Group Support Pricing

You might recall that a little earlier this year the NDIA quietly announced an extension to the transition deadline for group pricing arrangements. While some were hoping the new pricing mechanism would be chucked in the furnace, the Agency announced that due to the significant disruption caused by the COVID-19 pandemic, providers would have a further 12 months (until 30 June 2023) to adopt the new pricing model.

Since then, the NDIA has released its new pricing arrangements and price limits and the Annual Pricing Review (APR) Report. And naturally, us NDIS nerds scanned the APR Report and consultation summaries for clues about the elusive future of pricing for group supports – here’s the lowdown.

The consultation

In 2021, participants, families, community, providers, peak bodies, and other sector representatives were invited to make submissions to the NDIA’s APR. Of the 254 submissions received, 41 included feedback on the pricing arrangements for group-based supports. The NDIA also led 12 working groups to look at each consultation paper topic, one of which focused on group-based supports. The key topics raised in the consultations were as follows.

Value of group-based programs

Submissions argued that group programs are cost effective and fulfill a need in the market. Benefits cited include providing opportunities for social connection, community belonging, establishing daily routines, new experiences, and maintaining and learning new skills.

Pros and cons of the new and transitional pricing arrangements

The working group reportedly agreed that the new group-based pricing arrangements have a number of “theoretical benefits”.

The pros listed in the APR include

Being able to charge more accurately for non-face-to-face time (considered particularly valuable for people with more complex needs)

Opportunity for in-depth review of each group activity to determine the level of non-face-to-face support that is required to run the activity and a more granular understanding of the true cost of each individual
Potential to drive better outcomes for people and improve the quality of support through the inclusion of goal reporting as part of a Program of Support (POS), helping transition group supports to capacity-building programs
Separation of capital and labour increases transparency around the costs to maintain assets

There were also plenty of cons, including

Program development, equipment, and specialist facilitation being difficult to charge for under the new arrangements
Lack of time and resources to invest in future program development
Cost uncertainty and increased bureaucracy and complexity for participants and families
Difficulty in budgeting and tracking expenditure – increased risk of over- and under-servicing
Costs associated with implementing a new pricing structure, including communication, planning, and manual variations and adjustments
The administrative complexity involved in tracking non-face-to-face time could outweigh the benefits of claiming this component
Time spent negotiating with third parties such as plan managers and support coordinators and the increased risk of debt due to unpaid expenses
Increased risk of error
Reduced revenue and threat to sustainability, further amplified by the pandemic
If groups become unviable, it could leave a hole in the market for many participants and families

One submission raised an interesting comparison: “a hypothetical situation where the NDIS ran a bus service and required the charges for that service be split between fuel, driver cost, assets, and overheads. It was suggested that the provider of the bus service would also be required to adjust their price depending on how many people got on the bus. It was suggested that this would not be practical in a transport market, and hence questioned why the NDIA thought it was practical in the market for group-based core supports.”[1]

Cost of delivering group-based core supports

A number of submissions suggested that irrespective of pricing arrangements, group programs require additional resources to be effectively delivered. This is partly due to the time required to plan and organise a group that caters to individual and group needs, including relationships between members. Other increased costs cited include activity-specific risk assessments, program-specific training, assistive technology, and building modifications. The capital and infrastructure costs associated with running centre-based programs with specialised equipment are said to be significantly higher than is currently allowed. Capital allowances were generally considered inadequate, particularly given recent shifts in the property market, and limitations on group sizes and participant numbers due to COVID restrictions were said to add further strain.

The APR said the NDIA's benchmarking did not support the claims that group-based supports cost more. They said “efficient providers” of group-based core supports have a significantly lower overheads than other core support providers. While the wages appear to be slightly higher in groups, this was said to be counterbalanced by higher supervision ratios and lower workers compensation premiums.[2]

Programs of Support

Many have welcomed the introduction of POS to the pricing arrangement and acknowledge their usefulness in securing the financial viability of group activities and managing cancellation risk. However, submissions and the working group raised a number of issues with POS, mainly around complexity, administrative burden, and the restriction of a 12-week program.

While POS were said to work well for targeted capacity building needs, they were seen as less useful when needs and goals didn’t change. Concerns were raised about how complex it is to explain and navigate the new pricing arrangements for participants and families and that plan managers and support coordinators often didn’t understand them. The NDIA has been criticised for providing insufficient information regarding how POS can be implemented and operate practically.

The costs associated with renewing and updating a POS every 12 weeks – and when participant ratios change, usually due to factors outside provider control – were said to be overly burdensome. This was further compounded when multiple parties, such as carers, guardians, and administrators, need to be involved to sign off on new agreements.

Some potential suggestions were floated to improve POS:

Further clarity and guidance relating to the claiming rules associated with POS
Allowing a POS to run for longer than 12 weeks
If a participant agrees to a POS at a set ratio, allowing this ratio to be charged for the duration of the service, regardless of who attends weekly
Processes associated with the POS approach could be simplified to decouple front-end calculations from back-end invoicing and avoid the requirement to repeat administrative activities
Monthly or quarterly invoicing
Allowing a typical pattern of supports similar to employment services for POS.

