DISCLOSURE LOG

DOCUMENT 3

National Disability Insurance Agency.

Freedom of Information Act 1982 under which this document is released:

MR25/01967 FOI 24/25-2242

Disclosure Log - NDIS Board Meeting on March 28th, 2019

Agenda Item: # Agenda Item: Attendant Care & Participation Price Limits Paper Type: For Decision ELT Sponsor: Antonia Head Markets Provider Sector Development Draft resolution: The board agrees that prices be established based upon a new efficient cost model; introduces Conditional Adjustment Payment at rate of 7% over five years phase-out period for maintaining supply expansion while allowing providers time develop efficiencies operations.

Purpose To seek agreement from NDIA regarding arrangements setting price limits attendant care and community participation in line with an updated efficiency-based pricing system along conditional adjustment payment introduced (phasing out within next year) to maintain expanding service provision allow sufficient timeframe enabling operational improvements among suppliers.

Recommendations That the board agree set price limits according outlined herein aligning them efficiently modeled noted headline effects include increases real terms base rates as follows:

• Level I weekday attendants care East Guide +7.6%
• Level II weekdays attendants care East Guide +10.2%
• Level III week day attendants care East Guide +10.8%. That current Temporary Support Overheads replaced by Conditional Adjustments made up initially @5% then reduced annually thereafter only payable if provider complies following conditions publication prices NDIS non-NDIS clients differing on own websites, participate in Provider Finder arrangement also join financial benchmark survey/service approved by NDIA deidentified data provided assist future pricing decisions.

Agree establish price limits Western Price Guide Eastern Price Guide per document x.x.1 Board deliberations relating statutory functions confidential see Resolution September 4th 2017 Page of /1049

Disclosure Log

NDIA Board Meeting of 28 March 2019

• recommendation above), noting that the WA Market Review is still to report and may provide additional information about prices in WA.

That the Board NOTE further work requires setting non-weekday rates equal increases not precisely same effect implementation from July months next couple will be done over the following:

new limits should take effect participation should set equal recommendations -

existing plans adjusted reflect changes indexation part annual plan adjustments.

Scheme Actuary estimated adopting recommendations raise expenditure scheme per cent equating $ million .

####### Annual review re-examine price control arrangements group based care IPR pricing rules travel cancellations with any new arrangements implemented July. Discussion As market stewardship role limit providers charge supports transition controls ensure participants receive value money short medium term require disability goods services markets fully developed longer-term goal remove regulatory mechanisms for disability currently varies approach regulation depending on conditions between: deregulated cases where highly competitive example transport; imposition maximum allowable price payable significant number growing such as those attendant care; Attendant Care Participation Price Limits x.x.2 Board deliberations relating its statutory functions confidential see Resolution September released under Freedom Information Act by National Disability Insurance Agency.

Disclosure Log

NDIA Board Meeting of 28 March 2019

• Quotable Supports: In which participants are expected to obtain quotations from suppliers for provision to the National Disability Insurance Agency (”NDIA”), verifying fair prices. This approach is typically used when highly specialized or differentiated services may not have high competition — e.g., assistive technology; it’s applied similarly with supported independent living where a bundle of supports might be purchased, such as quasi-outcomes being bought; in these situations, service providers can adjust their outcomes in response to input costs they face.

Pricing Strategy

The NDIS pricing strategy plays an essential role during significant demand growth transition towards deregulation goals while improving efficiency and quality care. It acknowledges that maintaining current supply short-term alongside increasing medium-to-long term disability support levels will meet growing needs entering scheme and increased support requirements over time. This process requires substantial effort and potential price increases if market entry becomes easier (price elasticity). The four concepts guiding this strategy:

Efficient Price Levels – Long-run minimum production cost level achievable only under strong provider competition within mature markets.

Sustainable Price Levels - At any given moment represents average firm viability even inefficiently. Shorter terms require higher sustainable levels ensuring stable supplies at slightly above most efficient costs remain viable.

Transitional Price Levels Represent necessary prices attracting new suppliers reducing exits from the market to expand economic resources for supplier expansion. These are above sustainability but should apply primarily due to required large-scale supply expansions like those seen currently by NDIS.

Price Caps Upper limits on prices used prevent abuse of power.

