to update your records with the ACQSC to notify of any changes?
  • Are there roles within your organisation which meet the definition of key personnel – have the persons that occupy those roles been notified as key personnel to the ACQSC?
  • Review and update your policies and procedures to ensure that the timeframes for notification are now 14 days and not 28 days.
  • Ensure that key personnel are aware of their own obligation to give the provider written notice of a change in their circumstances that relates to a suitability matter (failure to do so is an offence for the individual).
  • Communicate the changes to your policies and procedures to all key personnel.
• Key Personnel: Annual assessment of suitability

  All providers will need to assess the suitability of each person who is key personnel against the ‘suitability matters’ at least once every 12 months.

  A provider must be ‘reasonably satisfied’ that the person is suitable to be involved in the provision of aged care. Information should be sought from the key personnel directly, and providers should undertake their own enquiries regarding each person.

  The suitability matters must be considered in respect of each person who is key personnel, include:^[2]

  • experience in providing aged care or other relevant forms of care
  • whether an NDIS banning order is or has been in place at any time
  • whether they have been convicted of an indictable offence at any time
  • whether they have been subject to the imposition of a civil penalty order at any time
  • whether the person is or has been at any time an insolvent under administration
  • whether the person is or has been subjected to adverse findings or enforcement action by various Government Departments, Commissions or Authorities (e.g. ASIC, ACCC, ACNC)
  • whether the person at any time was the subject of any findings or judgement in relation to fraud, misrepresentation or dishonesty in any administrative, civil or criminal proceedings (or is currently party to proceedings that may result in the person being subject to such findings or judgement)
  • whether the person has been disqualified from managing a corporation.

  Providers must make a record of the suitability matters considered for each person. Records must comply with s53 of the Accountability Principles 2014 (Cth), including by recording:

  • name of each key personnel
  • date/dates the suitability matters were considered
  • outcome of the consideration of each suitability matter in relation to each person, and
  • reasons the approved provider reached that decision.

  Failure to consider the suitability matters relating to key personnel is an offence under the Aged Care Act (300 penalty units).

  Tips for compliance:

  • Consider how you will satisfy the requirement to be ‘reasonably satisfied’ of suitability matters – what information will you rely on?
  • Establish a register to record the consideration of the suitability matters.
  • Review your onboarding procedures to ensure suitability matters are considered (and recorded) for all new starters in roles that meet the definition of key personnel.
  • Consider if, based on the size of your organisation, a rotating schedule for assessment of the suitability matters for all key personnel may be beneficial.
  • Consider if this process can be incorporated into existing attestation and disclosure processes.
• Code of Conduct for Aged Care

  The Code of Conduct for Aged Care (Code) commenced on 1 December 2022.

  The Code sets out eight elements that describe expected behaviours and applies to:

  • approved providers
  • governing persons of approved providers; and
  • aged care workers.^[3]

  A governing person is defined under the ACQSC Act and is any person who meets the first two limbs of the definition of Key Personnel, being someone who is responsible for the executive decisions or someone who has responsibility for, or significant influence over, planning, directing or controlling the activities of the provider.

  Aged care workers are any of the following
  

  • individuals employed or engaged (including as volunteers) by an approved provider (this includes independent contractors), or
  • individuals employed or engaged (including as volunteers) by contractors or subcontractors of an approved provider and who provide care or other services to the care recipients of the approved provider.

  In addition to complying with the Code, approved providers must take reasonable steps to ensure that aged care workers and the governing persons of the approved provider comply with the Code.^[4]

  Tips for compliance:

  • Review your policies and procedures and update where required to refer to the Code.
  • Consider what are the ‘reasonable steps’ being undertaken to ensure that governing persons and aged care workers of your organisation are aware of and understand their obligations under the Code, for example through training and resources.
  • Consider what are the ‘reasonable steps’ that need to be undertaken to ensure that any third party who delivers care and services on behalf of the approved provider through a subcontract or brokerage arrangement is aware of and understand their obligations under the Code, for example do you intend to contact your relevant contractors and provide them with a copy of the Code?
  • Update relevant contracts used to engage third parties to include a requirement to ensure compliance with the Code.
• Boards: Membership and Records

  As noted in Part One of this series, changes to the membership of an approved provider’s governing body will commence in 1 December 2023 for existing providers and will require the governing body’s membership to comprise:

  • A majority of members of the governing body are independent non-executive members; and
  • At least one member who has ‘experience in the provision of clinical care’.^[5]

  Although the obligations regarding the membership of an approved provider’s governing body do not commence for relevant existing providers until 1 December 2023, providers should, if they have not already, consider the membership of their board and whether any changes will be required.

