The rollout schedule, quality of plans and provider readiness are putting the NDIS at risk. These were the concerns to emerge from a Productivity Commission draft paper released last week.  The Commission also described the rollout timetable for the National Disability Insurance Scheme (NDIS) as “highly ambitious”.

Many of the concerns raised in the paper were about the rollout schedule, including issues around market and provider readiness, the capacity of the National Disability Insurance Agency (NDIA) systems to function at full scheme, and the quality of plans.

Productivity commissioner, Angela MacRae said while there were some emerging costs pressures, such as the higher than expected number of children entering the scheme, the NDIA has initiatives in place to address these cost pressures. However, the real challenge is growing the disability care workforce needed to deliver the scheme. “There are unlikely to be enough providers and workers as the scheme rolls out under current policy settings,” MacRae said.

Social policy commissioner, Richard Spencer acknowledged the scheme was facing some big challenges given its extraordinary scale, pace and nature.  “A key concern is the speed of the rollout and its impact on the experience of participants and providers through the planning process, plan quality and market development,” Spencer said.

The paper found that the NDIA must place greater emphasis on pre-planning, in-depth planning conversations, plan quality reporting and more specialised training for planners. Governments must also set clearer boundaries around who supplies what, so people with disability are assured of continued service.

To reach the estimated 475,000 participants at full scheme by 2019-20 the NDIA will need to approve hundreds of plans a day. In the March 2017 quarter, the NDIA approved about 14,000 plans, or roughly 160 plans a day. In 2018-19, the final year of transition, the NDIA’s modelling indicates that about 500 plans a day will need to be approved, while reviewing hundreds more.

But already there are signs that the rollout schedule is compromising the NDIA’s ability to implement the NDIS as intended and putting the financial sustainability of the scheme at risk as the number of participants entering the scheme is only now just starting to ramp up. At the end of March 2017, around 78,000 participants had approved plans which are just 82 per cent of the bilateral estimate.

The NDIA is aware of the risks of focusing on participant numbers, noting that bilateral estimates can and do impact upon the way in which the scheme is delivered. This can put sustainability at risk and impact on the way in which early intervention and investment initiatives are implemented in the short term. It may also have adversely impacted the quality of plans.

According to the paper, the rollout schedule is compromising the integrity of the planning process, and the quality of participant plans. While the NDIA has been set a challenging task of completing high numbers of plans in a short period of time, it is important that it also undertakes the planning process in a way that achieves the objectives of the scheme and financial sustainability.

The Productivity Commission is inviting comment on the position paper with public submissions open until July 12 with a final report due to be released in September, 2017.

To make a submission go to:

More details on the Productivity Commission position paper follow:

The NDIA is tasked with ensuring the NDIS is financially sustainable. This involves identifying and managing emerging cost pressures. The NDIA has identified five early cost pressures that need to be managed for the full scheme going forward.

  • Higher than expected number of children entering the scheme
  • Lower than expected participants (particularly children) exiting the scheme
  • No slowing in the number of potential participants approaching the scheme
  • Increasing package costs over and above the impacts of inflation and ageing
  • A mismatch between benchmark package costs and actual package costs

The NDIA has not updated its baseline cost projections to reflect these cost pressures but has put initiatives in place to address them, including the Early Childhood Early Intervention (ECEI) approach for children aged 0-6 years and the first plan process to reduce variability in the level of support provided to participants. While these initiatives appear appropriate, it is too early to tell whether they will be effective at containing costs.

At the end of March 2017, an additional 63,000 people were eligible for the scheme, taking the total number of participants to 99,092. Around 75,000 participants are currently active and have an approved plan. Some insights from the transition data are that: 

  • Autism and intellectual disability are the largest primary disability groups, accounting for almost two-thirds of scheme participants
  • Psychosocial disability is the next most common disability, accounting for about six per cent of scheme participants and most scheme participants at the end of 2016 were children aged 14 years and under, around 43,000 or 44 per cent of participants
  • Around 45 per cent of the children in the scheme have autism, while 34 per cent have an intellectual disability (including developmental delay) while only 18 per cent of packages approved from July 1, 2016 are more than $100,000, these account for 56 per cent of scheme costs.