Figure 1 Explained

Figure below illustrates pre-NDIS equilibrium point A with post-demand inclusion C showing long run clearing points, sustainable path red arrow & transitional green, recognizing inefficiencies through existing agreements and need adjustments.

Disclosure Log

NDIA Board Meeting of 28 March 2019

Figure 1: Transition from equilibrium prior to the NDIS to the long-run NDIS equilibrium

Disclosure Log

NDIA Board Meeting of 28 March 2019

the short-to-medium term at least, to be set with regard to transitional price levels rather than sustainable or efficient price levels. 3.9 Figure below summarised stages for NDIS pricing regulation as outlined above:

Transition Strategy (Figure)

• Expand demand during transition: Set price caps on average cost; adjust funding based on efficiency costs; collect provider info including financial data & benchmarking surveys to incentivise innovation contingent upon participation, maintain monitoring markets closely if shortages exist. deregulate when appropriate, removing price caps where they’re not needed.

In brief under Pricing Strategy (”NDIS”), prices should follow two paths in plans currently maintained but increased annually per input unit costs from providers (red arrow). The purchasing power would remain real terms and participants will purchase greater quantities over time due convergence between transitional/sustainable levels. Price caps must reflect adjustments made by suppliers adjusting new arrangements while unwinding agreements efficiently through TSP reductions. Market monitoring is necessary before considering removals once market pressures reduce towards long-term efficient rates.

Disclosure Log

NDIA Board Meeting of 28 March 2019

At the same time, the collection and dissemination of more market and consumer information is essential to effective pricing and future outcomes-based pricing.

This should ideally include:

• quantity and prices of disability supports provided for example hours care) NDIS group location could obtained linking details suppliers each payment made from NDIS budget;
• Market entrants exits; profitability other financial metrics statements provider supply conditions total expenditure participants on supports locations.

Gathered supply data assist determine caps short term enable better informed decision making when considering deregulation markets medium long term transitional above equilibrium may also reasonable oblige providers participate as form dividend To gain access transitional prices would need provide accurate responses.

Providers tools achieve efficiencies able understand performance own organisation accurately compare their peers requires good accounting governance standards practices ability across The can Q&SC help adopt over part registration process can support independent services especially where operating thinner benchmarks participation in those services development incentives make loading Transitional Support Payment at least contingent activities.

Going forward Consumer outcome data collected published regular basis consumers detailed view provider performance towards outcomes based pricing Information collect includes satisfaction individual received Outcomes employment gained engagement community ease potential shortages level empowerment plan utilisation reasons budgets not fully expended indicate undersupply Collecting such additional consumer data used measure longer-term transition outcomes-based pricing identify areas undersupply occurring short term

Attendant Care Participation Price Limits x.x.6 Board deliberations relating to its statutory functions are confidential – see Board Resolution 4 September Page 52 of 1049

Disclosure Log

NDIA Board Meeting of March 2019 - MR25/01967 FOI 24/25-2242

The current price limits for attendant care and participation are set according to the following assumptions: | | East Price Guide | West Price Guide | |-:|:-:||- |

EFFICIENT COST

Worker Classification SCHADS Award Working Days in Year Shift Loadings Permanent share of workforce Casual loadings Utilisation Manager Salary on costs Superannuation Workers compensation Payroll Tax Cost of non-client personnel Cost other corporate overheads Pre-tax margin (of other costs) TSO (on June rate)| Standard Level L 3.2 2,3 /L 3.1 2./Level 3 2,/Standard Level 1 2.,2/L 3.2 2.| =Level 1 TSO=Level 1 TSO=Level 1 TSO=Level 1 TSO=Level 1 TSO=

TEMPORARY SUPPORT FOR OVERHEADS

TSO (June )

Disclosure Log

NDIA Board Meeting of March 2019 - MR25/01967 FOI 24/25-2242

3.19 It therefore recommended that NDIS:

• RESET REASONABLE Prices based operational structures most efficient providers currently operating sector.
• REPLACE TSO with Conditional Adjustment Payment phasing out over five years in recognition average providers are long way short from efficient and require time adjust including additional costs Scheme administration Commission CAP represents difference between th percentile provider cost).
• RESET REASONABLE Prices each year observed percentiles.
• REDUCE CAP overtime increase pressure efficiency (a year)
• REQUIRE who access to take part annual benchmarking survey inform decisions better publish their prices offerings.

