what can the ACCC do to stop NDIS price gouging and reduce costs?
- Written by: Mona Nikidehaghani, Senior Lecturer in Accounting, University of Wollongong
Many Australians with disability feel on the edge of a precipice right now. Recommendations from the disability royal commission and the NDIS review were released late last year. Now a draft NDIS reform bill has been tabled. In this series, experts examine what new proposals could mean for people with disability.
At $14.4 billion over four years, the federal budget’s biggest savings come from efforts to rein in the cost of the National Disability Insurance Scheme (NDIS). The government also plans to invest $213.8 million to fight fraud and co-design NDIS reforms with people with disability. Previous estimates show up to 20% of NDIS expenditure may be fraudulent.
Alongside his “back on track” reform bill in March, NDIS Minister Bill Shorten, announced a taskforce to tackle overcharging that can mean participants pay more than people outside the scheme for the same product or service.
Chaired by the Australian Consumer and Competition Commission (ACCC), the taskforce will collaborate with the NDIS Quality and Safeguards Commission and the National Disability Insurance Agency (NDIA) to combat this so-called “NDIS tax”. But how does this taskforce work and will it be effective?
Overcharging NDIS participants
Currently, the NDIA (which administers the NDIS) provides individual funding to NDIS participants to purchase a range of reasonable and necessary goods and services from providers. The NDIA also has guidelines that set the maximum prices registered providers can charge NDIS participants for each item. For example, the capped price for cleaning services is around $54 per hour ($76 per hour in remote areas and $81 in very remote areas.)
However, there have been reports of providers charging the maximum price set by the NDIA as soon as a client is identified as an NDIS participant. Some providers employ a “twin pricing” strategy, charging an NDIS participant more than they would charge a non-participant. For example, a provider might charge an NDIS participant $130 for a waterproof mattress protector but charge everyone else $90 for the same item.
Previously, these activities were not necessarily fraudulent. However, the NDIS Code of Conduct was amended in December last year, making it illegal for the NDIS providers to charge a higher price for goods for a participant “without a reasonable justification”.
What can NDIS participants do?
NDIS participants are one of the key contributors to the operation of the new taskforce. They can report suspicious overcharging activities.
For example, if they are purchasing a shower chair, they could do a quick online search and obtain several quotes. If they believe they have been overcharged, they should double-check their service agreement to verify they have received the agreed-upon chair, then contact their service provider for an explanation. Ultimately, if they cannot resolve the issue, they can report the case to the taskforce.
Participants can also contact the ACCC if they receive a faulty product or one that does not match their agreement. And they can report providers who intimidate them into signing a contract or pressure them to purchase services they do not need.
What happens next?
Once the taskforce is tipped off, they can initiate an investigation, although the NDIS participant may not be notified of the process or the outcomes.
The taskforce will investigate suspected illegal overcharging of NDIS participants, misleading conduct, unfair contract terms, and anti-competitive agreements set by service providers.
Providers who are found in breach of the NDIS Code of Conduct may face unscheduled site visits, receive compliance notices, be permanently banned, incur financial penalties, and even face criminal sanctions where fraud is suspected.
Will the taskforce be effective?
Co-designed NDIS taskforces that operate mainly based on participant reports can certainly work. The Fraud Fusion Taskforce, established in 2022 to disrupt NDIS fraud and criminal activity, led to more than 2,000 tip-offs in February 2024 alone. Some of these investigations have led to prosecutions.
The ACCC taskforce could be particularly effective in combating price differentiation for tangible goods purchased by NDIS participants, such as wheelchairs, pillows and assistive technology for vision or hearing. But it is important to note some participants may lack the time, skills or capacity required to compare prices and report them to the taskforce.
Controlling price differentiation for services such as those provided by occupational therapists, in-home support and physiotherapists is more complicated.
Service providers may charge the maximum price for a variety of reasons. For one thing, becoming a registered NDIS provider is costly because of administrative expenses and costs related to quality and risk control. There are also expenses associated with registration, compliance and regular audits. And the price of services might depend on the provider’s level of experience and location. The flexibility of service providers and their reputation can also be factors.
Participants with more than one disability might require complex services, and providers could charge a higher price to serve participants with greater needs.
What powers does the ACCC have to monitor NDIS provider charges?
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A pricing model that needs redesign
As part of its findings, the NDIS Review said the scheme’s pricing model did not encourage quality and efficiency, with price caps acting more like “price anchors” than “price ceilings”. The 2024–25 budget pledges $5.3 million to investigate pricing reforms to “strengthen transparency, predictability, and alignment”.
These are important because the current model can encourage service providers to focus on profitability rather than on improving service quality. And the fee-for-service approach can encourage over servicing that discourages capacity building, particularly for people with complex disabilities.
While the ACCC taskforce may well prove effective in controlling unfair overcharging of goods, a review of the pricing model for services is also needed to minimise exploitation of the system.
Authors: Mona Nikidehaghani, Senior Lecturer in Accounting, University of Wollongong
