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2.1.2.2. Therapy Supports
- increase for supports delivered by Psychologists on 1 July 2024 in line with the weighted movement over the previous 12 months with no increases for other therapy supports noting this will have a financial impact of $21 million in 2024-25 and $94 million over the forward estimates.
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7.2.2
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- Research and Analysis
4.1. For the purpose of the APR, a range of research, statistical analysis and pricing benchmarking has been undertaken to ensure the recommendations are comprehensive. A measure of market concentration that looks at the entry and exit of businesses was analysed which examines the level of business inactivity for DSW, therapy and support coordination.
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4.3. Analysis of private billing rates across NDIS therapy supports was undertaken to compare the NDIS prices with the private sector, including regression analyses to test the significance of pricing differences. Other Government Funding Schemes therapy pricing levels was also gathered in analysis.
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5.3. Therapy Supports
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The NDIA should increase the price limits for supports delivered by a Psychologist on 1 July 2024 in line with the weighted movement over the previous 12 months in the Australian Bureau of Statistics (ABS) Wage Price Index (Australia, total hourly rates of pay excluding bonuses) and the ABS Consumer Price Index (All Groups, weighted average of eight capital cities) over the 12 months to the March Quarter immediately preceding the indexation date (with an 80/20 weighting).
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The NDIA should not make any further structural adjustments to the pricing arrangements for therapy supports at this time and should not index the price limits for all other therapy-related supports on 1 July 2024.
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7.1. There are a number of issues with the current price models, many of which were discussed in the NDIS Review including:
a) The DSW efficient price was a strategy to incentivise operates to become more efficient. It is appropriate to consider whether this strategy is still appropriate.
b) The NDIA lacks sufficient information to make informed decisions as to the impact of the prices it sets.
c) The current price model arguably preferences extremely small businesses with low overheads. Large organisations may benefit from the prices if they are able to achieve economies of scale. However, many medium and large organisations consistently report that the efficient price which does not reflect their actual costs of overheads noting increases in insurance and regulation compliance costs. While the data that the NDIA uses does not support these claims, there is need for further work with better data to set price limits.
d) The model is complex and difficult to understand noting that there is not cost model currently for therapy, support coordination and plan management related supports.
e) The pricing does not reflect quality or outcomes.
f) There is currently little or no incentive for providers to register apart from in relation to markets where registration is compulsory. Given the NDIS Review recommendations regarding provider and workforce regulation, there is a risk that providers will not maintain their registration status.
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7.2. The NDIA remains responsible for the 2024-25 APR irrespective of any move of the pricing function to the Independent Health and Aged Care Pricing Authority (IHACPA).
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10.2. The recommendation relating to psychology results in additional expenditure of $21 million in 2024-25 and $94 million over the forward estimates. Other recommendations have relatively minor impacts on Scheme expenditure.
10.3. The impact on Scheme expenditure of the draft recommendations in this Paper (without the transitional pricing strategy for providers of last resort) is $11 million in 2024-25 and
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$59 million over the forward estimates. This estimate assumes that the Fair Work Commission National Minimum Wage (NMW) decision will be 3.75%.
10.4. Estimated Scheme expenditure is highly sensitive to the Fair Work Commission NMW decision.
10.4.1. A decision of 4.5% would add approximately $250 million for 2024-25 and $1,150 million over the forward estimates to the figures above.
10.4.2. A decision of 5.0% would add approximately $430 million for 2024-25 and $1,900 million over the forward estimates to the figures above.
10.5. It is noted that a group of provider representative organisations including National Disability Services, Alliance 20, Ability First Australia, Disability Intermediaries Australia, and Allied Health Professions Australia have requested in their Joint Statement: Pricing for a sustainable quality driven sector an immediate increase of 10% in disability support, therapy, and intermediary prices. Applying such an increase would result in an increase in approximately $3 billion in 2024-25 and $13 billion over the forward estimates.
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Attachments
Attachment A: Draft 2023-24 Annual Pricing Review Report
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1.3 Therapy supports
The Australian therapy market encompasses a wide array of services provided by allied health professionals, who are typically university-educated with specialised expertise in preventing, diagnosing, and treating various conditions and illnesses. While the NDIS forms an important part of this landscape, allied health services extend beyond NDIS funding. These services are also accessed through various other arrangements, including Medicare subsidies, private health insurance, where it is common for out-of-pocket payments to be made by the consumer, other government schemes, and the Department of Veterans Affairs (DVA).
The NDIS therapy market continues to expand significantly. In the six months to December 2023, 59% (379,296) of the total 646,449 active participants, received therapy supports through their plans. During this period, the number of providers delivering therapy supports grew to 52,736, reflecting a 14% increase from the same period in 2022. Notably, payments made to unregistered providers increased by 60%, although registered providers still received the majority of payments - 65% or $1.3 billion of total payments. This demonstrates growth in both the provider base and financial volume within the therapy sector.
The NDIS therapy market operates in a manner that closely aligns with the characteristics of a deregulated, or private market, more so than other NDIS sub-markets. These price limits are closely linked to the dynamics of the private market, ensuring that NDIS pricing remains competitive and reflective of current service costs. Accordingly, other government schemes and the private billing market serve as suitable comparators to assess the appropriateness of the NDIS price limits.
ndis.gov.au
2023-24 Annual Pricing Review
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