NDIA Accountability Project

National Disability Services Submission: NDIS Pricing Strategies and Insurance Coverage

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National Disability Services Submission:

Joint Standing Committee National Disability Insurance Scheme (NDIS) General Issues Inquiry

About National Disability Services

National Disability Services (NDS) is Australia’s peak body for non-government disability service organisations, representing more than 1100 non-government service providers. Collectively, NDS members operate several thousand services for Australians with all types of disability. NDS provides information and networking opportunities to its members and policy advice to State, Territory and Commonwealth governments. We have a diverse and vibrant membership, comprised of small, medium and larger service providers, supporting thousands of people with disability. Our members collectively provide a full range of disability services, from supported independent living and specialist disability accommodation, respite and therapy, to community access and employment. NDS is committed to improving the disability service system to ensure it better supports people with disability, their families and carers, and contributes to building a more inclusive community.

Contents

1.0 Overview …………………………………………………………………………………………………………. 3

2.0 Scope of this submission ……………………………………………………………………………….. 3

3.0 The State of the Disability Sector…………………………………………………………………….. 3

4.0 Latest survey data ………………………………………………………………………………………… 8

4.1 Price setting ………………………………………………………………………………………………….. 8

4.2 Accessing insurance products and key issues encountered ……………………………….. 13

4.3 PACE Implementation …………………………………………………………………………………. 16

4.4 Other immediate challenges in the sector ………………………………………………………… 19

5.0 Conclusion ……………………………………………………………………………………………….. 21

1.0 Overview

National Disability Services (NDS) welcomes the opportunity to make a submission to the Joint Standing Committee on the National Disability Insurance Scheme (NDIS) General Issues Inquiry.

2.0 Scope of this submission

The NDS Submission is in response to the Committee’s request for information on the implementation, performance, governance, administration, and expenditure of the NDIS (National Disability Insurance Scheme).

Considering other recent submissions that NDS has made to the Joint Standing Committee (for example to its inquiry on the Culture and Capability of the NDIA) and as part of other inquiries this submission will focus on some immediate and emerging challenges facing the disability support sector. Specifically, we will refer to:

  • Impact of the 2022-2023 Annual Price Review outcomes
  • Implementation and national roll out of the new payment system - PACE
  • Growing concerns around being able to obtain appropriate insurance coverage

3.0 The State of the Disability Sector

Navigating the NDIS can be a complex and challenging endeavour for service providers in the disability support sector. The NDIS, Australia’s greatest and most substantial reform of disability services, aims to improve service accessibility, increase choice and empower people with disabilities. Although excellent results are promised, service providers nevertheless face several operational challenges. These difficulties include adjusting to new price caps, battling the availability and cost of insurance products, adhering to the PACE implementation, and dealing with a plethora of current difficulties including workforce concerns and navigating convoluted NDIS procedures. In this submission, NDS will examine the most immediate challenges that providers of disability services encounter in the NDIS environment, highlighting the need for system reform through creative solutions and assistance to enable the effective provision of high-quality services to NDIS participants.

NDS’s State of the Disability Sector 20221 report is based on data collected from disability service providers and has been running for 9 years. Conducted in

1 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report

partnership with the Centre for Disability Research and Policy at the University of Sydney, the report is based on responses from 364 providers from every state and territory, from sole traders to large multi-state organisations, delivering a wide range of services. The latest data was collected across August and September 2022.

A key theme from the 2022 Report that characterises the experience of providers delivering NDIS services is the impact that unclear and constantly evolving operational processes and procedures have on the capacity of the sector to provide high quality supports that meet the needs of NDIS participants.2

As with previous years, the effectiveness of the National Disability Insurance Agency’s (NDIA) approach to working with providers continues to be an issue. While this has improved compared to previous years, the working relationship between providers and the NDIA is poor. Two thirds of respondents (64 per cent) disagreed or strongly disagreed that the NDIA is working well with providers (and only 11 per cent believe that they are working well).3

Figure 1: Perception of the NDIS environment - the NDIA is working well with providers

Providers continue to be concerned about the policy environment with some improvement compared to previous years. In 2022, 79 per cent thought that the NDIS policy environment was uncertain.

