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PricewaterhouseCoopers: National Disability Insurance Scheme - Final Report (October 2009)

8. Governance options

Key Points

A crucial aspect of a successful and efficient welfare system is a robust structure and governance model.

There are multiple problems with the current system, including:

  • Lack of central planning, historically-based funding models, and little opportunity for acknowledgement of community need
  • As a result, significant and unsustainable unmet and under-met need
  • Many agencies involved (across both Commonwealth and State)
  • Little useful information to allow a planned and coordinated approach
  • Even if information were available, no mechanism for reporting it or making the system accountable
  • Accordingly, poor monitoring of service providers with respect to both service delivery and outcomes

It is argued that a properly funded insurance model can assist across this range of problems by:

  • Applying an initial discipline of needs analysis at an aggregate level to estimate the funding required to equitably provide services to those most in need
  • Introducing a regulatory process to achieving an agreed approach in assessing eligibility and entitlement within a model which recognises individual potential and planning for people with a disability
  • Establishing clear guidelines and expectations of service providers, including requirements of reporting and accountability
  • Establishing a comprehensive longitudinal unit-record data base which allows monitoring of expenditure, service provision and outcomes of scheme beneficiaries
  • Operating under a formal and independent governance model comprising a prudential board and an advisory council of stakeholders
  • Sponsoring applied research to achieve innovation and best practice in service provision
  • Sponsoring required industry initiatives to ensure sustainability in the system (for example, at present in the need for a workforce strategy)

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8.1 Introduction

As discussed above in Section 1.2, there are many funding bodies which have “community care for people with a disability” as part of their focus. There are a further set of entities (often different from the funding bodies) responsible for resource allocation and purchasing services, and yet another set (again different) providing services and payments.

Table 70 Funding, purchasing and service delivery in the current system presents the major group of stakeholders relevant to the direction of this paper in considering a NDIS for people with disabilities. While this table is by no means exhaustive, it is sufficient to demonstrate the disjointed nature of community care in Australia. Expanding the table would merely reinforce this message.

Some of the clear issues emerging from this table are:

In the remainder of this section, we explore the possibilities for a NDIS to address some of these issues.

Table 70 Funding, purchasing and service delivery in the current system
Data Source Funding Resource allocation, purchasing Service delivery, payment
CSTDA 20% Commonwealth (FAHCSIA) grants to States & Territories, who put in 80%

Historically based with annual growth adjustments agreed by negotiation 		Usually allocated to sub-state planning regions. Still largely based on historical allocations

Purchasing may be in grants to providers from head office or from regions 		Services either provided by the State agency or purchased from private providers (often NGOs) – often by block grant

Very poor information on clients and services – Minimum Data Set incomplete
HACC 60% Commonwealth (DoHA) grants to States & Territories, who put in 40%

Historically based with annual growth adjustments agreed by negotiation Moving to triennial planning 		Usually allocated to sub-state planning regions. Still largely based on historical allocations

Purchasing may be in grants to providers from head office or from regions 		Services either provided by the State agency or purchased from private providers (often NGOs) – often by block grant

Very poor information on clients and services – Minimum Data Set incomplete
Residential aged care Commonwealth (DoHA) and clients

Overall funding subject to target planning ratio 		Subsidies paid to residential aged care providers, depending on client needs mix.

Significant client copayments 		Services provided by residential aged care providers. Data poor and inaccessible
Commonwealth income support Commonwealth (FAHCSIA)

Uncapped, based on entitlement under work capacity test 		FAHCSIA engages with Centrelink for the payment operation Payments directly to pensioners. Vocational rehabilitation/RTW facilitated by DEEWR and outsourced to providers (for example, Job Network)

Comprehensive dataset, but information and monitoring poor
No-fault accident compensation Funded by premiums on motorists and employers estimated to fully fund the benefit/service need Services are purchased/paid by the insurer or statutory authority which collects premiums Combination of direct (income) payments to claimants and provider purchasing

Comprehensive data and monitoring
Fault-based accident compensation Funded by premiums on motorists and employers estimated to fully fund the benefit/service need Lump sum compensation is paid to the claimant, who may or may not purchase services Services may be purchased by claimants

Comprehensive data up to settlement

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8.2 Structure – what are the main segments?

