Growing the market and service provider readiness
Growing and fostering a competitive marketplace for disability services
is vital to the success of the Scheme. As a market steward, the NDIA has a key
role in facilitating the growth and diversity of this marketplace. This includes
providing information about the market, setting the infrastructure to support
market transactions and supporting the transition to the new system for
existing providers. Undertaking market interventions, including price setting,
is also critical to market growth and is discussed in Chapter 5.
Firstly, this chapter provides a brief overview of the disability
services market. Secondly, the chapter discusses provider registration
requirements under the NDIS the setup of the Quality and Safeguards Commission
It then examines the actions taken by the NDIA to facilitate provider
readiness, including provision of information about the market and the Scheme
and the setup of NDIS systems to facilitate market transactions.
Finally, the chapter explores the challenges experienced by service
providers transitioning to a market-based system.
Disability support market
The range of providers is diverse and includes existing disability
organisations transitioning from state-based systems, allied health
professional groups and individuals, and emerging non-traditional services such
as financial intermediaries including those employing new models such as online
The number of NDIS registered service providers has been growing every
quarter since the Scheme's inception. At 30 June 2018, there were a total of 16
755 registered providers across the country offering a range of supports, which
represents a 17 percent increase on the previous quarter. However, only 50
percent of the registered providers were active at 30 June 2018.
Therapeutic support has the highest number of approved service
providers, followed by assistance with household tasks and with travel
Whilst at 30 June 2018 44 percent of service providers were sole traders
the market is clearly dominated by large providers.
Indeed, at 30 June 2018, 80 to 90 percent of payments made by the NDIA were
received by 25 percent of providers.
According to McKinsey & Company, approximately 70 percent of NDIS payments
are to providers that cater to 100 or more participants each.
At 30 June 2018, $8.2 billion had been paid to providers and
participants since the introduction of the Scheme in 2013.
Payments went from $86.2 million in 2013-14 to over $4.9 billion in 2017-18.
Provider registration and the establishment of the Quality and Safeguards
Prior the NDIS, the Australian, state and territory governments were
responsible for provider registration, regulation and quality assurance in
their jurisdictions, and for the programs they funded.
In December 2016, the Disability Reform Council (DRC) endorsed the NDIS
Quality and Safeguarding Framework (the Framework). The Framework establishes
nationally consistent protections for participants. It is designed to help
participants and providers resolve issues quickly, and strengthen the
capability of participants, the workforce, and providers to participate in the
Until the framework is implemented in their jurisdiction, state and
territory governments will continue to maintain their current quality and
safeguarding arrangements, such as those for managing complaints and feedback.
NDIS Quality and Safeguards
The Australian Government established the Quality and Safeguards
Commission (the Commission) to implement the framework. As an independent body
it will regulate the NDIS market and be responsible for registration,
complaints, incidents, restrictive practice oversight, investigation and enforcement,
In December 2017, Mr Graeme Head was appointed as the inaugural
Commissioner to lead the Commission. The Australian Government, in its 2017-18
Budget, committed $209 million to fund the establishment and operations of the
Commission over four years.
The Commission started operating in NSW and SA on 1 July 2018. It will
start operating from 1 July 2019 in Victoria, Queensland, Tasmania, ACT and NT.
The Commission will provide national consistency, with operations starting in
Western Australia, from 1 July 2020.
As states and territories will transition to the national regulator at
different times, existing national providers will be required to comply with both
existing and new registration requirements, retain registration with the NDIA,
and commence the registration process with the Commission.
Additional costs and administration
Overall, submitters are of the view that registration requirements
during transition are onerous and a significant barrier to market growth.
For example, the Office of the Public Advocate NT argued that rigorous
accreditation requirements have already deterred some mainstream providers from
entering the market.
Speech Pathology Australia reported that members 'frequently described
the registration process as onerous, confusing and with conflicting
The committee also heard that providers are uncertain about what the new
quality and safeguarding arrangements mean for them and what their compliance
requirements are during transition.
According to the NDIA, the Agency is working with the DSS and the
DHS to manage the complexity of dual registration systems during the
Some submitters argued that current Scheme pricing does not address the
significant differences in compliance costs across the different jurisdictions. For example:
In comparing current requirements across NSW and Victoria,
the cost of compliance costs in Victoria is significantly higher. [...]However
the NDIS prices in Victoria and NSW are the same and do not factor in the
different costs for different jurisdictions.
However, stakeholders argued that additional measures should be
introduced to assist providers during transition.
