Independent Pricing Review
Independent Pricing Review updates
The NDIA is working to implement a number of the recommendations in the Report, with the aim of incorporating these recommendations into the FY2018-19 pricing review, which will take effect from 1 July 2018.
We will keep you informed as we progress these important changes for the NDIS. We will provide further information about each change before it is implemented to help ensure you are aware of how the changes apply to your situation.
- 24 April 2018 (read the full statement here) - The NDIA is prioritising those recommendations that provide the most immediate support to providers during transition, with every endeavor being made to implement those recommendations on 1 July 2018 as part of the FY2018-19 Annual Price Review. Those recommendations include:
- 4 – Regional Travel
- 10 – Short Term Accommodation
- 14 – Temporary Support for Overheads
- 15 – Cancellation policy for core supports
- 16 – Group supports
- 18 – Therapy assistants (phase one)
- 19 – Therapy travel
- 20 – Cancellation policy for therapy
- 21 – Reports requested by NDIA
- 05 April 2018 – we explain:
- Our progress on implementing IPR recommendations
- Therapy price controls
In response to feedback from Participant and Provider groups; and the Productivity Commission Report on NDIS Costs, the Board of the National Disability Insurance Agency (NDIA) commissioned an Independent Pricing Review (IPR) in June 2017.
McKinsey & Company were appointed to conduct the review. The Review assessed the NDIA's pricing strategy and approach, as well as specific price settings for supports and services that are critical to the Scheme's market stewardship role and the path to price deregulation.
Final report and NDIA response
In March 2018, the Board of the NDIA released the IPR Report undertaken by McKinsey & Company. NDIA has given in principle support to all of the Report's 25 recommendations.
Key recommendations made by the IPR include:
- Adding a third tier to the complexity loading to account for higher level skills or experience of workers and additional training required;
- Allowing providers to charge up to 45 minutes of travel time in rural areas;
- Allowing providers to quote on the delivery of services in isolated regions;
- Changing the cancellation policy to allow providers to recover 90% of their costs if a cancellation is made after 3pm on the day before the service;
- Removing the annual $1000 travel cap for therapy supports and aligning the travel policy with the attendant care travel policy;
- Changing therapy prices to better reflect different therapy types, and introducing a second tier of pricing for therapy assistants;
- Introducing temporary overhead assistance equivalent to a 2% to 3% loading on the price for providers delivering attendant care for the next 12 months.
- Other recommendations relate to price limits, interventions to address specific market challenges, and improvements in market monitoring and engagement..
- McKinsey & Company Independent Pricing Review Report (PDF 2MB)
- NDIA Response to Independent Pricing Review (PDF 643KB)
- NDIA Response to Independent Pricing Review (HTML 40KB)
- Media Release - NDIA accepts Independent Pricing Review's recommendations
Terms of Reference for the review
The terms of reference of the IPR were:
- To provide recommendations in relation to improved pricing effectiveness, including but not limited to:
- national versus regional pricing;
- pricing of services with different levels of complexity;
- pricing of respite services;
- thin and undersupplied markets, particularly in regional and remote areas;
- relative provider efficiencies (including overheads);
- adequacy of provider returns; and
- effectiveness of the Hourly Return approach used to set prices.
- To provide recommendations in relation to the potential early deregulation of price in more mature sub-markets and the glide path for the eventual deregulation of price more generally.
The review assessed the NDIA's price control strategy and approach, as well as specific price limits for supports and services that are critical to the in determining the ongoing appropriateness of these price controls and setting a path towards deregulation.
Given the vital role providers play in delivering the Scheme, McKinsey & Company consulted extensively with the sector in developing its recommendations through a series of open provider forums throughout September 2017. In total more than 1,000 individuals contributed to the outcome of the IPR.