Self-management: is a new world of cash payments on the horizon?

“What needs-based funding does is it empowers the person with a disability, their family and carers. It makes them in charge of their own life and their own future… and allows the person with a disability to purchase and deal with service providers to get the best outcome for themselves” 

– Premier Napthine

Over the past 20 months the National Disability Insurance Scheme (NDIS) has begun a transformation of the way services for people with disability are designed, delivered and paid for.

This transformation will be spreading across the nation over the next 4 years. Tens of thousands of people with disability will be coming into this new system each year, changing the way they purchase services. By 2019 $22.2 billion will be being spent through this system, potentially employing up to 140,000 people. The decisions participants make in how to manage and allocate their funds will be a critical issue over the coming years.

The NDIS allows participants to fully self-manage their funds – meaning they get cash payments with which to purchase their supports. These funds have to be used within a framework and set of rules set down by the Agency. Alternatively, participants can choose to leave all their funds with the Agency, or another third party, to manage with providers invoicing the Agency or a third party for services provided.

What changes can we expect the NDIS to bring in the way people with disability manage their funds?
Looking to the experience of other countries tells us three things about how this is likely to play out. First, we can expect that the take up of full self-management to be low. Second, it’s likely to be very uneven. Third, it’s likely to be highly disruptive to models of service provision and employment.

So far we are seeing a similar story in the NDIS to other countries.

Low take up
Currently only 3% of NDIS participants fully self-manage their plans. This rises to 31% of participants when we include those who self-manage some funds and leave the Agency to manage the remainder of their package. Yet, this larger figure incorporates those who manage only a few hundred dollars a year of cash payments for taxis. Overall, we are seeing very low rates, especially for full self-management.

Low take up of self-directed funding is a common feature across the world. In the United Kingdom only 11% of eligible people with disability chose to take up self-directed funding. The barriers in other countries have included a lack of information, support and a lack of available funds to purchase the services people need. The continually expanding roll out of the NDIS, plus ongoing certainty of funding, will help to overcome some of these barriers in Australia.

Uneven take up
Despite only 3% of all NDIS participants self-managing, 17% of children’s plans in South Australia are being self-managed. Families are finding that therapy services and aids and equipment for children are easily purchased in market‑based transactions. These higher rates are also due to active carers who have the time and skills to manage funds for their children. Already in the NDIS we are seeing that take up of self-management is by no means even.

Internationally we are also seeing that self-management is taken up by groups at varying rates. Carers play a critical role in driving take up of self-managed funds internationally with higher than average rates of self-management. People with mental health conditions, on the other hand, have a take up rate this is four times lower than the average level of self-management.

The NDIA does not currently provide a breakdown of self-management by characteristics such as the participant’s impairment. However, the evidence from abroad and historically within Australia suggests that we are likely to see higher rates for families with higher socio-economic status, and lower rates for people with multiple disabilities and who identify as Indigenous.

Causing disruptive change
Internationally the response by providers to self-managed funds has been diverse. Concerns remain in most countries about funding certainty for providers and lower wages and reduced security for directly employed workers.

Innovative approaches in other countries are seeing empowerment through self-management flow through to new types of organizations. JAG has emerged as a cooperative in Sweden, which is controlled by its membership of people with disability. Their model of self-management involves each member (person with disability) appointing their own service guarantor who is responsible for coordinating, training and supervising their care team. This person also acts the support worker of last resort in the event that care workers do not show up.

The NDIS experience is too young to see any impact on new organization models such as cooperatives. However, the NDIS is promoting the growth of plan management providers acting as a bridge between participants and their service providers.

How likely are these trends to continue? 
It is still early days, the experience of the NDIS in 2015 is going to change as more people become participants. In future we can expect that funding self-managed funds will rise, but remain low.

The NDIS is different from the experience of other countries. The low take up of self‑management in other countries is plagued by concerns about underfunding of need and many local governments operating below-scale schemes resulting in a lack of information and expertise on self-management. The NDIS in its current form will overcome both these problems.

Yet there are limited incentives to self manage funds in the NDIS.

The NDIS may be an insurance scheme, but it is a restricted insurance scheme where funds can only be used to spend on particular types of services. Participants who self-manage do not have any additional flexibility to purchase items that are listed in the Agency’s rules as not ‘reasonable and necessary’. For example, NDIS funds to spend on work readiness cannot be used to purchase dental work to fix gum and teeth issues even if this would be the most useful assistance to getting a job. Self-management may be intended to provide more empowerment, but it still does not allow participants full autonomy over how to most effectively and efficiently achieve their goals.

These restrictions exist despite good evidence that increasing the flexibility of using funds reduces costs to government, and improves the wellbeing of people with disability.

As long as self‑management doesn’t provide any extra flexibility in how funds can be used, it will be more of a headache than a help to most NDIS participants. Many people will find is easier to just let the Agency manage their invoices, not having to worry about record keeping and negotiating prices with providers. For that reason don’t expect self-management to skyrocket anytime soon.