For example, the Office of the Public Advocate NT was supportive of business
development grants being made available to assist organisations determine what
accreditation is required.
Two tiered market
As described in Chapter 2, participants who self-manage their funding or
use a plan management provider, are able to source supports from both
registered and unregistered providers. However, if a participant's plan is
managed by the NDIA, their supports can only be sourced from registered NDIS
National Disability Services (NDS) argued that this establishes a two-tiered
market, with one being more regulated than the other and bearing higher
NDS pointed out that, unlike their registered counterparts, unregistered
providers are allowed to employ workers without a national worker screening
clearance, are not audited against quality standards, and will not be required
to report serious incidents to the Commission.
NDS was concerned that a significant proportion of participants could be
exposed to unregulated environments:
Over time, the NDIS will see more people with disability
being supported in unsupervised environments and in situations where it is more
difficult to control outcomes. NDS opposes the arrangement that allows
self-managing participants to employ the services of unregistered providers.
NDS argued that all providers should be registered and that regulation
and reporting requirements should be proportionate to risk.
ASPECT and Noah's Ark raised similar concerns and encouraged the NDIA to
address the inequities of a two-tiered approach.
The committee is supportive of the establishment of the Commission as an
independent body, which will provide consistency, resolve problems and promote
safety and quality services at a national level.
The committee is concerned that during transition, providers have to
comply with different registration requirements. The committee agrees with
submitters that this contributes to additional administrative burden and costs.
This likely has a negative impact on the growth of the market. However, the
committee recognises that these issues are of a transitional nature and will be
resolved as the Commission expands its operations to all jurisdictions by July
The committee is concerned that service providers seem unclear about the
registration process and compliance requirements.
The committee recommends the NDIA and the Commission ensure that
consistent and clear information is provided about the registration process
with the Commission to service providers ahead and during rollout in each
Unregistered NDIS providers
The committee understands that the NDIS Code of Conduct applies to all
NDIS providers, whether registered or not, and to all people employed or otherwise
engaged by NDIS providers. However, the committee is concerned that some
self-managed participants may not be aware of the Code of Conduct and how to
make use of it when employing workers.
The Commission and the NDIA encourage the employees of unregistered
providers to apply for an NDIS Worker Screening Check and participants to make
use of the NDIS worker screening process for unregistered workers they engage.
However, the NDIS Worker Screening Check is not compulsory. Given the NDIA
Board's commitment to 30 percent of participants self-managing their plans by
2020, this may lead to an increased number of unregistered workers working in
the sector without having undertaken an NDIS Worker Screening Check. The
committee sees potential risks for self-managed participants.
The committee is concerned that the Scheme may lack sufficient
safeguards in the area of self-managed participants. However, the committee
believes it is too early to make an assessment of the new arrangements. The
committee agrees with the Productivity Commission that there is a need to
regularly monitor and review the regulations and quality assurance
The committee recommends the Productivity Commission examine the
effectiveness of the NDIS Quality Safeguarding Framework and the Quality and
Safeguards Commission as part of the next review into NDIS costs in 2023.
Supporting service provider readiness
Supporting provider readiness through the provision of relevant and
accurate information about the market and the Scheme, and through the
establishment of appropriate business operating systems, is vital to enable
market growth. The NDIA, as the lead market steward, is responsible for these
Provision of market information to
The NDIA has developed a range of publications to provide market
information to existing and prospective providers.
Market Position Statement series
The Victorian Government, in line with the recommendations from the
Productivity Commission, is of the view that the NDIA should collect and share
disaggregated, tailored and forward-looking market data to assist providers to
respond to market demand.
Between March 2016 and January 2017, the NDIA developed and published a
series of Market Position Statements (MPS) to inform market stakeholders,
including current and prospective providers of supports and services of the
opportunities that NDIS will create in coming years.
The NDIA published one MPS for each jurisdiction except Western
Australia, which joined the Scheme in December 2017.
David Bowen, the CEO of the NDIA at the time of the publication of the
MPS series said:
Each MPS is intended to be as practical as possible for
current and prospective providers, incorporating the information most useful
for commercial decision making. To achieve this, the NDIA is committed to
sharing data about the market as it becomes available.
To date, no additional market data or updated MPS have been published by
the NDIA since January 2017.
Market Insights series
The NDIA is developing a series of Market Insights, which aim to provide
concise information on specific submarkets. To date, the only Market Insights
which has been published is on Assistive Technology.
