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Is now the time to become an unregistered provider?

Many providers are worried about the changes foreshadowed in the latest Price Guide, and some are even considering becoming an unregistered provider. But, as Rob explores, this option comes with its own headaches.

By Rob Woolley

Updated 15 Apr 202413 Jul 2020

From the feedback we’ve been getting, the 2020/21 Price Guide has brought widespread change to the way some services are going to be structured, particularly group supports. The response has been shock and concern from providers already operating in this space. Registered providers have to bill at or under the pricing cap and that pricing cap, formally seen as an irritation, is now seen by some organisations as the single greatest threat to existence. Unregistered providers working with self managing participants are free to set their prices. As the new pricing guidelines become the new normal, we are expecting more providers to look at the Price Guide and seriously pose the question - “do we really have to be registered?”.

 

LIFE AS AN UNREGISTERED PROVIDER

For as long as there have been registered providers, there have been unregistered ones. This section of the market used to be predominantly mainstream organisations who delivered some disability support services, but didn’t specialise in NDIS supports, and didn’t want to undergo the substantial process of registering. But in recent years there has been an increase in the number of organisations, particularly from other sectors, who choose to deliver services unregistered as a conscious business decision. 

It’s often a low-cost chance to dip a toe in the NDIS waters, learn about how the market works, what participants are looking for, and how operations might work in the NDIS without investing a considerable amount in new systems and processes. Less common has been providers choosing to move from registered to unregistered, although it has happened.

Several years ago, I led an organisation through this journey. In 2015-16 the capped pricing and associated costs of service delivery became too much, and it was a choice between slowly going out of business or moving to operate as an unregistered provider and billing above the pricing cap. In hindsight, I wouldn’t necessarily recommend it - it was incredibly stressful, hard work, strengthened some relationships but destroyed others, and the main result was a ton more grey hair for everyone involved. But it did reinforce the financial realities and impact of the compliance costs of being a registered provider.

 One of the reasons that I wouldn’t outright recommend that any provider goes down this path is that the environment is different today to how it was then. The NDIS Quality and Safeguarding Framework is stronger than the patchwork compliance coverage we used to have. The Practice Standards are truly outcome-focused and person-centred, and the pricing is more responsive and flexible. There are also lots of reasons to be ‘inside the tent’ with registration:

  • Registered providers have access to the whole market, not only those people that are plan managing and self managing
  • In recent years the NDIA has tightened the enforcement of Plan Managers being required to bill to the pricing caps
  • Registered providers can deliver some services that unregistered providers can’t, including Specialist Disability Accommodation (SDA) and supports that involve any restrictive practices. The list of services that only registered providers can deliver is very small compared to all the other supports than can be delivered by both registered and unregistered providers.
  • Registered providers can be listed in the Provider Portal search function and the NDIS Commission Provider Register
  • As people find their way in a consumer-driven market where there are many services on offer, being able to say you have been assessed, tested and registered against a set of consistent quality standards could be an advantage over an unregistered provider. For lots of people, there is still an unsaid (and sometimes a more obvious) favouring of services that have that quality ‘tick’.

 

WHAT DO UNREGISTERED PROVIDERS STILL NEED TO DO?

Unregistered providers and their workers are required to adhere to the NDIS Code of Conduct. The NDIS Commission Enforcement and Compliance Policy still applies to unregistered providers, and anyone can make a complaint to the Commission about a provider or worker regardless of registration status. Providers must still maintain an in-house complaints system, can choose to screen their workers and will still be required to meet any professional registration and state-based legislative requirements (where applicable). The NDIS quality and safeguarding compliance requirements for unregistered providers are significant and still important to keep people safe but certainly less rigorous than for registered providers.

 

THE DOWNSIDES

By far, the biggest disadvantage to operating unregistered is that only self managed or plan managed funds can be spent with an unregistered provider, and only self managed funds can be used to pay above the NDIS price limits. There’s no way around it: that trims down the number of participants that you can work with. The most recent quarterly report put the national rate of fully self managing participants (i.e. all of their plan is self managed) at 19%, people partly self managing at 12%, and people plan managing some of their plan at 38%. For some providers, the benefits of being able to charge a financially viable rate (rather than the NDIS pricing cap) will outweigh the drawbacks of only being able to work with a third of all NDIS participants.

There is also local variation: in more mature markets, we generally see higher rates of self-management as people get more comfortable and confident with how to get the most out of their NDIS Plan. In Western Australia, only 13% of people fully self-manage, while in ACT the rate is 33%. Having said that, the data doesn’t draw any iron-clad conclusions (as an early rollout site we would expect South Australia to have a comparably high rate, but it’s actually one of the lowest).

There is also some interesting data deep in the Quarterly Report about the spread of plan budgets by the method of financial management. So while 19% of participants are fully self managed, only 11% of the funds in plan budgets in the Scheme are. 64% of the whole NDIS budget is agency managed, meaning that, for now, it’s only accessible to registered providers. 

THE DISCUSSION OF ‘VALUE’

One thing that moving from registered to unregistered did for my organisation was to open some fantastic discussions about the value of supports and why we were pricing ours higher than others. It’s something that has been brought to fore with the additional pressure the new pricing structure puts on group providers, as we discussed in our recent article: how are providers supposed to deliver fantastic, forward-thinking evidence-based groups that support genuine change, when there’s little incentive in the new NDIS pricing to deliver group services at all? Let alone sink resources and effort into creating something of the highest quality.

Each provider considering their place in the market would have thought about price vs value, even if that wasn’t the language used. While value is primarily determined by the person choosing the service, it’s helpful for organisations to classify the value they offer, and particularly how it relates to a price different from the NDIS cap. Pre-NDIS, value might have been made up predominantly of availability of the service (i.e. no long waiting list), location, and the qualifications of the staff who would be delivering the support. In an outcomes focussed NDIS, differentiation is king. For a person to pay more, there has to be a clear demonstration that what they get that is different (and better) than their other options. Pricing above the cap solely to protect a profit margin or because your organisational costs are high isn’t going to cut it with discerning participants.

 

There is no easy answer to the question of registered vs unregistered. It’s a complex mix of operations, financial viability, strategic planning and community engagement. But as the proposed changes to pricing start to become a reality, we are expecting more providers to think seriously about whether life as an unregistered provider is possible for them.

Authors

Rob Woolley

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