A party seeking to restrict another's commercial activities must consider whether such terms are normal in similar, factual and contractual circumstances.
We have been working with care homes to update their contracts and advise on the risks of charging the resident a regular “top-up” or additional fee where a resident is funded through NHS Continuing Healthcare ("CHC").
The risk of getting these arrangements wrong is shown by recent enforcement action by the Competition and Markets Authority (“CMA”) which has resulted in a £1 million refund to NHS-funded residents at Care UK’s premium care homes.
The CMA’s 2018 guidance ‘Care homes: consumer law advice for providers’ confirmed providers are more likely to infringe consumer law where they:
- demand a regular top-up to the weekly fee to cover a claimed ‘shortfall’ in the CHC funding (either as a condition of moving into the home or as a condition of staying in the home);
- ask a resident to sign an agreement (or to be invoiced) for the provision of additional private services, when these are not in fact provided and the true purpose of the payment is to cover a claimed ‘shortfall’ in the CHC funding; and
- require or otherwise pressurise a CHC resident to purchase additional services as a condition of moving into the home or continuing to allow them to remain in the home as an NHS-funded resident.
Many providers experience difficulties where NHS funding does not cover the price of a room at the home and some have sought to remedy this by charging residents for additional services or facilities on offer at the home.
It is permissible to charge residents for additional private services or ‘lifestyle choices’, such as aromatherapy, beauty treatments or extra sessions of physiotherapy, which are distinguishable from the care and accommodation necessary to meet their essential care. However, the CMA considers that Care UK broke consumer protection law by charging additional fees that did not relate to purely voluntary purchases and instead contributed towards essential care. The CMA has also clarified that ‘essential care’ refers to the care package that meets an individual’s health and social care needs.
Following enforcement action by the CMA, Care UK has agreed to repay NHS funded residents by the end of November 2020, with the majority of residents receiving more than £1,000 and some substantially more. It has also committed to stop charging this additional fee altogether for residents at its homes.
Providers will need to take care of how they distinguish between services that meet residents’ essential care and services that are genuinely ‘added extras’. It is very unlikely that enhanced quality of service or superior amenities will justify an additional fee if they cannot be separated from the general package of care and accommodation.
For more information
We have been supporting providers to navigate this complex area of consumer law and the impact of NHS rules upon their charging structures. For more information about the impact this may have upon your CHC funded residents, please contact Emma Watt or John Wearing.
Details of Care UK’s undertaking, which includes example wording which it is now prohibited from using, is available here.
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