Raising NDIS price caps results in higher fees and does not increase service provision, new research by the e61 Institute has found.
The research tracked prices and service hours in the weeks around 1 July 2025 when the NDIA lifted price caps for some services - including daily living assistance and behaviour supports - and decreased them for others such as physiotherapy and podiatry.
The analysis, using data from NDIS plan manager Kismet, found that for every 1% increase to a price cap, providers hiked prices by 0.61% on average with no meaningful increase in the amount of services provided.
“We found that even providers who were unaffected by the cap because they were charging well below it raised their prices by that same amount,” said e61 Research Manager, Dr. Pelin Akyol.
“Participant budgets are indexed to price caps, meaning participants have little incentive to shop around, and savings can't easily be redirected to other services. This means providers face little downside to increasing prices when the cap rises.”
Conversely, for services where price caps were reduced, the ones unaffected by the change did not reduce their prices by as much as those who were charging at the cap, and were compelled to reduce prices.
For every 1% reduction in the price cap, providers previously pricing at the cap reduced their prices by 1.11%, compared with just 0.3% for providers with pricing headroom. Providers previously pricing at the cap also reduced service provision slightly, while those with pricing headroom showed no meaningful change.
The psychology market provides a clear illustration. When the NDIA introduced a uniform national cap for psychology services on 1 July, providers in NSW, Victoria, Queensland and the ACT faced a cap increase while those in WA, SA, Tasmania and the NT faced a reduction. Prices rose in the east and fell in the other states — for the same service, on the same day — confirming that provider pricing follows the cap, not broader market conditions.
“Providers do not materially expand service provision when prices rise, and while small reductions in service provision emerge for some services facing cap cuts, these adjustments are modest in size and concentrated among providers most exposed to the change,” said e61 Institute Senior Research Economist, Erin Clarke.
“This suggests that price caps are a more effective lever over prices than over supply in the short run.”
The research found that most providers charge at or just below the relevant price cap, especially in highly specialised services such as occupational therapy, speech pathology, and support coordination, where more than 90 percent of claims are priced within 5% of the cap.
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