DIA RESPONDS TO NDIA SUPPORT COORDINATOR PRICE FREEZE

Support Coordinators help people with disability find their way through the masses of NDIS bureaucratic red tape and manage the frequently hostile interactions with the NDIA. This cut in real terms has come with next to no warning (6 Business Days) formally taking effect on Friday 1^st July 2022.

When the outcome of this year’s annual price review was announced, DIA immediately began to hear from our members and the sector expressing frustration, fear, desperation and distress that this pricing decision will force them to cease providing support coordination services, directly impacting participants, their employees and their own livelihoods.

As at the close of business 29 July 2022, DIA has captured the impacts of 623 Support Coordination Providers delivering supports to 98,371 NDIS Participants. DIA will continue to capture the impacts from Support Coordinators and expect these numbers to continue to grow.

Of the 623 providers who have responded thus far:

For clarity the above is not the full or total impact to the market, rather a break down of the respondents to close of business on 15 July 2022. DIA expects impacted number to continue to rise but believes that this sample is representative enough that the percentages are likely to remain consistent (i.e. 8% Severe, 32% High, 38% Medium).

The Support Coordination sector is overwhelmingly dominated by the SCHADS Award for both Participant Facing and Supervisory staff, with over 89% of the market reporting that their workers are employed under the SCHADS award. The remaining 11% is made up of individual agreements and contractor arrangements.

As discussed above, Support Coordinators are currently facing several cost pressures that appear to not have been accounted for in the NDIAs pricing decision.

Quality and Safeguarding Costs
It is estimated that the introduction of the NDIS Quality and Safeguards Commission, and the improved quality of support flowing from its measures, has increased costs unavoidably for providers by about 0.7% of direct worker cost.

COVID-19 Costs
It is estimated that COVID-19 will continue to increase costs for providers in the medium to long term. Noting that one off intervention to prevent market failure may continue to be necessary, it is estimated that the base costs associated with COVID-19 (PPE, additional overtime or leave usage etc.) has increased costs unavoidably for providers by about 1.5% to 2.0% of direct worker costs.

Changes to the SCHADS Industry Award
It is difficult to quantify the long-term impact of these changes before providers respond to their implementation. However, the preliminary estimate is that the impact is likely to be greater than 1.5% to 2.0% of direct worker costs.

Changes to the Superannuation Guarantee
During the 2021-22 Financial Year the Superannuation Guarantee increased by 0.5%, again from 1 July 2022 the Superannuation Guarantee increased by a further 0.5%.

Inflationary Pressures
Like many parts of the Australian economy Support Coordinators are experiencing runaway inflationary operations costs insurance, fuel, rents and power to name a few. However, unlike the rest of the Australian economy where these costs can in part be passed onto the consumer, Support Coordinators do not have that ability as the NDIS limits the maximum it can charge to NDIS participants.

Natural Disasters
There are a number of regional communities in NSW and QLD that have been recently affected by recent floods and as such are disproportionately affected by this pricing freeze. Many of these businesses have indicated that they are unlikely to be able to rebuild in such a constrained market.

All of these considerations were key to the pricing decisions for other critical and front line supports, such as support workers, but appear not to be addressed or considered in response to Levels 2 and Level 3 for Support Coordination.

The current pricing structure simply does not support market viability or quality. This has put the market under such strain that DIA anticipates sizable volumes of thin markets being created in outer metro, near metro and regional settings along with market failure likely in rural and remote settings along with discrete metro and outer metro geographical locations.

Below we have stepped out DIA’s response to each of the points raised by the NDIA in justification as to why a price increase is not required along with our response to each point.

NDIA Justification 1: Role of Support Coordination not adequately defined.

“NDIA should undertake a review of support coordination, in consultation with participants, providers and other stakeholders, to more clearly establish the roles, functions, responsibilities and accountabilities of support coordinators; and further consider the appropriate pricing arrangements for plan management and support coordination.”  NDIA – Annual Pricing Review 2021-22 Final Report

DIA rejects this position and finds the statement to be disingenuous and offensive. For the NDIA to suggest that a detailed review needs to be undertaken in order to effectively consider and appropriately price Support Coordination is laughable. The NDIA Have conducted review, after review, after review. To suggest that a further review is needed to understand the market flies in the face of the thousands of hours Support Coordinators have already freely given to the NDIA as a part of reviews conducted every year since 2016. Below is a summary of reviews conducted by the NDIA and its advisors into Support Coordination:

With all respect to the NDIA, there has been a significant review already conducted into the role, scope and function of Support Coordination within the NDIS. With a review, paper, advice or report being undertaken every year since 2016.

Of most concern is that less than 6 months ago, December 2021, the NDIA released the outcomes of its review and consultation into Support Coordination[1], where it proudly presented that the release of this review “clearly outline the role of a support coordinator”.