Published in November 2017, the Market Insights on Assistive Technology
is a five pages booklet which provides information designed to help providers
understand consumer demand for AT in the NDIS and identify potential
opportunities for business growth across geographic regions and product groups.
According to the NDIS website, 'the Market Insight on Specialist
Disability Accommodation will be available soon'.
Quarterly reports and other sources
The quarterly reports and dashboards provide information about
participants and providers in each jurisdiction and funding or provision of
supports by the NDIA in each jurisdiction.
However, these reports do not provide data at a regional level because the
NDIA registers providers by state or territory.
The NDIA also publishes a monthly Provider e-newsletter, which keeps the
sector informed about developments and engagement opportunities.
As discussed in Chapter 1, the Quality and Safeguards Commission will collect,
analyse and advise on a range of market information and identify trends and
changes in the NDIS market. It is, however, unclear how this information will
be made available to providers. The Commission's website says it will release
more information about this aspect of its remit in the future.
Provision of information to
prospective providers about the NDIS
The NDIA says it has conducted 'comprehensive community readiness
campaigns ahead of area rollouts to inform members of the community, providers
and potential providers about the NDIS'.
This includes organising face-to-face provider information sessions and webinars.
The NDIS website is a key source of information for service providers. A
recent survey of service providers operating in the ACT and NEMA regions
revealed that 41 percent of respondents identified the NDIS website as the
major source of information about the NDIS reform.
The website has a dedicated section for providers. This includes the
Provider Toolkit, which was redeveloped and launched in November 2017 to assist
providers to learn about and work with the NDIS. It provides information on how
to register, connect with participants, work with participants, invoice and
receive payment and meet reporting requirements.
Levels of communication from the
NDIA ahead of rollout
In April 2018, the committee held two public hearings in Western Australia
where the NDIS is scheduled to be rolled out from 1 October 2018.
The committee heard that service providers found there had been too little
information and engagement from the NDIA to prepare for the transition.
For example, Ms Caterina Prodonovitch, CEO of the Regional Chambers of
Commerce and Industry (WA), reported that service providers have not been
receiving timely and appropriate information from the NDIA ahead of the
From the service providers' point of view, there are quite a
few issues, but the overriding one has been the very poor communication from
Similarly, the CEO of Enable WA, a large service provider, also told the
committee that it was difficult to engage with the NDIA and access relevant
Similarly Mrs Lee Jacobsen, Chair of the Regional Development Australia
Goldfields-Esperance, told the committee that the NDIA has not been providing
information to providers ahead of the rollout in the Goldfields and that the
only place to get assistance as a service provider was located in Perth, some
640 kilometres away.
At the hearing, the NDIA responded to this claim by saying it was
planning to undertake targeted information sessions for providers in the
Goldfields Esperance region in coming months.
At the time of writing, it appears that only a 90 minute service
provider information session has been held for the whole Goldfield-Esperance
region in Kalgoorlie on 5 September 2018, less than a month before the Scheme
becomes available in the whole region.
NDIS infrastructure to facilitate
To facilitate transactions between participants and providers, the NDIA
has implemented the MyPlace Portal. This online portal allows providers to view
and manage their services with a participant. This includes:
making payment requests for services provided to participants;
managing and viewing the details of agreements entered into with
viewing registration details; and
instant messaging with participants.
NDIS IT and portal
Many submitters reported that the NDIA IT system is complex and that
they had many issues with the portal. Portal issues include
billing errors and service booking delays.
For example, a small service provider explained that delays caused by
the portal being down or showing errors is resulting in cash flow issues and
threatening the sustainability of its business.
Sunnyfield explained that 'to resolve each NDIA portal error, it
requires a manual corrective adjustment form to the NDIA, which can take
approximately 30 minutes per error'.
The Australian Physiotherapy Association remains concerned about the
problems with payment systems, including delayed and lump-sum payments, which
it makes challenging to reconcile payments and add administrative and
Provision of information about the
The committee notes the range of initiatives undertaken by the NDIA to
provide information about the market. The committee is of the view that more
detailed information about the market is required and should be provided regularly
until the market reaches maturity. Indeed, the MPS series should be regularly
updated and the committee urges the NDIA to accelerate the development and
publication of the MPS for Western Australia.
The committee recommends the NDIA publish yearly updated Market
Position Statements for each jurisdiction.
The committee recommends the NDIA urgently develop and publish a
Market Position Statement for Western Australia.