However, not all people with disability report improved outcomes under the NDIS. The National Institute of Labour Studies evaluation found that some people with disability are experiencing poorer outcomes under the NDIS and are receiving fewer services than previously. There has also been a significant fall in participant satisfaction with the scheme since the scheme entered the transition phase with participants reporting that they were satisfied or very satisfied falling from an average of 95 per cent to 85 per cent between 2015-16 and 2016-17, possibly linked to the speed of the rollout, and changes to the planning process.

The evidence suggests that providing individual supports for children with developmental delay can improve outcomes for individuals and reduce costs and is consistent with the early intervention principles of the scheme.  A review undertaken for the Department of Social Services (DSS) estimated that around 11,600 children with developmental delay or global developmental delay would be eligible for support under the scheme at a cost of $155 million each year. While no definitive data are available to test this estimate, trial site data, which may not be reflective of full scheme prevalence rates, suggest higher prevalence rates than the estimate provided to the DSS.

For children to be eligible for individual supports, they need to have a delay across multiple domains. This suggests that the eligibility criteria set an appropriately high hurdle. However, assessment of the functional capacity of children in the scheme suggests that the entry pathway may not be sufficiently robust, as 40 per cent of children in the scheme do not have any identified deficits compared to the normal range for their age. This points to a problem with eligibility screening, and underscores the importance of rigorous entry and exit pathways in moderating scheme costs. The development of the Early Childhood Intervention Approach (ECEI) pathway for children to enter the scheme seeks to tighten the entry pathway for children aged 0-6 years.

Psychosocial disability

In 2011, the Commission recommended that people with psychosocial disability be supported through the NDIS. This was on the basis that:

  • Day-to-day support needs for people with significant and enduring psychiatric disability are often the same as people who have an intellectual disability or an acquired brain injury
  • Some important parts of the care requirements of people with psychosocial disability, namely community supports, are best met through the NDIS
  • Providing supports to people with psychosocial disability through the NDIS provides them with the wider benefits of the scheme, including personalisation of supports to meet the needs of the individual, more choice in what supports are provided, when and by who, and greater access to early intervention supports. 

The planning process

There is a lot of dissatisfaction with phone planning. The Commission heard on numerous occasions that participants had been called with no forewarning of the planning conversation, were not prepared and could not have an advocate present. Others said that they had not known that the conversation they were having with the Agency was a planning conversation until they had received their plan while a number said they felt rushed during their planning meetings.   An individual approach to planning is a key feature of the NDIS and sufficient time is required to match participants with the supports that are right for them. Phone planning conversations can mean that planners do not ‘get the full picture’. For example, the living environment of participants may not be adequately reviewed, which means issues such as accessibility, safety and appropriate assistive technology can be difficult to identify.

Phone planning conversations are not appropriate for some participants, including those with particular accessibility requirements, mental illness, cognitive impairment and neurodegenerative diseases or people of culturally and linguistically diverse backgrounds. However, they may be appropriate for others, particularly if there has been adequate pre-planning.

The Commission considers that the pre-planning phase of the planning process has not received the attention that it requires and many participants are ill-prepared for planning conversations which is affecting the quality of plans. A greater focus on pre-planning should mean that phone planning conversations will be suitable for a larger pool of participants. Local Area Coordinators (LACs) need to be in place six months in advance in the areas in transition to assist participants with pre-planning. The Commission considers this to be a better and likely less costly option than trying to fix plans 12 months after they are first put in place. It will also mean that participants are not only in the scheme, but are also more likely to be exercising choice and control. There is considerable scope for the NDIA to improve transparency and clarity around planning processes. This includes providing clear and up-to-date information about what to expect during the planning conversation, when it will occur, and how the information gathered during that conversation will be used.

