Fair Deal: How is it funded and how does it work?

By mid-May of this year, alarm bells were ringing at the top of the health service about the escalating cost of the Fair Deal nursing home support scheme.

The HSE's top-level performance oversight group was told that spending on the scheme was some €5.6 million ahead of target. Minister of State at the Department of Health Jim Daly, who has responsibility for older people, sought projections as to what the figure would be by the end of the year.

It was later forecast that the scheme – which the Department of Public Expenditure had deemed to be financially sustainable in two spending reviews – was heading for a deficit of about €17 million.

This, in essence, boils down to people living longer when they enter nursing homes. The period people are staying in long-term residential care – more than three years – has been greater than was anticipated when the budget was drawn up.

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The Government’s official policy is that the waiting time for approval for a place on the scheme cannot go above four weeks. However, extending the waiting time is the main weapon available to health managers to scale back the costs. The Health Service Executive acknowledged on Friday that waiting times for entry to the scheme have risen to an average of six or seven weeks.

Some health sources suggest that if the cost overrun is to be eliminated entirely, the waiting time could rise to about 11 weeks. However, longer waiting times are politically unacceptable and also have wider consequences. In the past, longer waiting times led directly to more people remaining in hospital beds after their acute treatment ended, adding to trolley numbers in emergency departments and waiting lists overall.

The Irish Times reported on Friday that Daly has argued that the exchequer should provide additional money this year rather than allow the waiting times to exceed the Government’s limit.

“I remain concerned, however, that the estimated number of leavers from the scheme is significantly off forecast, and it appears clear to me that additional funding needs to be requested from the Department of Public Expenditure to ensure that the HSE can continue to fulfil the commitments made in the programme for government,” he said in a letter to department officials in July.

‘Elimination of waste’

He said that while health service managers had to be mindful of budgets, any deviation from the four-week limit for accessing the Fair Deal scheme could not be tolerated.

"While prudent management of resources and elimination of waste across the health service is an important matter, it will always come second to the patient's needs. The [Fair Deal] scheme has a strict and defined criterion and there are no efficiencies to be found in the tightly controlled finances of the scheme that is overseen by the National Treatment Purchase Fund.

“We either agree that the scheme is available to elderly citizens within the four-week timeframe or we agree that it is not.”

The Fair Deal scheme is not cheap, with its €985.8 million budget this year supporting more than 23,000 people in long-term residential care.

An individual supported by the scheme is most likely to be aged over 80, with nearly half of these coming to a nursing home from hospital. On average there are more females than males in receipt of funding.

The introduction of the scheme is generally considered to have been a success, or at least a major improvement on the system of subventions that existed before it.

Nearly 80 per cent of all residents in private nursing homes are funded through the Fair Deal, but there is deep unhappiness among the private operators at how their fees are determined.

The scheme involves both the public and private sectors and is funded jointly by the State and the individual. Access to it is determined after an assessment of a person’s care needs and finances.

Individuals make a means-assessed contribution to the cost of their care, paying 80 per cent of assessable income and 7.5 per cent of the value of any assets held annually.

The first €36,000 worth of assets, or €72,000 in the case of a couple, is not included in the financial assessment, while an individual’s principal residence is included for the first three years of care only. The State funds the difference between this contribution and the cost of a nursing home place.

Pricing review

In a spending review the department said the average client contribution to the cost of a nursing home place was 24 per cent.

Private operators are pressing for a revision of the Fair Deal payment structures on foot of a pricing review now being considered by the Department of Health. The private sector provides about 18,000 nursing home beds with about 5,000 public beds also available.

The Department of Public Expenditure’s spending review in 2017 stated that the average cost of a public bed was more than 1½ times that of a private one. It maintained that the average monthly cost of a person’s care was €4,161 in a private nursing home and €6,427 in a public facility. It suggested that this could be due to residents in public homes requiring more complex care.

However, the private operators dispute this and contended that the current funding model was jeopardising the sustainability of the sector.

Their representative body, Nursing Homes Ireland, has argued that the fee system "must be clear, logical, rational, fair, transparent and ensure the objective of having a sustainable nursing home sector with sufficient residential capacity, including those with complex needs, outside of the acute hospital system".

It is understood the new pricing report will recommend a graded system of payments based on the dependency of the resident.

Concerns at the cost of operating the Fair Deal scheme are not only a recent development.

Before the year started, the HSE was worried. It sought funding of some €999 million, a €32 million increase on last year. On foot of a report in The Irish Times in December about these concerns and warnings that waiting times could rise, Minister for Health Simon Harris added to the scheme's budget during last-minute haggling over the HSE's service plan.

The final budget – while up by €24.3 million – was still short of what was originally sought, and the projection of a €17 million overspend has borne these concerns out.