From 7 December 2021, a new subscription services clause was added to the NDIS Pricing Arrangements and Pricing Limits guide. In summary, providers can now claim for supports using a subscription model of payment.
Before we explore subscription services, let’s revisit prepayments and how these arrangements differ.
What is a Prepayment?
Prepayments represent funds paid in advance of the provider delivering the agreed support to the participant. Sometimes providers require prepayment(s) as collateral and/or to cover their expenses in order to source, build or tailor the support to meet the participant’s unique needs.
In general, prepayments should only be sought where a business will incur unrecoverable costs should delivery of the support to the requesting participant not proceed (e.g. a custom made support).
Prepayments are subject to all of the following conditions:
· The support item is an assistive technology (including vehicle modification), or a home modification;
· the support item value exceeds $1,500 or is custom made to address the participant’s disability related requirements, and a valid quote has been provided and accepted by the participant (or their nominee);
· a service agreement between the provider and participant (or nominee) outlines the requirement of a prepayment (e.g. deposit) or milestone payments, in line with normal business practice; and
· the final payment of not less than 10% of the total cost, may not be claimed until the participant has received the support ready for use.
A participant is entitled to a refund of any balance of prepayment(s) less the actual unrecoverable expense incurred by the business to that point when supply is terminated. The participant remains fully entitled to their rights under Australian Consumer Law in all circumstances.
Prepayments can be claimed by providers for a support where that support is specifically identified as eligible for prepayments in this NDIS Pricing Arrangements and Price Limits. Other supports may be eligible for prepayment where the NDIA has given prior written approval (including conditions) to the registered provider to claim for prepayments.
What is a subscription service?
From 7 December 2021, a provider may claim for a service agreed with a participant using a subscription model of payment. The participant is paying to be able to use that service (on the terms/hours agreed) for the period of the subscription.
Update 1 July 2022: Subscriptions may only be used for the supply of the following supports: Consumables (Support Category 03) and Assistive Technology (Support Category 05).
Providers wanting to claim for a subscription-based service must make sure that:
(a) A plain English service agreement has been accepted by the participant, that makes clear to the participant the service and its costs (including any extra fees), as well as reasonable exit conditions;
(b) The maximum price limit for a subscription is $5,000 per annum;
(c) Subscriptions are to be charged monthly (paid at or before the start of the service period). Small subscriptions, where the annual cost is not more than $1,500, may be charged less frequently (quarterly or annually). For example if a subscription service cost $199 per year, it could be charged for just once per year;
(d) There are no penalties (for example exit fees) should a participant wish to cancel a
subscription (with reasonable one month’s notice) on or prior to the end of the paid
(e) Invoices for the subscription to be paid, clearly describe the supports for the participant to be delivered/available during the subscription period. For monthly subscriptions, participant’s may agree in writing to be billed quarterly (in advance of the quarter), but must be refunded any unused months if they cancel the subscription with due notice (as stated above).
What does this mean for participants?
Participants can now purchase supports in advance through subscriptions. They can then use the support for the agreed subscription period. Subscriptions can be cancelled at any time. Providers who enter subscription arrangements for services must meet the conditions outlined in the pricing arrangements. For more information, visit the NDIS website here.