The new price limits for attendant care participation set according following assumptions:

| | Standard Level L | Level M | Level N | |-:|–:-:–:|–:––:—–| || || EFFICIENT COST Worker: Classification SCHADS Award) Working Days Year Shift Loadings Permanent share workforce Casual Loadings Utilisation Manager:Classification(SCHADS Award)Working Days Year Shift Loadings Utilisation Management ratio Salary on Costs Superannuation Workers compensation Payroll Tax Cost non-client personnel Cost other corporate overheads Pre-tax margin (% of other costs) TEMPORARY SUPPORT FOR OVERHEADS TSO 0 June rate)|75%|75%|7.5%

321 Table below illustrates impact adoption the pricing model weekday price limits attendanc ecare. |Current Base Current + TSO New Base New+TSO Increase inBase InceaseinBase TSOncreaseinLevel 1 $47,02$48,$69|$50.$57$54.|7.%12%.9Lvel %$49.,61$50.$$54$.69$58.$7910%,9Levle %$51$,86$52.$.98$57$.45$61.$7510%,8%16%,6Attendant Care and Participation Price Limits x.x.8 Board deliberations relating to its statutory functions are confidential see Resolution September .

Disclosure Log

NDIA Board Meeting of 28 March 2019

Risks:

• Risks

WA Market Review has not yet reported.

The WA Market Review is still pending reporting but it’s included within a broader communications framework that clarifies this decision does not prejudge any outcomes related specifically to market review results;

Outcomes represent shift away from recommendations in Independent Price Review (which were accepted).

Outcomes indicate changes diverging slightly compared with previous independent price reviews; however these risks have been mitigated through robust sector consultation processes as well as access provided via more comprehensive datasets enabling new insights,

Impact:

Scheme Actuary estimates raising expenditure for adopting Recommendations 2.1 - Recommendation 2.5 will increase scheme spending by approximately $789 million over fiscal year ending June, 30th ’19-’20 per cent., equating between $789m in FY’19-”20.‘See Attachment A’

Increase attendant care and community participation limits improves participant service accessibility.

Increasing pricing caps on services like attendant care & community engagement aims at enhancing participants’ ability accessing needed support,

Responsibility And Next Steps:

Information about proposed changes communicated according overall communication strategy outlined further in attachment B

Information regarding the suggested modifications concerning rates of payment for both personal assistance and group activities shall be disseminated following established procedures described fully under document attached B herein below,

Increases effective July first, annually indexed prices and plan values.

The adjustments are scheduled to take effect starting January onest, nineteennineteen ninetynine,’as part annual indexing process applied across all schemes;

Head Markets Provider Sector Development responsible overseeing implementation.

Pricing reforms pertaining to direct supports (personal assistants) along with broader programmatic enhancements fall within purview of Market Providers Sector Developers who oversee execution accordingly.

Disclosure Log

NDIA Board Meeting of 28 March 2019

Attachments

• Attachment A: Analysis by Scheme Actuary
• Attachment B: Communication Strategy

Internal Use Only - Removed For Meeting

|Prepared By | Action Officer | Approved By | GM Name| |- |- |- | Division | Action Officer’s Division | GM Title | GM Phone Number| Phone | Action Officer’s Phone Number | Phone | GM Phone Number| Cleared BY EMG | ELT Date ||||

Estimated impact of proposed price increases

Understanding of the proposed changes

It is proposed that the following changes will be implemented from July 2019:

• Attendant care
  • Increase in prices: o Standard supports/Level I: +7%. o High Intensity Level II: +6%. o Very high intensity level III: +8%
  • Temporary Support Overheads(TSO): increase from a rate of 25% up until July and then reduced annually at either -3, or -4%,or -5. A scenario where there’s no reduction considered as well.`
• Therapy
  • Price increase to therapy services from $1,79$to $1$. Introduction psychology item with an East cost of $2$,and West costs for physiotherapy items are introduced

Testing Impact

The effect on Scheme costs due to these changes tested using projected payments from 2017–18 financial sustainability report onwards. This approach assumes inflation adopted for year (total) sufficiently covers other expected sources superimposed inflations.“High-level analysis suggests this likely case”.

