Changes for care contracts

The Competition & Markets Authority (CMA), the consumer watchdog, has taken initial steps towards triggering the reform of residents’ care contracts. What does this mean for providers? We asked Hazel Phillips, partner in Royds Withy King’s Health & Social Care and Corporate & Commercial teams and CQC specialist, to explain.

What has the CMA produced?

In November 2017 the CMA published the final report of its care home market study, which has since been followed by the launch of a consultation and draft guidance on the charging of fees after the death of a resident. Further consolidated guidance will follow shortly.

What has been the reaction from providers?

Following the publication of the draft guidance on fees after death, a national provider confirmed that it would no longer charge fees beyond the date of death. It is clear from our experience that many providers will need to make wholesale changes to their admissions process, documentation and contracts in order to avoid enforcement action by the CMA.

Which areas of admissions processes and contracts are likely to be affected?

Areas of particular focus include:

• ensuring residents/relatives review contract terms in advance

• charging and protecting deposits
• transparency of fees and additional extras, particularly in relation to CHC funding
• asking third parties to act as a guarantor without adequate explanation of what it means
• charging third-party top-ups without due regard to the Care Act and Care & Support Statutory Guidance
• increasing fees in an unfair manner
• lack of transparency and consistency around the treatment of Funded Nursing Care contribution
• unfair termination clauses.

What are other challenges likely to come from the CMA study?

Some of the areas listed above are likely to pose some tricky commercial challenges for providers. The CMA study indicates that providers should be posting indicative fees on their websites, a directive that is likely to be unpopular in a competitive market. Neither does there seem to be any appreciation that it may be necessary for placements to be made at short notice and without the opportunity for scrutiny of contract terms. Care providers will need to consider how to work within the ambit of the guidance whilst protecting their commercial position.

What should providers do next?

In light of the CMA findings, now is the time to review your contracts to make sure they are compliant with consumer legislation and adequately protecting your business interests. For a FREE AUDIT of your care contracts please contact Hazel Phillips on 01225 730 166 or email hazel.phillips@roydswithyking.com.