It is clear from the costing work presented earlier in this report that the full need for care and support among the Australian population is one which is unlikely to be ever met though an insurance type model.

It is instructive, therefore, to predicate the extent to which this need for care and support is currently segmented, and how these segments could be reorganised to become more equitable, efficient and sustainable. The following may be postulated as the natural segments of “service provision” for people with a disability:

Table 71 Relative care and support funding - under and over age 65 ($m)

Australia

  Under 65 Over 65
CSTDA $3,673 $251
HACC $480 $1,044
Residential aged care $201 $4,584
CACP $23 $382
EACH $9 $120
National Respite for Carers $52 $115
Veterans home care $2 $93
Multi-purpose service program   $69
Transition care program   $33
Day therapy centres   $34
TOTAL $4,440 $6,725
Number of people with severe/profound disability 649,783 562,287
TOTAL per person with a severe/profound disability $6,833 $11,959
Multiple - Over 65 to Under 65 1.75

As a working hypothesis, therefore, we have assumed:

  1. Entitlement to care and support following an injury will be provided by an extension and national coordination of State-based accident compensation schemes, civil liability coverage and medical indemnity coverage to full no-fault for the care and support of catastrophic injury.
  2. As well as coordinating these injury schemes which will cover lifetime care and support needs following injury, NDIS will provide care and support (as defined above) to people with an early onset (before age 65) disability other than an injury – that is, eliminating Options 2 and 4 from the options in Section 6

It would be quite feasible to attach income support to this model as a means of integrating the services required for the target client group, and realising the potential outcome benefits of this integration. This would then be similar to the service coverage of the NZ Accident Compensation Corporation. However, our initial cost analysis does not presume that this integration will occur.

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8.3 Eligibility and assessment

While the vision for the NDIS would be a comprehensive disability insurance culture supporting the whole community, a prescribed process will be needed to determine those people eligible to enter the NDIS in a formal sense. This development should give rise to a nationally consistent process, preferably developed within the framework of the ICF, as discussed later in this section.

These processes would be developed around eligibility to determine need and entitlement on an individual basis and assessment to agree on a workable support plan recognising these needs, but with outcome goals or milestones.

Entry to the scheme

Basis of entry

It will be necessary to develop a functional need classification system which avoids the use of specific disease or health condition definitions to establish the need for NDIS type services.. However, it will be necessary also to capture health condition within the International Classification of Diseases (ICD) described in Appendix C for the following reasons:

There are a multitude of functional assessment instruments already in operation, including:

However, functional assessment tools introduce other complications such as when and how often to undertake assessment. In particular, it is most unlikely that functional status will develop quickly and remain stable during the lifetime of the claimant.

Also, the tools do not provide an ability to predict or explain 100% of the services that will ultimately be needed. Studies in the US have suggested that ICAP may satisfactorily capture data that explains 50% of service requirements.

To a large extent, the design of the NDIS will determine which eligibility assessment tool(s) is appropriate. In this context, the International Classification of Functioning, Disability and Health (ICF)114 provides a very useful framework for the further discussion and development of assessment mechanisms.

In this context, we would recommend the following requirements for the development of any entry assessment tool:

The threat to an insurance scheme that does not assess eligibility within the principles described above lies in the financial consequences of potential erosion of:

The consequences of these would inevitably be a return to unsustainability of the system within the available resources. This risk underscores the need to develop a robust and objective national assessment process.

Assessment process

It is not just the instrument of assessment which is important, of course, but also the process, which is now considered.

Assessments of health condition or functional limitation serve two purposes in a potential NDIS. One is to determine eligibility for admission into the scheme, and the second is, once applicants are admitted, to determine the appropriate selection and quantity of services to be provided. The two issues are, of course, related. To the extent that disease and function change with time, future assessments may alter the view as to appropriate services, and in fact with a deteriorating condition may suggest that “late” entry into the scheme is appropriate. The services which may be considered “appropriate” for inclusion in a NDIS are mentioned below.

