10 March 2004
Table of Contents Page
Report Summary 2
Introduction 4
Legal and Administrative Background 4
Investigation 6
Mrs Easton Council’s Residential Care Placement 6
The Council’s Position 9
(i) The Standard Rate 9
(ii) The Third Party Contribution 13
Conclusion 14
Table 1 – Standard Rate, Actual Charges and Third Party Contributions in respect of Mr Easton from November 2000 to December 2023.
Table 2 – The Council’s standard rates which applied to residents who were in supported Residential care before 1998 and those who entered supported residential care between 1998 and December 2003.
Key to names used
Mr & Mrs Randel – Complainants
Mrs Easton – Complainant’s Mother
Officer A – Assistant Director of Social Services
Bellcare House – Private residential care home
Report Summary
Mr and Mrs Randel (not their real name for legal reasons) complained that the Council’s scheme for determining how much it would contribute to the care home fees of each resident at “Bellcare House” (an independent sector residential care home) was inequitable in that it required the relatives of residents who have lived longest at the home to contribute more towards their total charges than the relatives of residents admitted more recently. Mr and Mrs Randel complain in addition that the Council failed to provide them with an adequate explanation of why this should be the case.
The Ombudsman concluded that the Council’s policy was contrary to Department of Health directions and guidance because the Council’s standard rate of payment should have been determined only by the assessed needs of the resident. She pointed out that the Council’s system created a nonsense whereby, if the resident moved to a different home or was temporarily discharged and readmitted to the same home, the new higher usual rate would apply and her relatives would have had to make a smaller contribution.
Finding
Maladministration causing injustice.
Introduction
- Mr and Mrs Randel complain that the Council’s scheme for determining how much it will contribute toward the care home fees of each resident in “Bellcare House” (an independent sector residential care home) is improper and inequitable in that it requires the relatives (or other third parties) of residents who have lived longest at the home to contribute more toward their total charges than the relatives (or third parties) of more recent residents. Furthermore the Council has failed to provide an adequate explanation as to why this is the case.
- For legal reasons, the names used in this report are not the real names of the people and places concerned.
- An officer of the Commission has spoken to the complainants, has examined the Council’s files and has interviewed an officer of the Council.
- An opportunity has been given for the complainant and the Council to comment on a draft of the factual part of this report prior to the addition of the conclusion.
Legal and Administrative Background
- Where a Council has carried out an assessment of a person and has decided that residential accommodation should be provided the Council shall, subject to certain conditions, make arrangements for accommodation for that person at the place of his or her choice if he or she has expressed a preference for particular accommodation. The conditions which apply are that the accommodation must be available, provided in accordance with the Council’s usual terms and conditions, suitable to the person’s needs and would not require the Council to pay more than it would usually expect to pay having regard to the person’s assessed needs.
- Where a person wishes to enter more expensive accommodation than the Council would normally fund and elects to enter or remain in that accommodation rather than the accommodation which would be offered by the Council, then the Council has a duty to make the placement in the preferred accommodation provided that a third party (non liable relative, friend or other agent) is able and willing to make up the difference between the amount the Council would normally pay and the actual charge (a “third party” contribution). The directives refer to Councils making such arrangements where the cost would not require them to ‘pay more than they would usually expect to pay having regard to [the person’s] assessed needs’.
- A person provided by a Council with residential accommodation is liable to pay to the Council all or part of the cost of the accommodation up to the “standard rate” fixed by the Council as the maximum it would normally be willing to pay for such residential accommodation. The amount the resident will have to pay will depend on his or her income and capital/savings. Where a person has capital above a certain limit then she or he will be required to meet the full cost until and unless the capital falls below the limit.
- When making arrangements for residential care for an individual, a Council is responsible for the full cost of that accommodation and must contract with the service provider (the residential care home) to that effect. Any third party contribution paid in order to enable a resident to enter (or remain in) more expensive accommodation is treated as the resident’s income for charging purposes to enable the Council to recover the additional cost.
