Tiered Pricing in the NDIS: A Smart Step Forward or a Risky Detour?

The recent announcement of Afford’s closure, alongside growing concerns about the financial fragility of other long-standing disability service providers, is a wake-up call for the sector. It signals something deeper than isolated organisational issues; it points to systemic cracks in the NDIS pricing structure itself.

In response, National Disability Services (NDS) has called for a tiered pricing model that links funding to the quality of services delivered. At first glance, this solution seems practical and compelling; it would reward the best providers, encourage innovation, and make the system more sustainable. But like any major reform, it comes with challenges and risks that demand attention.

Let’s unpack what is on the table, and what is at stake.

Why Tiered, Quality-Based Pricing is Worth Considering

First, it protects the providers we cannot afford to lose. High-quality providers often carry higher costs. They invest in workforce training, robust governance, tailored participant engagement, and best-practice frameworks. These are not extras, they are essential to safe, effective, and empowering services. Yet under the current flat-rate NDIS pricing, those providers receive the same funding as those doing the bare minimum. Tiered pricing could finally correct that imbalance.

Second, it drives innovation and continuous improvement. When pricing structures reward outcomes, not just compliance, providers are encouraged to go beyond the basics. This opens the door for creativity, participant-led approaches, and genuine transformation. A quality-based system helps shift the focus from what is billable to what truly works.

Third, it responds to real differences in participant needs. Not every person accessing the NDIS has the same goals, barriers, or level of complexity. Tiered pricing could allow for a more responsive funding model, one that recognises the varied support required across different situations and stages of life, particularly in employment and independent living supports.

Finally, it aligns with the broader reform agenda. The NDIS is evolving toward a more outcome-driven, person-centred system. A pricing model that reflects quality and results, not just processes, fits with that ethos. It helps ensure that participants receive not just any service but also exemplary service delivered well.

But Let’s Not Ignore the Risks

While the rationale behind tiered pricing is strong, the pathway to implementation is anything but simple. Without careful co-design and a deep understanding of the sector’s realities, the reform could end up entrenching the very inequities it seeks to dismantle.

A two-tiered market is a real possibility. Larger, well-resourced providers with internal compliance teams and advanced systems are likely to qualify for higher tiers. Meanwhile, smaller, community-based or culturally specific organisations, those often closest to participants, may lack the capacity to meet the new benchmarks. This could lead to service consolidation, loss of choice in rural or diverse communities, and a shrinking ecosystem of providers.

Defining quality is difficult, and measuring it can be even harder. What counts as quality in disability services? Is it participant satisfaction, community inclusion, employment outcomes, or compliance audits? Unless the indicators are co-designed, transparent, and grounded in lived experience, we risk rewarding providers who tick boxes over those who change lives. Worse still, it may favour providers with slick reporting systems rather than those doing deep, complex work.

Compliance burdens may crush smaller providers. To access higher payment tiers, providers will likely need to gather more data, undergo more audits, and navigate more bureaucracy. While this might be manageable for large providers, it could be unsustainable for smaller organisations operating on tight margins. Unless capacity-building support is built into the reform, we risk further weakening the sector.

There is also a broader philosophical risk that it deepens the marketisation of care. This model, if not designed with care, could unintentionally frame support services like consumer products available in gold, silver, or bronze. That risks undermining the NDIS’s foundation as a human rights-based scheme. Quality support should not be a premium add-on, it should be the minimum standard.

Finally, tiered pricing may delay or distract from deeper structural reform. While it could help stabilise the sector in the short term, it does not address core issues like support underpricing, workforce shortages, or the disconnect between pricing and real service delivery costs. Without tackling these fundamentals, we risk using tiered pricing as a band-aid on a much deeper wound.

So, What is the Path Forward?

There is no doubt that the NDS proposal is grounded in a genuine effort to prevent further erosion of quality in the sector. It is a positive sign that the conversation is shifting from volume to value. But if we want to get this right, we need to:

• Co-design the model with people with disability, families, frontline workers, and community providers

• Establish independent and transparent price-setting mechanisms

• Build in equity safeguards to support smaller, rural, and culturally diverse organisations

• Ensure that definitions of quality reflect real-world outcomes, not just administrative neatness

The goal should not be to create a hierarchy of providers. It should raise the standard of services for everyone while protecting diversity, choice, and control.

Final Thoughts

The closure of Afford is not just a headline, it is a symptom. The funding system, as it stands, does not reward quality. Tiered pricing may be a viable part of the solution but only if it is done carefully, collaboratively, and with a commitment to equity at its core.

Let us not rush toward a new model just to be seen as doing something. Let's do it right so that every person with a disability gets access to the support they deserve, delivered by valued, resourced, and respected providers.

What is your perspective? Can tiered pricing help restore quality and sustainability to the NDIS, or does it risk reinforcing the system’s existing divides?