Initial assessment

For scheme entry, the timing of assessments is a balance between delays (to increase the certainty of the decision, particularly evident for gradual onset or progressive conditions), and the implications that this delay may have. Untimely delivery of appropriate services may be detrimental to rehabilitation and ultimately more costly to the scheme. Delay may also result in negative community attitudes over the treatment of people with severe disabilities.

A recording and reporting process should be linked to appropriate health and hospital pathways and databases and community access points – much exploratory work has already been undertaken with Single Point of Access pilots. For some health conditions and jurisdictions, links should be established with existing registries (for example, cerebral palsy, trauma), the National Perinatal Registry and Injury Surveillance processes.

Periodic updates of major cases should be made at six months and 12 months post initial assessment, with a review of eligibility and need at regular intervals post initial assessment.

With any eligibility decision there will be those on the borderline who miss out on entry. A possible implication of this is that there may be significant legal involvement in these borderline cases arguing the eligibility decision. It is a typical feature of both no-fault and common law accident compensation schemes that pressure is placed on eligibility thresholds, with corresponding financial pressure.

Ongoing review

Review of function or disease after the initial assessment would normally need to take place when significant events in the clients’ lives occur, or at least on a periodic basis. The review would determine the appropriateness of existing service provisions and potential changes. Reasons that NDIS services would need to change include change of personal situation (marital status, ageing – both younger people requiring more independence from parents or older people becoming more dependent on others), changes to employment status and changes to the disease status or functional ability (aggravation, complications, ‘natural’ deterioration).

On the other hand, the Scheme will require a clear statement of when scheme responsibility stops – review also makes “finalisation” of claims a possibility. If function returns to levels that would no longer require NDIS support, no further support should be offered. Such a function of regular review may reduce the pressure on the initial assessment.

The uncertainty surrounding these changes clearly adds to the difficulty in the financial management of the scheme.

Appeals and dispute resolution

Disputes in the scheme may arise in the areas of:

As such, the process for dispute resolution plays a vital role in ensuring that the scheme continues to be viewed by the community as providing fair and reasonable support to people with serious activity limitations.

In order to do this, it is essential that all aspects of the scheme’s operations are transparent and defined as objectively as possible. The decision making process for the more qualitative aspects of the scheme will need to be clearly enunciated, as will the entitlement and appeal process, either via an informal internal process, or a more formal external process such a resort to appeals tribunals.

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8.4 Service delivery model – individual potential

Another important concept in disability management is that of recognising each person with a disability as an individual, with needs and potential along a continuum with respect to both his or her care and support needs and aspirations to participate to a maximum extent in employment or other community activities.

Another way of looking at this concept is to acknowledge that every human being from birth will encounter a number of pathways throughout their lifetime.

One of these pathways is a “utilisation” one, and along it are the needs, wants and services that every human finds necessary to sustain themselves – emotionally, physically and economically. People with disabilities have a high intensity “utilisation pathway” – they need a lot of care and support, and often income replacement and accommodation. Traditionally, we have thought of disability as one dimensional – focussing on this pathway and therefore considering people with disabilities as a social burden.

The changing demographics in our society make it incumbent upon us to consider the parallel pathway of most people that is unfortunately too often ignored for people with disabilities, especially by people who make decisions that affect their lifestyles. This is a “contribution pathway”, and it contains the inputs that each person makes to society, family and community, and it plays an important role in defining both our economic and social capital.

By insisting on a focussed and functional utilisation pathway for people with disabilities, we can optimise their contribution pathway, for the net benefit of our society. We may also mitigate or prevent some of their navigation of the utilisation pathway.

In terms of translating these concepts into deliverable systems, we must include the notion of individual plans and budgets for people with disabilities, with interested guides, or coordinators to assist them in their system navigation.

The next graphic presents a notion of this ”system” in terms of the needs people with different type of severity of limitation might have, or the continuum of needs which an individual person might traverse over time.

Figure 26 The continuum of care

Figure 26 The continuum of care

While this continuum goes beyond the projected coverage of the NDIS in including lower levels of need, the key point of this section is to emphasise the need for planning, integration and individualism in delivering a whole of life suite of services to people with disabilities. Nevertheless, the clear definition of both the quality and quantum of services are paramount for the successful financial management of any insurance care scheme.

