NDIS price differentiation – avoiding sharp practices

Following the Disability Royal Commission and NDIS review in late 2023, The NDIS Sector has faced unprecedented scrutiny. 

We’ve all seen the headlines in the news scrutinising pricing and fraud in the NDIS. Even the NDIA have themselves used inflammatory press release titles such as: “Ripped off? What to do if you've been charged more for NDIS goods or services” and “Cracking down on overcharging of NDIS participants”.

There is no doubt that there are bad actors, and that non-compliance and poor business practices can have truly tragic consequences for the participants relying on the care provided, the LiveBetter civil case and surrounding media furore clearly show the very real, human cost to poor practice.

As of June 5th 2024, The NDIS Quality and Safe Guards Commission (QSC)  will have new and improved powers for compliance and enforcement.  Penalty notices for NDIS Registered businesses carry a heavy price tag, with a single penalty unit is costed at $313 AUD. The Civil penalties policy enforced by the QSC has penalties ranging from 60 to 1000 units per individual (or between $18,780 to $313,000) per infringement, per day. Corporations face higher penalties ranging between 300 to 5000 units (or between $93,900 to $1,565,000) per infringement, per day.

The cost of non-compliance with pricing is 250 units ($78,250) for individuals and 1250 units ($391,250) for corporations, Per day. We all know the NDIS cost model has little flex, The model specifies a margin of only 2% for services rendered a margin of between $1.27-$1.91 AUD per hour worked, in comparison even the Public Health sector is benchmarked to a profit margin of between 2.5-3.5% and Private companies are generally expected to be working to a profit margin of 10% and higher. This means that a fine would be financially calamitous for most registered NDIS providers.

The commercial pressure being placed by the government on providers is negative, with terms like “Price gouging”, “overcharging” prevalent in the public discourse. But what does price differentiation and ‘sharp pricing’ actually mean? How can you ensure your NDIS business is complying with the NDIS Code of conduct and providing the requisite ‘Honesty, Integrity and Transparency’ to participants?

Well!  It really boils down to these key elements: 

1. Pricing Transparency and Fairness

• Your service sets prices – not the NDIS.  (The NDIS sets price limits). 
• If your service does not require additional efforts, materials or administration you must charge the same price for NDIS and non-NDIS clients.  For example, if you are a cleaning service and you offer cleaning for $45 per hour, and the service is not materially different for that participant, you cannot increase your price to the NDIS price limit for an NDIS participant.   
• If servicing NDIS clients requires additional overhead costs, you must clearly explain and outline how and why the cost for your service is higher for NDIS participants and transparently communicate this to participants and customers.  For example, if your cleaning service required purchasing different products or equipment to provide the service to an NDIS participant, this may provide sufficient evidence to increase your price commensurately. 
• Cannot accept or request additional fees or “gap fees” on top of your advertised price. 
• You must ensure that your prices comply with the NDIS Code of conduct and the NDIS Pricing Arrangements and Price Limits guide.

2.    Service level Agreements (SLA) documentation and compliance

• Any pricing variation must be clearly explained and outlined in your service agreements with NDIS Participants.
• All organisational employees and staff members must understand the pricing policy and approach and be able to clearly communicate any pricing variation in written and verbal form to assist in the communication with participants. 
• You must ensure robust and compliant record keeping and documentation to ensure all variations are clearly denoted and meaningfully justified. 
• You must remain up to date with any Code of conduct or regulatory changes and ensure your documentation, SLA’s, and training protocols are updated to reflect this. 
• All services must align with the participants approved plan.

3.    Marketing and Sales

• You must not offer rewards or inducements (such as discounts, or sign up gifts) which could encourage people to retain or choose your services over another provider.
• Engage in high-pressure sales tactics (you cannot offer ‘special deals’ with a time pressure for completion, or suggest services will not be available if they do not sign up within a specific time frame without significant and provable justification).
   

FOR MORE INFORMATION

If you want to learn more about the NDIS Code of Conduct and how it affects your business, or if you need help with developing policies and procedures that comply with the code, RSM can assist you. Contact RSM’s NDIS Subject Matter Expert Kirsy McGovern-Hooley to learn how we can help your business. 

RSM is a leading provider of audit, tax and consulting services to the NDIS sector, with a team of experts who understand the challenges and opportunities of the NDIS environment. Contact RSM today and let us help you deliver quality and ethical services to your clients.