2 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report 3 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report

Figure 2: Perception of the NDIS environment - the NDIS policy environment is uncertain

Overall, the number of respondents who ‘agreed’ or ‘strongly agreed’ that ‘the risks that the NDIS presents to my organisation outweigh the opportunities’ sat at 30 per cent (roughly the same as the previous three years).4 Alarmingly few organisations plan to deliver new types of services in the year to come, even though many were unable to meet the demand for services over the course of the last 12 months, often due to a shortage of workers.

Providers reported that unfunded activity, such as helping people understand and navigate the Scheme, was distracting from direct service provision (together with a related concern that there was insufficient advocacy for NDIS participants). Seventy- three per cent thought that there is not sufficient advocacy for the people they support; only 14 per cent agreed. Respondents agree that helping people understand and navigate the Scheme is taking them away from service delivery.5

4 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report 5 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report

Figure 3: Perception of the NDIS environment – helping people understand and navigate the Scheme is taking us away from service provision

As indicated providers are willing to assist people to understand and engage with the NDIS however this comes at a cost which is unfunded and places additional pressure on providers already struggling to meet demand and deeply concerned about the ongoing viability.

More generally the report indicates that there is a sense of real and growing optimism about the new federal government’s NDIS reforms. High levels of pessimism in 2021 have turned into greater optimism that NDIS policy reforms are heading in the right direction in 2022. Up from 25 per cent last year (the lowest level ever recorded), 43 per cent of respondents agreed or strongly agreed that NDIS policy reforms were heading in the right direction. However, seen over a longer period, the 2022 results are returning to pre-pandemic levels, which have not been higher than 55 per cent between 2016 and 2021. Respondents continued to tell a story of frustration with administrative burdens, NDIS systems and processes, and staffing. Concern also continued that NDIS prices would not cover costs and support quality service provision.6

6 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report

Figure 4: Perception of the NDIS environment – NDIS policy reforms are heading in the right direction

Financial outlook is pessimistic

Despite the uncertainty around COVID-19, predictions in the 2021 results regarding financial outlook were quite accurate. In 2021, 45 per cent of respondents predicted they would make a profit or surplus in the 2021/22 financial year – and in the 2022 survey 46 per cent of respondents reported that they made a profit or surplus for that financial year. Similarly, in 2021, 23 per cent predicted a loss or deficit and 23 per cent did have a loss or deficit in 2022. This shows that the sector has a realistic understanding of the impact of the operating environment on financial operating conditions.

In 2021, many organisations reported concerns about the impact that ending JobKeeper would have on overall financial position. This was also borne out. The decrease from 2020/21 to 2021/22 in the number of organisations making a profit was highly statistically significant (68 per cent versus 46 per cent). For-profit organisations were more likely than not-for-profit organisations to report a profit or surplus in 2021/22 (56 per cent versus 42 per cent).

There was more pessimism about operating conditions, with 36 per cent of organisations indicating that they expect to make a loss or deficit in 2022/23, up from 23 per cent in 2021/22. As noted, historically, organisations have demonstrated high levels of accuracy in financial prediction, a record which suggests that the sector is likely to experience poor operating conditions into the immediate future. When compared with not-for-profit organisations, for-profit organisations were more likely to predict making a profit in 2022/23 (64 per cent versus 39 per cent).

Finally, the 2022 report identified that while the disability sector wants and needs more reform, it is also suffering from change fatigue. Far too many leaders have spent far too much time dealing with never-ending NDIS changes. And far too many disability workers feel exhausted by the challenge of constantly learning new systems and the complex administrative sagas that each tend to involve.

The 2022 State of the Disability Sector Report identifies several issues that are useful to consider in the context of the NDIS. The report points to clear areas where improvements can be made, in processes, communication and establishing a more positive relationship with the NDIA. Providers are facing the future with a sense of optimism about changes to come however at the same time are ‘change fatigued.’ NDS trust that the implementation of outcomes from the NDIS Review will address these issues both in an incremental and considered manner.7

4.0 Latest survey data

In response to providers’ continued concerns around financial viability, emerging issues relating to insurance coverage and apprehension around the implementation of the new NDIA PACE system, NDS released a Pulse Survey to gather the views of members. The Survey was released into the field for an 8-day period from 28 June to 5 July 2023, with 302 verified responses received.