It must be stressed that even extensive and detailed standards of quality and quantum of services will not guarantee financial stability. Procedures and processes are subject to constant change. The NDIS must be flexible enough to introduce new services and have the discretion to extend the quantum of services dependent on the care needs of individual clients and change as the needs and circumstance of each client changes. However, such discretion must be closely monitored and allowed only within clearly enunciated guidelines. To do otherwise could expose the scheme to apparently small changes that have far reaching financial consequences.

In the next section we investigate how an insurance model might help with this objective.

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8.5 Insurance – how does it help?

8.5.1 Introduction

The picture presented in this report to date is of “disability” in Australia as a social concept which needs focussed attention in the following areas:

The following paragraphs consider these issues, and present examples of how insurance frameworks have assisted in their development.

8.5.2 Pricing, Underwriting and Social Insurance

Pricing and underwriting

Two of the fundamentals of insurance are the notions of fair pricing and underwriting. In fact, these two concepts are really the same, but with one commonly describing the cost estimate of a portfolio of risks (pricing), and the other concerning itself with the relative price of individual or groups of risks within a portfolio.

The simple equation of pricing is as follows:

Fair premium + Interest earned = Cost of claims plus Expenses plus Cost of capital

Each of these is considered in turn:

The important distinction between this process and pay-as-you-go social welfare is the detailed analysis which occurs at each point of this equation. This analysis requires comprehensive data, and a thorough understanding of the processes and risks which underpin the business. It also allows a consideration of how this process might be managed to achieve desired outcomes for each individual claimant or system participant.

In a risk-rated underwritten portfolio, it is common for the portfolio to be segmented into smaller homogeneous groups of risk which might have different costs of claim per unit of exposure. For example, in a workers’ compensation portfolio, the premium for the financial services industries may be $0.50 per $100 of wages, while in a heavy manufacturing or construction industry, it may be as high as $20 per $100 of wages.

Pure unrestricted risk-rated insurance can usually only exist in a voluntary market where individual policy purchasers assess the relative value of the insurance price offered compared to their expected likelihood of drawing on the insurance.

Social insurance

Australia has several insurance type models where the premium is not risk-rated. The best known of these are the Medicare levy, which covers part of the cost of universal medical coverage, and private health insurance premiums where all members in the same table must be charged the same rate of contribution, regardless of age or health condition.

There are many examples of “social insurance-like” schemes between these extremes, where high-risk policyholders are subsidised by low-risk policyholders to achieve a public benefit. For example, all compulsory motor injury schemes in Australia have structures in which the premiums of young male drivers are heavily subsidised. Virtually all social insurance schemes are comprehensive in population coverage – that is, they need to be either compulsory or allow opt-out only under some regulated conditions which maintain the public benefit.

The following paragraphs describe social insurance in Europe, where these schemes are most common.115

In the international literature the term “social health insurance” is used in OECD and WHO to describe those health systems (mainly European) which provide universal health cover through mandatory insurance, financed by levies on individuals’ incomes, separate from the general taxation system, in a similar way to which superannuation is now organised in Australia.

Countries with significant use of social health insurance include Germany, The Netherlands, France, Austria and Belgium. Key features of these European systems include:

In the context of a NDIS, social insurance models offer the opportunity to consolidate the various pieces of consolidated revenue and other levies and taxes which make up Commonwealth and State contributions to the multitude of programs described earlier. At the same time, a disciplined needs-based pricing paradigm (described earlier in this report) would estimate the additional levy required to underpin the integrated system in a sustainable way.

8.5.3 Funding

The other side of insurance pricing in a scheme context relates to funding, or the extent to which the scheme, through accepting a beneficiary, accepts liability and puts aside enough funds not just for one year of benefits, but for the totality of all expected future benefits associated with the conditions that trigger claims.

Private insurers in this country are required by the Australian Prudential Regulatory Authority (APRA) to not only be fully-funded, but have an additional risk margin (or prudential margin) which increases the probability of the likelihood of their being able to meet future liabilities (noting that the “Expected” cost of claims has approximately a 50% probability of being insufficient). Australian Accounting Standards Board 1023 (AASB 1023) covers this and other insurance reporting and accounting requirements. Moreover, insurers are required to have an approved actuary who certifies their financial position.

