Revisions to the Japanese Long-Term Care Insurance Law in Reiwa 6 (2024): Understanding the Background and Measures Care Service Providers Should Take

The Japanese Long-Term Care Insurance Act is a law established in Japan to provide appropriate health care and welfare services to those in need of long-term care. As the Long-Term Care Insurance Act is regularly reviewed and amended, care service providers must continually adapt their practices to comply with the law. Notably, the Act will undergo a two-stage amendment in April and June of Reiwa 6 (2024), which may leave some unsure about the specifics of these changes and the necessary responses.

This article will explain the background and key points of the amendments to the Japanese Long-Term Care Insurance Act, as well as provide illustrative examples. Operators of care service facilities are encouraged to use this information as a reference.

What is the Long-Term Care Insurance Law?

The Long-Term Care Insurance Law is legislation established to provide appropriate health care and welfare services to those in need of long-term care. The law was enacted in the year 2000 (Heisei 12) and is revised every three years to address the evolving needs of society.

The enactment of the Long-Term Care Insurance Law was driven by the following reasons:

• The increase in the elderly population requiring care and the prolongation of the care period due to Japan’s aging society
• Issues with family-provided care due to the progression of nuclear family structures
• The limitations of the conventional welfare and medical care systems for the elderly

According to the Ministry of Health, Labour and Welfare’s report on “Recent Trends in the Field of Long-Term Care[ja],” the number of individuals certified as needing long-term care (or support) increased from 2.18 million in April 2000 (Heisei 12) to 6.9 million in March 2012 (Heisei 24), a 3.2-fold increase.

The Ministry of Internal Affairs and Communications’ report on “Changes in Social Structure, Population Dynamics, and Family Types[ja]” indicates that the proportion of nuclear family households increased from 77.6% in 1990 (Heisei 2) to 86.7% in 2020 (Reiwa 2). While traditionally, children or other family members were expected to take care of their elderly parents, the rise in nuclear families has led to an increase in cases where this is no longer feasible.

For these reasons, the existing Welfare Law for the Elderly and the Medical Care Insurance Law for the Elderly were no longer sufficient, leading to the establishment of the Long-Term Care Insurance Law.

Background of the Reiwa 6 (2024) Enforcement Amendment to the Japanese Long-Term Care Insurance Act

One of the issues surrounding long-term care is the 2025 problem. The 2025 problem refers to the challenges that will impact various sectors such as employment, healthcare, and welfare, as the baby boomer generation reaches the late-stage elderly category and Japan enters a “super-aged society.”

Furthermore, the elderly population is predicted to peak in 2042, and it is clear that the current long-term care insurance system will no longer function effectively. For this reason, the system is reviewed and amended every three years.

In the fiscal year of Reiwa 6 (2024), amendments are being implemented based on the following four fundamental perspectives, taking into account changes in population structure and socio-economic conditions:

Deepening and promoting the community-based integrated care system
Measures aimed at supporting independence and preventing the need for more intensive care
Efficient provision of high-quality services
Creating a work environment conducive to these goals
Ensuring the stability and sustainability of the system

Source: Ministry of Health, Labour and Welfare, “Overview of the Deliberation Report on the Reiwa 6th Year Long-Term Care Fee Revision”[ja]

The details of past legal amendments are as follows:

Reference: Ministry of Health, Labour and Welfare, “Overview of the Long-Term Care Insurance System[ja]“

The Ministry of Health, Labour and Welfare plans to continue efforts to extend healthy life expectancy, improve productivity through reforms in medical and welfare services, and create a variety of work and social participation environments so that all citizens can remain active and healthy for longer.

Six Key Points of the Japanese Long-Term Care Insurance Act Revision in Reiwa 6 (2024)

The key points of the Japanese Long-Term Care Insurance Act revision set for Reiwa 6 (2024) are as follows:

• Mandatory disclosure of financial statements by long-term care service providers
• Electronic management of care information and system development
• Approval of combined services of home-visit nursing and small-scale multifunctional in-home care
• Expansion of services provided by in-home care support centers
• Promotion of the implementation of the Scientific Care Information System (LIFE)
• Improvement of productivity in long-term care facilities

Here, we will explain each point in detail.

Mandatory Disclosure of Financial Statements for Care Service Providers

As of the legal revisions in Reiwa 6 (2024), care service providers will be required to disclose their financial statements. Care service providers must report their financial status, including revenue and expenses, to the prefectural governor for each fiscal year. (Article 115, Section 44-2, Subsections 1 & 2)

The purpose of this amendment is to make the financial status of care service providers more transparent, thereby making it easier for users of care services to understand the current situation and reality, and to facilitate the consideration of support measures based on the analysis and investigation of information. Previously, the disclosure of financial statements was already mandatory for social welfare corporations and disability welfare service providers, but the low submission rate had been an issue. The Reiwa 6 (2024) amendment not only extends the obligation to care service providers but also establishes penalties for non-compliance.

