Report on Nursing Home Subventions

Introduction

An issue raised in many complaints was whether the subvention system was intended to operate in a fashion which would enable nursing home patients to retain a minimum level of their own income as "pocket money". It emerged that six of the health boards adopted a practice which excluded this possibility. The complaints made to the Ombudsman in relation to this issue involved the Southern and South Eastern Health Boards in particular and the Midland, Western and Mid-Western Health Boards to a lesser extent. (The Eastern and North Eastern Health Boards appear to have implemented the "pocket money" provision correctly. The Ombudsman did not receive any complaints against the North Western Health Board on the issue but it appears it did not implement the provision correctly until 1998.) Dealing with these complaints absorbed a very considerable amount of the time of the Office of the Ombudsman particularly during 1995 - 1996.

Assessing Means

The provisions of the 1990 Act relating to the payment of subventions have already been cited at Chapter Three. Section 7(2) of the 1990 Act authorises the Minister, by regulation, to prescribe the amounts to be paid by way of subvention and it enables the Minister to set these amounts "by reference to specified degrees of dependency, specified means or circumstances of dependent persons or other such matters as the Minister may consider appropriate." The key determinants of a subvention are dependency and the degree of dependency, means and circumstances. In this immediate context, we can assume that neither dependency nor circumstances are an issue; though the latter was very much an issue in Chapter Four. What is at issue, however, is the assessment of means and how this relates to the rate of subvention to be paid.

The means assessment is based on the income and assets of the claimant and detailed rules on this are set out in the Second Schedule to the Regulations. Under the Regulations, a person whose means are assessed as equivalent to, or less than, the current rate of Non-Contributory Old Age Pension (NCOAP) will be paid the maximum subvention for his or her level of dependency. (In 1993 the NCOAP rate was �59.20 per week; the current rate of NCOAP is �85.50 per week.) Thus, a person assessed with a medium level of dependency, and whose means are no greater than the current NCOAP rate, can expect a subvention of �70 per week; that same person, if assessed with maximum dependency, can expect a subvention of �120 per week.

Where the means are assessed as being greater than the current rate of NCOAP then the rate of subvention (if any) is calculated by reducing the maximum possible subvention by the amount by which the assessed means exceed the NCOAP rate. Thus, to take a simple example, where the NCOAP rate is �75 per week, where the claimant's assessed means are �100 per week, then the subvention payable is the maximum rate for that level of dependency less �25 (i.e. �100 minus �75). From the outset, the Regulations clearly provided that in assessing means an amount of the claimant's income should be excluded or disregarded with a view to ensuring that, after the nursing home fees would be paid, the claimant would be left with at least a modest level of personal income or "pocket money". This was provided for at Article 8.2 of the Regulations:

Internal Department of Health Minute of 23 September 1992

Internal Department of Health Minute of April 1993

"A health board in assessing the means of an applicant ... shall disregard income equivalent to one fifth of the weekly rate of the Old Age Non-Contributory Pension payable at the time, such sum to be retained by the person for his or her own personal use."

The effect of this provision was that a claimant could have actual income equivalent to the NCOAP rate plus one fifth before any reduction from the maximum level of subvention would apply. It is important here to distinguish between "means" and "income". An income equivalent to the NCOAP rate plus one fifth actually amounts to a means assessment equivalent to the NCOAP rate alone. In current cash terms, an income of �102.60 per week results in a means assessment of only �85.50 per week.

Complaints and Official Response

Despite the absolute clarity of the regulatory provision outlined above, and even though there is nothing elsewhere in the Regulations to modify or restrict its application, it emerged from complaints received that many of the health boards were not applying it to the benefit of claimants. The requirement, in assessing means, to exclude income equivalent to one fifth of the NCOAP rate, was not being met in these cases. This meant that many claimants were being paid a lower rate of subvention than was their entitlement. A typical statement of this type of complaint, against the South Eastern Health Board in this case, is set out below: "My mother's sole income is a Survivors Pension of �69.20 per week, she owns no property, and has no savings. However the subvention granted to her is �86.80 per week, this is as a result of the subvention being abated by �8.20 per week, which is the excess of her pension over the Old Age Non Contributory Pension.

It appears to me that Article 8.2 ... has not been applied to my mother for the purpose of calculating her means. .... If the ... article, which is very clearly written, was applied to my mother's subvention application, the following is how it should have been calculated:

Weekly Pension = �69.20 Less 1/5 of NCOAP = �12.20 Net = �57.00

Under Article 8.2 my mother's weekly means are identified as �57.00 per week, therefore, no abatement should have been incurred." Letter of 10 April 1995 to Ombudsman from daughter of subvention applicant.