Some accident compensation schemes in Australia are privately underwritten, and participating insurers are required to meet all of the requirements described above. Monopoly publicly underwritten schemes are not required to report to APRA, but their auditors usually still require that they comply with AASB 1023, or the equivalent AAS 26 for public sector insurers. They also usually appoint a statutory actuary, and are typically fully-funded, or at least have this as an objective, and some have a risk margin as well. The benefit of these schemes is that in times of cost escalation (which can be extreme), the scheme can make use of its funding flexibility to buy time to identify the management and process issues – and rectify them - without immediately raising premiums. A classic example is the NSW WorkCover Scheme of 1995 to 2005 which turned a $1 billion funding surplus into a $3.5 billion deficit, and back again into surplus, without raising premiums above 2.8% of wages (although the underlying cost at one point was 3.5%). Similar experience was shared by Victorian WorkCover and South Australian WorkCover at various times.

Hence it is by no means clear that public insurance schemes need to be fully-funded at all times, or indeed at all. The social insurance schemes of Europe generally are not, being more akin to public welfare systems which collect their revenue from predicated levies. However, these schemes would be at risk of “shock” cost escalation requiring levy increases in times of scheme inflation, and the decision to increase levies would not be an easy political one at such times.

It would be feasible to adopt a notion of partial funding in the context of NDIS – say 30% of full funding for new incident exposure. This is particularly appealing as an avenue to allow for the extinction of the “tail” (that is, the existing prevalent people who would be covered by the scheme), while gradually building up reserves for the new exposure. In this way, the scheme would have the characteristics of insurance, and would be required to price and report as an insurance entity. It would also have the flexibility of absorbing “shocks”, as do monopoly accident compensation schemes, but could do so at more affordable levy rates. This type of scheme has a precedent in Australia – with the NSW TransCover Scheme of 1987. The NZ Accident Compensation Corporation has also shared some of these characteristics along its history from 1967 to the present.

In the particular case of a NDIS, this partial funding approach is very appealing since the annual incident cost of a funded scheme is actually projected to stabilise over time as a proportion of GDP, compared to the strongly escalating costs of a pay-as-you-go approach. This structure thereby automatically absorbs some of the risks of cost escalation. (See the projections of Option 6 presented in Section 6 above).

8.5.4 Investment management

Based on Option 6, the NDIS will have ultimate annual income (excluding income support) of the order of $12 billion and initial annual payments for care and support plateauing to around $10 billion over a phase-in period.

There will therefore be a significant investment function both in managing cash flows and also in managing a reserve which will accumulate to billions of dollars over a short time frame.

Moreover, because of the long term nature of the liabilities, the net rate of return on investments has a very material impact on the required levy rates over the longer term.

As a result, investment strategy and investment management will be crucial.

Considerations for strategy include:

Considerations for funds management (all of which have precedents in Australian accident compensation schemes) include:

8.5.5 Administrative effectiveness

A further very important aspect of scheme management is the administrative efficiency and effectiveness of the overall system.

It is generally agreed among both disability administrators and service providers that the efficiency and effectiveness of the current system could be significantly improved. To this end, jurisdictions are examining both the service delivery models of their systems and their benchmark positions with respect to the effectiveness of available resources in meeting the needs of their target groups.

At present such analyses and benchmarking do not exist, and any current and future developments are taking place within only a loosely confederated framework. It is argued that a NDIS could enormously facilitate such studies, and in doing so could identify areas for potential gains in administrate efficiency and effectiveness – the governance and accountability frameworks for a NDIS are discussed further below.

8.5.6 Data

A key plank of this disciplined analysis associated with insurance-type schemes would be a comprehensive longitudinal database (already existing on many items and well used in Australia’s accident compensation schemes and insurers), containing information on participants in the following areas:

As indicated earlier in Section 8.3, the evidence of what works best in engaging with people with a severe activity limitation focusses on individual case management which has both an input plan and an output plan.

8.5.7 Reporting and accountability

Data analysis should be continuous, allowing regular and meaningful reporting to a hierarchy of reports, and ultimately to a governing body.

