Why the NDIS needs a pricing shake up

The National Disability Insurance Scheme needs greater pricing flexibility to reflect local differences in costs across remote parts of Australia, experts say.

Researchers at the Centre for Social Impact (CSI) believe the scheme’s approach to price setting is too centralised and detached from the realities of service delivery.

NDIS providers have long argued that the main challenge for the sector was unrealistic pricing limits – which set the maximum prices that providers can charge participants for specific supports.

A new CSI report recommends giving local National Disability Insurance Agency (NDIA) offices the discretion to set prices.

Lead researcher Gemma Carey said local offices would ideally take pricing advice from Local Area Coordinators (LACs).

“The idea is that you can take more account of local variations in cost. For example, in regional areas where things cost more,” Carey told Pro Bono News.

“You might also be able to pay a provider a bit more to offer a different service – where the market is ‘thin’ – that meets clients’ needs. The idea is that you can ‘buffer’ local providers and help them stay in the market.”  

Our latest paper on #NDIS price setting with @gemcarey @MeganWeier @drhdickinson Making markets work for disability services: The question of price setting: https://t.co/lHVsVL62zB @CSIsocialimpact @DisabilityHlth pic.twitter.com/g5aByEHhlP

— Ellie Malbon (@Ellie_Malbon) July 22, 2019

CSI researchers noted that 46 per cent of providers surveyed for National Disability Services’ 2018 market report listed “addressing pricing” as their top priority for the NDIS.

Carey said these pricing concerns were exacerbated by a lack of capacity building within the sector to help providers adjust to the scheme.  

She said organisations need to re-organise and re-skill, not just in relation to NDIS-specific rules, but also to ensure they can operate in a “business-like” environment effectively.

“At the moment providers are having to cover costs related to training and reskilling workers to the new system, so it is putting additional financial pressure on providers,” Carey said.

“The prices in the NDIS do not take account of training more broadly either, so we could deskill the workforce if we’re not careful.”

The federal government has taken action recently to address pricing issues in the NDIS.

NDIS Minister Stuart Robert last month announced a doubling in the loadings on price limits for remote and very remote services, and an increase in the provider travel claim cap from 1 July.

The NDIA confirmed that existing plans that include remote and very remote services would be automatically adjusted to reflect the price increases.

Carey said if local discretion was given in price setting as CSI recommended, a similar adjustment to participant plans could be the best way to implement the changes.