NDIS Review Conversation Series: Paper No. 10
The elephant in the room: addressing the issue of 'reasonable and necessary'
- The concept of ‘reasonable and necessary’ support is not well understood and is, therefore, not providing a firm and consistent foundation for determining what supports the NDIS should fund
- Despite the rhetoric of an uncapped Scheme, there are practical examples of decision making that suggest there is a cap on overall Scheme expenditure
- ‘Reasonable and necessary’ should be understood and applied in the context of advancing participants into social and economic participation and enabling individual choice and control
- The criteria to define the limits of ‘reasonable and necessary’ should consider what happens for most people in Australia and what constitutes good practice in delivering high-impact disability supports
When the Productivity Commission contemplated a new approach to disability care and support in Australia, one of its most important tasks was to define the boundaries of a proposed new national scheme – in other words, what should a scheme pay for and on what terms. In its 2011 report, the Commission determined the proposed scheme should not be means tested, should not involve co-payments or any insurance-style excesses, and that it should fund supports that are ‘reasonable and necessary’ for participants eligible for an individual package. The use of ‘reasonable and necessary’ as the criteria to determine what supports should be funded was borrowed from state no-fault accident insurance schemes, such as the New South Wales Lifetime Care and Support Scheme and the Victorian Transport Accident Commission (TAC) scheme. However, its transfer to the National Disability Insurance Scheme (NDIS) has not been seamless and for many of those trying to navigate the Scheme its incoherent and inconsistent application continues to be an ‘elephant in the room’.
In the tenth paper in this NDIS Review Conversation Series, we grapple with the concept of ‘reasonable and necessary’ and how it is practically applied in individual support judgements affecting almost 600,000 participants. Despite the prominence of this concept in the first 10 years of the NDIS, it is not well understood and, as such, is not providing a firm and consistent foundation for how the Scheme determines what funding each participant receives. Without a shared understanding, people can reach very different views about what is ‘reasonable’ and what is ‘necessary’ leading to inequity and disputation. Some participants are over-funded while others are under-funded for their needs. Therefore, to guarantee the future of a strong sustainable NDIS, it is essential to establish a clearer understanding of the concept and how it should be used. Below, we suggest some fundamental principles about how this might be achieved in order to support efforts already underway to address this issue.
Understanding the concept of ‘reasonable and necessary’
For many people living with disability, accessing services prior to the NDIS was characterised by inadequate provision, long waiting lists, segregation, exclusion, and little to no assistance to connect to community. The NDIS was designed to address these shortfalls and provide people with a decent level of support according to need. Globally, it had no readily comparable peer. As such, the Productivity Commission took its guidance from state no-fault accident insurance schemes, despite their many differences compared to what the Commission was recommending be created. These schemes are much smaller, support a narrower cohort of people with injury, and rely on calibrating consistent judgements among far fewer workers. Arguably, the speed with which the NDIS was subsequently rolled out hampered the ability to navigate a way through these core differences and ensure the application of the concept was adapted and made coherent with the new Scheme’s goals and values.
Based on the Commission’s recommendation, ‘reasonable and necessary’ was enshrined in the NDIS Act 2013 as the criteria for determining what the NDIS could fund, albeit without a legislated definition. Instead, six criteria were set out in Section 34 to determine what could be funded. All six criteria must be satisfied for each and every support, including that it assists the participant to reach their goals, facilitates social and economic participation, is value for money, is beneficial, accounts for what is expected of non-funded informal supports, and is most appropriately funded by the NDIS rather than another service. NDIS Rules expand on these legislated criteria and, taken together with many years of tribunal and court determinations, have produced a complicated and often ambiguous set of parameters for what ‘reasonable and necessary’ means in the NDIS. The consequences of this are not only the significant expense of the appeals process – the NDIA reportedly spent more than $40 million on legal fees in 10 months between 2021 and 2022 – but also the time consuming, inflexible, and stressful nature of the approach for participants, especially those who self-manage. Relying on tribunals and courts to clarify ‘reasonable and necessary’ has been a painfully slow and incremental process that has arguably only produced losers – and no winners.
Applying ‘reasonable and necessary’ coherently within the NDIS
The NDIS is underpinned by the goal of advancing people living with disability into social and economic participation (otherwise known as inclusion, Citizenhood, and similar), and doing this via participant choice and control, as we described in a previous paper in this Series. Notably, the no-fault accident schemes from which the concept of ‘reasonable and necessary’ was borrowed are not designed for this purpose; rather their strong focus is on clinical treatment and rehabilitation with the aim of restoring a person’s life chances. Therefore, the use of ‘reasonable and necessary’ as criteria in the NDIS requires the concept to be rendered useful for a substantially different purpose. This endeavour has proved challenging so far but is not insurmountable.
