2023/24 Pricing Arrangements and Pricing Limits documents released

It’s the moment we’ve all been waiting for! The 2023/24 Pricing Arrangement and Pricing Limits (PAPL) document has been released. In the DSC Sweepstakes I had 28th June so while I’m sad to lose that, I am delighted we’ve not got another “it’s 1 July and there’s still no new Price Guide yet” situation.

There’s been some key pricing changes that will be effective 1 July 2023. First, the good news. Price limits for supports delivered by disability support workers will see a real-terms increase of 5.3% to account for:

• The Fair Work Commission’s increase to minimum Award wages by 5.75%. The NDIA has fully covered this wage increase to workers employed under the Award, meaning providers don’t need to cover it themselves. This change will also come into effect for level 1 support coordination (support connection).
• An extension of the temporary loading for a further 12 months at 1%. The downside is that it’s been halved from last year (previously 2%) and will cease on 1 July 2024.
• Inclusion of paid family and domestic violence leave of 0.1% to reflect the new National Employment Standards entitlements for workers.
• Passing on the increase in superannuation guarantee charge of 0.5% in full.

Overall this is positive, as it could have been worse in the context of many conversations about 8% growth cap / target / framework / [insert another murky synonym here].

The full updated Disability Support Worker (DSW) cost model is here. 

Therapy supports

• The NDIA has stated after “extensive market analysis and consultation”, there will be no adjustment to the pricing arrangements and price limits for therapy supports on 1 July 2023. 
• The party line is that the market for therapy continues to attract new providers entering the market. The Agency says results from extensive benchmarking analysis suggest the current NDIS price limit of $193.99 is above the average fully loaded hourly cost of most types of therapy professionals. This may not reflect the experience of participants on the ground, who often struggle to find allied health and therapy services. Or the therapists that choose to remain unregistered because the NDIA price cap doesn’t cover the costs of being registered.
• The NDIA’s comparison to other government therapy schemes and private billing rates suggest that NDIS price limits for therapies remain competitive. The Agency also says they have invested significantly in the therapy market, with the amount claimed rising by 26% to $1.6 billion July-December 2022, compared to the same period in the year prior. 

Support Coordination and Plan Management supports

• Level 1 support connection will be indexed in line with the NDIS DSW Cost Model. We often say not many people access support connection, and the Pricing Review confirmed that only 777 participants used support connection in the 6 months prior to December 2022 compared to more than 200,000 participants using support coordination (level 2). 
• After “careful market analysis and consultation” - that phrase again - there will be no adjustment to the pricing for support coordination level 2 and 3 (that’s support coordination and specialist support coordination), or for plan management. This will be disappointing to many providers and sole traders who are seeing the complexity of their role grow.
• The NDIA says it invested significantly in the markets for support coordination (the amount claimed rose by 15% to $428 million) and plan management (where the amount claimed rose by 14% to $228 million) over the six months leading to December 2022, compared to the same period the year prior.  

One of the great unknowns of this pricing update: what is the NDIA saying about the future and role of level 1 support connection by increasing its price, but not levels 2 and 3? The service and business models of many support coordination providers cannot work with level 1. We await further information about the larger intent of this move, either from the NDIA themselves (who have said they see merits in establishing cost models for level 2 and 3 supports) or the NDIS Review.

Disability Intermediaries Australia (DIA) stated that this is the 4th consecutive price cut in real terms for plan management and support coordination - grim reading for those who are already grappling with moving goalposts, wage inflation, and increased business costs.

And a bit of PAPL housekeeping

• The price limit for other supports will be increased by 4.36% from 1 July 2023.
• Temporary Transformation Payment (TTP) loading will drop from 3% to 1.5% as expected, and will cease from 1 July 2024. 
• It was confirmed that providers delivering group and centre based activities need to use either transitional pricing or apportioned pricing. Communications from the NDIA in May were inconsistent about whether a mixed model could be run. However, the wording on page 62 of this update confirms that a provider has to use the same approach for all group supports.
• The NDIA has also released the outcomes of its Specialist Disability Accommodation (SDA) Pricing Review 2022-23 and new benchmark price changes for SDA will take effect from 1 July 2023.
• The full 94 pages of the Annual Pricing Review, giving context and reasons for all these changes, is available to read here

All in all this wasn’t a PAPL of huge changes, but the changes that were released will have a significant impact on the operations of many providers. I’m not sure the NDIA was ever going to not fully pass on the minimum wage increase (that would probably break the Scheme completely). 

What is a concern is the uncertainty of the future of the intermediaries markets: an increase in the price for support connection but another year of no increase to support coordination, specialist support coordination and plan management will push many of those providers closer to the edge. A consistent growth in a market doesn’t necessarily mean many service providers aren’t skating on increasingly thinner ice. The final report and recommendations from the NDIS Review may cast more light on what is in store.

Read the updated Pricing Arrangements and Price Limits document here. 

Header artwork by David Steele