Doubts over NDIS pricing add to uncertainty for disabled

Originally published by David Gilchrist on 4 May 2018 in The West (print edition).

The recent publication of the National Disability Insurance Scheme Independent Price Review, undertaken by consulting firm McKinsey, has failed to grasp the issues faced by people living with complex disability and their service providers. This has increased the risk faced by people with complex disability as they become the shock absorbers for the new system.

Since 2013 there has been great change in the disability sector. As we progress toward the rollout of the NDIS in WA< it seems uncertainty and risk are the order of the day. Our research, including the National Performance Benchmark study now in its third year, and our anecdotal experience reinforces this perception.

The NDIS is a critical reform that could lead to much better outcomes for many Australians, their families and supporters. However, since its inception, we have had concerns about the absence of clear policy and rigorous design and planning processes that would be expected of such a complex and significant social reform. The NDIS has been designed primarily for those with less complex disabilities.

This “one-size-fits-all” approach assumes people with disabilities are a homogenous group. But the disability community is diverse, requiring a range of strategies, structures and funding models to meet individual needs.

Where the current design of the NDIS works for people, it should be preserved and supported in order that those people are not further disadvantaged.

For those who are not well served by the structures and processes, however, the system should be modified so the relatively small percentage of people with complex needs are also able to enjoy at least comparable services to those they have had up to this point – not inferior.

The pricing of services remains the single most important factor. In June last year, the board of the National Disability Insurance Agency commissioned the Independent Price Review and recently the disability services sector was presented with “analysis” that was rudimentary at best and did not do any statistically relevant research upon which to base any “contrast and comparison” conclusions.

There are more than 12,500 services providers across the country and only 45 organisations nationally were surveyed for the Independent Pricing Review. The report provides no breakdown of which organisations were contacted, their size, service capacity, service type or locations. These are critical explanatory elements that provide context and rationale for the recommendations made.

In the case of service providers supporting people with complex disability, the clinical requirements or quality care are not negotiable. The methods of managing and providing quality care have been developed over years with the health and wellbeing of the person with complex disability at the very centre of service provision. The cost of providing this care is significant but not negotiable – clinical requirements, as part of service quality, simply must be met.

The pricing review made some whole-of-NDIS recommendations. For instance, additional funding of between 2 per cent and 3 per cent was recommended for the rollout in order to fund the costs of organisational investment needed to respond to change. However, these amounts being offered build on an already low base which will not fix the fundamental issues of an inadequate hourly base rate and the high cost of doing business with the NDIS.

Nor will they provide the much needed capital for required infrastructure. The report notes from provider feedback that the cost of transition to the NDIS is in the order of 1.5 per cent of total annual expenditure as it stands. This cost of transition can escalate quickly for groups that provide complex disability services. The loss of working capital will eventually threaten sustainability.

The McKinsey report, combined with the “in principle” acceptance of all 25 recommendations by the National Disability Insurance Agency board, is likely to result in potential consequences such as market failure for services providers, especially those in rural and remote areas and those supporting people with complex disabilities. The pricing structure will lead to an underclass of disability support workers as we move to highly casualised employment, minimal training, unpaid hours of work and the inability of people to earn a basic living wage.

Given the need for a strong market to meet NDIS targets, the current conditions will not give providers incentives to grow. Most importantly, the impact of a poorly constructed and ill thought-out NDIS will be borne by those with complex disability as they act as the shock absorbers of the new system.