NDIS price caps. The ceiling became the flaw

The aim of the NDIS was to create competition to keep prices for disabled services low. Instead, most service providers charge the maximum amount allowed. Claudia Weisenberger reports.

The majority of NDIS providers featured in the report NDIA’s own Financial Benchmarking Survey He acknowledged that they always set prices at the maximum rate allowed. This is a self-reported figure from 2020-21 and has not been updated since. But this is backed by something newer and more robust: transaction data.

Independent NDIS Review published in 2023analyzed actual billing records across the system. It found that 83% of all price-capped transactions occurred at or near the ceiling. The review was blunt in its assessment. It was found that price ceilings do not function as price ceilings.

They act as price anchors.

Two independent data sources. Five years apart. Same finding.

The market is not working

When the NDIS was designed the pricing framework was based on a specific theory. Published price caps will prevent abuse. But below these ceilings, providers will compete on quality, convenience, and service, and participants with real choice and control will be able to take advantage of market forces that keep prices efficient.

In practice, the competitive market has not yet materialized. Participants with disabilities are in most cases not in a position to shop and bargain. Support needs are specific, options are often limited by geography or disability type, and there is no direct financial cost to paying the cap fee. The result is a market where the maximum published price becomes the actual price in almost every transaction.

A price cap is only beneficial if providers have an incentive to charge below it. In the NDIS, 83% of providers never do this.

Support worker shortage

The support worker category demonstrates the pricing structure most clearly. The 2025-26 NDIS price limit for standard weekday disability support work is $70.23 per hour. The worker doing the job earns $34.58 per hour. SCHAD’S The award is the minimum wage framework that regulates the industry. The $35.65 difference covers retirement, insurance, management, compliance and margin expenses.

These are legitimate costs in any service industry. The question is not whether they exist or not; In a market where 83% of providers charge maximum fees, whether there is any mechanism to reduce them.

The 83% figure does not indicate widespread fraud among service providers. This indicates a pricing system that is poorly designed to charge the maximum price.

rational response to the incentives it creates.

Therapy rate dropped

in 2025-26 Annual Pricing ReviewThe NDIA did something it had never done before: it reduced the physiotherapy rate. The rate dropped from $193.99 per hour to $183.99 per hour (a 5.2% decrease) after its own benchmarking analysis found that the current rate was above the average fully loaded cost of most therapy professionals.

The NDIA drew on more than ten million procedures and compared NDIS rates with Medicare and private health insurance data for the first time.

What he found went far beyond physiotherapy. The 2024/25 Annual Pricing Review found that many NDIS therapy pricing limits are contrary to wider market rates, in some cases exceeding them by up to 68%. This was the NDIA’s own benchmark result from its own data. There was no decrease in rates of occupational therapy, speech pathology, behavioral support, and support coordination.

NDIS and Medicare pricing

Cause of autism and developmental delay 45% of all NDIS participants — the biggest driver of demand for therapy in the program. Physiotherapy alone represents around 1% of total NDIS annual spend. Total therapy spending across all disciplines is estimated to be approximately $5 billion.

The table below shows where NDIS rates are based on Medicare coverage. The difference is stark, and the fundamental structural failure is not just the level of rates. There is no competitive mechanism to test whether these rates are fair.

Solution

Another distinction: Medicare allows co-pays; The difference between the discount and the provider’s fee is paid out-of-pocket by the patient, creating at least some price signal. The NDIS does not do this. Participants pay nothing directly;

It removes the incentive to question whether the price is fair.

NDIS Review recommended We are moving towards independent pricing, but the NDIA has historically set its own prices, assessed whether those prices were fair, and reported the results without independent oversight. Productivity Commission warned in 2017 This creates an incentive to use pricing as a budget tool rather than a market development tool.

In every other major government-funded health sector in Australia, at least one of these three functions is performed independently. The NDIS has none of this.

A more effective solution than a price ceiling that becomes a floor price is a published reference price with an automatic marking mechanism. Any request above the reference price will trigger a review before payment is made. Providers with genuine cost justifications may still be paid. Those who don’t have one cannot do it.

The burden is shifting from the NDIA, which attempts to detect anomalies after payment has been made, to providers justifying exceptions before payment is made.

The question is not whether providers should be paid fairly;

whether the current pricing mechanism produces fair prices.

Support work for people with disabilities is truly complex. However, in a market where participants cannot bargain effectively, a price ceiling set above market rates, imposed at the maximum level by almost every provider, is not a competitive market.

Blank checks. NDIS problem and solution

Claudia Weisenberger is a management consultant with deep experience in pharmaceutical, hospital transformations and strategic due diligence on four continents. It combines keen analysis with hands-on application.