Planners need more disability knowledge

Planners’ limited disability knowledge is an issue of real concern. Many advocacy groups said that planners do not have sufficient knowledge of particular disabilities or the impact that particular conditions have on people’s lives, and they often did not know what supports would be most effective for the participant’s disability. Alzheimer’s Australia, for example, reported that a person with Multiple Sclerosis (MS) was asked by the LAC at a planning meeting ‘How long will MS last?’

Why regulate the price of disability supports?

Governments have historically regulated the price of human services, including disability care and support services, on the grounds of equity and efficiency. Without appropriate price regulation, the provision and use of disability services may be below socially optimal levels for a number of reasons, including abuse of market power arising from a lack of competition.

The simplest example is that there may be too few providers in a market for there to be competition. This is a real risk in the market for disability supports. Early data indicate a market concentration of more than 80 per cent in some disability service sub-markets. If prices are not regulated, this may result in limited access to services for some disadvantaged groups over the transition period.  This was recognised by the Commission in 2011, who recommended that an early, but temporary task for the NDIA was to set efficient prices to allow providers to recover the costs of service provision, including adequate returns for capital investment, and in turn, ensure the supply of disability supports. But price regulation should not persist unnecessarily, have excessive scope, nor shape the market, such as by benefiting some providers or participants over others.

In practice, the NDIA must balance these two objectives. Setting prices too high may induce greater supply in the market, but reduce the purchasing power of participants. Setting prices too low may ensure lower costs, but may lead to shortages of particular supports. Striking the right balance is difficult. Some existing providers who would benefit from an increase in price caps argued that some price caps are too low to provide quality supports. In turn, the NDIA stated that existing providers, many of whom relied on block funding previously, may be finding it difficult to adjust to the fee-for-service model. Given that the NDIA’s most recent price review has only just concluded, with new prices to take effect on 1 July 2017, the Commission has made no findings or recommendations about the adequacy of those prices.

However, there is a potential conflict of interest with the NDIA setting prices and also being responsible for the financial sustainability of the scheme. This is a structural issue in the design of the scheme that needs to be addressed, as the mere perception of a conflict is sufficient to disrupt the transition to price deregulation.  Mindful of the immediate and significant challenges being managed by the NDIA, the Commission proposes moving towards the deregulation of prices in three stages. The first stage is to immediately introduce an independent price monitor with responsibilities including:

  • Examine how the market is responding to prices set by the NDIA
  • Review the NDIA’s price caps based on the available evidence, including comparing NDIA’s price caps to other care sectors, such as aged care
  • Report publicly on its assessment of the NDIA’s price controls with regard to market development and participant outcomes. 

The independent price monitor would improve transparency around how price caps are set, and in turn, lead to greater accountability and thereby confidence to participants, providers and the wider community. It should be put in place immediately to serve as a ‘check and balance’ on the NDIA’s pricing over the crucial transition period.  The second stage is to shift the NDIA’s price-setting powers to a regulator that is an independent statutory authority, an approach consistent with the evolution of other markets for consumer-directed care, such as the aged care sector. Such a move would allow the NDIA to focus on its core responsibilities of delivering and administering the NDIS, remove the potential conflict of interest, and provide ongoing independence and transparency of price regulation. At this time, the Commission envisions that the independent price monitor would be best placed to take over these pricing powers, as it would have developed the knowledge and expertise necessary to understand the disability support market.

The third and final stage of deregulation occurs when the price of a given disability support has been deregulated, but is still subject to subsequent monitoring. The independent price monitor would maintain an ongoing watch on pricing, collect data, and publicly report on emerging market issues that affect the purchasing power of scheme participants.

A key question is when the NDIA’s pricing powers should be transferred to an independent price regulator. There appears to be broad consensus among many, including the NDIA, the DSS and the Australian National Audit Office, that price controls are likely to be needed for the foreseeable future. Given the potential conflict of interest that the NDIA faces in setting prices, the need for price regulation to persist over coming years, and the imminent significant increase in participants, the Commission’s view is that the price regulation powers should be transferred to the independent body by July 1, 2019.

The Commission is seeking feedback on possible improvements to support coordination and complementary actions that may make support coordination more efficient.