The committee believes that market information be urgently made
available on sectors or regions that are particularly underdeveloped and
unlikely to meet expected demands. The committee believes that the development
and publication of the Market Insight series needs to be accelerated. The
committee notes that the Commission will collect and analyse data on market
trends. This data will be a useful source of information for the production of this
The committee recommends the NDIA accelerate the publication of further
Market Insights on specific submarkets and regions.
Provision of information about the
Scheme to providers
The committee acknowledges the work of the NDIA in providing information
about the Scheme through a range of platforms. The committee is of the view
that face-to-face engagement activities with providers are important in order
to increase provider readiness and grow the marketplace. However, based on the
evidence received by the committee in Western Australia, it appears that the
level of engagement with service providers has been, in some instances,
inadequate if not tokenistic, and has come far too late. The committee urges
the NDIA to immediately commence engagement and provider readiness activities
in all locations where the NDIS is not yet available.
The committee notes that the NDIS website is a key source of information
for service providers. The committee believes that implementing Recommendation
6 of this report around improving the design, navigation, quality and
accessibility of the NDIS website will assist existing and prospective service
providers seeking information about the NDIS and its operating systems.
The committee recommends the NDIA commence engagement and provider
readiness activities by January 2019 in all locations where the NDIS will start
on 1 July 2019.
Having reliable and fit-for-purpose ICT infrastructure and systems to
facilitate efficient market transactions between participants and service
providers are paramount. Since its establishment in September 2016, the
committee has heard on many occasions that the NDIS ICT systems and the portal
in particular were a source of issues for both participants and service
providers. As a result, the committee is currently conducting an inquiry into the
NDIS ICT systems and their impact on the implementation of the NDIS. The
committee will report on this matter in the near future.
Transition to a market-based system
The transition to the NDIS is challenging for many existing service
providers. McKinsey & Company, which was engaged by the NDIA Board to
undertake an Independent Pricing Review (IPR) of the NDIS, reported that challenges
for existing providers identified during the review included adapting from
block funding to unit funding, shifting to a consumer-driven service
environment, moving from payment in advance to payment in arrears, and
complying with the new Quality and Safeguards Framework.
Costs of transitioning to the NDIS
For existing providers, the transition from block funding to a market-based
system means that they need to change the way they operate and provide
disability support. This requires significant investment in new infrastructure,
human resources, marketing and other areas.
Indeed, inquiry participants reported that the costs of transitioning to
the NDIS business model were significant and that not all organisations had the
resources and capacity to do it.
Ms Patricia Staines from the Aboriginal and Torres Strait Islander
Corporation for Women in Townsville talked about the lack of operational
capacity and cash flow to adapt to a new operating model:
The lack of capacity in the community-based organisations in
terms of cash flow and that operational capacity—those organisations have been
in a funding model for generations and, all of a sudden, we're expected to
develop a business model [...] and change thinking within an organisation creates
a huge cost.
According to Professor David Gilchrist there is no capacity within
organisations to invest in the necessary infrastructure to be as efficient as
they can in the context of the rollout.
The cost of change to the NDIS for organisations is actually significant:
[...] there are infrastructure changes and they have to change
their workforce and management structures—all those sorts of things. There is
also the additional cost of growth: they are not just being asked to change
from this model to that model—round peg, square peg—they are being asked to do
so and absorb a 30 or 40 per cent increase in demand at the same time.
Ms Caterina Prodonovich, from the Regional Chambers of Commerce and
Industry (WA), also highlighted that the cost of changing business models
involves investing in new infrastructure, including new IT and internal
Cost of moving to fee-for-services
Inquiry participants mentioned the shift to billing and payments in
arrears as a major challenge.
For example, Mental Illness Fellowship of Australia told the committee that this
has resulted in cash flow challenges for not not-for-profit organisations with
typically only have small cash reserves.
Professor David Gilchrist explained to the committee the change and its
impact on cash flow for organisations:
Under the previous funding system, as the committee is
probably aware, funding was provided in advance and therefore cash flow and
other costs of operations were mitigated through that process; whereas, under
the NDIS and the NDIS structure, money, or cash flow, is provided after the
event, in which case there is a cash flow working capital requirement of these
The Regional Chambers of Commerce and Industry (WA) also reported that
businesses are concerned about the effect of payments in arrears on the
sustainability of their operations.
Occupational Therapy Australia (OTA) raised concerns about the financial
risks for providers.
Similarly, the Victorian Government noted that the new model has increased
financial risk for providers:
Under the new fee-for-service delivery model providers bear
increased financial risk, for example for non-payment and late payment, an in
turn may have a greater need for cash reserves.