Assumptions

A number assumptions required test impacts include: For attendant care, The proportion impacted by pricing increases As Dec., 45% related daily activities & social participation excl SIL) Of those, were provided one-to-one. Current distribution into levels 1-3 Three levels introduced in February 2019; data unavailable assess split between each.

Disclosure Log

• Data on the split between Standard and Complex participants under the previous price guide was used as a proxy and alternative splits tested as a scenario.
• It is assumed that two-thirds of individual supports are Standard (Level 1) and one-third of individual supports are complex, split between High Intensity (Level 2) and Very High Intensity (Level 3). o The impact of the increase to the TSO is assessed using the proportion of supports that are impacted by the TSO (estimated to be 36.4%), the increase from 2.5% to 7.5%, and the delay in unwinding the previous assumption (the 2017–18 FSR assumed that the TSO would partly unwind in 2020 and fully unwind by 2021).• For therapy, these include: o The proportion of Capacity Building - Daily Activities payments related to the general therapy line item. Based on payments for the 2017–18 support year, this is assumed to be 43%.o The proportion of therapy relating to psychology and physiotherapy. There is currently no data collected on this. Therapy supports split by age and disability have been examined as a proxy for the potential split (currently assuming 2% of general therapy supports relate to psychology and 10% relate to physiotherapy).

Results

• At full scheme (2023), the increase in attendant care prices results in an estimated increase of between $661 million (2.5%) to Scheme costs if the TSO is unwound over three years; it increases further at higher timeframes.
• At individual level participants could receive up to a 14% cost increase due to TSO application across all levels or specific Level 3 services. • Analysis indicates around one-sixth utilise more than eighty percent which may require plan review upon price changes. • Similarly some might see increased costs from six-to-eight percentage points with similar utilisation rates requiring reviews, specifically those living West using only general items seeing larger impacts like twenty eight per cent needing re-evaluation.

Disclosure Log

Figure 1 Distribution of utilisation for attendant care and therapy supports

Sensitivities

The following tables show the impact of changing a number of assumptions related to the proposed attendant care and therapy price increases on Scheme costs between 2020 and 2023. The scenarios for attendant care include:

• Lower TSO: assumes the proportion of supports that the TSO impacts is smaller (30%)
• Higher TSO: assumes the proportion of supports that the TSO impacts is higher (50%)No normal inflation in2020: If there is no further inflation increase on July, then it's reduced. More favourable split levels for attendant care:if more are delivered at Level I less at Levels II & III Less favorable split level attendants care:if fewer are delivered at Level one more at Levels two three. Table total scheme cost projected in FSR 2017–18 Year | 2020 | 2021 | 2022 | 2023| 2017 - 18 FSR Scheme Cost | $19.6M$ | $4K$ | $23.371m

Disclosure Log

Table 2 Cost impact of attendant care price changes (difference relative to 2017–18 FSR)

	$	%
Adopted assumptions    & $\quad{}^{}$**​$^$  &nbs…
Lower TSO &nb…

DISCLOSURE LOG

• There is currently no data on psychology and physiotherapy supports. The analysis uses therapy supports received by participants with a psychosocial disability as a proxy for psychology supports, testing that they are used in place or substitution for other purposes, such as when one type can be substituted easily without compromising effectiveness.

Pricing Announcements Staged Releases

Purpose

• Outline how the Annual Price Review (APR) will be supported through coherent, consistent staged communications to the launch of the new Price Guides, active July.

Communications position

• Demonstrate the NDIA’s commitment to pricing and price controls that encourages a thriving competitive market with fair return to providers while supporting participants achieving goals.

Key messages focussing on Release 1)

• The NDIA takes its commitment as market steward seriously.
• The Pricing Reference Group continues monitoring markets consulting taking feedback using benchmark methodologies guiding decision-making.
• The NDIA is building confidence balancing certainty annual review process adapting needs ad hoc special arrangements.
• These adjustments stimulate supply encourage innovation allow providers continue supporting participants achieve their goals.