4.1 Price setting

Current financial impact

Economic viability is a major concern for disability service providers, with many facing challenging budget situations. Day services are experiencing challenges with the shift to the new group pricing model, and some participants have chosen not to return to services after the pandemic lockdowns. Short-term measures like JobKeeper payments and one-off NDIS funding have been welcomed, but do not address the underlying multiple pressures impacting the market. Inadequate NDIS prices pose a risk not only to individual disability service providers but to the Scheme as a whole. NDS’s 2022 State of the Disability Sector8 report reflected a sector less confident in their capacity to operate within current NDIS pricing and funding approaches, with 59 per cent of providers concerned they cannot continue to provide NDIS services at current prices.

It is vital that that the NDIA ensure a vibrant market for high-quality supports but also has a strong agenda on constraining costs. Current issues surrounding insufficient

7 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report 8 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report

funding stem from Disability Support Worker Cost Model (DSWCM) inadequacies, causing inadequate coverage for high compliance costs for NDIA processes and requirements.

NDIA Annual Price Review

On 16 June 2023, the NDIA released its Annual Pricing Review (APR), announcing an average 5.3 per cent increase in price limits for 2023/24. This includes the 5.75 per cent increase to minimum award wages announced by the Fair Work Commission in May 2023. This was applied to wage elements within the price guide to supports underpinned by the DSWCM.

Although there are limited improvements in the latest APR, the average price increase of 5.3 per cent is still well below the inflation rate of seven per cent. Providers were already operating with dwindling cash reserves and on slim-to-none profit margins. As a result, we are concerned that many providers in the sector may face immediate challenges to their viability.

NDS’s submission to the APR in April 2023 highlighted significant gaps between NDIS prices and the real costs of service delivery. These included approximately:

  • 23 per cent in supported independent living (SIL) core supports
  • 20 per cent in core (non SIL) supports
  • three per cent across therapy
  • 13 per cent across early childhood intervention supports (ECIS)
  • 16 per cent for support coordination.

The average increase of 5.3 per cent for some supports, and no increases in others, clearly does not meet the needs of providers expressed in our APR submission to the NDIA.

The disability sector faces constant adaption due to changes in SIL, Home and Living, quality and safeguarding obligations, and PACE. NDS is concerned that current prices for essential supports are insufficient to cover business costs and the ability of providers to adapt to reforms from the Disability Royal Commission and NDIS Review.

Providers have been relying on short-term measures, such as the temporary loading and the temporary transformation payment, to bridge the gap. Unfortunately, these measures will be phased out entirely in 2024, which will further challenge the sector’s ability to meet the needs of participants.

The APR reports significant growth across the sector in support coordination and plan management. It notes that the number of participants with support coordination

9 National Disability Insurance Agency (2023) Victoria, 2022-23 Annual Pricing Review Report, accessed 4 August 2023, https://www.ndis.gov.au/providers/pricing-arrangements/making-pricing- decisions/annual-pricing-review

have increased by 4.5 per cent each quarter over the past two years (36 per cent), while unique providers delivering support coordination supports has increased by 24 per cent. Over the same period, the use of plan managers by NDIS participants has increased from 45 to 58 per cent, while the number of plan managers has increased from 1098 to 1797 (61 per cent).9

Consequently, since both participants and providers are growing, the Agency concludes that this market is still viable at current pricing.

In summary, the APR recommends:

  • that Level one support coordination will be indexed in line with the indexation of supports determined by the DSWCM
  • not indexing the price limits for the Level two: Coordination of Supports services and Level three: Specialist Support Coordination services on 1 July 2023
  • not indexing the price limits for plan management supports and fees.

Freezing price limits for support coordination and plan management yet again does not account for the actual costs that these providers incur. Costs are already high, and inflation is making them worse.

The NDIA’s price freeze also does not reflect other factors driving up costs, such as changes to practice standards, the introduction of portable long service leave programs, the rollout of the new PACE system and the drive to increase quality.