The next section discusses the macro-governance and structural considerations in building a NDIS.

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8.6 Structure and Governance

8.6.1 Introduction

As well as the fundamental difference of “fair pricing” in an insurance context, which requires a detailed needs-based analysis of the risks to be covered, the other main advantage of an insurance context is that of governance – ownership or responsibility.

A National Disability Insurance Scheme will require a National Disability Insurer, or presumably a statutory authority, to govern it as a holistic entity.

8.6.2 Disability Scheme Structure

The graphic overleaf presents a schematic view of how the disability system might operate with such an insurer. It also includes the integration of the identified Priority Areas of the Disability Investment Group (DIG), which are:

  1. A National Disability Insurance Scheme
  2. Options for Housing Support, and particularly Public-Private Partnerships
  3. Savings and Insurance Vehicles to generate funds into the disability sector
  4. Enhanced employment strategies for people with a disabilities
  5. Building Best Practice and Encouraging Research

The graphic consolidates these Priority Areas with existing or already developing planks of the system, including:

The centrepiece of the graphic is the objective of outcomes for the person with a disability, with all of the other “parts of the puzzle” being funnelled towards this centrepiece through a case management approach, and importantly, intersecting the two major areas of support:

Figure 27 Possible disability scheme structure

Figure 27 Possible disability scheme structure

The graphic on the previous page consists of five types of “component” plus the central theme of personal realisation of outcomes.

With respect to the NDIS, major components are:

Funding inflowsFunding inflows: The National Disability Insurance (NDI) funding has been estimated on the basis that it will fund a basic level of personal care and support for eligible people (for example, people with an existing disability aged less than 65 on a pay-as-you-go basis for life, plus people who acquire a disability before age 65 after scheme start-up, on an enhanced funding basis providing pay-as-you-go plus pre-funding 30% of their future lifetime costs). Assuming a transition to the ultimate target rate over time, it is estimated that the net cost of the scheme could commence at $0.97 billion, giving a total annual cost of care and support in 2011 of about $7.5 billion. Cost and funding issues are discussed in Section 6.2.2.

Consolidated revenue is assumed to continue as the primary funding source for income support (DSP) and employment support (CSTDA and DEEWR) for people with disabilities, amounting in total to nearly $10 billion per annum (nearly 2.0% of taxable income). Under a reformed system, this funding dynamic could continue, but the objective of outcomes for the person with a disability, would need to be integrated with the NDI under person-centred case management. Alternatively, income and employment support funding could be transferred to the NDI on a cost-neutral (in fact probably cost-positive) basis, via an integrated levy.

Administrative bodies/authorities/regulatorsAdministrative bodies/authorities/regulators: The National Disability Insurance Scheme or “Commission” or “Authority”, would be responsible for:

Local fundholders/purchasersLocal fundholders/purchasers: Funds would be allocated regionally (for example, to States) according to a needs-based resource allocation formula to purchasers and coordinators of care and support services under the NDIS. These services would include supported accommodation, community care, respite, day programs, aids and appliances, transport, home and vehicle modifications.

Service providersService providers would be required for the provision of care and support services under the NDIS. These services would include supported accommodation, community care, respite, day programs, aids and appliances, transport, home and vehicle modifications.

Best practice and researchBest practice and research: This proposed model of insurance-type governance, outcome monitoring and accountability opens the door for an applied approach to research driven by real life problems as identified by the NDIS and/or service providers. Collaborative (and perhaps “virtual” foundations) are proposed:

In the next section, we consider in more detail the operational and prudential governance requirements which go hand in hand with an insurance model.

8.6.3 Components of Governance

At a very fundamental level, the need to keep a balance sheet and set annual levy rates introduces a discipline of monitoring and evaluation in insurance models (including statutory accident compensation schemes) which is not even vaguely apparent in any disability or community care schemes in Australia. The following diagram illustrates this point.

