General issues around the implementation and performance of the NDIS Submission 76

Joint Standing Committee: Transitional arrangements

roundtable BRIEFING February 2019

The Victorian Healthcare Association is the peak body supporting Victoria’s public health services to deliver high-quality care. Established in 1938, the VHA represents the $19.4b Victorian public healthcare sector including public hospitals and community health services.

The VHA provides exceptional access, influence and scope for a unified advocacy and policy development voice to state and federal governments and other key stakeholders.

In addition, the VHA supports its members with the implementation of major system reform and strategic business support and provides networking opportunities through topical and informative events on vital issues.

Public sector provision of disability services in Victoria

In Victoria the public sector delivers approximately 15 per cent of registered disability services. While not every hospital, health service, or community health service in Victoria is registered to provide every support under the NDIS, when the sector is looked at as a whole, the public sector is registered to deliver the full spectrum of NDIS supports.

Public hospitals, health services and community health services delivering these services have a considerable footprint in regional and rural areas (traditionally areas of lower demand) and often provide services to people living with high and complex needs. In many cases they are the only provider for vulnerable people, as such they act as a safety net for Victorians who may otherwise struggle to access services that meet their needs in, or near, their homes, families and communities.

This document

This document responds to key priority areas, as identified by the Joint Standing Committee as relevant to public sector providers of aged care in Victoria, including:

the interface with the health system
the issue of Maintaining Critical Supports (Provider of Last Resort)
emerging service gaps

Interface with the health system

People access services from a range of sectors across their life span. It is also common for people to receive multiple services from multiple systems at the same time. It has been stated that the capacity of the NDIS to interface effectively with mainstream services is critical to ensuring good outcomes for participants and the long-term financial sustainability of the scheme.

To prevent people ‘falling through the gaps’, an effective interface between the disability and health systems is crucial, however, coordination between the two sectors continues to be a key issue.

The NDIS intersects with the health system on a number of levels, including:

NDIS participants will continue to require clinical treatment, health and rehabilitation services
healthcare providers will have an important role in assisting people to navigate information and support their access to the NDIS
many healthcare providers may also decide to become NDIS providers.

Despite this clear overlap, the roll-out of the NDIS has, in some cases, created artificial barriers between ‘health’ and ‘disability’ needs, which actively work against the provision of integrated and holistic care.

The delineation between the services to be provided by the NDIS and those provided by mainstream services has not been made sufficiently clear. At times the negotiations of these service splits between the state government and the NDIA have left providers grappling with undefined boundaries during a fast-paced rollout.

In May 2018, the VHA met with the Scheme Policy Branch of the National Disability Insurance Agency (NDIA), which is responsible for working through the challenges associated with the interface between mainstream systems and the NDIS. At this meeting the VHA, on behalf of members, raised concern regarding the interface between the NDIS and the health system.

The VHA has been working closely with members to understand the interface issues the sector is experiencing with the NDIS. Feedback received so far includes:

the interface is not clearly defined
the distinction between health and disability is problematic
the application of the Council of Australian Government (COAG) health applied principles have been inconsistent.

As a consequence of the interface issues, the sector is already seeing service gaps emerging as well as a lack of capacity in the HACC Program for Younger People to support Victorians who are both ineligible and eligible for the NDIS.

In response to the VHA’s concerns, it is acknowledged that the NDIA has advised it is working closely with jurisdictions and the Department of Social Services on health interface issues through the Senior Officials Working Group (SOWG) and COAG to clarify responsibilities determined in the COAG health applied principles. These parties aim to provide a framework that ensures a seamless experience for NDIS participants when transitioning in and out of the health system. They have noted they understand that a framework is crucial for ensuring consistent planning across the board, positive participant experiences and essential continuity of care.

To date, the VHA has not received further information regarding the progress of this work.

Recommendations:

that a mechanism to monitor the impacts of the NDIS on health services and to address interface concerns between all levels of government and relevant sector stakeholders is established
that a co-designed strategy to address the needs of consumers and organisations across the health, aged, community and disability care sectors to ensure the interfaces between these sectors support better patient outcomes is developed and fully funded
that health services are provided with a clear framework for navigating the health-disability interface by COAG.