- Guidance to the National Assistance Act (Choice of Accommodation) Directions 1992 states that:
“Arrangements between the (Council), resident and third party will need to be reviewed from time to time to take account of changes to the accommodation fees and also changes to the amount the (Council) would usually expect to pay. These may not change at the same rate, and residents and third parties should be told that there cannot be a guarantee that any increases in the accommodation’s fees will automatically be shared evenly between the authority and third party should the particular accommodation’s fees rise more quickly than the costs the (Council) would usually expect to pay for similar people.”
- The Department of Health has told me that it considers its published guidance on charging to be quite clear. It says that the usual cost referred to in the Choice of Accommodation directions should be the cost the Council would usually expect to pay to meet the individual’s care needs and should be set with reference to the individual’s assessed needs. The fact of whether an individual is a new or continuing resident is not relevant to the cost of meeting that individual’s care needs.
Investigation – Mrs Easton’s Residential Care Placement
- In January 1999 Mrs Randel’s mother, Mrs Easton, entered Bellcare House private residential care home having arranged her own placement and funding it from her own resources. She was aged 93 years at the time. She occupied (and continues to occupy) a single room without en-suite facilities.
- By November 2000 Mrs Easton’s capital/savings had depleted to the point where she became eligible for assistance from the Council with her residential care charges.
- On 18 December the Council carried out an assessment of Mrs Easton’s community care needs and financial circumstances based on her choice of remaining at Bellcare House.
- The assessment social worker’s referral form to the Council’s “Residential Care/Nursing Home Allocations Panel” noted that Mrs Easton had complex care needs and that it was appropriate for her to remain at Bellcare House as she had lived there for two years and had made many friends.
- Given Mrs Easton’s income and remaining capital, the Council calculated that she would have to contribute toward her residential care charges. The agreed to fund the remainder of the charge up to its standard residential care rate (that is the maximum it was normally prepared to pay for the type of residential accommodation) from 21 November.
- At the time the weekly residential charge made by Bellcare House was £260 and the Council’s standard rate was £237.50. This meant that if Mrs Easton was to remain at Bellcare House a third party contribution was required and Mrs Randel agreed with the to pay the difference between the Council’s standard rate and the actual charges made by Bellcare House. The Council says Mrs Easton’s needs could have been met elsewhere (and the decision) for her to remain at Bellcare House was based entirely on choice.
- The Third Party Agreement form signed by Mrs Randel on 21 December states:-
“The Council shall review the Third Party contribution in the event of an increase in the Accommodation Charge or in the event of any change in the amount which the Council expects to pay towards the Client’s placement in the Home. The Third Party contribution may be reduced following any such review and the Third Party shall be notified accordingly. Alternatively, the Third Party may be requested to make a higher contribution in respect of the Client’s placement in the Home”.
- It also states that:-
“any increase in the Accommodation Charge payable … will not automatically be shared equally between the Council and the Third Party and the Third Party may be requested to meet the full value of any such increase”.
- At the time Mrs Randel first entered into the third party agreement her contribution toward the cost of her mother’s residential care accommodation was £22.50 a week.
- Third party agreements are with the Council and not the care home and third party contributions are paid to the Council which undertakes to pay the whole of the accommodation charge to the care home.
Table 1: Standard Rate, Actual Charges and Third Party Contributions in respect of Mrs Easton from November 2000 to December 2003
| Year | Standard rate paid in respect of Mrs Easton (% increase shown in brackets) | Standard rate for new residents | Actual charge at Bellcare House (% increase shown in brackets) | Third party Contribution required | Third Party contribution as % of total charge |
| November 2000 | £237.50 | £237.50 | £260 | £22.50 | 8.65% |
| April 2001 | £242.73 (+2.2%) | £244.62 | £270(+3.85%) | £27.27 | 10.1% |
| April 2002[1] | £300(+ 3%) | £262.50 | £283(+4.8%) | £33.00 | 11.66% |
| April 2003 | £260 (+ 4%) | £273.00 | £295(+4.24%) | £35.00 | 11.86% |
| December 2003 | £273 (+ 5%) | £273.00 | £295 (0 %) | £22.00 | 7.45% |
- On each occasion when the standard rate changed in respect of Mrs Easton, Mrs Randel was informed by the Council and notified of any requisite alteration in the amount she was required to pay as a third party contribution.
