The increasing impact of the Disability Support Worker Cost Model

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Many NDIS providers are expressing concerns about prices for the 2020-21 financial year, reporting expectations of substantial reductions in revenue and indicating they will be forced to exit or limit the delivery of some supports. We are raising these concerns with the Agency as a matter of urgency.The Agency’s report on the Annual Pricing Review 2020-21, together with the Price Guide, provide an indication on what is driving pricing decisions. Two noticeable features are their decision to link more pricing directly to the NDIS Disability Support Worker Cost Model, and to have participants charged only for the actual support they receive. These decisions result in linking Supported Independent Living (SIL) funding to prices for activities of daily living (which are derived from the Cost Model) and to remove the allowance for non-face-to-face time built into prices for group supports. Participants receiving support in a group will therefore share the cost of the worker/s providing the support, with any non-face-to-face supports being charged separately.NDS has noted previously that the current Cost Model contains inaccurate assumptions about cost drivers. The Agency has compared these existing assumptions with results of a survey of providers that had charged the Temporary Transformation Payment (TTP) some time over the course of this year. The Cost Model assumes a Span of Control of 1 supervisor to 11 disability support workers (FTE). The TTP survey results indicate an average Span of Control of 11.8, with the 25th percentile at 15. The Review recommends the Span of Control be re-set to 15, despite the fact that 75 per cent of providers surveyed are not operating at that ratio. Given the large number of part-time staff in the sector, the headcount ratios are much higher than this.The Cost Model assumes a permanent employment rate of 80 per cent. The survey indicates an average of 43.8 per cent, with the 25th percentile at about 72 per cent. The Review recommends re-setting the permanent employment rate to 70 per cent. This is a step in the right direction (given providers now have to pay casual staff a casual loading as well as any applicable penalties), but is again not reflecting the structure of most providers.The variation among providers in their overheads is large. The Cost Model allows for 10.5 per cent while the survey indicated an average of almost 28 per cent, with the 25th percentile at almost 20 per cent. Despite these figures, the Review recommends only a minor increase to 12 per cent for the overhead allowance.Other recommendations for changes to the Cost Model are:• increasing the share of staff assumed to take up their long service leave entitlements to 100 per cent• decreasing the workers’ compensation premium percent to 1.7 per cent (down from 3 per cent)• adding an allowance provision for support workers and supervisors to 1 per centThe TTP survey shows an average utilisation rate of workers of about 80 per cent compared with the Cost Model assumptions of 92.5 per cent for a Level 1 worker (and 90 and 87.7 for level 2 and 3 respectively). Despite this vast difference, the Review does not recommend a change.When the TTP Benchmarking Survey was announced, providers were told the results would be used to inform the assumptions within the Cost Model. This report indicates that this did not happen.With the release on Friday of the National Minimum Wage increase of 1.75%, the finalised NDIS prices should be available shortly. Other changes being implemented through this price guide are substantial. Providers will not be able to make all the administrative adjustments required by 1 July, being required to implement lower prices but having no time to put in place ‘Programs of Support’ and/or Service Agreements that allow billing for non-face-to-face time. NDS is continuing to discuss this impact with the Agency.On a positive note, after contacting the Agency about problems with pricing for a worker engaged across a shift change (for example, working across a day and an evening shift) they have implemented changes. In these circumstances, providers can charge the entire shift at the higher rate (consistent with the Modern Award requirements).NDS has also had it clarified that a therapist offering a program of sessions (for example, six preparing for school sessions) could, if they desired, use a ‘Program of Support’ arrangement for charging those supports.To inform our negotiations with the Agency, please continue to provide us with your analysis of the impacts of the new price guide. Please provide your feedback to Philippa Angley.

For any enquiries, please contact David Moody, Chief Executive Officer, 03 8341 4343, 

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