The APR report did not accept that a 12-week program is restrictive and administratively burdensome. Responding that “Choice and control by participants is fundamental to the design of the NDIS. It is therefore very reasonable to expect that a provider will regularly discuss with a participant the extent to which a program of support continues to be appropriate for the participant. The current 12-week limit on the duration of program of support is considered to strike the right balance between reducing administrative complexity for providers and ensuring choice and control for participants.”[3]

However, the APR did concede that it is clear from the submissions that some participants and providers require more guidance on the appropriate arrangements for the delivery and billing of POS and that the NDIA should develop better guidance material.

Options for change

Many argued that the NDIA should revert to the original pricing arrangements for group supports, which allow providers to charge a packaged hourly fee to adequately cover the costs to deliver the service. Yet others suggested that given the significant investment they had made in the transition (such as IT infrastructure), the new arrangements should continue but with greater clarity and case examples from the NDIA on how to implement and charge for things like non-face-face time. Submissions consistently highlighted a lack of education and training and detailed guidance associated with the transition to the new pricing arrangements as a major drawback of the rollout.

Members of the working group requested there be multiple options for how group-based programs are charged and that providers should be able to choose which approach to adopt. Under the current approach, once providers have transitioned to the new pricing model for group-based core supports, they are not able to move back. It was argued that this provision would need to be removed for providers to have a choice of which approach they adopt. The working group also expressed a “desire for the NDIA to acknowledge daily support providers, group support providers and other support workers as experts in their field, and for increased trust in the sector.”[4]

Challenges associated with interactions with plan managers and support coordinators were raised throughout the consultation. Concerns were expressed that – because providers no longer have access to what is in a participant’s plan – debts would be incurred when providers are not informed that funding has been exhausted. Members of the working group also reported a perception that plan managers and support coordinators are “policing” the NDIS. The working group argued for increased education and guidance for planners, participants, and plan managers to help get everyone on the same page. A guide from the NDIA covering which non-face-to-face supports can be charged was suggested.

APR Recommendations

So, there we have it: the run-down on the key issues. To wrap it all up, the APR has produced the following recommendations to the NDIA:

Recommendation 18: The NDIA should extend the transitional pricing arrangements for group-based core supports until 30 June 2023 to allow providers more time to adjust to the new pricing arrangements. It is also recommended that the NDIA work closely with those providers who have not yet transitioned to the new arrangements to assist them in making that transition. The NDIA should also develop better guidance material for participants, providers, plan managers, and support coordinators on the new (post-2020) pricing arrangements, including better guidance on billing for non-face-to-face supports
Recommendation 19: The NDIA should work closely with providers who have not yet transitioned to the new arrangements to assist them in making the transition
Recommendation 20: The NDIA should develop better guidance material for participants, providers, plan managers, and Support Coordinators on the new (post- 2020) pricing arrangements, including better guidance on billing for non-face-to-face supports and on appropriate arrangements for the delivery and billing of POS.

Another 12 months…

So, it looks like the transition to the new group pricing arrangement continues full steam ahead (for now). The APR reported that of the 7,206 registered and unregistered providers who delivered group-based core supports to agency- and plan-managed participants in 2020-21, more than half (64.8%) are using the new arrangements, including 24.8% of providers who claimed under both arrangements.[5] Given that providers are required to transition fully to the new pricing arrangements – they cannot partially opt in – we can only presume this figure is inclusive of Australian Disability Enterprises, which had an earlier transition timeline.

Later in the report the APR states that most providers have not yet transitioned to the new group-based pricing arrangements (which is consistent with what we hear in our workshops), citing the following:

In 2020-21, only 7.8% of claims for and 8.6% of expenditures on group-based supports were made under the new arrangements
In the first half of 2021-22, by contrast, more than a quarter (29.2%) of claims for and almost a quarter (24.3%) of expenditures on group-based supports were made under the new arrangements
Of the expenditures on group-based supports made under the transitional arrangements in the first half of 2021-22, 30.4% was for 1:1 supports, 26.8% was for 1:2 supports, 33.2% was for 1:3 supports, and 9.6% was for 1:4 or higher-ratio supports.[6]

The APR has clearly signalled to the NDIA that providers need more support to transition to these new arrangements. We eagerly await the guidance material and support the NDIA will provide to participants, group-support providers, and other stakeholders as we approach another 12 months in “transition”. Of course, you can check out Team DSC’s Group Supports Pricing Models Workshop Series to help you along the way.

This is just a snapshot of the group pricing findings for our time-poor friends. You can get all the details in the 2021-22 Annual Review of Pricing Arrangements: Report on Consultations and the Annual Pricing Review 2021-22 Final Report on the NDIA website. There are vast amounts of data there, so if you find something you think we’ve missed, be sure to let us know, and we can spread the word.

Thirsty for more? We also have two other articles in this series exploring the pricing decisions for capacity-building supports and compliance. You can read them here:

[1] NDIS Annual Pricing Review 2021-22 Report on Consultations, p. 48.

[2] Annual Pricing Review Final Report 2021-22, p.104

[3] Annual Pricing Review Final Report 2021-22, p.104

[4] NDIS Annual Pricing Review 2021-22 Report on Consultations, p. 56.

[5] Annual Pricing Review 2021-22 Final Report, p. 18.

[6] Annual Pricing Review 2021-22 Final Report, p. 101.