Independent pricing review

In response to feedback from participant and provider groups; and the Productivity Commission Report on NDIS Costs, the Board of the NDIA commissioned an Independent Pricing Review (IPR) in June 2017.

In March 2018, the Board of the NDIA released the IPR Report undertaken by McKinsey & Company. The NDIA gave in principle support to all of the Report's 25 recommendations.

The NDIA has addressed and implemented the recommendations in the Report.

Phase one of the Agency’s response was to implement changes in response to 10 of the recommendations which took effect from 1 July 2018.

Phase two of the response involved additional work, including changes which took effect 1 February 2019. Remaining  changes are effective 1 July 2019 as part of the release of the NDIS Price Guide and Support Catalogue 2019–20.

The Agency has now established a new process to continue to review NDIS pricing arrangements; including the Pricing Reference Group which advises the NDIA executive and the NDIA Board.

Through the ongoing Annual Price Review process, the Agency will continue to monitor and adjust pricing and related market settings. 

The NDIA continues to work collaboratively with the sector to deliver a strong, vibrant and innovative market for quality disability supports.
 

Updates:

21 June 2018 (read the full statement here) - from 1 July 2018 we will start to implement the first set of recommendations from the Independent Price Review.

These changes will not only give providers immediate support to meet challenges as they transition to the participant-led NDIS—they will also help ensure NDIS participants have access to the supports they need and greater choice and control over their supports.

This table (DOCX 92KB) explains how we are approaching the first 10 recommendations outlined in the IPR.

NDIA CEO, Rob De Luca, has outlined the key changes being implemented as of 1 July 2018 :

  • IPR update summary (PDF 737KB)
  • IPR update summary (DOCX PDF 440KB)
  • 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..

Key documents

It has been brought to the attention of the NDIA that the Independent Pricing Review released in March 2018 included a statement relating to criminal liability of providers delivering services to forensic disability participants. The statement in question reads as follows:

Under state-based criminal justice system Acts, the management and directors of a provider can be held criminally liable if a participant under their care re-offends.” Independent Pricing Review, Section 4.3.2, p. 53

McKinsey & Company has advised the NDIA that the statement made in the report was not based on a reading of the Forensic Disability Act 2011 (QLD) itself, but rather the comments and sentiment expressed during consultation and interviews with providers of forensic disability services.

McKinsey & Company would like to apologise for any distress or confusion that has been caused by this statement. After a review of Section 118 of the Forensic Disability Act 2011 (QLD), the NDIA agrees that criminal liability on behalf of a provider is not specified for a participant within their care re-offending.

The report has been updated to reflect this change.

Terms of Reference for the review

The terms of reference of the IPR were:

  1. 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.
  2. 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.

This page current as of
25 June 2019