Figure 28 Cycle of Governance

Figure 28 Cycle of Governance

It emphasises:

This model accommodates the two primary points of vulnerability in a system of social welfare:

Board of Governance

Using the precedent of accident compensation schemes, the way in which this governance model would operate in practice would be through an independent statutory board of directors, overseeing the operation of the NDIS. The board would actively monitor all aspects of the scheme operations as described above. Individual board members would be appointed based on their acumen and experience in a range of disciplines necessary in managing a personal disability care and support service delivery system operated within a prudential insurance framework – that is, a business board rather than a stakeholder board. The board’s roles and responsibilities could be to oversee the scheme and report on issues such as:

However, the two risks presented above translate in practice to the existence of at least two forces which bring pressure for regular scheme review:

While a strong prudential and business board is well placed to manage the second risk, the first needs clear engagement with stakeholders (beneficiaries and carers) and their representatives.

Advisory Council

In 1997, the Grellman Review116 into NSW Workers Compensation suggested a solution to these pushes, by vesting “ownership” of the Scheme with the major stakeholders – in this case a tripartite advisory council represented by employers, employees and government (through the NSW WorkCover Authority) – this model was based on the long-successful Wisconsin Scheme in the US. While the council did not, in hindsight, achieve its potential, much of the explanation for this can be found in the advanced state of financial difficulty of the NSW scheme, which was not fully addressed until the 2001 legislative reforms.117

In our view, the philosophy of the advisory council concept is a valid one, and has potential for stakeholders to recognise the need for compromise in insurance type schemes in finding a balance between acceptable benefits on the one hand and affordable levies on the other hand. The model has more recently been adopted by the NSW Lifetime Care and Support Scheme, and while this is a young scheme (starting in October 2006), initial indications are very promising.

An advisory council’s roles and responsibilities would be limited to policy advice on the need for and appropriateness of benefits for the disability sector, the ongoing quality of support and services, and on the mutual responsibility required of stakeholders. Representatives on the council may include:

This structure of a strong prudential board of governance and policy-based advisory council could provide a circular reporting framework whereby the council sought prudential and financial advice from the board on possible policy and delivery initiatives – this advice would allow the council to reconsider and fine tune suggestions, and so on until sensible management decisions emerge.

8.6.4 System wide issues

As well as the structural and governance reforms identified above, two major system wide issues cannot be ignored:

Undoubtedly other issues such as this will emerge during any feasibility and implementation phase – discussed in the next section (Section 8.7).

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8.7 Implementation

The range of issues to be considered in fulfilling the possibilities of this report are extremely wide, and it is beyond the scope of the present report to fully develop an implementation plan. However, it is proposed that implementation needs to be addressed within the five main “issue areas” of:

  1. Commitment – Stakeholder Consultation and Management
    1. Clearly the threshold implementation requirement for a major change such as the NDIS is a commitment from government at all levels that the proposal represents a strong piece of both economic and social policy reform – indeed a necessary piece of reform. This commitment was indicated in a preliminary stage at the 2020 Summit, and it is hoped that the present report is able to inform the future debate in a more concrete fashion
    2. Once central government is committed to the process, a major engagement process will be required to involve and both educate and learn from a wide range of stakeholders – to educate and communicate the concept and potential of the vision, and to learn about the many operational and real life situations which will need to be accommodated
  2. Governance – Building the Infrastructure

Outside of the political and stakeholder management issue, will be an important process of envisaging and implementing what the new system would look like – policy, bureaucracy, fund-holding, IT and administration, accountability, reporting and best practice research.

The report proposes some structural options around a central conceptual vision with a core of positive outcomes of the person with a disability.

Within the wider governance debate, subsidiary issues will require resolution around the three operational streams of insurance, scheme coverage and entry points, and service delivery.

  1. Insurance - Insurance Management

The costing and projections included in this report represent only a very first approximation of the development work required to build a comprehensive financial condition vision for the NDIS.

Leading up to scheme start-up, the numbers will need to be tested and revisited from all angles and involve collaboration with government and the emerging governance and infrastructure model. Ideally, this process will capitalise on what data already exists to begin the process of longitudinal management of information.

Similarly, the whole process of levy implementation, notification and collection will require a major collaborative engagement with other government agencies, as will the processes of funding, investments, disbursements and payment options and their links with a centralised IT system.

Finally, the processes around prudential and outcome governance within an insurance framework will need to be designed and built into a risk management and reporting system.

