Associated provider regime – the goal posts move again!

The Aged Care Act 2024 (Cth) introduced a new “associated provider” regime that significantly expands the accountability of registered providers for services delivered by third parties. While the ACQSC has issued practical guidance in Regulatory Bulletin RB2025-1 (Bulletin), the statutory definition remains exceptionally broad (arguably almost limitless in scope).

This creates a tension: the ACQSC’s compliance framework focuses on direct arrangements but the legal liability under the Act extends through the entire contracting chain. Providers must not assume that compliance and liability are aligned. In practice, the only way to manage this exposure is through a robust quality governance framework that actively engages with subcontracted goods and services (whether not they are associated providers).

What the Act says

Section 11(6) of the Act deems any entity that “engages in conduct under an arrangement with a registered provider relating to the provider’s delivery of funded aged care services” to be an associated provider. The Act applies as if the provider had engaged in that conduct. This means the provider is legally responsible for the acts and omissions of any third party involved in delivering funded services (regardless of whether they are formally declared or directly contracted).

There are no exclusions listed in the Act. The statutory language is intentionally expansive, designed to prevent loopholes and ensure that care responsibility is non-delegable. Courts will consider this regime when assessing whether providers and their boards have met their statutory duties of care and diligence under Aged Care Act.

What the ACQSC says

The Bulletin, thankfully in many ways, offers a more practical interpretation. It defines associated providers as organisations that have an arrangement with a registered provider to deliver funded aged care services on their behalf. It excludes:

• Individual aged care workers directly engaged by the provider or through a labour hire agency;
• Labour hire firms supplying staff;
• Corporate service providers (e.g. IT, accounting, legal);
• Indirect vendors (e.g. taxis, supermarkets, pharmacies); and
• Subcontractors of associated providers (who “are not usually” considered associated providers).

However, the ACQSC is clear: the provider remains responsible for the quality, safety and compliance of all services it is funded to deliver, regardless of who performs them. This includes services delivered through subcontracting chains.

Compliance vs liability

Providers must distinguish between the compliance test and the liability test. The ACQSC’s compliance obligations focus on direct arrangements (e.g. notifying the Commission of associated provider relationships in Categories 4–6, naming associated providers in service agreements and S@H monthly statements and maintaining oversight of their performance).

But the legal liability under the Act is broader. If a subcontractor (not formally declared) causes harm, the provider is still accountable. Courts and regulators will ask: did the provider do “everything reasonably practicable” to avoid harm to an individual (including in relation to ensuring safety and compliance throughout the care delivery chain)?

Passive reliance on contracts is not enough. Providers must demonstrate active oversight, including:

• Vetting associated providers (broadly defined);
• Embedding obligations into contracts (e.g. screening, incident reporting, cooperation with investigations);
• Monitoring performance, incidents and responding to complaints; and
• Ensuring all workers meet Code of Conduct and screening requirements.

Governance implications

Managing this regime requires robust and integrated clinical governance. Providers should treat associated provider oversight as a core part of their governance framework, encompassing for example:

• Incident management
• Complaints handling
• Whistleblower protections
• Workforce screening
• Clinical risk oversight

Boards must ensure that governance systems extend to all contributors to care, whether direct or indirect. Failure to do so may result in personal liability for breach of the duty of due diligence under the Act.

Strategic considerations

Providers should review their outsourcing models. Some may choose to bring services in-house to reduce complexity/retain control. Others will need to strengthen their contract management and oversight. Key actions include:

• Updating contracts to mirror provider obligations under the Act
• Requiring approval for subcontracting and flow-down of compliance terms
• Including associated provider staff in training and quality systems
• Maintaining internal registers of all care delivery partners

Our current offerings

To support providers in navigating these changes, we’ve developed a suite of legal tools tailored to streamline implementation, strengthen oversight, and reduce risk.

Bundled Compliance Solutions

• Quick Start Compliance Pack
  Tools for identifying Associated Providers, reviewing contracts, updating legacy agreements and embedding whistleblower protections.
• Contract Management Pack
  Supports robust contracting arrangements with both major and minor service providers as well as individual contractors (who will be treated as aged care workers) and labour hire agencies.
• Governance Pack
  Frameworks, briefing materials and compliance checklists to embed oversight into governance processes.

Standalone Legal Tools

• Decision-making tools for identifying Associated Providers;
• Agreement templates for new service arrangements;
• Deeds of variation for updating existing contracts;
• Whistleblowing policy;
• Risk management frameworks for board and executive levels;
• Board briefing memos outlining governance duties and potential penalties; and
• Comprehensive checklists to support planning and implementation.

If you would like to discuss how these products can support your organisation, please contact Amber Crosthwaite at 0400 143 677 or amber.crosthwaite@lavan.com.au.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.