Alliance20 Submission to the Inquiry into the Administration of the National

Disability Insurance Scheme – Parliament of Australia

Alliance20 is made up of many of Australia’s largest disability service providers. Alliance20 organisations support well over 125,000 participants, many with intellectual disability and high and complex support needs. Alliance20 organisations provide a range of specialist supports such as Supported Independent Living (SIL), complex therapy and Support Coordination, skills building, and other services.

Whilst the National Disability Insurance Agency (NDIA) is attempting to fulfill its responsibilities in relation to the management of financial sustainability risks and claimant and provider compliance with National Disability Insurance Scheme (NDIS) claim requirements, and the monitoring, measurement and reporting of NDIA performance, it is doing so without a clear transparent plan on the areas it is working on to address financial sustainability risks, the future market and appropriate oversight over the vast majority of providers or other aspects of the scheme.

Alliance20 members indicate that:

1. The current approach to NDIS pricing does not best serve the delivery of good participant outcomes, higher quality services, or sustainable disability provider markets.
2. It considers the NDIA’s role in setting prices for services and supports to be in direct conflict with its responsibility to manage the scheme and reduce overall scheme costs. The current pricing approach disregards the cost pressures in the market, as demonstrated in past annual pricing review consultations.
3. The current pricing approach undermines the market stewardship required for a sustainable market of quality supports that safeguard scheme participants.
4. It supports the establishment of an Independent Pricing Authority separate from the NDIA as recommended by the NDIS review.
5. It supports a differential pricing approach for quality, registered providers - per the NDIS review recommendations - that enables participants to exercise greater choice and control by distinguishing quality of service based on registration requirements, particularly for more complex supports. This is discussed later in this submission.
6. The current pricing approach has placed registered therapy and support coordination providers under stress, undermining the sustainability of this segment of the disability sector. These providers have not received any CPI increase for several years.

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7. The current planning approach inadvertently disadvantages participants with complex needs. The NDIA has progressively reduced funding from high intensity to standard funding as a means of saving money. Members have reported a reduction in the proportion of clients funded at high intensity level from 60% in 2018 to 20% in 2025 despite no concomitant reduction in participant needs. The NDIA does not pro-actively collect sufficient information on the needs of these participants with complex behavioural, intellectual or medical needs. Standardised pricing at which many participants with complex needs are now funded, inadequately recognises the true cost of complex support, including the higher resource demands, time and effort, and staff training and qualifications. The result is that the NDIA is funding Unsafe Plans for many participants with high and complex behavioural, intellectual or medical needs.

The context of the current operating conditions is equally important, and we make several points below. We believe these issues must be considered as the pricing approach has a significant impact on ensuring the provision of quality and appropriate supports for participants in the NDIS and future operations of the scheme:

• The existing segmentation of supports in participants’ plans promotes fragmentation and a lack of transparency, making it challenging for support to be well coordinated and complementary.
• The current pricing approach does not adequately recognise the cost of service provision, compliance, and alignment with industrial instruments and does not provide any incentive or reward for quality and safety; in fact, the current approach incentivises low-quality services.
• The NDIS is a highly controlled market, and adjustments in pricing do not adequately reflect changes in the market, such as salary and other cost increases. The Disability Support Worker (DSW) cost model, which provides the basis for setting prices, is not fit for purpose and should be replaced.
• Registration requirements should provide a basis for price differential. It is believed that there are over 260,000 providers in the NDIS with only 16,000 registered providers. Even if the current SIL providers become registered by 30 June, as is now required, the proportion of NDIS providers who are registered will remain very small. Unregistered providers and Sole Traders are mostly claiming the same price as registered providers with many of those providers profiteering from the scheme. The NDIA and the NDIS Quality and Safeguards Commission have almost no oversight over most providers.
• Whilst the pricing model continues to be a significant concern, application of the Pricing Arrangements and Price Limits by agency planners varies and lacks

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clarity; clear guidance on how pricing is applied and planning decisions are made is essential to support participants and their supports as well as providers.