  1. Coverage and eligibility - Assessment/Review

Parallel with developing a vision of a system and its funding and reporting flows, the implementation plan must build a process of identifying, assessing and accepting where appropriate entrants to the system. It must also be able to conduct an assessment of reasonable needs and build a support and case management plan on an individual basis, and implement the service delivery.

To a large extent, similar pieces of work have commenced in individual jurisdictions, but in a disjointed and inconsistent manner. It will be a major implementation requirement, but challenge, to reach agreements on a way forward.

  1. Service (care and support) delivery – Care and Support Management

Finally, at the core of the development of the care and support delivery framework will be the extremely problematical implementation requirement of how to build a workforce and/or alternative capacity to accommodate the burgeoning support needs.

This supply issue, and how the field staff and service providers interact with the insurance and administrative infrastructure, will be critical in achieving the desired outcomes of the proposal.

With respect to the timing of the vision, our understanding is that the DIG will recommend a comprehensive Feasibility Study along the above lines, which can, and perhaps should, begin immediately. The graphic overleaf presents a schematic view of what such a study might consider bringing out the ideas and themes expressed in this section.

Figure 29 NDIS Feasibility study

Governance structure & prudential management

Governance options (consider a range of options and their advantages, including international and Australian examples)

Cost modelling (develop a detailed demand and utilisation model, extending the work of DIG and conducting a need/gap analysis)

Revenue modelling (consider a range of options for revenue, including projections linked to economic/demographic forecasts)

Data requirements (develop data requirements across the spectrum of streams and feeding back to utilisation, outcomes and governance

Investment management (investigate investment management options, including links to the Future Fund/Superannuation models)

Insurance concepts (explore advantages of the insurance model of risk sharing, liability management & prudential oversight/feedback)

Stakeholder Engagement & Consultation

Develop a strategy for stakeholder engagement aimed at concept explanation, pros & cons, engagement and participation

Commonwealth (Central agencies [PM&C, Treasury], Human Service agencies [FaHCSIA, Health, DEEWR], and other related agencies)

States and Territories (equivalent agencies to the Commonwealth, plus accident compensation, civil liability and health care liability bodies)

Service providers (peak bodies and agencies engaged in service delivery of all types, including academic partners and researchers)

Carers (peak bodies and carers representing the needs and interests of providers of unpaid care to people with a disability)

People with a disability (peak advocacy bodies and individuals, whose needs and potential are at the centre of the support framework)

Assessment and Review requirements

Need type definitions (establish the types and quantum of care and/or support requiring coverage and support by the scheme)

Expert panel engagement (assemble the recognised experts on linking need and demand to measurable constructs and instruments)

Functional assessment (explore suitable classifications and instruments for establishing (a) eligibility and (b) level of need for care and support)

Need and Assessment management (explore operational issues related to assessment timing and frequency and utilisation monitoring/feedback)

Appeals and Review Mechanisms (explore issues around the nature of review and appeals, including the structures in similar schemes)

Sensitivity testing (link different eligibility and entitlement options, with service caps and options, to cost and liability modelling)

Care and Support management

Network development options (consider the required service provision network and infrastructure vs existing State structure)

Care & Support requirements (consider the types and range of services required, considering the need and demand expectations)

Service provider engagement (consider how service providers can be engaged and/or developed, and requirements of them)

Individual planning & monitoring (consider how individual client potential might be realised through personal planning, application and outcome monitoring)

Case management (investigate insurance-type models of case management, care coordination and individual plan monitoring)

Workforce development (determine workforce needs to deliver expected demand, and investigate options to generate this workforce)

  1. RL Tate Brain Injury, 2004. Assessing support needs for people with traumatic brain injury: the care and needs scale (CANS).
  2. World Health Organisation, 2001. International Classification of Functioning, Disability and Health, Geneva.
  3. Mary Foley, 2008. A mixed Public-Private system for 2020, Discussion paper prepared for National Health and Hospitals Reform Commission.
  4. Grellman RJ, 1997. Inquiry into workers compensation system in NSW.
  5. NSW Workers Compensation Legislation Further Amendment Bill 2001.

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