The NDIA’s decision is insufficient for support coordinators and plan managers, potentially causing quality registered providers to leave the market, reducing NDIS participant support availability.

NDS believes the recent pricing review missed an opportunity to prepare providers for the NDIS Review and Royal Commission recommendations. If the unfunded gap remains significant, and if NDIS pricing does not increase above wage inflation, it will continue to worsen market failure and support quality.

What are our members’ saying?

In our recent Pulse Survey, 83 per cent of respondents stated that they were concerned about their organisation’s ability to deliver disability services using the

9 National Disability Insurance Agency (2023) Victoria, 2022-23 Annual Pricing Review Report, accessed 4 August 2023, https://www.ndis.gov.au/providers/pricing-arrangements/making-pricing-decisions/annual-pricing-review

new price limits. While only nine per cent were not concerned about their organisation’s ability to delivery disability services using the new price limits.

Figure 6: Concern regarding ability to deliver disability services using the new price limits in the next financial year (n=302)

Of the 251 respondents who expressed their concern about the delivery of disability services using the new price limits, we received 203 qualitative responses summarised into key themes:

  • Financial & pricing viability (50 per cent)
  • Support Coordination/Plan Manager (20 per cent)
  • SCHADS/wages (18 per cent)
  • Allied health (two per cent)
  • Insurance costs (two per cent)
  • PACE (two per cent)
  • Other (two per cent)

The commentary highlights concern about support coordination and plan management using new pricing. The lack of price increase for four years and rising costs of service delivery and compliance may cause some organisations to cease operations. While many organisations predict financial losses and financial viability due to the increase in the SCHADS award, only 9 per cent respondents were not concerned about their organization’s ability to deliver disability services using the new price limits, citing their operational strategy as the reason.

In conclusion, the NDIA’s Annual Pricing Review has failed to address the significant gap between NDIS prices and the real costs of service delivery. As a result, many providers in the sector may face immediate challenges to their viability.

NDS urges the NDIA to reconsider its decision and to increase prices to reflect the real costs of service delivery. This is essential to ensure the sustainability of the disability sector and to protect the quality of supports for NDIS participants.

Recommendation: NDS is calling for an out-of-cycle pricing update, for NDIS prices to be independently set, and for prices that meet the true costs of delivering essential services to people with disability.

Independent price setting is important for the NDIS because it ensures that the prices of supports are transparent, fair and reflect the real costs of service delivery. A mechanism like the Independent Health and Aged Care Pricing Authority (IHACPA) that supports responsive pricing with the aim of achieving sustainable and efficient services is required.

Funding for disability support must be based on objective, independent advice, and rely on informed consumers. A market-based approach requires informed consumers and a nuanced approach for thin markets, considering unique market characteristics and sustainability of ongoing support provision. Individualised approaches may lead to fragmentation and poorer outcomes for participants with complex needs and remote providers.

In addition to ensuring the sustainability of the disability sector and the quality of supports for NDIS participants, independent price setting also has several other benefits, including ensuring that there is a competitive market for disability supports, ensuring that prices are transparent and fair, and ensuring that the NDIS is responsive to the needs of NDIS participants and providers.

Overall, independent price setting is an important improvement to the NDIS that must be considered to ensure the success of the scheme and sustainability of the sector.

The following are examples of how greater transparency, use of sector data, and independent price setting and monitoring could benefit the NDIS:

  • Greater transparency would allow providers to better understand the factors for setting prices, helping them make more informed decisions about their costs and business models.
  • Use of sector data would allow the NDIA to better understand the costs of providing NDIS supports. This would help them set prices that reflect the true costs of providing these supports.
  • Independent price setting and monitoring would help ensure that the price setting process is fair and transparent. This would help to build confidence in NDIS pricing and support ongoing investment in the sector.

NDS proposes efficient and effective changes to the NDIS pricing system, benefiting providers and participants while ensuring high-quality supports for people with disabilities through the NDIS.

4.2 Accessing insurance products and key issues encountered

The high cost of premiums, the difficulty of getting approved for coverage, and the lack of understanding about the NDIS among insurers are all making it difficult for support organisations to access insurance products.