• Increased costs and pressures are experienced due to the lack of predictability in the release of annual updates to pricing. Organisations are unable to budget effectively, plan and effectively update systems, analyse changes, and communicate to staff, participants, and their supports.
• There are items that participants with complex needs require in their NDIS plans that, under choice and control, a participant or their family do not prioritise. Often participants and families do not understand the need nor necessarily ask for items such as High Intensity funding, sufficient behaviour support hours for assessment of client needs and training of staff or sufficient nurse hours for health care planning and training of staff to keep clients safe, co-tenants safe and workers safe. Nevertheless, these are required for participant safety.

The current pricing approach can play a role in driving industry reform and promoting market stewardship but has proven to be ineffective due to the conflicting interests of the NDIA in its implementation. This has led to:

• Under-pricing risks
• Stifling innovation
• Increasing administrative burden
• Regional disparity
• Rewarding and proliferation of unscrupulous providers and profiteering
• A significant expansion of Sole Traders whom most are claiming the same price as registered providers yet do not have the same overhead costs. A Sole Trader who might work 40 hours per week would be claiming in excess of $150,000 per year as a disability support worker compared to a disability support worker paid under the national Industrial Award who would be paid about $75,000 per year plus entitlements.

Differential Pricing

It is essential to progress differential pricing within the scheme as soon as possible to ensure efficiency within the scheme, maintain viability of quality registered providers, and ensure appropriate pricing for unregistered providers and sole traders.

Differential Pricing partially exists within the scheme now through High Intensity funding and Standard funding. However, the issue is that the NDIA does not properly assess the care needs of participants with high behavioural concerns or high medical needs or collect appropriate information from providers to appropriately include high intensity funding when it is needed resulting in the agency funding Unsafe Plans in many cases.

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To provide supports to clients with high behavioural or medical needs, providers need to employ more experienced and trained/qualified workers to deliver the range of services required to deliver quality care. The inadequate assessment of individuals and planning process undertaken by the NDIA for many in this client cohort is resulting in the funding of Unsafe Plans as the NDIA is funding many of this cohort at standard funding believing that services to this cohort can be delivered by less experienced workers and increasingly compromising providers’ ability to continue to provide services.

In addition to differential pricing for client complexity, it is also possible, fairer and a better way to spend public funds by differentiating by provider type. There are three types of providers:

1. registered providers,

2. unregistered providers that are companies or associations, and

3. sole traders

Registered providers are required to be registered against the quality standards, be audited every 18 months and have significant reporting requirements. The cost of delivering services as a registered provider is higher than that of an unregistered company or association, with no obligation to meet the standards. It is estimated that the cost of meeting the standards, being audited and the higher reporting requirements adds 3% or more to the cost of service delivery.

It is imperative that these additional registration costs be reflected in differential pricing for registered providers. Equally imperative is that the additional price for registered providers be paid as a supplement directly to the provider. If the differential price is paid via individuals’ NDIS plans, there is a very high risk that participants will be incentivised to choose the cheaper, lower quality provider – placing greater risk on the safety and wellbeing of participants. There is precedent for this kind of payment in the previous temporary COVID supplement paid directly to providers.

The Alliance20 has several members participating in the NDIA’s Quality Pilots and these are demonstrating how difficult it is to measure quality in a meaningful way. What is clear is that quality means different things to different people not just participants and families but also the disability the person has will impact what the quality outcome is for that person. Someone with a physical disability may have a very different quality goal compared to someone with severe intellectual disability. The real challenge for

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pricing in the future, if linked to quality outcomes, will be to be differentiated on this basis.

In addition, the DSW cost model does not meet the current costs of registered providers and all elements of the cost model need to be transparently reviewed. The NDIA pricing model is built on an efficient corporate overhead of 12% of direct costs, however actual provider overheads shown in independent financial benchmarks (Stewart Brown) show that average corporate overheads can be as high as 34.9% for some providers. Providers have generally become more efficient with median overhead percentages reducing from 32.5% in FY19-20 to 19% more recently, but many struggle to meet the NDIA’s 12%. There needs to be greater transparency in how the direct overhead percentage is derived.

Unregistered providers do not have the costs associated with being registered, being audited or reporting and therefore the price should be a minimum of 3 % below a registered provider.

