The future of NDIS pricing? Or the NDIS pricing report they did want you to see

Over the past year, two significant but curiously parallel processes have emerged around the future of NDIS pricing.

First, the federal government engaged the Independent Health and Aged Care Pricing Authority (IHACPA). This is the independent body that the NDIS Review recommended take over advising the NDIA on pricing strategy. IHACPA consulted widely and was tasked with identifying opportunities for future reforms to NDIS pricing, reviewing existing pricing approaches and developing a pricing data strategy. But despite the rigour of this process and the clear public interest, that report has never been published. Whether it was simply shelved or deliberately buried is open to interpretation but its absence is hard to ignore.

At the same time, in September 2024, the NDIA convened their own Independent Pricing Committee (IPC), also tasked with reviewing the pricing structure and suggesting reform. Unlike IHACPA, this committee did not undertake extensive public consultation. It instead drew on existing sources: the NDIS Review, the 2023–24 Annual Pricing Review, the unpublished IHACPA report and targeted consultation with the Agency’s consultation groups.

Why a new committee was needed or why its work proceeded while IHACPA’s was shelved has never been explained. The IPC’s remit was essentially the same as IHACPA’s: to examine how well the current pricing arrangements are working and to consider alternative approaches to price setting and regulation.

I'm sure I’m not alone in saying I’d sure love to see that IHACPA report, but the IPC is the one we’ve got so let’s dive into the detail.

Why change the pricing approach?

Capped prices set by the NDIA were initially introduced to help encourage providers to enter the market while ensuring value for money for participants and the Scheme. They were never intended to be a long term market strategy.

Originally, prices were intended to be set at a level reflecting an efficient cost of delivery. When these failed to attract enough providers to meet demand, the NDIA increased prices, especially for therapies, in the 2019-20 Price Guide. This was intended to bring them in line with the higher end of pricing observed in other care and private sector markets. Conveniently, the report omits the fact that the pricing strategy has clearly done a 180 since then, as this was the last time that most therapy prices were increased at all.

The idea was that as the NDIS market matured, providers would naturally begin to differentiate on price and caps would no longer be necessary. The report makes a few suggestions as to why this vision hasn’t eventuated:

• Demand often outstrips supply, so providers have no incentive to reduce their prices
• Pricing is often less important to participants than other factors (eg. proximity, rapport and reliability) when choosing providers
• People have more immediate priorities than shopping around for lower priced services
• Participant budgets are calculated using the price caps so people are fully funded to buy all their required services at the price cap

10 years into this pricing approach and the pricing cap has effectively become a de-facto price, at least for plan managed and agency managed funds. It’s a blunt instrument that remunerates all providers at the same rate, regardless of the quality or complexity of service or organisational structure. This has led to a situation where some providers, like sole trader support workers, may be getting paid well above what it costs them to deliver services. While other established providers delivering more complex services have no financial incentive (or means) to specialise, invest in clinical governance, supervision or develop and train junior staff.

Proposed models

The report proposes four different types of approaches to pricing to attempt to resolve these tricky pricing dynamics. These are:

1. Standard and higher value services: This is pretty consistent with the current approach and the report suggests that most supports will continue to fall into this category. The detail provided is:
   1. Standard price limits - Prices that cover the cost of delivering support to most participants by a provider with low overheads. The report notes that the price for these may be lower than current prices.
   2. Higher prices for higher value services - Prices that reflect higher-value services required where people have more specialist needs or there is greater delivery risk. This would be similar to high intensity pricing or remote/very remote loadings in the existing pricing approach, with the potential addition of providers needing to pre-qualify to charge these rates to eligible participants.
2. Alternative prices paid across a group of participants - This approach would apply when a service cannot be neatly billed to just one individual or when the benefit of the service does not relate directly to the time spent delivering it to an individual. Under this blended payment approach, top-up payments would be provided in addition to or instead of price caps for pre-qualified providers. The example provided here is on-call support.
3. Services commissioned from providers - This is where the NDIA or government commission providers to deliver specific services similar to the way Partners in the Community or pilots for services commissioned in rural areas are currently funded. The IPC notes that it is a matter for government to decide which other services would be appropriately funded through this approach.
4. Largely fixed cost services - Prices for services that typically require significant upfront investment by a provider but low ongoing costs. It’s envisioned that these services would usually be delivered alongside services in the first category. No examples are given to help illustrate this approach.

