The NDIS Price Guide 2024 / 25: Pushing more providers to bankruptcy?
So, it is the last working day of the financial year. Why would you expect more than 6 working hours of notice on what you can charge for your services in the new FY?
The headlines from the new NDIS price guide
- There appears to be more robust rules on what is reasonable and necessary and claiming for ancillary services (but I haven’t deep dived here yet)
- Standard support prices have increased 3.19%, but the SCHADS award has increased by 3.77%. The reason for the backwards movement appears to be the removal of the Temporary Transition Payment
- For another year, there has been no increase to Support Coordination and Plan Management
We have quickly dug into the NDIS Direct Support Cost model to see how the Agency has developed the prices for next FY and I am not a mathematician (and would love to have this confirmed to me) but I have found a 1 cent discrepancy. I know that it’s likely to be a rounding issue, but you tell me, when you add up the FY24/25 direct worker costs do you get $48.62 or $48.63?
Table: Comparison of the FY 23-24 and the FY 24-25 Disability Support Worker Cost Model Assumptions and Methodology
I got the higher number but the cumulative impact actually makes it a 2 cent difference to the final price. Now I know my math skills are very crude, but I’m thinking that 1 cent difference to the hourly base direct support cost driver might save the government over $12 million next FY alone. Now that’s a lot of speech writers…
You do your own math, how may service hours are you likely to deliver this FY? Times that by 0.02 and you have the financial impact of this rounding issue to your org.
Now $12 million in a $40+ billion dollar scheme is hardly consequential. But when you already have 55% of providers reporting a loss (Stuart Brown, StewartBrown_-_FY23_Disability_Services_Financial_Benchmark_Report_final.pdf)
And the NDS State of the sector 2023 report stating:
We are worried we won’t be able to provide National Disability Insurance Scheme services at current pricing
Category | Disagree or strongly disagree | Neither agree nor disagree | Agree or strongly agree |
Not for profit | 14 percent | 14 percent | 72 percent |
For Profit | 22 percent | 11 percent | 67 percent |
A 2 cent per hour reduction, based on rounding plus the removal of the Temporary Transition Payments that were introduced on July 1, 2019, combined with Super increasing up by .5% from July 1 and the industry rate for all insurances increasing; may see many providers finally slip into liquidation.
The TTP was originally designed to support registered NDIS providers during their transition to the NDIS market. It was meant to be temporary, but the impetus was to provide additional funding to help providers cover the costs associated with adjusting to the new pricing arrangements and regulatory requirements of the NDIS, ensuring they can continue delivering high-quality services while adapting to the new system. My question is – has the sector stabilised with the pricing and quality regime to state we are no longer in a period of transition?
Given we still don’t have a formal government response to the Disability Royal Commission or the Independent review of the NDIS, my guess is that only more changes are to come.
I welcome the NDIS review recommendation for pricing to be taken over by the Independent Hospital and Aged Care Pricing Authority. But the realist in me knows that is still a way away.
Providers need to take the future into their own hands now and look at how to adapt their services to the already lean margins. What can be automated? What can be streamlined? Where are you overservicing? How can you ringfence your quality and safeguards liability?
I don’t want to see more providers leave the sector. That goes against the original intention of strong markets and choice and control. But if there was ever a signal that you MUST start doing things differently. This price guide is it.
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