If a care service provider fails to submit financial statements or submits a false report, they can be ordered to report or correct within a specified period. (Article 115, Section 44-2, Subsection 6) Furthermore, if they do not comply with the order, their designation can be revoked, and their operations can be terminated. (Article 115, Section 44-2, Subsection 2, Paragraph 8)

Electronic Management and System Development for Care Information

One of the legislative reforms includes the implementation of measures to establish an information infrastructure that allows local governments, users, and medical institutions to electronically access care information. The Japanese Long-Term Care Insurance Act states the following:

The Minister of Health, Labour and Welfare shall collect, organize, and analyze the management information of long-term care service providers and implement necessary measures to swiftly provide the results of such analysis to the public via the Internet or other advanced information and communication networks. (Article 115-44(2)-3)

Source: e-Gov Legal Search ‘Japanese Long-Term Care Insurance Act[ja]‘

If care information is freely accessible over the Internet, users will find it easier to check care information and receive care services that suit their needs. Additionally, the digitization of care information reduces paperwork and enables information sharing through data, which can lead to more efficient operations.

As a result, more time can be allocated to providing care to users and to developing necessary services, leading to further enhancement of care services.

Acceptance of Combined Services of Home-Visit Nursing and Small-Scale Multifunctional In-Home Care

In the legal revisions of Reiwa 6 (2024), it was clarified that services provided at the service bases for nursing small-scale multifunctional in-home care, which combines home-visit nursing and small-scale multifunctional in-home care, include nursing services for convalescent care and assistance with necessary medical treatment during “daytime and overnight” stays. (Article 8, Paragraph 23 of the Standards)

However, the planned establishment of a combined service that integrates home-visit care and daycare services in Reiwa 6 (2024), which would offer a combination of two or more care services, has been postponed.

Expansion of Home Care Support Business Operations

Home care support businesses are now able to perform care prevention support tasks (such as creating care prevention service plans) that were previously entrusted to the Comprehensive Community Support Centers (Article 115-22, Paragraph 1). As a result, home care support businesses designated by municipalities can now directly contract with users to provide services.

The purpose of this change is to reduce the workload of the Comprehensive Community Support Centers. Additionally, it will now be possible to outsource a portion of the comprehensive consultation support tasks to home care support businesses (Article 115-47, Paragraph 4).

Promotion of the Scientific Care Information System (LIFE) Implementation

The recent legislative amendments promote the implementation of the Scientific Care Information System (LIFE). Scientific care refers to caregiving based on scientific evidence. With the use of LIFE, it becomes possible to share information about the condition of care service users and the plans and contents of care provided at caregiving facilities with the Ministry of Health, Labour and Welfare over the Internet. By utilizing LIFE, the information collected can be analyzed and fed back by the Ministry, enabling evidence-based caregiving. Additionally, since this will be added to the additional remuneration, it also presents benefits for caregiving businesses.

The revisions made in this legislative amendment include the following three points:

• Changing the frequency of LIFE submissions from once every six months to once every three months
• Clarifying the definitions of input items and unifying the options for items that are common with other additional charges to reduce the input burden
• Allowing the unification of data submission timings under certain conditions when calculating multiple additional charges (a grace period is provided for the data submission deadline)

When implementing LIFE, it is important to be aware that regular data submissions are required and that this will increase the input burden.

Reference: Ministry of Health, Labour and Welfare “About the Revision Items in the Fiscal Year 2024 (Reiwa 6) Long-Term Care Fee Revision[ja]“

Improving Productivity in Long-Term Care Facilities

Article 5, Section 2 of the Japanese Long-Term Care Insurance Act mandates that it is the responsibility of prefectures to support the improvement of productivity in long-term care facilities. Prefectures are required to endeavor to promote initiatives that contribute to the efficiency of operations and the enhancement of the quality of care services at facilities providing such services. (Article 5, Section 3 and Article 118, Section 3)

In addition, municipalities are instructed to include in their long-term care insurance business plans the necessity of support and measures for improving productivity, in collaboration with prefectures. (Article 117, Section 5)

In recent years, despite the growing demand for long-term care, the shortage of care workers has become a significant issue. The aim of the legislative amendments is to improve productivity through the introduction of care robots and technology, enabling operations with fewer workers.

With these legislative amendments, we can expect increased support from prefectures and municipalities for initiatives aimed at improving productivity.