Sole Traders are now claiming the same price as registered providers. The make up of the price under the DSW cost model includes 2% margin, 12.% overhead levy and operational overheads between 21% and 39%. Sole Traders do not incur these expenses so a price which includes the cost of an hour plus direct on-costs which includes superannuation, allowances and other loadings should be more appropriate for sole traders. A Sole Trader currently working 40 hours per week can be collecting in excess of $150,000 per annum from taxpayers funds for being a disability support worker often working with less complex clients. There are many thousands of Sole Traders operating in the scheme and significant savings could be made if Sole Traders were paid a more appropriate price given their business structure.

Price controls are a powerful mechanism for shaping the disability services market, promoting fairness, and ensuring sustainability. When combined with other market stewardship tools, such as targeted subsidies, block funding some items, grants, and capacity-building initiatives, they can support industry reform and foster a well- functioning, participant-centred market.

In summary, whilst the agency is attempting to fulfill its responsibilities, there are a number of areas which need addressing as a matter of urgency, including:

• Registration of providers and a plan on market stewardship
• Reform of the current approach to NDIS pricing including the DSW Cost model, independent pricing and differentiation in pricing

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• Improving the planning process which significantly disadvantages participants with high and complex behavioural concerns, intellectual disability or high medical needs resulting in the agency funding Unsafe Plans for many of those participants for whom the scheme was initially meant.

NDIS Quality & Safeguards Commission

Our members’ experience of the Commission’s regulatory functions is that they are inconsistent, disjointed and unnecessarily burdensome. The Commission’s actions are often not proportionate to the severity of the incidents they are investigating, and Commission staff appear to have a poor understanding of their regulatory functions and powers.

As a result, our small safeguarding teams, which are not funded by the NDIS, are consumed with responding to detailed requests from the Commission, taking resources away from the preventive and educative role they should play in safeguarding participants.

Requests for evidence routinely occur many months after the incident occurred, often three to six months later and sometimes over 18 months later. The same set of evidence is requested regardless of the incident or its severity. Very often, this information has already been provided to the Commission previously. This appears to be a template approach that has no regard to the specifics of the matters themselves. In recent experience, matters are batched together into several requests at once, all with very short timeframes for response.

We believe the evidence demonstrates that Alliance20 providers are committed to quality services and safeguarding our clients. We invest in safeguarding measures, make regular staff training mandatory, and take serious steps to remove workers who may present risk to people with disability.

We acknowledge the Commission has been funded for increased staffing and improved IT systems. These will be critical to effectively safeguarding the rights and safety of NDIS participants. However, the Commission’s role will continue to fail without also taking a strong focus on consistency of approach, creating a clear understanding of their role and range of powers, implementing risk-proportionate interventions and developing a stronger focus on prevention.

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The Commission also needs to be independent, transparent and provide advice on the effectiveness of the NDIS system itself in delivering quality and safety for NDIS participants. This includes the policies and actions of the NDIA. The NDIA are responsible for many decisions about NDIS plans and funding (or lack of them) that impact on providers’ ability to prevent and address violence, abuse, neglect and exploitation of people with disability.

In addition, the Commission currently does not consider the impact of NDIA decisions in relation to funding of participants with complex behavioural, intellectual or medical needs. Providers are very concerned that the NDIA does not collect adequate information on participants with high behavioural, intellectual or high medical needs and does not meet these participants and yet makes funding decisions that frequently provide only standard funding. This means that providers only have enough funding to employ entry level or unskilled workers to work with clients with significant behaviours of concern. In addition, in this scenario, the level of funding does not include sufficient hours for behaviour support practitioners to develop and review behaviour support plans and train staff or sufficient nurse hours to develop and review health care plans and train staff. The Commission should take the decisions made by the NDIA and the funding levels as part of their investigations and hold the NDIA accountable for funding at levels below participant requirements.

To be truly effective, the Commission must turn its attention to these system and NDIA issues where they cause or contribute to potential harm.

The Commission also has an important role to play in identifying system level patterns and opportunities for prevention and response that go beyond the individual worker or provider. By sharing aggregated data and insights from their regulatory activities, and by supporting education of workers, providers and participants, the Commission can play a much stronger role in improving quality and safeguarding NDIS participants.

Critically, the Commission needs to respect the role of trusted providers and the impact their poor processes and onerous requirements can have on the safety and wellbeing of the people we support.

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