Emerging service gaps

Psychosocial disability

More than 120,000 Victorians are unable to access the mental health care they need due to the reduction in mental health funding,¹ most apparent in the decline of community mental health services, where funds have been diverted to the National Disability Insurance Scheme (NDIS). The Productivity Commission estimates that only 60,000 of the 489,000 people living with serious mental illness in Australia would be eligible for support through the NDIS.² Registered community health services in Victoria are subsidising shortfalls by engaging in unpaid work in order to support participants and those attempting access to prepare for the NDIS, in the following areas:

preparation for engagement with the scheme
support for people with psychosocial disability before and during planning and review meetings with the NDIS
engaging hard to reach groups (such as people who are homeless or geographically isolated) or groups with special requirements (such as indigenous communities, culturally and linguistically diverse communities).

This is unsustainable for these organisations, which have been forced to make a significant number of redundancies of qualified mental health workers, and is resulting in poorer outcomes for participants and people hoping to access the NDIS. Mass redundancies of qualified mental health staff are underway in Victoria with 300 plus qualified workers given notice since December 2017.³ These qualified and experienced workers are being replaced by inexperienced and under-qualified workers with no mental health training, creating safety issues for workers and participants.

1 Australian Institute of Health and Welfare 2 Source: http://www.pc.gov.au/inquiries/completed/disability-support/report/37-disability-support-appendixm.pdf 3 Mental Health Victoria, Saving lives, saving money: A case for better investment in Victorian Mental Health, June 2018, available at: https://www.mhvic.org.au/images/PDF/Policy/FINAL Saving Lives Money Brochure HR.pdf

The VHA considers that both the state and federal governments must work together to find solutions to this issue, and not shift or relinquish responsibility.

The NDIS will provide disability supports, not mental health services. It is unclear how the mental health needs of NDIS participants will be met. Failure to invest will translate into more mental health emergency department admissions, up 19 per cent for the two year period ending December 2017, creating more stress on health and ambulance services, and the justice system.

Recommendations

that the NDIA works to minimise barriers to access that may be caused by the scheme’s eligibility criteria
that an accountability framework for an all-inclusive mental health service system, outlining State and Commonwealth responsibilities and linking with the broader health and community support service system has been created.

The issue of maintaining critical supports (provider of last resort)

It is broadly acknowledged that in regional and rural areas there is high potential for market failure, defined where services and supports are not available for purchase by NDIS participants. Any geographic area where the population is disparate and demand for services is not sufficient to support a monopoly provider will drive significant gaps in services and supports for participants. This is defined as a ‘thin market’. Fee for service pricing is creating complex challenges in thin markets for providers to achieve sustainability and viability for many NDIS services.

Assistance with daily personal activities

The VHA understands that in Victoria three of the 79 local councils have registered to deliver NDIS supports, with only two of these having accepted any new clients since transitioning to the NDIS. This poses a significant risk for the ongoing delivery of services aimed at supporting a participant to live as independently as possible at home, and in the community.

The decision of local councils to withdraw from the delivery of NDIS supports is placing a significant amount of pressure on health services and registered community health services, particularly in regional and rural areas, to deliver assistance with daily living supports, a range of supports not traditionally delivered by these organisations.

This will also have ramifications for the workforce currently employed by local councils in Victoria and delivering assistance with daily living supports.

Therapy supports

There is growing concern and conjecture in the sector around the viability of NDIS services under the NDIA funding model. The VHA undertook an evidence-based assessment that:

reviewed the transition of the HACC Program for Younger People participants to the NDIS in Victoria
identified ‘at risk’ regional and rural areas in Victoria that may become ‘thin markets’ under the transition to the NDIS.

The project was completed in two parts, part one a systematic gap analysis of the two programs, HACC PYP and the NDIS, and part two the development of an economic model to identify sustainability of individual providers and the service coverage.

Part one of the assessment included:

a literature review highlighting the challenges that providers and participants have reported in their transition to date between the two programs
a review of the funding and service gaps likely to arise from the differences in purpose and scope of the two programs and discuss the differences in implications of service delivery
consideration of the impacts on the provision of services, and how health services are managing issues related to the interface between NDIA-funded support services and legacy state-funded health services.