We believe ‘reasonable and necessary’ should be understood and applied to the National Disability Insurance Agency’s (NDIA) decision making in the context of the Scheme’s fundamental goals and values. Therefore, we think it is helpful to explore the concept by thinking about what it reasonably and necessarily takes to lift people into authentic social and economic participation and to do so in ways that reflect individual choice and control. This gives rise to questions like:
- If a participant is unemployed, what type of support is reasonable and necessary to lift that person into authentic mainstream employment opportunities in line with their skills, interests, and goals?
- If a participant needs to be housed, what type of support is reasonable and necessary to lift that person into a housing arrangement that is an authentic platform for social and economic participation, and which gives the person the same level of choice and control that non-disabled people expect for themselves?
- If a person is socially isolated and has few people in their lives who are not paid to be there, what type of support is reasonable and necessary to lift that person into community connection and authentic relationships?
- If a person needs assistance with decision making, what type of support is reasonable and necessary to uphold that person’s central role in the decisions that affect them, so they are the author of their own life?
- If a person needs assistance with daily living tasks, what type of support is reasonable and necessary to uphold that person’s navigation through a typical day, and which reflects the person’s choice and control?
These are but five examples that demonstrate how ‘reasonable and necessary’ should underpin NDIA decision making in a way that is coherent with Scheme goals and values regarding some of the essential elements of how a person’s life chances can be advanced.
Current limits on ‘reasonable and necessary’ producing perverse outcomes
There has been much conjecture about whether the NDIS is, or should be, an uncapped or capped Scheme. For many, the fundamental values and principles of the Scheme require that it be demand-driven with funding allocated based on need without being limited by the total money available within the Scheme; in other words, the total funding available within the Scheme can be adjusted up or down according to the need of citizens. Pre-NDIS disability support funding arrangements were based on an overall cap of how much money state and territory governments were each prepared to allocate for this purpose. Given the NDIS was designed to supersede this approach, address unmet need, and remove waiting lists for essential supports, it follows that participants should expect to access reliable budgets sufficient to pay for supports irrespective of how many other people need to do the same. Hence, funding for reasonable and necessary supports according to demand is not curtailed by overall Scheme costs.
For others, reality dictates that resources are always finite and therefore the notion of an infinite amount of money available within the Scheme to meet demand can only ever be a myth. Therefore, the question once again becomes one of the extent to which governments, and therefore taxpayers, are prepared to fund the Scheme balanced against other public expenditure considerations. Politically, we have seen this dilemma play out recently as NDIS Minister Bill Shorten tried to navigate a path through the government’s decision to limit Scheme growth to eight per cent per year while insisting this does not constitute a cap.
Experience over the first 10 years of the NDIS suggests an attempt to straddle both sides of this dilemma, resulting in incoherence and inconsistency in the Scheme. Although the rhetoric of an uncapped Scheme has tended to win out, there are many practical examples where the Scheme does appear to have been limited by some kind of cap. For example, the NDIS’ Specialist Disability Accommodation (SDA) framework appears to have been established and operated on an assumption there is a financial cap on the Scheme – and therefore a limit on reasonable and necessary supports – because many participants are awarded eligibility at a funding level that assumes they will share a dwelling with one or more other Scheme participants. Indeed, on numerous occasions throughout the life of SDA reference has been made to a perception that individualised housing arrangements based on choice are prohibitively expensive, inefficient, or somehow unreasonable for people living with disability in a way that seemingly does not apply to non-disabled Australians.
This contradicts Australia’s obligations under the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) that states people have the right to choose where they live and who they live with. It is also out of step with the government’s oft-stated commitment to inclusion, whereby people living with disability are supported to access the same opportunities, with the same expectations, as non-disabled people. Most non-disabled people would not consider it is reasonable to be forced to live in a house with several other adults over the long term simply based on having one thing in common. Therefore, it follows that in this respect the Scheme is capped, such that when considering funding for housing for Scheme participants with higher support needs, the Scheme is working to the assumption it is not ‘reasonable and necessary’ that they be allowed to choose a housing arrangement typical of most Australians.
