NDIA Board Meeting of 27 March 2024 - 6. Corporate Plan Key Activity 2: Improving participant experience and outcomes with a financially sustainable…
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ndis
- Comparison of market and other government schemes suggests that NDIS therapy price limits may be on par or lower for certain types of therapies.
- Support Coordination: About 61% of participants responding reported they are satisfied or very satisfied with the support from a support coordinator. Using NDIA payment data, indicative analysis suggests that the number of active providers continues to rise, largely driven by unregistered providers.
- Cancellations: Early insights suggest that providers do not necessarily use the 7-day cancellation policy, with some opting for a 24 or 48-hour cancellation policy. Around 49% participants suggesting they have different cancellation policies across supports.
Disability Support Worker Cost Model
The Model estimates the fully loaded cost of a billable hour of support considering six main factors: base pay; direct on-costs; operational overheads; corporate overheads; margin, and a temporary loading (currently 1%, set to cease on 1 July 2024).
Concerns from sector stakeholders include:
- Potential underestimation of corporate and operational overheads. Median corporate and operational overheads have increased in recent years, attributed to factors such as insurance premiums and regulatory compliance costs.
- Potential model limitations where the Model does not fully account for services or staff required by clients with higher or more specialised needs.
- Previously, price limits were set based on the ‘efficient’ level at the 25th percentile across a range of parameters. The Model was simplified from July 2022, where this assumption is no longer explicit in current publications. Current parameters have considered the 25th percentile of the available data at that time.
- Concerns were raised that this assumption is flawed and the parameters in the Model were not adequate to allow providers to recover costs.
Financial Data Sources
The NDIA previously commissioned an annual Financial Benchmarking Survey (Survey) for providers of DSW supports over a 6-year period. Data from the Survey were used to derive parameters to inform the Model. The last Survey was conducted over 2021-22. The parameters are now somewhat dated given the rising costs of living in recent years.
The NDIA has attempted to work with the sector on sector-run surveys to capture financial information of providers (Ability Roundtable and Stewart Brown).
However, these surveys do present drawbacks:
- Sample sizes of these surveys are much smaller than the previous NDIA Survey, raising concerns on representativeness. For 2022-23 benchmarking data, 55 providers benchmarked with the Ability Roundtable (11% of NDIS payments). The Stewart Brown June 2023 Survey had 51 participating organisations (percentage of payments unknown).
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6.2.2
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NDIA Board Meeting of 27 March 2024 - 6. Corporate Plan Key Activity 2: Improving participant experience and outcomes with a financially sustainable approach
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6.3.2 As current surveys are conducted by the sector, there may be a perception of bias within data collection and/or reporting and interpretation of results.
6.4 The Agency is looking into the financial health of organisations through published financial data of not-for-profit organisations (providing NDIS services), as mandated by reporting requirements to the Australian Charities and Not-for-profits Commission (ACNC).
6.4.1 Evaluating NDIS providers’ financial health with ACNC data is limited by the inability to separate NDIS from non-NDIS activities, coupled with the significant difference between for-profit and not-for-profit organisations’ financial profiles.
Considerations for APR
7.1 The true costs of service delivery incurred by providers and their financial bottom lines continue to be largely unobserved, which hinders the Agency’s ability to make informed pricing decisions. In the absence of a comprehensive financial database, the Agency does not have sufficient information as a basis for parameter change, outside minimum wage, or legislative changes, in the near term.
7.2 To manage expectations and public scrutiny, it is recommended that the Agency have a clear position through the upcoming APR to acknowledge that some assumptions within the Model were the best estimates at the time of the financial benchmarking survey data available. Since the Model was simplified in 2022, the assumption of the price limits being set at the ‘efficient’ level at the 25th percentile is no longer explicit in the current publications. Disability markets continue to show healthy growth over the last 2 years and there is no evidence to suggest that supply is not meeting demand. Business entries and exits are an important part of the business dynamism and competition, and there have not been widespread systemic exits observed in the market.
7.3 The APR recommended to explore options with the NDIS Review on mandatory financial reporting as an input to the Model, similar to the aged care sector. Continued work should be undertaken to gather more comprehensive financial information to refresh the pricing strategy. Some of these considerations could be through collaboration with the Department of Social Services (DSS) on the NDIS Review’s recommended Pricing and Payment Framework paper. Any changes will need to be explored and with IHACPA and potentially DSS as part of the proposed pricing transition.
7.4 There has also been heightened criticisms from some sector stakeholders in the pricing approach given price limits for some provider groups (therapy, support coordination and plan management) have not been increased for 4 to 5 years. However benchmarking data (in relation to therapy prices), as well as data relating to market entries and exits (across all these providers) have provided support for the decisions previously made. Early evidence suggests that the picture is less clear cut this year.
Risks
8.1 There is a reputational risk to the Agency for not having adequate financial data of providers. This further creates tension with the sector, who have been raising concerns on the costs and profitability of delivering disability supports for NDIS participants.
8.2 There is a risk of incomplete information leading to inadequate prices, and therefore supply issues and in turn, participant safety risk. Conversely, there is a risk of incomplete information leading to overly adequate prices, leading to Scheme sustainability issues.
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6.2.3
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NDIA Board Meeting of 27 March 2024 - 6. Corporate Plan Key Activity 2: Improving participant experience and outcomes with a financially sustainable…
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- Impact
9.1. The APR process and setting NDIS pricing arrangements and price limits is crucial to ensuring a sustainable provider market to deliver supports to NDIS participants.
- Responsibility and next steps
10.1. The draft APR recommendations will be presented at the 9 May 2024 Board meeting.
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6.2.4
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