Annual Report 2016-2017

16.Chapter 3

A financially sustainable Scheme

Key to the success of the NDIS transition is ensuring the long-term financial sustainability of the Scheme. The financial sustainability of the Scheme relies on the Scheme being able to support people with a disability to achieve social and economic outcomes in a way which represents value for money.

To achieve these outcomes the NDIA needs to focus on quality plans for participants, and work with the market to implement these plans.

The NDIS is based on insurance principles. In particular, financial sustainability is monitored by considering emerging experience and comparing this experience with expectations. The insurance approach allows any differences between emerging experience and expectations to be identified quickly, and management responses put in place if required.

The financial sustainability of the Scheme is monitored by the Scheme Actuary, and the Annual Financial Sustainability report includes an assessment of the NDIS after the first year of full Scheme transition (see Section 4).

This Chapter provides a summary of:

3.1 the initiatives that are underway to ensure the financial sustainability of the NDIS; and

3.2 the Productivity Commission Review to date.

3.1 Managing financial sustainability

The NDIS was within budget for the first three years of trial and also for the first year of transition (2016-17). The Productivity Commission estimate of $22 billion a year at full Scheme (2019-20) remains the best estimate of the longer-term cost of a well-managed NDIS.

Monitoring of financial sustainability has indicated the following:

Higher than expected numbers of children are entering the Scheme (0-18 year olds).

Plan budgets are increasing over and above the impacts of inflation and ageing.

Higher than expected numbers of individuals are continuing to approach the Scheme in sites that commenced during the trial period.

Lower than expected numbers of children are exiting the Scheme and being supported in mainstream and community settings.

A mismatch exists to some extent between benchmark package costs (typical support packages) and actual plan budgets.

Boundaries between the NDIS and other mainstream supports are not always well-defined (for example in the areas of health and mental health).

Differences from expectations are not unexpected in the early stages of the Scheme, and the insurance approach has allowed these differences to be identified early. Importantly the Participant and Provider Pathway Review that is currently being undertaken recognises financial sustainability as a critical factor in the success of the Scheme, and improved pathways are being designed considering insurance principles. Some specific initiatives already underway to manage financial sustainability are outlined below.

Managing early intervention

The Agency implemented the Early Childhood Early Intervention (ECEI) approach (detailed on page 50) in response to higher than expected numbers of children entering the Scheme. While it is still too early to assess the impact of the ECEI approach, it is expected that it will provide a meaningful benefit for children with disabilities. The approach aims to both assist with Scheme sustainability by reducing lifetime costs and help build the capacity of the mainstream and community systems.

Refining typical support packages and the planning process

The typical support package and planning process is a method for better aligning a participant’s support need with their funded support when they first enter the Scheme. The Agency will continue to refine this process to ensure that appropriate assessment tools and questions are used during the planning process. This approach assists with financial sustainability as plan budgets will be more in line with benchmark amounts and plan inflation will also be more in line with expectations.

Reviewing plans

The Agency is implementing a plan review strategy which aims to align better plan budgets to support need and typical support packages for participants already in the Scheme. The strategy also aims to apply a risk-based approach to plan duration. Some plans will require earlier review than others based on the characteristics of participants and the supports in plans. For example, children receiving early intervention support may require earlier review to understand progression against outcomes, compared with some participants whose disability and circumstances are unlikely to change in the near future.

Providing quality assurance

The Agency is implementing additional quality assurance processes so decisions are consistent, equitable and sustainable. The Agency is undertaking file reviews and audits to assist in understanding differences between emerging experience and expectations. This assists in developing management responses to financial sustainability.

Improving training

Staff and Partner training on core capabilities is ongoing and includes training on insurance principles, Scheme sustainability, reasonable and necessary decision-making, typical support packages, and quality.

Mainstream interfaces

As recognised by the Productivity Commission, clarifying boundary issues with mainstream services, including those that exist in the areas of health and mental health, will be essential. The state, territory and Commonwealth governments are responsible for implementing the National Disability Strategy which aims to remove barriers for people with a disability accessing mainstream services. The Agency will encourage the use of mainstream and community supports in the planning process to achieve both better outcomes for participants, and also financial sustainability.

3.2 Productivity Commission Review of NDIS Costs

On 20 January 2017, the Commonwealth Government announced a Productivity Commission Review into NDIS costs, consistent with the Heads of Agreements with the states and territories and the Commonwealth. The Productivity Commission had always planned to conduct a review in 2017 to ensure the NDIS was operating sustainably and providing the best outcomes for participants.

The Agency made a submission to the Productivity Commission in March 2017. At 30 June 2017 more than 200 submissions to the Review had been presented from a range of stakeholders including the Department of Social Services (DSS), service providers, community groups, peak bodies, and individual participants and their families.

The level of public engagement in the Productivity Commission demonstrates the high level of public resolve to make the NDIS a success.

The review is intended to inform the final design of the full Scheme by focussing on updating initial cost projections estimated by the Productivity Commission and by providing advice on longer-term projections and overall sustainability issues.

A preliminary position paper of the Productivity Commission published in June 2017 sought feedback on the Commission’s preliminary conclusions, and any additional issues for consideration before the public release of the final study report in October 2017.

The position paper raised a number of concerns in relation to the experience of NDIS participants and providers. As highlighted throughout this report, the Productivity Commission’s concerns are consistent with those raised by the Agency and the Agency has commenced a number of initiatives in response to these issues, for example through the Participant and Provider Pathway Review and Independent Pricing Review.

On 17 July 2017, the Agency made a submission in response to the position paper. The response notes that the Agency generally agrees with the findings and recommendations of the paper, and that many of these are already being addressed, but that it disagrees with the proposals for an independent pricing regulator and for informal carer payments.

CASE STUDY:

Rohan’s story

Ipswich NDIS participant Rohan joined the NDIS in May 2017, along with his younger brother Bryn. Rohan has Asperger’s Syndrome and motor dyspraxia, as well as other physical and cognitive issues. Rohan has found comfort and a creative outlet in writing fantasy stories, and here he shares his story in his own words.

“My name is Rohan and I am 10 years old. I have Asperger’s, which is a type of autism. Having autism has affected my life in lots of ways, both positive and negative.

“Before I started doing home-school I always had bullies. In primary school they made me feel like I was just a backdrop in a movie and they were the stars.

“I have come to realise since then that all of my bullies were wrong. Their actions now can just be brushed off like fine dust.

“I know Asperger’s makes me unique and special in ways that will leave an important mark on the world.

“I have many dreams and I am so excited that I am in the NDIS because the help I get will propel me towards those dreams so that I can make them real.

“I would like to feel strong and healthy in my body, but my biggest heart’s desire is for people to be able to read and enjoy my stories. I want my name to be beside J.K Rowling, Stephen King, Roald Dahl, Dr. Seuss and all of the greats.”