This is a major challenge for disability service organisations, as they often rely on insurance as part of their risk management frameworks. For registered NDIS providers, maintaining appropriate insurance coverage is an obligation under the NDIS Practice Standards and is of course good practice for all providers.

The lack of affordable insurance options has negatively impacted providers’ financial viability and sustainability. The market for physical and sexual abuse (PSA) insurance coverage has been significantly impacted by Royal Commissions into Institutional Response to Child Sexual Abuse, Aged Care Quality and Safety, Violence, Abuse, Neglect and Exploitation of People with a Disability, and the National Redress Scheme. As a result, many insurers have withdrawn or restricted coverage, affecting disability service providers. Policy terms may be inconsistent with NDIS funding approaches, for example, providers of SIL supports being told they can only obtain PSA insurance if two staff members are rostered overnight, which is often not covered in participant budgets.

The general insurance market is in a ‘hard market’ cycle, characterised by increased Pricing, reduced insurer capacity, restricted coverage options, increased deductibles, and additional underwriting scrutiny. This global market cycle is fuelled by natural disasters, challenging interest rates and inflationary environments, and emerging risks driving up claims costs.

What PSA coverage is available?

Over the past five years, insurers offering PSA insurance have decreased across various care sectors, including education, childcare, and disability supports. Many insurers have withdrawn, leaving only a few willing to provide cover for disability services. Those remaining offer PSA cover under claims-made policies with limited retrospective or retroactive coverage. This change is driven by the actual and forecast claims experience of insurers providing this coverage, which is considered ‘long-tail’. This ‘long-tail’ nature of the cover has put insurers on notice for future liabilities, as seen in the National Redress Scheme response to Royal Commission recommendations. Many claimants have taken their claims to civil courts, which is expected to increase claims costs for insurers.

What are our members’ saying?

Worryingly, 32% of respondents (79 organisations) had trouble accessing the insurance required to run their disability services in the last 12 months. Fifty-nine per cent (n=147) did not have problems accessing insurance for their disability services.

Figure 6: Accessing insurance to run disability service operations (n=250)

The commentary obtained from the 32% of respondents who have encountered problems accessing insurance services provides a real insight into the issues faced by NDS members. Not only the cost of insurance premiums becoming prohibitive but also the requirements being set by insurers. Numerous examples around the inability to get insurance around PSA coverage have been cited. Other advised insurance products such cyber security represent another issue, with the cost of these products being a barrier.

Several respondents state the inability to obtain insurance may result in their organisation not providing services going forward. Key issues faced when trying to access insurance products included:

  • PSA (46 per cent)
  • Cost of insurance (25 percent)
  • General (six per cent)
  • SIL/SDA (six per cent)
  • Workers Compensation (six per cent)
  • Accommodation/respite (four per cent)
  • Cyber security (four per cent)
  • Other (three per cent)

The challenges faced by disability service organisations in accessing insurance products have had significant implications for their financial viability and sustainability. The high cost of premiums, difficulties in obtaining coverage, and a lack of understanding about the NDIS among insurers have created barriers. Additionally, the impact of various Royal Commissions and the global ‘hard market’ cycle have further exacerbated the limited availability of suitable insurance options. As a result, many providers are struggling to secure appropriate coverage, leading to potential constraints on their ability to deliver essential services in the future.

Amid these challenges, NDS remains committed to advocating for fair and appropriate insurance coverage for disability-related risks. Through engagement with policymakers and insurance regulators, NDS aims to raise awareness about the specific challenges faced by the disability sector. By fostering a more supportive insurance landscape, NDS seeks to address the issues surrounding PSA coverage and other insurance products essential for disability service organisations. As the disability sector continues to evolve, collaboration and advocacy efforts are essential to ensure that providers can access the insurance protection necessary to fulfill their vital roles in supporting individuals with disability.

Recommendation: Government should work with the provider and insurance sector to help broker solutions to issues that are making it difficult for disability support organisations to access insurance products.