Part two of the assessment aimed to challenge the NDIS pricing structure and how it is applied from a ‘break-even’ perspective which enabled the identification of geographic locations where ‘thin markets’ are at risk of evolving under the NDIS.

The specific market and program in scope for this project is rural and regional Victorian allied health services under the Home and Community Care Program for Young People (HACC PYP) including:

speech pathology
physiotherapy
psychology (counselling)
occupational therapy
dietetics
podiatry
exercise physiology.4

The modelling analysis conducted for this project has provided conclusive evidence that NDIS allied health services in Victorian regional and rural small towns will incur market failure, and compromise the viability of small rural health services (SRHS), multi-purpose services (MPS) and community health services in these same towns. Larger towns and metropolitan Melbourne will face significant operational challenges and pressures to meet the efficiency requirements. Larger towns are likely to see consolidation of services into monopoly markets.

The key findings from the analysis were:

4 Exercise Physiology is an allied health service provided by the NDIS, but not currently provided by HACC PYP.

No small town (with population fewer than 10,000 people) service provider was able to ‘break-even’ on any NDIS market scenario. While NDIS services may contribute to cost recovery activities and provide necessary volume in small towns, any contribution NDIS services make to a small rural health service’s business will be at a financial loss to the health service. The diversity of allied health disciplines is likely to be reduced.
Large towns such as Geelong, Albury, Shepparton, Wangaratta and Ballarat will struggle to offer a choice of service providers, being ‘natural monopoly’ markets. Breaking even in these markets will only be possible if substantial improvements to efficiency are delivered.
Metropolitan Melbourne is the only Victorian market area that has the sufficient size or scale to support a competitive market. The current travel reimbursement framework advantages providers with multiple locations, and disadvantages or limits the coverage area in which travel can be reimbursed.

The two underlying structural market issues impacting provider viability in ‘thin markets’ are:

limited number of potential NDIS clients in the market geography/ coverage area to achieve the volume or scale required to be sustainable or viable within the NDIS price controls, given the locality and employer obligations
providers who are sustainable within the town itself, but are unable to provide services to a broader coverage area without incurring financial losses – the remote and very remote price loadings incorporated in the NDIS price controls and the current transport reimbursement arrangements are not sufficient to fund a viable service.

Recommendations

To ensure the continuation of a wide range of services that are reflective of consumer need, protections must be in place to allow public providers and smaller, niche services the opportunity to participate and contribute to a diverse marketplace. The VHA has recommended that the NDIA develop a market strategy for managing natural monopoly markets, including for the delivery of NDIA allied health services, in regional and rural areas that considers:

funding sustainable NDIS allied health services within the context of the broader health infrastructure of small rural health services and multipurpose services, where they are the sole provider of allied health services in that market.
benchmarking provider efficiency in a remote and rural service environment, and including allowances for increased overheads and employment costs as compensation and acknowledgement for lack of scale
developing a purpose-built NDIS geographic classification based on service coverage areas, mapping geographic classifications based on participant population and coverage, so appropriate loadings can be applied to the price controls.
- The Modified Monash Model currently used is not detailed enough to support the principles of the efficient price model. Because the NDIA know how many total

service hours they are allocating in a given geographic area, it should be possible to base this analysis on actual data as the scheme matures.

developing a set of principles that will guide decision making for transport arrangements and funding that balances the NDIS goals of ‘reasonable and necessary’ with ‘choice and control’, and that also supports provider sustainability. For example, travel reimbursements influence the development of certain types of provider business models.
developing a set of principles outlining a standard of allied health service access in small towns:
- The current funding arrangements will support one allied health full time equivalent (FTE) in one discipline (such as speech pathology or occupational therapy) in very small towns, so facilitating access to a diversity of allied health disciplines will be critical to improving participant access to supports, improving plan utilisation and spends.

For more information, contact:

Emma Liepa Director of Policy and Strategy

Ali Georgalas Advisor, Policy and Advocacy