Attendant care

Substantive increases proposed in attendant care better reflect evidence about current efficient prices ongoing need temporary support overhead these ensure adequate stimulation attendants’ market.

Therapy Review outcomes

The therapy was opportunity do deep dive understand specific challenges this market variations discovered including those based geography other factors related labour markets reflected limits psychology physiotherapy have higher differentiated regional caps analysis existing NDIS providers open market align adjacent markets enter Scheme. ####### Special conditions In order access updated terms agreeing abide by providing data participating benchmarks surveys publicly provide lists. Provider participation enables continuing build base assumptions transparency provider information ensuring understanding discussions value money financial year.

Disclosure Log

• These changes are driven by three key pieces of work: – Annual Price Review – Therapy Review – WA Market Review The Price Guide is being redeveloped to be user-friendly. It will be easier to navigate, with refreshed content and improved layout.The number of Price Guides is being reduced from four versions: National, to Remote, Very Remote.As part of APR a consumer-oriented Price Guide will also be prepared to provide better transparency for participants.

Content of communications releases

Release 1 – End-March

Therapy Review outcomes” implement as part of APRAttendant care price changes conditional adjustment payments introductionPolicies to investigate clarify for 2019/20CancellationsCentre-based care including community outingsUse volunteersTravelGroup based supportsHow policy consultations heldUpdate pricing guideDate next announcement

Release 2 Beginning JuneReinforce Therapy Review OutcomesWA Market Review OutcomesAnnounce price changesAnnounce Policy ClarificationsAnnounce date Pricing Guide launch

Release 3 End-JunePrice Guide now liveWhen system updates occur

Release 4 Beginning JulySystem Updates Live

Disclosure Log

Pricing Reference Group Minutes of the Meeting of May 14th , 2019

Members present:

• Antonia
• Jim PSM Independent Member
• David
• Daniel proxy Michael
• Graeme AM independent member
• Sarah
• Louise proxy Vicki
• Victor

Apologies: Anthony

Secretariat - David Cullen

Item 1 . Conflicts Of Interest:

• The PRG noted that Graeme was a member Board Life Without Barriers; A member Summer Foundation; a member Joblife Employment;a member Attitude Foundation and. Item Minutest meeting March th , : The PRG endorsed minutes previous meeting. **Terms Specialist Disability Accommodation (SDA) Limited Assumptions Price Review Item Terms Reference for SDA Reference Group Consultation with group reference terms proposed timing review item Annual Indexation Control Support Items Covered SCHADS will be indexed Fair Work Commission Increase Minimum Wage + Consumer Price Index CPI) support items workers not covered SCHADS will index by 5. Endorsement method indexing support items below as follows:

DISCLOSURE LOG

FOR OFFICIAL USE ONLY National Disability Insurance Agency - Pricing Reference Group Minutes of the Meeting of 14 May 2019

• 80% Wage Price Index (WPI) + 20% CPI (c) Support items that fall under Capital items, including SDA will be indexed by: –100% CPI

Item 2.3 Simplified Quoting Arrangements for Assistive Technology and Home Modifications (AT&HM)

The PRG AGREED: #6 participants/providers may claim up to $5000 AT&HM included in a participant’s plan after they have fulfilled assessment requirements. #7 new support item codes with benchmark value $5k enabling inclusion reasonable necessary supports but ensuring basic categorisation spending effect recommendation #2.1. #8 one quote sufficient decision-making capability between $5K-$15K where tested against AT&HM Funding Estimate Tool (as appropriate). #9 arrangements reviewed end year impacts on AT&HM quotes numbers.

Item 2.4 Individual Living Options (ILOs)

The PRG DISCUSSED transitioning ILO NDIS model packages sector currently. PRG NOTED paper pricing ILO intended presented July next meeting.

Item 2.5 Basic Skill Development part of community participation supports) The PRG AGREED further work skill development supports

Item 2.6 Subscription-based Supports

PRG AGREED conduct subscription-based supports further work.

Item 3.1 Preliminary Report Western Australia WA Market Review

PRG NOTED update market review. PRG AGREED discussion preliminary recommendations at the next PRG meeting.

Item 3.2 Annual Review Price Controls Update

The PRG noted annual price controls update and discussed outcomes to be addressed by next PRG meeting.