Federal government to crack down on 'profiteering' under the NDIS and make overcharging for the same product illegal

The federal government is working on a new law to explicitly make it illegal to charge more for products and services because a client is on the National Disability Insurance Scheme (NDIS).

That practice has been referred to as a twin pricing regime, with countless examples of the same product being advertised or sold at an inflated price once it is known a client is on the NDIS.

Australia's Competition and Consumer Act makes it illegal to engage in unconscionable conduct, but pursuing a case of this nature can be expensive and requires substantial evidence.

NDIS Minister Bill Shorten said existing rules had failed to discourage the practice.

"An aluminium shower chair is $150 if you buy it from wherever, but then I've seen the exact same chair advertised and you put the words 'NDIS shower chair' and you get to pay $600 for it," Mr Shorten said.

"That's just wrong — it's immoral, it's profiteering."

"It should be illegal to have a twin pricing regime for the same product and the same service purely based on the fact you have an NDIS package."

Mr Shorten has told the annual DSC NDIS conference in Sydney that he met with Assistant Minister for Competition Andrew Leigh and the Australian Competition and Consumer Commission (ACCC) to discuss creating the new law.

"I've asked the ACCC, is it possible to give us a specific, for-purpose regulation which will make it illegal," he said.

"There should be no business model in Australia which makes its profits by discriminating against people with a disability, and I promise we're going to do a lot more on this sooner rather than later.

"Some providers and contractors shouldn't view the NDIS as a chance to build a verandah on their beach house."

The operation of the NDIS does not incentivise high-quality services, fails to drive efficiency and allows for a culture of fulfilling plans at the maximum cost, according to the co-chairs of a wide-ranging review of the scheme.

Bruce Bonyhady and Lisa Paul have flagged a series of potential changes to the scheme, pointing to a lack of clarity, information and fairness ahead of handing down their review into the decade-old scheme in October.

Eligibility for services funded by the National Disability Insurance Scheme (NDIS) is set to be tightened as the government seeks to bank $74.3 billion in savings through trimmed growth forecasts.

The review has been tasked with examining the design, operation and sustainability of the $35-billion-a-year NDIS, as well as supporting a responsive and sustainable workforce, and is due to report back to government in October.

Last month's federal budget revealed the scheme was the highest-growing government payment, projected to average 10.4 per cent a year over the next decade, down from the 13.8 per cent annual growth forecast in the October budget.

The federal government vowed to rein in spending by $74 billion dollars in the decade ahead, including $15.3 billion in the four years from 2023-24.

The NDIS Actuary had forecast expenses would grow $17.2 billion by 2027-28 without changes.

The co-chairs heard payment and pricing methods have focused too heavily on competition, rather than quality and efficiency.

They found some participants faced persistent service gaps and that poor design meant incentives for providers were not aligned with service needs.

Professor Bonyhady said blunt price caps meant people with complex needs and those in remote areas often missed out.

"The result of that is that in some cases the price caps are too high, in other cases the price caps are too low," he said.

"What we're seeing and what we're hearing from providers is that there is a culture of trying to fulfil the items that are in people's plans at the maximum price."

"Price caps are intended to drive efficiency, improve quality. The question we're raising is, 'has it done that?' and there's not a lot of evidence to say it has."

Co-chair Ms Paul said the fee-for-service model had proven "fantastic" for some.

"It's clear and it can help choice and control, but on the other hand, it can incentivise overservicing — dependence, even. People have said we are seeing many downsides," she said.

"We're not going to recommend chucking that out but the paper talks about what can we look at that might work a bit better in some areas.

"Workers and the providers that support people with really, really complex needs, intersectionality, people who have many different types of co-occurring conditions — that pricing just isn't good enough, it's not working.

"A fee-for-service doesn't allow for a provider to do capacity building."

The review of the scheme, which has 580,000 participants, has received more than 1,000 submissions.

The government — while wanting to lower the growth of the scheme's budget — insists there will be no hard funding caps on the program.

It has announced an 8 per cent a year growth target for the scheme from July 2028.