Solutions could include for example:

  • Collaboration and Education: To enhance insurers’ understanding of the NDIS and the unique needs of disability service organisations, there should be increased collaboration between insurers and relevant industry stakeholders. Regular workshops, forums, and educational sessions could be organised to foster dialogue and knowledge exchange, helping insurers gain insights into the sector’s complexities and risks.
  • Government Incentives: The government can play a pivotal role in addressing the high cost of premiums by introducing incentives for insurers to provide affordable and comprehensive insurance options. Initiatives such as subsidies or tax concessions for insurers offering coverage to disability service organisations could encourage more companies to enter or remain in the market.
  • Risk Mitigation Strategies: Disability service organisations should work collaboratively with insurers to develop risk mitigation strategies. By implementing best practices and demonstrating effective risk management, providers can potentially lower their insurance premiums and increase their insurability.
  • Diversification of Coverage Options: Encouraging insurers to diversify their coverage options could provide disability service organisations with more

tailored and flexible insurance solutions. Insurers could consider developing specialised packages that address the unique needs of disability service providers, including tailored PSA coverage.

  • Data Sharing and Analysis: Collaborative data-sharing initiatives between disability service organizations and insurers can help identify trends, risks, and best practices. Such insights could lead to better underwriting and pricing strategies, benefiting both insurers and disability service providers.
  • Reviewing Claims-Made Policies: The current trend of offering PSA coverage under claims-made policies with limited retrospective or retroactive coverage may create uncertainties for disability service organisations. A comprehensive review of these policies could be conducted to explore more suitable alternatives that provide better long-term protection and stability for both parties. There have also been significant increases in WorkCover Costs in certain jurisdictions

4.3 PACE Implementation

The NDIS are currently introducing a new computer system to replace the current SAP Customer Relationship Management (CRM) system. The new computer system is known as PACE.

PACE is one of the key deliverables for the Participant, Platform and Process improvements initiative (3P). 3P is the NDIA’s strategy to improve the client experience. It responds to recommendations from the Tune Review, Early Childhood Early Intervention (ECEI) Reset, Joint Standing Committee on NDIS and policy direction from the Disability Reform Ministers Meetings. 3P includes the redesigning of process and systems to increase consistency in decision making and improve communications with participants.

Since June 2022, the NDIS has been testing PACE with NDIA staff, Partners in the Community (NDIS partners) and providers nationally, prior to the Tasmania trial.

The NDIA has announced that the National roll out of PACE will commence in September 2023. The trial taking place in Tasmania began in November 2022 and involved responses from general provider, plan manager, and support coordinator working groups. The PACE advisory group is identifying key improvements before the system rolls out in September. The NDIA has made several improvements to PACE, including ‘ring fencing’ funding in a participant’s plan for Home and Living Supports, improved communications, adjusting language and processes such as replacing Participant-Endorsed Provider (PEP) with My Provider, and better plan visibility.

Key Issues for implementation

Proposed additional validation required by participants has negatively impacted revenue assurance for service providers, with invoices taking up to 10 days for approval. This delay has significant financial impact, as providers can only see a participant’s goals and not allocate funding to a category. This lack of budget information and increased possibilities of overspending or using funds not in line with approved supports have led to disruptions in revenue flow. Delays in payments and potential overspending of allocated funds have further impacted service providers’ ability to receive funds for services provided in good faith.

The My NDIS provider portal and tools have been criticised for creating significant administrative burdens for providers, including understanding the new system and training staff. The NDIA has created guides on using PACE on their website, but in- house training and changes remain significant and unfunded. The new My NDIS portal should be accessible to all participants, including those with specific communication requirements, reduced digital literacy or access, or those from a CALD background. Participants must be supported to adjust to the new system, as they risk missing out on essential services and being exposed to fraud.

The Tasmanian trial highlighted the need for PACE to be trialled with a broader range of participants to ensure it works for the most vulnerable participants it seeks to support. Provider feedback has been raised with the NDIA, but the introduction of PACE appears to conflict with 3P, which aims to free up Agency capacity for individual follow-up of participants.

What are our members’ saying?

Fifty-nine per cent of respondents (n=142) expressed concern about the capacity of their organisation to adapt to this new system. Six per cent (n=15) of respondents were not aware of the new payment system PACE.

