Cover Image of Report on the Sustainability of the NDIS for Q4 of Y1

Report on the sustainability of the scheme

1 July 2013to 30June 2014

August2014

Prepared by the Scheme Actuary

Introduction

This section presents analysis on the first year of scheme experience (2013/14), including:

participant satisfaction
trends in the number of eligible participants and participants with approved plans
trends in the amount of support committed to these participants and the distribution of these packages
actual payments made to date.

Overall the experience of the scheme to date is positive, with committed support packages and the number of participants eligible largely in line with expectations. Participant satisfaction with the Agency is also very high.

It is important to note that it is early stages in the roll out of the NDIS. Scheme experience will emerge over time and allow more thorough analysis of financial sustainability.

The first year of scheme experience (2013/14)

Participant satisfaction

Participant satisfaction with the Agency has remained very high in recent months. Satisfaction is reported on a scale of extremely dissatisfied (-2) to extremely satisfied (+2), with neutral being 0. The participant satisfaction level is currently 1.66, consistent with the March results.

Eligible participants

As at the 30th June 2014 (Table 1):

8,585 participants were eligible for the scheme (91% compared with the bilateral target and 77% compared with the actuarial model).
7,316 participants had an approved plan (78% compared with the bilateral target and 66% compared with the actuarial model).
The number of eligible participants and participants with approved plans relative to the bilateral agreements and actuarial model is largely in line with the March results (Figure 1).

Table 1Eligible participants and participants with approved plans

1 July 2013 to 30 June 2014 / NSW / SA / TAS / VIC / Total
Number of expected participants (bilateral agreements) - (a) / 3,000 / 1,565 / 792 / 4,076 / 9,433
Number of expected participants (actuarial model) - (b) / 3,000 / 2,697 / 801 / 4,584 / 11,081
Number of eligible participants (active & inactive participants) / 2,612 / 1,921 / 833 / 3,219 / 8,585
Percentage deemed eligible compared with expected - (a) / 87% / 123% / 105% / 79% / 91%
Percentage deemed eligible compared with expected - (b) / 87% / 71% / 104% / 70% / 77%
Number of participants with current approved plans (active & inactive participants) / 2,268 / 1,355 / 786 / 2,907 / 7,316
Percentage with approved plans compared with expected - (a) / 76% / 87% / 99% / 71% / 78%
Percentage with approved plans compared with expected - (b) / 76% / 50% / 98% / 63% / 66%

Figure 1 Participants with approved plans by month compared with the bilateral agreements and the actuarial model

Committed support and actual payments

To date, $285.4 million of support has been committed to participants with approved plans. Of this $285.4 million, it is estimated that $130.9 million (46%) will be provided in 2013/14 (including actual paid to date). The funding envelope based on the bilateral agreements for 2013/14 is $148.8 million, including both cash and in-kind. Overall, for participants who have entered the scheme in the first twelve months, committed support for 2013/14 is around 88% of the funding envelope (Table 2).

In 2014/15, the funding envelope is $384.4 million. Committed support for 2014/15 is at 40% of the funding envelopeto date.

Stockton (a large residence in the Hunter trial site) impacts the funding envelope significantly – removing Stockton from the analysis results in committed support of $253.3 million (a reduction of $32.1 million) of which $123.6 million (49%) is expected to be paid in 2013/14. The Stockton large residence is an in-kind contribution and hence specific support is available for these participants. However, the overall funding envelope was based on trial site negotiations which assumed $35,000 per participant (including for this concentration of high cost participants).

Table 2 Committed support to date and compared to the funding envelope

Total / Total (excl. Stockton)
Expected to be paid ($m)
2013/14 / $130.9 / 46% / $123.6 / 49%
2014/15 / $154.5 / 54% / $129.6 / 51%
Total / $285.4 / 100% / $253.3 / 100%
Funding envelope for 2013/14 ($m) / $148.8 / $148.8
Expected to be paid in 2013/14 as a proportion of 2013/14 funding envelope / 88% / 83%
Funding envelope for 2014/15 ($m) / $384.4 / $384.4
Expected to be paid in 2014/15 as a proportion of 2014/15 funding envelope / 40% / 34%

Actual payments to service providers as at 30th June 2014 were $49.7 million, of which 15% is in-kind. Actual payments only represent 38% of committed support expected to have been provided in the first twelve months of the scheme, and this is reasonably consistent across trial sites. This has increased from 27% as at the end of March. As more experience emerges and the Scheme matures, it will possible to use this information to understand the extent to which participants are utilising the support in their in packages.

Trends in average package cost

The average annualised package cost at the end of June2014 is $38,200 including the Stockton large residence, and $34,600excluding Stockton large residence. This is slightly higher than the average cost at the end of March, largely due to the high number of shared supported accommodation participants who phased into the Victorian trial site in May 2014.

In general, average annualised committed supports have been trending downwards across all trial sites (Figure 2). Some of this trend can be explained by operational reforms introduced in January which aimed to provide more concrete guidelines around reasonable and necessary supports, and some of the trend is likely to be due to the phasing schedule.

It should also be noted that there will continue to be variability in the quarterly average package size due to different groups of participants being phased into the scheme each quarter.

Note: Average annualised package cost is not an appropriate measure of scheme performance when considered in isolation from other metrics. It is important to consider the number of scheme participants, the distribution of packages committed to these participants, and actual payments for supports provided. All of these factors contribute to the overall cost.Further, the focus should be on the supports provided to participants over their lifetime, rather than annual package amounts.

Figure 2Average annualised committed package cost by trial site – cumulative averages

Distribution of package costs

Consistent with the March results, the distribution of the cost of support packages differs from expected across all trial sites. In particular, a higher proportion of low cost participants were expected compared with actual experience, and there are a higher proportion of participants receiving mid-range packages than expected. This is consistent across all trial sites.

The shape of this distribution, and particularly the lower proportion of lowcost participants, explains why the actual number of participants is somewhat lower than the actuarial projections, which expected a higher number of low cost participants in line with the Productivity Commission model.

The majority of participants in the New South Wales and Victorian trial sites have annualised package costs of between $10,001 and $30,000 and very few participants have high cost plans of over $100,000 (Figure 4). Of the 5,148 active participants with approved plans in the New South Wales and Victorian trial sites, 3,346 participants have an annualised package cost of less than $30,000 (65%). The total annualised package costs of these 3,346 participants only represent 18% of committed supports. Therefore, the overall annualised average package cost is driven by a small number of participants with high cost plans.

Understanding this distribution is key to monitoring the Scheme and much more relevant than average annualised package cost – a point also highlighted in the March 2014 and December 2013 quarterly reports.

Figure 3Distribution of package costs by trial site

Figure 4Total package costs and number of participants by trial site and annualised committed support band