Catholic Social Services Australia (CSSA) argued that the high unfunded
costs of meeting NDIA terms of business is one of the challenges faced by the
providers transitioning to the NDIS.
Similarly, other submitters reported that the current administrative
burden created by NDIS inefficiencies is creating additional costs to
For example, Mr Cris Massis, Chair of Allied Health Professions
Australia, is of the view that 'the Scheme has far more onerous bureaucratic
requirements than other schemes, resulting in significant unpaid time for
Mr Phil Calvert believes that the administrative burden experienced by
providers can be resolved significantly through improvement of NDIS internal
Improvements in processing quotes, in resolving plan reviews
and in consistent messaging will all contribute to greater efficiency. Our
physios strongly feel the economic burden of poorly designed systems and
processes and the associated duplication of effort.
Mr Calvert reported a case of a physiotherapist who now has to spend an
additional $67 000 in administration wages to specifically deal with the NDIS.
Similarly, in the IPR final report, McKinsey & Company said that
'providers raised challenges relating to additional overhead costs associated
with operating in the NDIS, which they believe are partly attributable to NDIA
processes and systems'.
Lack of investment
Sunnyfield reported that 'very little investment has been made by
government to harness the disability sector knowledge and to develop the
essential commercial expertise, organisational business systems, and capacity
for organisations to deliver the NDIS'.
Other inquiry participants are of the view that existing service
providers should be offered business mentoring and support to transition to a
However, according to the NDIA, 'providers can attract some funding or
assistance to support their transition to the NDIS, through grant programs from
the Australian, state and territory governments'.
For example, the Victorian Aboriginal Community Controlled Health
Organisation (VACCHO) has received funding from the Victorian Government's
Transition Support Package to support Victorian ACCOs to transition from block
grant funding to the NDIS individualised funding model.
The transition to the NDIS is massive structural change for the
disability sector. With the transition to the NDIS, service providers are
expected to change business practices, shifting from a model where
organisations were mostly block-funded and paid in advance to a fee-for-service
model where organisations are paid in arrears on a price regulated unit cost
basis. Organisations have to invest in new infrastructure and systems to meet
the requirements of the new operating model. Additionally, organisations are
expected to grow to meet the increased demand in services. As a submitter
pointed out to the committee, when sectors such as the motor industry or the
tertiary education sector, have been subjected to extensive transitional
changes, it has generally been well supported by publicly funded industry
adjustment programs combined with planned change process.
However, it appears that this is far from the case when it comes to the
disability sector transitioning to the NDIS. Indeed, the committee have
consistently heard that service providers are struggling to make the necessary
changes to operate under the NDIS. In short, service providers critically lack
capacity, expertise, cash reserves and infrastructure to make a successful
transition and operate in the new NDIS environment. Furthermore, to date, it
appears that the growth in new providers is far too slow and patchy to mitigate
current and projected supply gaps.
The committee is of the view that the NDIA as a market steward has
lacked forward planning and not adequately facilitated access to support and
assistance for existing and prospective service providers to operate in the
NDIS environment. The committee understands that the Sector Development Fund
(SDF) and Boosting the Local Care Workforce Program have provided some small
grants to service providers to assist with the transition to the NDIS. However,
the committee has heard no evidence about the adequacy of these programs or of
any noticeable impact it has had on the sector.
The committee is of the view that a disability transition industry plan
with a transition assistance fund program need to be urgently developed and established.
The program should aim at supporting existing service providers to transition
to the NDIS and to grow their operations to respond to increased demand.
Importantly, the program should also aim at attracting and supporting new
businesses entering the disability market. The program should provide
assistance with business training and mentoring activities, infrastructure
investments, workforce recruitment and training as well as seed funding grants
for start-ups and new businesses entering the market. The committee recommends
a whole of government approach to develop the fund assistance program. This
will ensure that the expertise of all relevant departments such as the
Department of Jobs and Small Business are utilised in the development and
implementation of the disability transition assistance fund.
The committee also heard that the additional costs of administration
associated with the NDIS are not factored in the NDIS pricing. This is
contributing to service providers struggling to operate in the NDIS environment.
The committee is of the view that the NDIA should consider how to better
reflect in its pricing of supports the additional administration costs
associated with operating in the NDIS environment at the next NDIS pricing
The committee recommends the DSS lead a whole-of-government approach to
establish a Disability Sector Transition Assistance Fund to support existing
and prospective service providers to operate in the NDIS environment.
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