Figure 7: Concern about capacity to adapt to the new PACE payment system (n=242)

The key theme from the commentary is that providers want and need more information about the implementation of PACE. There is concern about the cost of implementing a new IT system (including training) on already limited budgets. Respondents expressed concern that the new system may result in delayed payments, as previously experienced with PRODA roll out.

Providers were clear in what support and assistance they require to adapt to PACE, including:

  • More information required (34 per cent)
  • Admin burden/cost of implementation (27 per cent)
  • Implementation concerns (27 per cent)
  • Training (12 per cent)

The introduction of the PACE computer system by the NDIS represents a significant step towards improving the client experience and streamlining processes. While the implementation of PACE is not fundamentally changing the way the NDIS operates, it aims to enhance the payment enquiry system and communication with participants and providers. The ongoing trial in Tasmania has provided valuable insights and identified key improvements before the national rollout commences in October 2023. However, there are some key issues for implementation that need to be addressed to ensure a successful transition. The proposed additional validation required by participants has negatively impacted service providers’ revenue assurance, leading to delayed payments and potential budget disruptions. Moreover, the My NDIS provider portal and tools have created administrative burdens for providers, necessitating better support and training. Feedback from providers emphasises the need for more information and assistance in adapting to the new system. As the

NDIS moves forward with PACE, it is crucial to address these challenges and ensure that the system works effectively for all participants and providers, ultimately fulfilling the goals of the 3P initiative and improving the overall NDIS experience for everyone involved.

Recommendation: Appropriate support for the successful implementation of the new PACE system to optimise its impact and efficacy

The introduction of the new PACE system brings about significant advancements in the NDIS, improving the quality of service the NDIS delivers to participants and providers and ensuring NDIA staff and NDIS partners work the same way everywhere in Australia, making consistent decisions. However, for this initiative to achieve its full potential, it is imperative to equip providers with the necessary resources and assistance.

To accomplish this, NDS proposes the implementation of three vital support mechanisms:

  • Comprehensive Training: A well-structured training program is essential to empower providers with a clear understanding of the PACE system’s functionalities and processes. This training should cover all relevant aspects, including navigating the platform, accessing vital information, and adhering to best practices.
  • Real-time Support: Ensuring real-time support for providers during the initial stages of PACE implementation is crucial. This support can be in the form of help desks, dedicated hotlines, or online support channels, enabling prompt resolution of queries and challenges as they arise.
  • Additional Implementation Funding: Adequate financial resources are instrumental in driving successful implementation. By allocating supplementary funding specifically for the integration of the PACE system, the NDIA can assist providers in mitigating any financial burden and further motivating their active participation. As PACE rolls out providers will be forced to engage with two different systems, an issue and inefficiency for organisations. Employees of providers will need to be proficient at dual systems.

By implementing these support measures, the NDIA can foster a conducive environment where providers can embrace the new PACE system confidently, unlocking its full potential to streamline administrative processes.

4.4 Other immediate challenges in the sector

The Pulse Survey identified several other key challenges in the sector which providers are facing. The data set reveals immediate challenges faced by members in their organisation’s operations, including registered/unregistered providers, registration costs, staff poaching, delays in provider registration, financial viability due to rising costs, and constant sector change, causing staff burnout.

Other immediate challenges faced by organisations affecting the viability of operations include

  • Financial & pricing viability (21 per cent)
  • NDIS/NDIA (15 per cent)
  • Workforce (15 per cent)
  • Registered/unregistered (11 per cent)
  • Admin burden (8 per cent)
  • SCHADS/Wages (7 per cent)
  • Support Coordination/Plan Manager (7 per cent)
  • SIL (5 per cent)
  • PACE implementation (3 per cent)
  • Other (8 per cent)

The disability support sector faces numerous challenges that need to be addressed.

