NDIS cancellation rules – reasonable and fair for all?

Organisations can suffer serious financial damage if clients fail to keep scheduled services or cancel scheduled services at the last minute. NDIS cancellations are often beyond the control of the client and the service provider. Ill health, hospitalisation, poor weather, lack of transportation or difficulty getting out of bed can make it impossible for clients to attend a pre-booked NDIS support session. Most people have probably forgotten appointments in their lives and sometimes an appointment is simply inconvenient.

Service businesses generally try to lessen the financial loss through cancellations by establishing cancellations policies, charging cancellation fees or factoring cancellations into the hourly service fee. Under Australian Consumer Law, organisations’ cancellation terms and fees must be fair and reasonable and must be communicated to the client when booking into the service. 

NDIS service providers are bound by a price cap. Assuming they are charging at the maximum price (as most providers do) they cannot adjust the fee if the risk of cancellation is high. The NDIS price guide also prescribes the cancellation rules that apply to all service providers irrespective of service, location, customer base and needs.

The February 2019 NDIS Price Guide states:

  • Providers may charge up to 90% of the agreed price if the participant makes a short-notice cancellation. Short notice is defined as a cancellation after 3pm the day before the service or a ‘no show’ on the day.
  • For personal care and community access supports, the fee may be charged against a participant plan up to 12 times per year. Beyond this threshold, the NDIS will require the provider to demonstrate they are taking steps to actively manage cancellations.
  • For therapy services the provider can charge a maximum of 90% for up to six hours within the period of any service booking.
  • Providers may not charge for cancellations, where the participant provides notice of cancellation prior to 3pm the day before the scheduled service.

Surely, the intention of the cancellation rules is to strike a balance for participants and providers while safeguarding participants against unfair contract terms. Participants and providers enter into service agreements with a minimum of 14 days’ termination notice period. Yet, participants can cancel the scheduled service at any time and at reasonably short notice, for any reason. The responsibility is with the provider to have individual arrangements in place to minimise the risk of cancellation or late changes to the delivery of scheduled support.

The 90% charge for very late NDIS cancellations or ‘no shows’ on the other hand seems generous and difficult for participants who have limited budgets and substantial reasons to miss services frequently. Yet, is seems justified if the provider still has the same cost, irrespective of whether  the client is attending the scheduled service. Should a provider doing a home visit get paid less if the client is not at home? The provider is also required to make every effort to follow up with the customer to find out if the client is in crisis and needs immediate help.

The NDIS 3pm notification rule implies that if the organisation or support worker receives the notification earlier in the day there is a chance of filling the slot with another client. This may work for therapists and specialists who have wait lists and requests for appointments on the day. Personal care and community access services however are generally pre-arranged and scheduled and ideally staff are thoughtfully matched to clients. Last minute bookings are unlikely.

How can providers mitigate the loss?

In case of one-on-one support provided by casual staff, the staff will likely receive a call and have the shift cancelled or reduced (as long as they have completed the minimum hours stated in their work agreements). This leads to disjointed shifts, unpredictable working hours, insecure income for the disability workers, and may impact on their reliability. Casuals often sign up with several providers or jobs to ensure a reliable income. For the provider this increases staff turnover, recruitment and training costs, difficulties in filling shifts and finding the right support person for each customer.

But what if you cannot send your staff home? The costs for salaries, rent, utilities, administration and other overheads remain the same. 

If the participant was booked into a program delivered in a small group, the program will go ahead with one less paying attendant, which is unlikely to be viable if there are frequent cancellations prior to 3pm. When raising this issue with the NDIA it was suggested that the provider could charge the fee according to the ratio of the actual attendance on the day instead (with prior consent of the customers). If for example the group was scheduled at a 3:1 ratio and only two customers attend, the provider could charge the attending clients the 2:1 rate instead. This approach creates administrative nightmares for providers, making budgeting, quoting and service bookings more laborious and difficult. It also seems greatly unfair for the attending customers who must bear the costs of absent customers while having to monitor their NDIS budget. A customer who cancels the attendance of a program that runs for several hours and on consecutive days, creates a major loss for the provider or the customers who get charged a higher fee. At the time of NDIS plan review, the absent participant might also give the impression that the allocated NDIS budget is not needed.

Cancellation policies of programs outside the NDIS service provision (such as social, educational or sports activities) tend to differ in what is considered fair and reasonable. Once booked onto a program, consumers pay the full program fee from the point they start until the conclusion of the program or cancellation of the contract. If they are sick or choose not to attend, in most cases they still pay the full fee. At times customers that missed sessions are offered make-up sessions within a set period and if vacancies exist. Customers willingly pay for their recreational activities and respect the agreed termination notice periods unless there is a major problem. Unlike the providers of consumer recreational or educational programs, NDIS providers are also not permitted to charge in advance or keep money as bonds from participants prior to the service.

What arrangements would be reasonable and fair for participants, NDIS providers and staff? Should the NDIS establish cancellation rules that are more differentiated or will this make the system even more complex and difficult to navigate? Should NDIS service providers be able to set their own cancellation rules or would this increase the risk of abuse? And how do participants get protected from providers that cancel at last minute or do not show?

We are keen to learn how NDIS service providers deal with the current 3pm notification rule. We would like to hear how your organisation minimises the risk of NDIS cancellations and what barriers do you face? How do you manage the business impact of NDIS cancellations? What would work better for you and your clients, especially for those who need to cancel frequently? Please share your thoughts and experience with me by emailing me at the address below. We look forward to hearing from you and are planning to share and discuss our findings in one of our next Foreword editions.

NDIS consultant

Dr Ellen Schuler
Business Consultant
Email: eschuler@cbb.com.au
Phone: 1300 763 505