Commission speaks on the impact of non-compliance on star ratings

The Aged Care Quality and Safety Commission has given its monthly Financial and Prudential Insights a refresh with the January update the first to be published under the  Compliance Management Insights banner.

Each month, Peter Edwards, Executive Director of Compliance Management Group, shares insights via the Commission’s website to foster a deeper understanding of the relationship between aged care provider obligations and how compliance helps to provide better outcomes for older Australians. 

The name change reflects a broadening of scope for Mr Edwards with the first 2024 post looking at how the Commission manages non-compliance and how their decisions influence the aged care star ratings system. It’s a timely topic as the Commission and Department of Health and Aged Care have faced increased scrutiny over the monitoring and penalising of non-compliance.

Among the leading concerns is the discrepancy between providers receiving non-compliance notices but still achieving four or five star ratings when all the regulations indicate they should not. 

Mr Edwards briefly referenced the commentary he has seen, stating there may be some confusion about how non-compliance impacts star ratings. 

“Under the rules for the star rating system, there is a difference between non-compliance and a non-compliance decision. Non-compliance is defined as the failure of an aged care provider to meet one or more of the regulations and standards as set out in the Aged Care Act 1997, whereas a non-compliance decision is when the Commission uses one of its formal regulatory powers in response to identified non-compliance,” he explained.

“A finding of non-compliance in itself does not impact a service’s star rating; rather it is only where the Commission then uses its formal powers to require a service to take corrective action that a service’s star rating will be impacted.”

Mr Edwards said the Commission’s regulatory powers are designed to typically be used when a provider fails to seriously address identified non-compliance. Therefore, they are less likely to step in when risk levels are lower, or if there is a certain amount of trust in the provider to rectify issues.

“Specifically, we consider evidence that demonstrates their willingness and ability to remediate the identified non-compliance in a timely manner,” added Mr Edwards.

Despite citing evidence such as a provider implementing a revised continuous improvement plan as a suitable outcome where formal powers are not required, some may argue that “a certain amount of trust” is still highly subjective. However, this reasoning arguably explains why some providers have not seen their star ratings decrease despite recurring non-compliance.

Mr Edwards added that a service’s star rating will be impacted when normal powers are used, citing the table below as an explanation of the penalties handed out. 

“As a risk-based regulator, this approach is important because we want to create an environment where providers are incentivised to actively engage with us and demonstrate that they are willing to take necessary action to self-correct as soon as possible when things go wrong,” said Mr Edwards.

“That’s because it creates an incentive for providers to get ahead of the regulator and start to address non-compliance in advance of the Commission needing to intervene.”

“This then leaves us to focus on active case-management of higher risk providers and /or those that have had a pattern of non-compliance until we are satisfied that risks related to the non-compliance have been satisfactorily managed,” he added.

With a clear focus on non-compliance cases that are deemed high-risk, there will be some service providers that escape with an unblemished star rating despite being non-compliant in certain areas. Mr Edwards explained that this means the case is either low-risk or the provider is demonstrating their commitment to fixing the problem.

If ongoing issues remain, the Commission will take further action, although it may not always jump straight into formal regulatory actions. This indicates the Commission aims to work with providers, and not against them, in order to solve challenges. 

Mr Edwards’ full post can be viewed on the Commission’s website.