  • Funding Uncertainty: Disability service organisations often face funding uncertainties due to changes in government policies and budget allocations. Adequate and consistent funding is crucial for organisations to deliver quality services and support to participants.
  • Workforce Shortages: There is a significant demand for disability support workers, leading to workforce shortages. Attracting and retaining skilled and qualified staff remains a challenge, especially in remote or under-served areas and for specific services such as those delivered by allied health professionals and behaviour support clinicians. The 2022 NDS State of the Disability Sector Report has seen a significant decline in workforce recruitment and retention, with many categories worsening. Recruiting allied health clinicians, occupational therapists, psychologists, and physiotherapists remains a significant challenge. Limited applications and bureaucratic burdens hinder international candidate employment. Disability support workers face challenges in identifying and recruiting suitable candidates, and current pay rates do not accurately reflect their complexity.10
  • Compliance and Quality Standards: NDIS providers are required to meet certain compliance and quality standards and there is significant duplication of reporting to national and state and territory regulatory systems. Ensuring ongoing compliance and maintaining high-quality services can be complex, resource and cost intensive, and time-consuming for organisations.
  • Administrative Burden: Navigating the NDIS system, including participant plans, payments, and reporting, can be administratively burdensome for service providers, diverting resources from direct support provision.

10 National Disability Services (2022) Victoria, State of the Disability Sector 2022, accessed 1 December 2022, https://www.nds.org.au/about/state-of-the-disability-sector-report

  • NDIS Pricing Structure: The pricing structure of the NDIS has been a matter of contention, with concerns about pricing not keeping up with the actual cost of delivering services, leading to financial strain for service providers. Similarly, the cost and pricing models used by the NDIS include little allowance for training, support and supervision. Funding training and supervision for the disability workforce outside of a NDIS participant’s plan needs to be considered
  • Plan Flexibility: Some organisations face challenges in negotiating flexible and reasonable NDIS plans for participants, which may result in limitations in meeting individual needs and goals adequately.
  • Coordination and Collaboration: Effective coordination and collaboration between different stakeholders, including participants, families, service providers, and government agencies, are essential for the successful implementation of the NDIS.

It is important to note that the disability support sector is dynamic, and new challenges continue to emerge. Additionally, specific challenges can vary based on regional and organisational contexts. Organisations in the NDIS continuously work to address these challenges to improve the support and services provided to participants and ensure a more inclusive and accessible disability support sector.

5.0 Conclusion

The implementation of the NDIS has been a significant step forward in supporting many people with disability. Whilst not perfect, the introduction of individualised funding plans has allowed for greater flexibility and choice in accessing services and supports tailored to each person’s unique needs.

In terms of performance, the NDIS has undoubtedly made a positive impact on the lives of many participants, enabling them to lead more independent and fulfilling lives. However, there have been challenges, particularly in ensuring timely access to services and addressing the varying levels of demand across different regions and for specific groups of participants such as those from First Nations communities.

The recent Pulse Survey conducted by NDS has shed light on critical challenges faced by disability service providers in the NDIS sector. Financial viability remains a significant concern, driven by inadequate NDIS prices, compliance costs, and challenges in adapting to the new NDIA PACE system. The recent NDIA Annual Price Review failed to address the substantial gap between NDIS prices and the real costs of service delivery, posing immediate viability challenges for many providers.

Disability service organisations face challenges in accessing affordable insurance options due to high premiums, limited coverage, and insurers’ lack of understanding

about the NDIS. The current ‘hard market’ cycle and Royal Commissions complicate the insurance landscape, impacting the availability and cost of insurance products.

The NDIA’s PACE computer system aims to improve payment processes and communication, but providers express concerns about its impact. Challenges include delayed payments, administrative burdens, and information and support needs. The sector faces funding uncertainty, workforce shortages, compliance, quality standards, administrative burdens, and plan flexibility. Collaborative efforts between stakeholders are needed to ensure the success of the NDIS and provide high-quality support to participants.

NDS urges the NDIA to reconsider its pricing strategies, adopt independent price setting mechanisms, and collaborate with insurers to provide fair and accessible insurance coverage for disability service organizations. Moreover, enhanced transparency, data sharing, and risk mitigation strategies can further support the disability sector.

Addressing these challenges and advocating for fair pricing and insurance options are crucial to ensuring the sustainability and quality of services in the disability support sector. By working together, stakeholders can create a more inclusive and efficient NDIS, fulfilling its vision of empowering individuals with disabilities and enhancing their quality of life.

Contact: Laurie Leigh

    CEO

         National Disability Services

        August 2023