As outlined in the fourth paper in this Series, there has also been a tendency for ‘reasonable and necessary’ decisions to work against the goal of advancing people into social and economic participation. In that paper, we explained the example of a participant being told that attending a local art class was not ‘reasonable and necessary’ because it was not a ‘disability-related expense’, but that one-to-one art therapy could be funded. Similar perverse results arise when participants are unable to use their budget for group therapy classes such as hydrotherapy, or to undertake their established exercise programs at a public facility. Instead, they must undertake their therapy one-to-one with a therapist each time, usually at a therapy facility disconnected from their local community, something which is inevitably more expensive as well as an ineffective use of the therapist’s time. In these examples, the permitted purchases seemed neither reasonable nor necessary given the mainstream alternatives had a far better fit with Scheme goals.
A more coherent application of ‘reasonable and necessary’
Charting a more coherent and consistent approach to the application of ‘reasonable and necessary’ criteria within the context of the Scheme’s fundamental goals and values would allow the Scheme to straddle the uncapped versus capped dilemma without producing the kind of incongruous outcomes demonstrated in the examples above. Scheme participants should not have to agree to move into housing arrangements that reinforce ‘grouping’, ‘othering’, and, thereby, marginalisation, as this is profoundly at odds with Scheme goals and values. Conversely, the decision that does adhere to the application of ‘reasonable and necessary’ criteria grounded in Scheme goals is to support, fund, and enable individual housing choices on the same basis as non-disabled Australians enjoy. If the NDIA continues to permit investment in housing construction designed for shared living, then Australia is creating the next generation of group houses, which cannot be defended in any way as being ‘reasonable or necessary’ in the context of participants living ordinary valued lives.
Of course, the application of ‘reasonable and necessary’ criteria grounded in the context of fundamental Scheme goals and values does not mean there are no boundaries. The Productivity Commission made a strong case for both boundaries and benchmarking to ensure that the Scheme’s efforts were directed toward the best possible outcomes. The first element in setting boundaries is to consider what happens for most people in Australia, drawing on the framing of the Scheme in terms of enabling participants to live an ordinary life. Most people do not drive an expensive sports car; they drive more affordable vehicles that are sufficient to get from one place to another. Most people do not live in the biggest house in the most affluent suburb; they have a more affordable housing arrangement (notwithstanding the current challenges in Australia about housing availability and affordability) where they are central to decision-making within that house and create a personal sense of ‘home’. If they share, it is a choice and typically with those who they have deep bonds with, like a partner, family, or friends.
The second factor to consider in determining boundaries is what constitutes good practice in disability support and how much that typically costs. If there are support agencies with a strong track record of lifting people living with disability into sustained, mainstream, award-waged employment, then the fair and real costs of that work can be used as a benchmark for setting a budget for unemployed Scheme participants to access supports to achieve this outcome. If there are support agencies with a strong track record of lifting people living with disability into genuine valued relationships in local community life, then the fair and real costs of that work can be used as a benchmark for setting a budget for socially isolated Scheme participants to access supports to achieve this outcome.
in this way, it becomes possible to set out what ‘reasonable and necessary’ looks like for each relevant aspect of a participant’s circumstances, such as transport, housing, employment, community participation, and so forth. With a clear benchmarked understanding of the typical costs of delivering impactful support in each facet, a participant’s individualised budget can be assembled by understanding which elements of an ordinary life a participant needs support to attain or defend (through a ‘consequences of disability’ based assessment, as described in the third paper in this Series), accounting for specific cost influences, such as thin markets in rural and remote areas, and then aggregating them to form a person’s overall budget.
In this way, participants are assigned an individual budget that reflects both their personal circumstances and the benchmarked population-based costs of impactful support done well. Consequently, the NDIA can be less occupied with granular level ‘reasonable and necessary’ disputes and instead focus on driving genuinely transformational outcomes. And participants can form expectations about the impact that they can expect from their budget and seek this from support providers, thereby driving quality improvements among providers and workers. This, in turn, enables the disability support market to evolve to produce highly impactful work that lifts participants into authentic social and economic participation.
It is troubling that such a prominent concept in the administration of the NDIS as ‘reasonable and necessary’ is still not well understood and inconsistently applied. However, we believe there is a clear path to clarifying the concept and ensuring its application in NDIA decision making is rendered more coherent and consistent. ‘Reasonable and necessary’ should be understood in the context of the Scheme’s goals of advancing people living with disability into social and economic participation, and the presence of choice and control therein. The criteria for determining the limits of ‘reasonable and necessary’ support should focus on matching the expectations and experiences in non-disabled people’s life chances, and in identifying the typical costs of high-impact support work done well and using this as the benchmark in setting budgets for individual supports.