Expectations and Challenges for the Revised Japanese Long-Term Care Insurance Act in Reiwa 6 (2024)

The legal revisions in Reiwa 6 (2024) have postponed certain items. Here, we will discuss two postponed items and the future challenges they present.

Expectations: Points Postponed in the Reiwa 6 (2024) Revision

This time, the transition of home-visit and day-care services for the elderly with care levels 1 and 2 to the “Comprehensive Services” has been postponed. The term “care level” refers to the classification of the state of needing care, indicating how much care is required. Care levels range from 1 to 5, and individuals can receive care services within the limit set for each level. “Comprehensive Services” refers to the Integrated Community Care System, which includes preventive care and support for daily living.

Had the home-visit and day-care services for those with care levels 1 and 2 been moved to the Comprehensive Services, it would have allowed municipalities to set their own fees, which was expected to reduce costs. However, concerns about varying quality of services between municipalities and potential withdrawal of service providers led to the postponement in this round of legal revisions.

Additionally, the introduction of fees for care plans has also been postponed. A care plan is a document that outlines the goals and details of services provided, based on the user’s and their family’s situation and wishes. While the creation of care plans is fully covered by insurance for home services, facility services require a user contribution. The proposal to introduce fees aimed to maintain fairness, but issues such as increased demands from users and their families and additional workload have pushed the revision to Reiwa 9 (2027).

Challenges: Increased Burden on Service Providers Due to Business Expansion

One of the challenges of the Reiwa 6 (2024) legal revision is the increased burden on service providers. This is due to the new requirements for submitting financial statements, implementing the LIFE system, and the need for electronic management and system development, which will lead to an increase in paperwork and data entry tasks that were not previously required.

Not only will it take time to adapt to the new tasks, but there will also be costs associated with acquiring the necessary tools for electronic management and system development.

Leveraging the Amendments to the Japanese Long-Term Care Insurance Act: Successful Cases

Let’s discuss two examples of how the amendments to the Japanese Long-Term Care Insurance Act are being effectively utilized:

• Volunteer Point System
• Community-Based Integrated Care System

Let’s take a closer look at the details.

Volunteer Point System

The Volunteer Point System is a program that awards points based on the achievements of volunteer activities in support of long-term care. Accumulated points can be exchanged for gift certificates or cash.

The Volunteer Point System was initiated in 2007 (Heisei 19) as a part of the Japanese Long-Term Care Insurance system. Following the amendment of the Long-Term Care Insurance Act in 2014 (Heisei 26), which established general preventive care services, the number of municipalities offering point awards increased.

In Machida City, an initiative called the “Iki-iki Point System” is in place. Citizens aged 65 and over who volunteer at long-term care insurance facilities earn points. These points can be exchanged for book cards or QUO cards in the following fiscal year.

Reference: Machida City “Why not participate in the Iki-iki Point System?[ja]“

Community-Based Integrated Care System

The Community-Based Integrated Care System is designed to ensure that individuals in need of care can continue to live their lives in a manner true to themselves, with housing, medical care, and long-term care services provided in an integrated manner.

In Nagaoka City, Niigata Prefecture, 13 support centers have been established around Nagaoka Station to provide integrated services including housing, medical care, and long-term care. Additionally, during local festivals, small multifunctional home care facilities are offered as rest areas, aiming to create a system that fosters community interaction and mutual support.

Reference: Nagaoka City, Niigata Prefecture “Efforts Toward Establishing a Community-Based Integrated Care System – Initiatives in Nagaoka City, Niigata Prefecture[ja]“

Summary: Understanding the Amendments to the Japanese Long-Term Care Insurance Act Correctly

In the Japanese Long-Term Care Insurance Act of Reiwa 6 (2024), various amendments have been made that require care service providers to take action, such as the mandatory disclosure of financial statements and the establishment of electronic management and systems. These are important initiatives to enhance the quality of care services and to meet the needs of those requiring care.

With the amendments to the Japanese Long-Term Care Insurance Act in Reiwa 6 (2024), some care service providers may find themselves struggling to comply. In such cases, it is advisable to consult with a lawyer.

Guidance on Measures by Our Firm

The caregiving industry is governed by a complex web of laws, including the Japanese Long-Term Care Insurance Act, the Japanese Elderly Welfare Act, and the Japanese Companies Act. Monolith Law Office serves as the legal advisor for the Japan National Federation of Care Providers and for care providers across various prefectures nationwide, possessing extensive know-how related to legal matters in the caregiving business.

Areas of practice at Monolith Law Office: Corporate Legal Affairs for IT & Startups[ja]