For the NDIA to now state that it is unable to consider appropriate pricing arrangements for support coordination until it conducts yet another review to more clearly establish the roles, functions, responsibilities and accountabilities of support coordinators is simply unacceptable and is exceptionally wasteful of taxpayers money to conduct yet another review that will tell the NDIA the same thing that Support Coordination:

1. Is a critical and highly valuable support, delivering value for money;
2. Builds participant capacity and capability to understand they plan, navigate the NDIA and make their own decisions;
3. Responds to and reduces complex barrier to accessing supports;
4. Is a complex and challenging business to operate;
5. Margins are very modest;
6. Should be delivered by skilled practitioners;
7. Should be delivered by an intermediary provider who does not also provider that participant with other direct services (like SIL, SDA, Core Support, Support Workers, Therapy etc);
8. Is underpinned by 11 principles:

• • Self-direction,
  • Independence,
  • Consumer approach,
  • Capacity Building,
  • Participant Best interest,
  • Participant Dignity,
  • Accountability,
  • Support of Participants Values and Beliefs,
  • Continuous improvement,
  • Respect in position of power,
  • Safeguarding

9. Consists of 11 domains and functions which are deployed as required by the individual participant

• • Support to understand the participants plan,
  • Connect with supports and services,
  • Design support approaches, Establish supports,
  • Coach, Refine and Reflect,
  • Deliver targeted support for interface areas,
  • Crisis planning, prevention, mitigation and action,
  • Address complex barriers,
  • Design complex service plans,
  • Build capacity and resilience,
  • Report to the NDIA.

Whilst DIA does not object, rather we wholeheartedly support, the undertaking of further work to improve quality and supports for NDIS participants, it does not require a review of the type proposed. This work would naturally build upon the sizeable amount of work already undertaken.

NDIA Justification 2: Immature Market

“The roles of, and expectations on, support coordinators are still evolving. Neither the service offering, nor the market has fully matured and the context within which support coordinators deliver their services is also not yet fully developed.”

To say that the Support Coordination market is not mature enough and in turn for this to militate against modelling average costs and setting a defensible pricing regulation structure for Support Coordination is a farce.

Like all sectors, Support Coordination will continue to develop and respond to the needs of its customers (Participants). It was the sector that built a valid, structured and defensible cost model for Support Coordination which consisted of an:

• Extensive 149-page, evidence-based, data driven submission; plus
• A de-identified data set that included 68,620 individual data points on 373 Support Coordination businesses.

DIA with the sector built and delivered a benchmarking process, report and findings to the NDIA and the Australian taxpayer at no cost. Something that no other Sector or Peak body has achieved within the NDIS. This clearly shows a sizable increase in sector maturity and clearly indicates a sector that is rapidly heading towards even greater professionalisation.

The NDIA conducts its own benchmarking process for determining the Disability Support Worker cost model a process that the NDIA spends hundreds of thousands of dollars on external consultants to achieve, and yet it has the wherewithal to say that the support coordination market is not mature enough to be able to effectively and defensibly price with a structured cost model.

NDIA Justification 3: Financial Performance

“Currently, some Support Coordinators appear to be able to make a reasonable return under the current arrangements while others are reporting losses.

According to a survey undertaken by DIA some 41% of Support Coordination providers reported that they had made a profit in 2020-21 with a further 39% reporting that they had broken even in 2020-21.”

To say that providers operating within the Support Coordination market are profitable enough as to not justify an increase to the price limit is a misrepresentation of DIA’s submission.

In simple terms in the last 2020-21 financial year, i.e. to 30 June 2021:

• 20% of Support Coordinators made a loss,
• 39% of Support Coordinators broke even,
• 41% of Support Coordinators made a profit (EBITDA as a Percentage of Total Costs with an average 3%, median 1%).

At 1 July 2021, was the Support Coordination price limit lifted to factor CPI or inflation? No, despite CPI rising 1.3% and the super guarantee lifted to 10% (up 0.5%) on 1 July 2021.  Further over the past 12 months 2021-22 financial year there has been significant inflationary pressures

So, it is reasonable to assume that the market those providers in 2021-22 that made a loss will make a bigger loss, those that broke even in are now making a loss and there is a sizable number of those that were making a modest profit are now only breaking even.

You then add in the 4.6% fair work wage rise, 0.5% superannuation guarantee, the sizable increase in operational costs for this upcoming year and it is no wonder that 78% of providers that responded are impacted are indicating significant impacts.

NDIA Justification 4: Increase in Registered Providers

“There also continues to be a considerable number of new entrants to the market. Some 320 new providers registered as Support Coordinators in the in the first half of 2021-22”

As a part of DIA’s Annual Price Review submission DIA has conducted an analysis of the providers registered for Support Coordination in the NDIS between two points in time being December 2018 and June 2022.

The number of providers registered in the ‘Assistance in Coordinating or Managing Life Stages, Transitions and Supports’ (Level 2 Coordination of Supports) and ‘Specialised Support Coordination’ (Level 3 Specialist Support Coordination) registration groups was:

• 1875 as of December 2018; and
• 3636 as of June 2022.

DIA notes that not all providers registered in the ‘Assistance in Coordinating or Managing Life Stages, Transitions and Supports’ deliver Level 2 Coordination of Supports as there are other supports that are contained within this registration group.

Whilst this appears to be a positive indication of market growth, or a healthy market on first inspection, analysing the change in number of registered providers between 2018 and 2022, it is apparent that the number of providers which remain from 2018 is around 50% (only 939 of the 1875 have remained registered).

Whilst the NDIA has focused on the overall number of registered providers and the basic metric of ‘new entrants’ to suggest a flourishing or healthy sector, the incredibly high market ‘churn’ or volatility of registered providers demonstrates the lack of understanding regarding both the modest margins available and the level of investment, both in terms of dollars and workforce required, to establish a viable Support Coordination business.

DIA finds the continued rhetoric from the NDIA that the Support Coordination market is profitable with sustainable pricing to the point that it can absorb year on year on year price freezes from the NDIA, to be reprehensible and setting new entrants to the market up for failure.

[1] Improving Support Coordination for Participants: https://www.ndis.gov.au/community/we-listened/improving-support-coordination-participants