  For new approved providers (approved after 1 December 2022), the requirements apply immediately.

  These membership requirements do not apply to providers:

  • that are a State or Territory approved provider or a local government authority, or
  • that have fewer than five board members, and the provider provides care to fewer than 40 care recipients across all of its aged care services, or
  • are known as an Aboriginal Community Controlled Organisation, or
  • where a determination under s63-1E of the Aged Care Act is in place that certain responsibilities relating to the governing body of the approved provider do not apply.

  What is an independent non-executive members?

  Generally, someone will be an independent non-executive member where they are not employed by the organisation in an executive capacity or as part of the leadership/management team. That is, they are appointed to the governing body and their connection to the approved provider is through the governing body/board. Rather than being involved in day-to-day management, they bring independent and objective judgement to the issues being considered by the governing body of the approved provider.

  The ACQSC has provided some examples of factors that may be considered in assessing a person’s independence or capacity to act independently. These include where a person:

  • has provided professional services to the organisation or has a material business relationship with the organisation, for example, being a supplier, consultant or contractor for the organisation
  • has relationships or preferences that may mean they’re influenced by other factors, for example having a family member receiving care and services from the approved provider or is a shareholder in the approved provider
  • a person who has previously been engaged by the approved provider in an executive role.

  Existing providers will from 1 December 2023 be required to make and keep records regarding:

  • The membership of the governing body, including identification of:
    • who are the independent non‑executive members
    • who are not independent non‑executive members, and
    • who has experience in the provision of clinical care, and the details of that experience for each of those members.

  • How the governing body of the approved provider has ensured that staff members:
    • have appropriate qualifications, skills or experience to provide the care or other services the approved provider provides to care recipients through an aged care service
    • are given the opportunity to develop their capacity to provide care and those other services.

  New providers will be required to comply with the above record keeping requirements from the date they become an approved provider.

  Tips for compliance:

  • If changes to the membership of your organisation’s governing body need to be made have you considered whether these changes may be made by removing and replacing members or adding additional members?
  • How will you assess and determine if a person is ‘independent’? How will you document this assessment?
  • Do your board/governance policies, including your conflicts of interest policy, require updating to ensure they support sound decision making about ‘independence’ at the outset and on a continuing basis – eg do they give clear guidance to members of the governing body about disclosure of changes which may impact upon independence?
  • If your organisation intends to apply for an exemption, you must collate and provide adequate information in the form prescribed by the ACQSC to support your application for an exemption. The kind of information that the ACQSC may take into account when making a determination includes any arrangements the provider has made or proposes to make to assist the governing body to act objectively and independently in the best interests of the provider and to seek where necessary advice from a person with experience in the provision of clinical care.^[6] The ACQSC expects that providers seeking a determination will engage with the ACQSC and will provide adequate information regarding how the quality of care will be maintained in the absence of those governance requirements.^[7]
  • Consider what kind of information (if any) currently is reported to the governing body regarding the qualifications, skill or experience of staff: can this be improved?
• Constitutions of certain approved providers: check whether changes are required

  
  This change applies to those approved providers that are wholly-owned subsidiaries of another body corporate (known as a holding company), and the holding company is not an approved provider.

  Many wholly-owned subsidiaries have clauses in their constitutions that expressly permit directors of the wholly-owned subsidiary to act in the best interest of the holding company. If certain circumstances are met, the director will then be taken to be acting in good faith in the best interests of the subsidiary.

  The changes require approved providers to ensure that their constitution does not include a provision of this nature.^[8]

  Existing providers have until 1 December 2023 to comply.

  Tips for compliance:

  • Locate your constitution and review it to identify whether it includes provisions that expressly authorise directors to act in the best interests of a holding company.
  • Consider whether these provisions have been relied upon in the past and what this might mean for the future decisions and practices.
  • Seek legal advice about amending your constitution – ensure there is enough time for the change to be made including by reference to notice requirements under your constitution for meetings of members/shareholders.

^{[1] See s8B of the ACQSC Act for the full definition of key personnel. There are some differences for particular approved provider eg State or Territory authorities
[2] See s8C of the ACQSC Act for the full list.
[3] Aged Care Quality and Safety Commission Rules 2018 (Cth) s 23AC.
[4] Aged Care Act s 54-1(1)(g) and (ga).
[5] See s63-1D(2). For providers who were approved prior to 1 December 2022 these obligations will commence from 1 December 2023, for new providers (those approved on or after 1 December 2022), these obligations will commence from 1 December 2022.
[6] Aged Care Act s63-1E(4)
[7] Provider responsibilities relating to governance, Guidance for approved providers November 2022 (Draft as at 14 November 2022)
[8] Aged Care Act s63-1H.}