Comments on specific services

While the approaches described above are generally applicable to most NDIS supports, the report includes some comments on specific supports we think you might find interesting:

Therapy

The report suggests that their proposed standard/higher value differentiations could help to more appropriately fund specialised therapies that are currently undercompensated in the one-size-fits-all approach. While it acknowledges the therapy sector’s appetite for more outcomes-based payments, it points to problems in the implementation of these models, including the clear definition of outcomes, managing risks of perverse incentives and client cherry-picking. It concludes that such models are likely to remain a small component of the overall pricing approach.

Plan management

While the report floats the idea that Plan Managers may potentially be more appropriately compensated through something like a payment per transaction, this section mostly focuses on a rare acknowledgement of the uncertain future of plan managers in the NDIS, stating:

“Long-term pricing approaches for plan managers need to consider the long-term role of plan management supports. Improved digital infrastructure is likely to significantly reduce participants’ need for plan managers to support them pay providers and thus alter the value and role of plan managers”.

Later in the report, they go even further, stating:

“The IPC believes it is possible over time to consolidate and even transition away from the role of plan managers in the context of ongoing improvements to digital claiming and payments systems. Over time this activity should be streamlined through application of digital payments technology. To the extent a role remains for plan managers, it is likely to be a highly standardised service which could readily be outsourced to a limited number of providers through a tendering process and complemented by specialist navigators conducting niche or specific activities valued by participants, as envisaged by the NDIS Review”.

Support coordination

Similar to plan management, the section on support coordination highlights the challenge with changing the pricing approach when the introduction of navigators is likely around the corner. “Significant pricing changes, including development of support coordination specific cost models do not make sense while the future role remains unclear.” It does highlight that time spent with a support coordinator is a poor indicator of value and suggests that future pricing might involve shifting towards a direct payment model on outcomes over volume, though this suggestion reads more as an afterthought than a proposal.

Other suggested strategies

The report also includes a list of non-pricing strategies that could support people to navigate choice and control, which are largely projects the NDIA already has underway. These include:

• A digital payment platform to enable participants, plan managers and providers to submit claims and receive approval in near real-time.
• An e-marketplace (referred to in the report as “a digital supermarket”) to enable participants to readily compare and find service providers who best match their need.
• A price comparator site where participants, providers and the Agency can see the actual prices charged by providers.
• Scheduling solutions that would allow service providers to organise delivery of a bundle of services, for example, ahead of visiting remote towns or regions.
• The introduction of the Navigator role, they also float the idea of a broker-dealer model of intermediary.
• Publishing regular information on NDIS spending projections by region and category, similar to the Market Position Statements that were published by the Agency during the transition to the full Scheme.
• Working closely with the NDIS Commission to streamline and reduce compliance obligations, particularly if the proposal to have pre-qualified providers for higher value supports is implemented.
• Giving providers earlier guidance on changes to pricing.
• Working across the care sector to coordinate effort in common areas of interest such as workforce development.

Where to from here?

The report acknowledges that there will be significant implementation challenges associated with their recommendations and outlines a four year implementation pathway. Starting with consultation with participants and providers, the NDIA should test the approach and design the new pricing structures, building on the pilots already underway.

Notably, the IPC warns against increasing prices in the short term to ease financial pressure without changing the underlying pricing approach. The IPC suggests this would exacerbate the current dynamic, encourage more sole traders to enter the market and draw resources away from the providers already facing resource constraints.

If the IPC report is meant to mark a shift in how NDIS pricing is approached, it does so cautiously, mostly reinforcing directions already signalled by the NDIA. While it raises valid concerns and surfaces some useful ideas, the pathway it outlines feels more like formalising the status quo than setting a bold new course.

What’s still missing is any transparency around the IHACPA report - the one genuinely independent from NDIA and informed by more extensive consultation. Without it, we’re left to interpret the IPC report in a vacuum, unsure whether we’re being presented with the best thinking available or simply the most aligned with the Agency’s current plans.