This Appendix contains the National Disability Insurance Scheme (NDIS) Prudential Governance Framework, and Insurance principles of the NDIS, as defined in the NDIS Insurance Principles and Financial Sustainability Manual (NDIS Insurance Principles Manual), dated November 2016.
Prudential Governance Framework
The below comprises an excerpt from the NDIS Insurance Principles Manual, defining the Prudential Governance Framework for the scheme:
In order for the Board to meet its obligations under s118 (1)(b) of the NDIS Act, it is proposed that financial sustainability as defined above is monitored and reported using the following Prudential Governance Framework. Each component of this framework requires specific operational support, and these are articulated in the attachment to this paper, together with linkages to the NDIS 2013-2016 Strategic Plan:
1.
The NDIA will have access to a person centred longitudinal database of all NDIS participants, and where necessary supplementary linked data sources, containing sufficient information to:
(i)
provide NDIA operational staff with real-time comprehensive data and information on participant utilisation, cost of supports and participant outcomes, and
(ii)
provide the necessary information for the Scheme Actuary to develop reports on quarterly experience, future expenditure and financial sustainability (as defined above).
2.
In addition to the emerging experience contained on the NDIA longitudinal database, and in order to support the development of capacity and expertise across the network of NDIA, scheme participants and their support networks, the NDIA will invest in early investment, research, innovation and the development of social capital across the NDIS.
3.
Using its longitudinal database and other necessary data sources and research outcomes, the NDIA will develop an actuarial monitoring framework appropriate to the description and estimation of participation of NDIS participant populations (including ILC), support utilisation and cost, and continuous evaluation of ILC and participant outcomes in terms of economic and social participation and independence.
4.
The NDIA and its Scheme Actuary will develop a hierarchical needs-based resource allocation framework to provide each NDIS participant with a package of individual support appropriate to that person's particular current and expected future support needs, and within the framework of aggregate reasonable and necessary support.
5.
NDIA operational staff and contracted providers including local area coordinators, disability support organisations, and support providers will endeavour to assist scheme participants to aspire to and achieve the most positive outcomes in terms of future economic and social participation and independence, within a reasonable and necessary resource allocation appropriate to each participant.
6.
On the advice of the Scheme Actuary’s interpretation and valuation of emerging monitoring experience as presented in the financial sustainability report, the NDIA Board will annually report the estimated annual cost of support for NDIS participants, the expected future trends in the estimated cost, the projected long-term financial outcomes of the scheme and the inherent uncertainty and volatility in those estimates.
7.
Based on these assessments, the NDIA Board will annually assess and report on scheme financial sustainability based on:
(i)
participant outcomes in terms of economic & social participation and independence, and participant perception that they are getting enough money to purchase enough goods and services; and
(ii)
affordability, value for money, and willingness of contributors to continue support as defined by the available funding envelope.
8.
On the basis of this assessment, where necessary the NDIA Board will manage scheme sustainability using actions which may include process redesign or improvement, realignment of support expectations, community support and development or proposals for legislative change with respect to support entitlements, scope of available supports or the eligible population.
9.
The insurance control cycle will then require recalibration of expectations and database requirements and return to steps 1 and 2 of this cycle.
Insurance principles of the NDIS
The below comprises an excerpt from the NDIS Insurance Principles Manual, describing the insurance principles of the NDIS:
1. The aggregate annual funding requirement will be estimated by the Scheme Actuary’s analysis of reasonable and necessary support need. The Scheme Actuary will estimate this on the assumption that the NDIS is well functioning. If the Scheme Actuary believes that the actual scheme expenditure is likely to differ from this baseline estimate, then this should be reported, along with reasons and, if possible, an estimate of the difference, including a buffer for cash flow volatility and uncertainty. The aggregate funding requirement will comprise equitable resource allocation at an individual and subgroup level, and will be continually tested against emerging experience. This will require a comprehensive longitudinal database.
2. The NDIS will focus on lifetime value for scheme participants, and will seek to maximise opportunities for independence, and social & economic participation with the most cost-effective allocation of resources. This will align the objectives of the NDIS with those of participants and their families.
3. The NDIS will invest in research and innovation to support its long term approach and objective of social and economic participation, and independence and self-management, for participants.
4. The NDIS will support the development of community capability and social capital so as to provide an efficient, outcomes-focused operational framework and local area coordination and a support sector which provides a high quality service and respects participant social and economic participation and independence.
The NDIS insurance principles will be governed by the NDIA Board within a prudential framework to assess, monitor, report and manage scheme sustainability.