In the next Paper in our NDIS Review Conversation Series, we will consider the roles of intermediaries in the NDIS including support coordination and plan management.
► Join the conversation at our To The POint webinar
Tell us what you think about the current approach to ‘reasonable and necessary’, share your ideas for reform, and help raise expectations about what the NDIS Review can deliver at our tenth To The POint webinar on Monday, 3 July 2023 at 12:30pm ACST (that is, 1pm AEST and 11am in the West). The webinar will run for 45 minutes and feature Robbi Williams, CEO of JFA Purple Orange, discussing this Paper. Attendees will have the opportunity to ask questions and provide their feedback on how ‘reasonable and necessary’ is applied.
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► Our NDIS Review Conversation Series
With the NDIS Review underway, JFA Purple Orange is publishing a series of papers to help stimulate conversations about the future of the Scheme. Each fortnight, we will tackle a different topic of reform that we think is critical to the work of the NDIS Review. We strongly believe that the NDIS is an essential component of ensuring that Australians living with disability get a fair go at what life has to offer, but it must be strengthened and sustained. We are committed to playing a constructive role in developing ideas for reform that ensure the Scheme delivers on its original promise.
Watch out for Paper No.11: Recalibrating support coordination and plan management to boost participant outcomes on Monday, 10 July 2023, or visit our website to find out more about our NDIS Review Conversation Series.
► About us
JFA Purple Orange is an independent social profit organisation based in South Australia that undertakes systemic policy analysis and advocacy across a range of issues affecting people living with disability and their families. We also host a range of peer networks for people living with disability including people living with intellectual disability, physical and sensory disability, younger people, people from culturally and linguistically diverse backgrounds, and people in regional South Australia. Our work is characterised by co-design and informed by a model called Citizenhood.
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 Productivity Commission, ‘Disability Care and Support,’ Report no.54, 2011, pp.22-29, available at https://www.pc.gov.au/inquiries/completed/disability-support/report.
 The United Kingdom’s direct payment approach has some similarities, but not the size or scope of the NDIS. Direct payments may be used ‘flexibly and innovatively and there should be no unreasonable restriction placed
on the use of the payment, as long as it is being used to meet eligible care and support needs.’ There are no uniform criteria for determining what an unreasonable restriction may be. In recent times, the Government’s austerity measures applied to its direct payment approach have made it more difficult to assess the effectiveness of their scheme design. See further https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs24_personal_ budgets_and_direct_payments_in_social_care_fcs.pdf.
 The Productivity Commission considered and rejected the idea that ‘reasonable and necessary’ could be applied at the level of an overall budget, believing this could incentivise the exaggeration of need. See Productivity Commission, ‘Disability Care and Support,’ Report no.54, 2011, p.317, available at https://www.pc.gov.au/inquiries/completed/disability-support/report.
 This criterion can be particularly difficult to apply when expert opinion varies, for example regarding the benefits of a therapy.
 This criterion is also particularly fraught with questions about what a reasonable expectation of family, friends, or even housemates is in terms of the provision of informal unpaid support. It also raises complex questions about equity between those with and without strong informal support networks.
 Michael Read, ‘NDIS legal bill hits $40m as appeals quadruple’, Australian Financial Review, 7 June 2022, available at https://www.afr.com/policy/economy/ndis-legal-bill-hits-40m-as-appeals-quadruple-20220607-p5armw.
 So far appeals have mainly focused on the scope of support, level of support, balance of formal and informal support, and principles of equity.
 See further Susan Pennings, ‘Budget Resources: The National Disability Insurance Scheme’, May 2023, https://www.aph.gov.au/About_Parliament/Parliamentary_departments/Parliamentary_Library/Budget/reviews/2023-24/NDIS.
 See media coverage, for example, https://www.abc.net.au/news/2023-04-28/ndis-funding-sustainability-budget-disability-participants/102278498; https://www.afr.com/policy/economy/bill-shorten-wants-to-save-74b-on-the-ndis-here-s-how-20230511-p5d7pl; and https://www.smh.com.au/politics/federal/crackdown-on-prices-and-junk-therapies-to-slow-ndis-spending-shorten-20230501-p5d4kk.html.
 Productivity Commission, ‘Disability Care and Support,’ Report no.54, 2011, for example pp.24-29, available at https://www.pc.gov.au/inquiries/completed/disability-support/report.
 Ibid, p. 21 and Chapter 7.
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