Letter from Western Health Board to Ombudsman, 28 July 1995

In the course of dealing with such complaints, it emerged that most of the boards were acting in accordance with advice received from the Department. Over the period 1993 - 1996 the Department regularly explained its position on the issue in response to queries from health boards and from the Ombudsman. The following passage, which is an extract from a standard letter sent by the Department to various health boards, on various dates throughout 1995, is typical of the advice it was giving:

"The important point about Article 8.2 of the Regulations is that a health board is obliged, in assessing the means of an applicant, to disregard income equivalent to one fifth of the weekly rate of the Old Age Non-Contributory Pension in deciding whether or not a person qualifies for subvention. However, this does not affect the amount which a person may be paid who has qualified for a subvention. In other words, if an applicant's only source of income is the Old Age Non-Contributory Pension he or she will qualify for the maximum level of subvention in his or her dependency category. Any income of the person in excess of the OAP is abated from the maximum amount of subvention payable in respect of the person's level of dependency as specified in Article 10.4 of the Subvention Regulations. Under the scheme, the successful applicant retains income equivalent to the OAP and can decide how much of it to spend on nursing home fees.

Article 10.4 allows abatement from the amount a person qualifying would otherwise receive by no more than the amount by which the person's means and circumstances exceed the rate of the Old Age Non-Contributory pension payable at the time. It does not contradict Article 8.2 which concerns the earlier stage of assessment of income."

The essence of this advice was that an amount equivalent to one fifth of the NCOAP rate could be disregarded for the purposes of qualifying people for a subvention; but, when it came to calculating the amount of subvention to be paid to a qualified person, the disregarded amount was to be taken back into the equation with the effect, generally, of reducing the level of subvention to be paid.

In some versions of the standard letter quoted above, the Department attempted to present its position as something positive rather than one which actually disadvantaged subvention applicants. The Department suggested that its interpretation had the effect of qualifying more people for a subvention than would otherwise be the case. In fact, this was not so and it could only have been true where the Department's interpretation effectively extended the "entry" requirements i.e. extended the level of means within which payment of a subvention was possible. Under the Department's approach, the means range for qualification purposes was precisely that provided for in the Regulations. Accordingly, there is no merit in the claim that more people were qualified under the Department's approach than would otherwise have been the case. On the other hand, as explained below, the Department's approach did have the negative consequence of paying many applicants a smaller rate of subvention than they were entitled to and, in some cases, subventions were refused where a low rate should have been payable.

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Letter of 10 May 1995 from Western Health Board to the Department of Health

The Department's approach involved an unwarranted distinction between the assessment of means for the purposes of "qualification" and assessment of means for the purposes of determining the rate of subvention payable. For the somewhat nebulous purpose of "qualifying" people for a potential subvention (according to the Department), means should be assessed on the basis that an amount equivalent to one fifth of the NCOAP rate would be disregarded. But for the all-important purpose of calculating the rate of subvention, or whether there would be any subvention, the Department proposed that means be assessed without the exclusion of an amount equivalent to one fifth of the Non-Contributory Old Age Pension. Given that the key factor is the amount by which means exceed the rate of NCOAP, the use of the latter approach necessarily disadvantaged, rather than advantaged, applicants.

For example, in the case cited earlier above, the applicant's weekly means were assessed as �57 for the purposes of "qualification"; but for the purposes of the rate of subvention payable, means were assessed at �69.20. For the latter purpose, the disregard of income equivalent to one-fifth of the NCOAP (amounting to �12.20) was not allowed. As the applicant's means, on this latter assessment, exceeded the NCOAP rate by �8.20 per week, her subvention was reduced by �8.20 per week. In fact, her weekly means for all subvention purposes should have been assessed at �57 and she should have been paid the full rate of subvention.

In December 1995 the Ombudsman's Office contacted the Department in relation to its advice and suggested that it was not accurate. The Ombudsman was told that the Department would seek legal advice on the merits of its interpretation of the Regulations. In November 1996, in view of the failure of the Department to respond on the matter, Ombudsman staff met with senior Departmental officials on this and related matters. At this meeting, the Department said that recently received legal advice supported the interpretation put forward by the Ombudsman. The Department said it intended to amend the Regulations to clarify the matter but, pending such an amendment, it would contact the health boards suggesting they act on the basis of its recent legal advice.