- The Council periodically reviews Mrs Easton’s financial circumstances and adjusts the amount she is required to pay toward her care charges accordingly. The amount Mrs Easton pays does not affect the third party liability and she does not contribute toward the third party payment.
- In February 2003 and again in March and April Mrs and Mr Randel queried why Mrs Easton was eligible for a lower standard rate than other residents and why, as a consequence, their contribution toward her residential care fees was significantly higher than that of the relatives of newer residents. The Council’s response was that:
“Each year the Department has an allocated budget and enters into discussions with representatives from Bolton residential homes to agree placement costs for new clients and increases to the fees for existing clients for the forthcoming year. This is the reason for differing rates for clients as the standard fee is determined by the year they were admitted into care.”
- The Council says that:-
“It was made clear to (Mrs Randel) that (the) Social Services Department had no control over the fees charged, as these are set by the individual proprietor and that therefore the “top up” fee may increase.”
- Mrs and Mr Randel say they accept that they were told the third party fee for Mrs Easton would rise. However they were not told that in future it was possible they would be contributing significantly more than others paying third party fees for residents at the same residential care home even though exactly the same level of care was being provided. They say that they have paid £1,177.28 more than the relatives of new residents would have had to pay for the period from April 2001 to the end of November 2003.
- In its response to my enquiries into this complaint the Council suggested that the reason why Mrs Randel is required to pay more toward her mother care charges was because Bellcare House increased its fees above the standard percentage rate increase.
The Council’s Position
i) The Standard Rate
- The Council says that about three years ago it decided to cease making its own provision for the long term residential care of the elderly and any remaining beds in local authority care homes occupied by long term residents are gradually being phased out. Residential care for elderly people is now provided by the independent sector and the supports each eligible placement by way of a contribution toward the cost of the placement up to a maximum limit, the “standard rate”.
- Officer A, a senior Social Services Manager, says that each year the Council consults with the independent residential care homes sector about what would be considered a reasonable standard rate to pay to enable a prospective resident to secure a place in a private residential care home in the Council’s area. Until very recently, when a new standard rate was introduced it applied only to those residents who started to be supported by the Council for the first time after the introduction of the new standard rate. Existing residents received an inflationary increase to the standard rate already in payment in respect of their placement. The Council’s records indicate that a new standard rate could be higher or lower than the previously agreed and implemented standard rate.
- Officer A says that the decision to pay an inflationary increase in respect of existing residents and to apply any new standard rate to new residents only was a policy decision taken on purely financial grounds and reflected what the Council could afford to pay to maintain those residents already in care and ensure new placements could be secured.
- Officer A says that within the Council’s area there are independent residential care homes which charge the rate which is commensurate with the Council’s standard charge while others charge considerably more. She says that some homes charge residents supported by the Council a different (lower) rate to that charged to residents who are privately funded. That is not the case at Bellcare House.
- Officer A says that when a (prospective) resident is first assessed as eligible for support from the Council, the Council enters into a contract with the selected care home to provide residential care to that resident at a certain rate and this is set out in the “Client Placement Agreement”. The standard rate payable by the Council in respect of that named resident is then increased by an amount for inflation each year. She says that the same inflationary increase to the standard rate is applied whether or not a third party contribution is required.
