National Disability Insurance Scheme costs creating shadow market

Expensive compliance measures associated with the NDIS are creating a potential shadow market of unregistered providers.

Clinical psychologist Lydia Meem says she cannot afford to be officially registered with the NDIS. Picture: Peter Stoop

A shadow market of unregistered providers offering services under the $22 billion National Disability Insurance Scheme could grow even larger as a perverse response to expensive new compliance measures that have seen some small practices quoted $24,000 for an audit.

Figures obtained under Freedom of Information by The Weekend Australian reveal in the nine months to last September almost 40 providers had their registrations terminated for fraud and “compliance” issues while more than 200 quit the scheme of their own accord because it was no longer viable for their businesses.

The system by which providers can register with the National Disability Insurance Agency is changing, however, to introduce more stringent controls over the quality and safety of services ­offered to disabled people. The new NDIS Quality and Safety Commission began operating in July with coverage so far of NSW and South Australia, and organisations in these states now have to pay for their own audits to clear entry for the scheme.

Newcastle-based clinical psychologist Lydia Meem is one of those providers who, having previously been registered by the NSW state government, was told in October she would have to re-register under the new arrangements.

There are only eight approved auditors who can do the work for both states, however, and four never responded to her request for a quote, another said they couldn’t do the work and the remaining three offered remarkably similar quotes.

“The audits are on three-yearly cycles so I’ve been told it will cost me $8000 in the first year, $5000 and $5000, each for the next two years just for them to double check I am still doing what they said I was in the first year and then $7000 to be re-audited again the year after,” Ms Meem said. “The commission has forgotten that not all companies are ­McDonalds.”

South Australian speech pathologist Diana Bleby is in a similar position — quoted between $6000 and $11,000 for the first year audit — and said the effect of the onerous entry requirements will lead to the “deregulation of the market”.

“This is important stuff — two of my clients were defrauded of $5000 each by a NSW-based transport company but these rules will have the effect of pushing providers into the unregistered part of the market,” Ms Bleby said.

The NDIA told Senate estimates late last year that it has no way of tracking how many providers were in the unregistered market.

Under the new regulations, sole traders in most circumstances have been given a small reprieve but any business that trades as a company — and many do for tax and liability purposes, no matter their size — must undergo the most comprehensive audit.

Ms Meem works four days each week and her two other psychologists work one day a week and one day a fortnight.

“This is a huge imposition on all of my clients. They want to ­interview all of them for an hour about the business. These children have intellectual disabilities and they will be uncomfortable,” she said.

In any case, Ms Meem is ­already accredited by her industry’s professional body and the national health regulator.

Under the NDIS legislation, participants can have their individual funding managed by the agency itself, in which case they can use only registered providers.

But if they or their families “self-manage” or engage a third party to look after the funding, there is no requirement for them to use an officially registered provider.

Ms Meem said she has decided she cannot afford to be officially registered with the NDIS and will ask her clients and their families if they will consider managing their own funding so the process will not apply.