The Department did write to the health boards in December 1996 outlining its new position in relation to the application of Article 8.2 of the Regulations. The Department advised that the income disregard, equivalent to one fifth of the current rate of NCOAP, applied not only in calculating means but also in calculating the actual rate of subvention payable. At the meeting with the Department in November 1996, the Ombudsman's staff raised the question of having the benefit of Article 8.2 applied not just for the future but also retrospectively, i.e. that appropriate arrears payments be made in all those cases where a subvention had either been refused or paid at a lower rate because of the failure to apply Article 8.2. The Department, at that stage, declined to advise the health boards to apply the article retrospectively. It argued that Article 8.2 lacked clarity and that its previous interpretation, while now accepted to be incorrect, was at least arguable and had been held in good faith.1

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Eventual Resolution

From January 1997 most health boards applied Article 8.2 correctly and excluded an amount, equivalent to one fifth of the NCOAP, from the means assessment. However, this change of practice applied on a current basis only and subvention arrears were not paid in the case of applicants who had been disadvantaged by the previous practice. Payment of arrears was not a realistic option for the boards without an additional financial allocation for that specific purpose. In December 1997 the Department allocated an additional �4m among six of the eight health boards (excluding the Eastern and the North-Eastern Health Boards) for the purpose, amongst others, of paying subvention arrears to claimants adversely affected by the failure to apply Article 8.2 correctly.

This additional allocation was actually paid out by the Department in January 1998. It appears some of the health boards failed to apply this additional funding immediately for the purpose intended. Or, at least, it appears that some of the Boards felt the money was more urgently needed in other areas and "borrowed" the allocation for other purposes. From information provided by the health boards themselves, it is clear that the payment of arrears has not been treated with any great urgency and inaction or half measures appear to have been the order of the day. The position, based on information from the Department's files and from direct contacts with the boards concerned, seems to be as follows:

• The Southern Health Board (SHB) says that, arising from advice from its own legal adviser, it had applied Article 8.2 "correctly" with effect from August 1995. However, the correct approach was applied from August 1995 only in the case of new applicants. In January 1998 the SHB received an additional allocation of �560,000 towards the operation of the subvention system. Of this, �197,000 was specifically earmarked for the payment of subvention arrears to people in respect of whom Article 8.2 had not been correctly applied. By September 2000 only �65,860 of this had actually been paid out - the bulk of these payments seems to have been made in the period June - September 2000.2 By early January 2001, according to the SHB, it had paid out a further �107,611 which related to patients who were either deceased or had been discharged. The SHB says it hopes to have the balance of arrears payments, involving 89 cases, paid by the end of January 2001.
• The South Eastern Health Board (SEHB) received an additional allocation of �610,000 in January 1998 of which �200,000 was intended to cover payment of arrears to people who had not been given the benefit of the "pocket money" provisions in the subvention means test. The SEHB says that in July/August 1998 it paid arrears in "appropriate cases" direct to the nursing homes involved, rather than to the applicant or to the family. Arrears have not been paid in cases where the claimant had died prior to the arrears being calculated. It is not clear how much of the �200,000 has actually been paid out by way of arrears.

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• The Mid-Western Health (MWHB) received an additional allocation of �950,000 in January 1998. It is not clear how much of this was intended to cover payment of arrears to people who had not been given the benefit of the "pocket money" provisions in the subvention means test. The MWHB says it has paid arrears only in those cases in which (a) a subvention was still in payment on 1 September 1998 and (b) where it could get adequate details of income. Arrears were not paid in respect of applicants who had died prior to the arrears being calculated. The total amount paid out by way of arrears is not clear.
• The Western Health Board (WHB) received an additional allocation of �750,000 in January 1998. It is not clear how much of this was intended to cover payment of arrears to people who had not been given the benefit of the "pocket money" provisions in the subvention means test. As of 27 September 2000, the WHB had not paid any of the arrears under Article 8.2.3
• The Midland Health Board (MHB) received an additional allocation of �300,000 in January 1998 of which �150,000 was intended to cover payment of arrears to people who had not been given the benefit of the "pocket money" provisions in the subvention means test. The MHB originally said that it had applied Article 8.2 correctly, but when its attention was drawn to a particular case it accepted that this was not so. As of 30 September 2000 the MHB had paid a total of �86,256 arrears (including arrears in respect of people who had died in the meantime). The MHB did not begin to pay arrears until 26 May 2000, despite having received the allocation for that purpose in January 1998. It believes it has now discharged its full liability in respect of such arrears.
• The North Western Health Board (NWHB) received an additional allocation of �830,000 in January 1998. It is not clear how much of this was intended to cover payment of arrears to people who had not been given the benefit of the "pocket money" provisions in the subvention means test. There is some confusion as to how this allocation was used. On the one hand, the NWHB told the Department that it was reviewing all payments where Article 8.2 was an issue. On the other hand, it subsequently told the Ombudsman that it had always applied Article 8.2. More recently, the NWHB has told the Ombudsman that it operated Article 8.2 correctly "from a current date in 1998". The NWHB says: "[a] review of all previous applications has been carried out and all arrears are being paid". As of 10 November 2000, the NWHB had not paid any of theses arrears but had calculated the arrears figure for Co. Donegal as amounting to �80,000; it said it intended to pay arrears "within the next week to those [Co. Donegal] clients who are still alive". Arrears payments to the next-of-kin of deceased clients would, according to the NWHB, take longer. As of 10 November 2000, the arrears calculations for Sligo/Leitrim were still being worked on. It appears much of the �830,000 allocation has been used to "restore" to other service areas money which had been diverted, over a period of years, to implement the Health (Nursing Homes) Act.