- The Council has a standard agreement for nursing and residential placements. It is this agreement which forms the basis of the individual contract between the Council and the residential care home providing accommodation. The agreement which was in place with Bellcare House at the time the Council first started to support Mrs Easton states that:
“For each placement where the Accommodation Charge at the commencement of the placement is or was less than or greater than the Council’s then current Standard Rate the Home may only thereafter increase the Accommodation Charge annually … (by a percentage increase) … The percentage used to calculate the increase shall be equal to the percentage by which the Residential Care home Rate or the Nursing Home Rate (benefits in payment at the time) is increased for the year in question, according to the category of placement”.
- The Council says that until recently the standard rate for existing residents was increased by the relevant percentage rate. It says most homes in the area increase their charges by the same percentage but that some, such as Bellcare House, implement higher increases in charges. Officer A says that, whilst the Council may expect a residential care home only to increase its charges in line with the relevant percentage increase it cannot control the actual fees charged by any of the independent sector homes.
- The Council’s files indicate that, over the years, the Council has periodically reviewed and varied the level of the standard rate payable for new residential and nursing home placements in light of changes in volume of demand, budgetary pressures, central government funding, demands from the independent sector and its statutory responsibilities. For instance, in 1998 the Council reduced the standard rate it was prepared to pay for new residents although existing residents continued to receive the benefit of the old rate. The following year, the standard rate for new residents was increased to reflect the increased demands made on private sector care homes from the “Working Time Directive” and the “Minimum Wage” and in April 2001 a new “single room” rate was introduced and placements made from that date were paid at either the single room rate or a lower rate if the resident shared a room.
- The Council’s records indicate that discussions with the independent sector about introducing a flat rate standard rate were ongoing from at least 2000. Officer A says that the Social Services Department recognises that the system of paying different standard rates to different residents depending on when the contract for their placement was entered into is administratively complex and inequitable.
- In October 2003 the Council decided to remove the significant anomalies and pay a flat standard rate in respect of all residents regardless of when they first became supported by the Provider. The new payment scheme commenced on 1 December. The only remaining anomaly applies to those residents who have been in supported residential care since before April 1998 and who continue to receive a slightly higher standard rate.
- The table below illustrates the variety of standard rates the Council paid between 1998 and December 2003. The figures do not include any additional allowances such as those applied where a care home meets the criteria for “Investors in People” or where en-suite facilities are provided.
Table 2 – The Council’s standard rates which applied to residents who were in supported residential care before 1998 and those who entered supported residential care between 1998 and December 2003
| Year entered Residential care or became supported – April to April | ||||||||
| Standard rate paid in year.. | Pre April 1998 | 1998 | 1999 | 2000 | 2001 9/4/01 to 6/11/01 | 2001 7/11/01 to 7/4/02 | 2002 | 2003 |
| 1998 | £247 | £225 | ||||||
| 1999 | £302 | £230 | £233.75 | |||||
| 2000 | £306 | £233.75 | £237.50 | £237.50 | ||||
| 2001 | £261 | £238.90 | £242.73 | £242.73 | Single: £244.62 Double: £242 | Single: £305 Double: £248 | ||
| £268.85 | £247.20 | £300 | £300 | Single: £301.95 Double: £300 | Single: £262.50 Double: £305 | Single: £262.50 Double: £305 | ||
| 2003 | £279.60 | £260 | £260 | £260 | Single: £262.00 Double: £260 | Single: £273 Double: £265.20 | Single: £273 Double: £265.20 | |
| 1/12/03 | £279.60 | £273 | £273 | £273 | Single: £273 Double: £265.20 | Single : £273 Double: £265.20 | Single: £273 Double: £265.20 | Single: £273 Double: £265.20 |
- By April 2003 it was possible that there were single occupancy residents of Bellcare House who variously qualified for a standard rate of £279, £260, £262 or £273 per week. Mrs Easton, because of the date she first became eligible for support from the Provider, qualified for a standard rate of £260 per week. As a consequence the third party contribution required from Mrs Easton’s relatives to make up the difference between the standard rate and the full charge was correspondingly one of the highest.
ii) The Third Party Contribution
- Officer A says that relatives are normally advised against entering into third party agreements because of the problems which can occur in the future with increased charges or changes in the circumstances of the third party. Where the third party wants a particular care home for their relative which costs more than the current standard rate then the Council requires that the third party sign an agreement to pay the additional charges.