Untangling the detail of what precisely happened the additional allocation would involve a separate investigation. The Department has informed the Ombudsman that it is continuing to pursue the relevant health boards on the question of payment of arrears arising from the failure to apply the pocket money provisions (Article 8.2) correctly.4

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Letter of 4 February 2000 from Department of Health and Children to Western Health Board

Comment

The Ombudsman does not accept that Article 8.2, in its original wording, was unclear either as to its meaning or its intended application. Article 8.2 was amended, with effect from 1 January 1999, ostensibly to clarify whatever was allegedly unclear in the original version. The amended version, provided by SI No. 498 of 1998, is as follows:

"A health board in assessing the means of the person in respect of whom a subvention is being sought under these Regulations, and in calculating the amount of subvention to be paid in accordance with the Regulations, shall ensure that income equivalent to one-fifth of the weekly rate of the Old Age Non-Contributory Pension payable at the time, is disregarded for the purposes of such assessment, such sum to be retained by the person for his or her personal use"

It is the Ombudsman's view that this amendment was unnecessary and achieved no improvement within the Regulations. Furthermore, in the light of information subsequently acquired from the Department's own files, the Ombudsman has great difficulty in accepting that the Department's interpretation of Article 8.2 (up to December 1996) was soundly based. Equally, in view of the information which subsequently came to light, it is evident to the Ombudsman that the Department was less than open and helpful in its dealings with his Office in relation to the Article 8.2 issue. Among the facts to emerge subsequently, and which are dealt with in more detail at Chapter Seven, are the following:

1. There was quite a deal of scepticism among many of the health boards regarding the validity of the Department's advice on Article 8.2. This advice was originally given in late 1993 but by January 1995 the first of a number of health boards had formally written to the Department querying the advice. The Department subsequently gave the impression (letter of 15 December 1996 to all health boards) that it had only become aware of the disquiet in December 1995.5
2. In July /August 1995 two health boards (WHB and SHB) sought their own legal advice in relation to Article 8.2. These advices were unequivocal in concluding that the Department's interpretation was incorrect and that the position held by the Ombudsman was correct. Both health boards supplied the Department with copies of their advice within weeks. Yet when the Ombudsman's Office was in contact with the Department on the matter, in December 1995, no reference was made to these advices and the Department continued to hold its line.
3. The Department eventually requested legal advice on Article 8.2 from its own legal advisor on 13 December 1995. This advice was not received until 3 July 1996, more than six months later.6 The Department's legal advisor also rejected the position being adopted by the Department and supported the Ombudsman's interpretation. The Department failed, over a four month period, to notify the Ombudsman of this advice despite a number of follow up contacts from the Ombudsman's Office.
4. Not until 15 December 1996, when it advised the health boards to change their practice in relation to Article 8.2, did the Department act on the legal advice received on 3 July 1996 . The Department's decision to issue new advice in December 1996 was the result of its meeting with the Ombudsman's Office in late November 1996.
5. The Department was at all stages aware that the EHB and the NEHB were operating Article 8.2 as envisaged by the Regulations. One of the functions served by the Department, in relation to health boards generally, is to assist in ensuring uniformity of practice in individual areas of activity. For more than three years the Department presided over a situation in which the practice of two boards, including the largest health board in the country, was at odds with the practice of the other six boards.

It is difficult to reach any conclusion other than (a) that the Department was aware from the outset that its interpretation of Article 8.2 was incorrect; (b) that it gave incorrect advice to the health boards; (c) that it was dilatory in withdrawing its incorrect advice and (d) that it was less than open and transparent in its dealings with the Ombudsman in relation to his examination of complaints on the matter.

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The Board should therefore exclude the equivalent of 20% of the non-contributory old age pension rate from the means of each claimant for a Subvention. I would recommend that this be put into effect immediately ...."

Western Health Board Internal Minute of 21 April 1995