- Officer A says that the Council has no system for means testing a third party to establish whether they have the means to meet the third party contribution from the outset or in the future. She says this is one of the main reasons why the Council advises against top up agreements as it may prove more of a commitment than the third party anticipates.
- Officer A says that the Council has an agreement with the Independent Homes sector that it will verify that self funding residents have sufficient resources to last for at least two years and that they are made aware of the rate at which the Council will support a placement should that prove necessary in the future.
- The Council says it is made clear to the third party, prior to the commencement of a placement by the Council, that the Council has no control over the fees charged by an independent home as these are set by the individual proprietor and that therefore the third party fee may increase.
- Officer A says that should a third party become unable or unwilling to meet the increased cost of the third party contribution then they may feel the need to seek alternative cheaper residential care accommodation for the elderly resident. She says the Council would be very reluctant to suggest that an elderly resident move and that some attempt would be made to negotiate with the care home over the charge made. She says that as it would be a new placement the requisite standard rate for a new placement would apply.
- Officer A says that even although it has now set a flat rate standard rate the residential care homes could increase their charges by an amount greater than any standard rate increase and consequently the level of the third party contribution would rise.
Conclusion
- Mr and Mrs Randel agreed to pay a contribution to Mrs Randel’s mother’s care home fees when her mother’s resources were no longer enough to cover them and the Council took over responsibility for paying the care home. They were properly informed that their third party contributions might rise and that they might be required to meet the largest proportion of any increase in accommodation charges. They have not complained about that.
- However, the Council did not tell them that Mrs Randel’s mother would not necessarily qualify for any new standard rate of payment which might be introduced and they found themselves paying more than the relatives of those who entered the same home in later years. Mr and Mrs Randel consider this to be unfair.
- I can appreciate why a Council, having negotiated a contract with the home which limited any increases in payments for existing residents to a percentage agreed at the time of the initial contract, would prefer to keep payments to that limit rather than increase them to a higher rate negotiated for new residents in subsequent years. If they were not contractually bound to increase the payment to the new higher rate, why should they do so?
- I think there are two main reasons why they should have done. The first was to comply with the Department of Health’s directions and guidance on the matter. I agree with the Department that those are clear that the usual cost (which determines the level of third party contribution) can only vary in response to a resident’s assessed needs, and therefore that the length of time a resident has been funded by the Council is not relevant to determining that usual cost. The effect of the Council’s approach was to create a situation where a different usual cost would be used to calculate third party contributions for residents with identical needs. That is not in line with the directions and guidance.
- The second reason was more a matter of common sense. The system created a nonsense whereby if Mrs Easton had moved to a different home (or even been temporarily discharged and readmitted to the same one) she would have been entitled to have the new, higher usual rate applied, and consequently lower third party contributions would have been required than if she remained in the same home. Whilst I am sure no one involved would have wanted to inflict such disruption on Mrs Easton, that scenario highlights the anomaly which the Council’s approach created.
- It is to the Council’s credit that it has now changed its policy in favour of one which, to all intents and purposes, pays the same standard rate regardless of the date the placement commenced. I have to conclude however that I consider the Council’s original policy to have been contrary to the spirit and intention of the directives and guidance and to amount to maladministration. The consequent injustice is that Mr and Mrs Randel have paid more than they should for the care of Mrs Randel’s mother and I look to the Council to reimburse them for that.
- 10 March 2004
Mrs P A Thomas
Local Government Ombudsman
Beverley House
17 Shipton Road
York
YO30 5FZ