S9E01 - NDIS Reset Explained: Breaking Down The Biggest Changes To The Scheme

The National Disability Insurance Scheme is entering a major reform phase, with sweeping changes designed to improve long-term sustainability. These updates will reshape how people access the scheme, how funding is allocated and how services are delivered.

While some reforms aim to strengthen consistency and reduce misuse, others introduce significant shifts that will directly impact participants and the clinicians who support them. For Occupational Therapists, understanding the direction of these changes is essential for navigating what comes next.

A system under pressure

The driving force behind this reset is cost growth. The scheme has expanded rapidly, both in participant numbers and overall expenditure, prompting concerns about its long-term viability.

In response, the government has outlined a four-year reform plan focused on reducing fraud, slowing spending, clarifying eligibility and improving service quality. A new legislative package is expected to be introduced and passed quickly to enable these changes.

A fundamental shift to functional capacity

At the centre of the reform is a move away from diagnosis-based access towards functional capacity. Eligibility will increasingly depend on whether a person has substantially reduced functional ability, rather than the presence of a specific condition.

This change will be supported by a new standardised assessment tool, although key details remain unclear, including who will complete these assessments and how they will be implemented in practice.

Over time, this approach is expected to apply not only to new applicants but also to existing participants as their plans are reviewed.

Fewer participants, tighter entry

Alongside changes to eligibility, the government is aiming to significantly reduce the number of people on the scheme compared to current projections.

This will likely occur through stricter access criteria, reassessment of existing participants and a greater reliance on supports outside the NDIS. While funding has been allocated to strengthen these alternative systems, there is limited clarity about how they will function or whether they will meet demand.

Funding changes that will impact daily life

One of the most immediate and tangible changes is the reduction in social and community participation funding. Budgets will be reset to align with earlier averages, resulting in an estimated 30 per cent decrease for many participants.

These reductions are expected to begin from October 2026 and may occur regardless of where a participant is in their plan cycle. This represents a significant departure from previous approaches and may create uncertainty for participants who rely on this funding for everyday activities.

Although a national fund has been proposed to support community-based alternatives, questions remain about whether this will adequately replace individualised supports.

Reduced flexibility in plan management

Changes to plan reassessment processes will also affect how participants respond to changing needs. Stricter criteria for unscheduled reviews are expected to limit access to additional funding within a plan period.

While intended to reduce overspending, this may also reduce responsiveness when circumstances change, placing greater pressure on initial planning accuracy.

Provider reforms and market shifts

The reform package includes several changes that will reshape the provider landscape.

Mandatory registration will apply to providers delivering higher-risk supports, particularly those involving personal care or restrictive practices. In addition, a new system will require basic identification or enrolment for most providers, improving visibility across the sector.

Plan management will also undergo significant restructuring, with a move towards an approved panel system. This is likely to reduce the number of providers and may disproportionately impact smaller businesses.

There are also early indications of differentiated pricing, potentially favouring registered providers, although details are still emerging.

A move towards commissioned supports

A notable structural change is the potential introduction of commissioning for home and living supports. This would involve funding a select group of providers directly, rather than allowing participants to choose freely from the market.

While this approach may improve consistency and cost control, it represents a shift away from participant choice and could reduce the diversity of available options.

Strengthening compliance and oversight

Fraud prevention and compliance remain key priorities within the reform. Planned changes include improved payment systems, increased evidence requirements and expanded regulatory powers.

These measures are designed to protect participants and ensure funds are used appropriately, addressing ongoing concerns about misuse within the scheme.

What this means for Occupational Therapists

Although many of the changes do not directly target allied health, the flow-on effects will be significant.

Occupational Therapists will need to support participants through funding reductions, changing eligibility criteria and increased uncertainty. Clear, functional evidence will become even more important in demonstrating need and justifying supports.

There will also be a growing role in helping participants adapt to reduced flexibility and navigate alternative support systems outside the NDIS.

What to watch next

Many elements of the reform are still evolving, with further detail expected as legislation is introduced and implementation plans are released.

Key areas to monitor include the development of the functional assessment tool, the rollout of support needs assessments from 2027 and updates to pricing and provider regulation.

Staying informed and adaptable will be critical as the scheme continues to shift.

Key takeaways for OTs
• Expect a stronger focus on functional capacity in both access and funding decisions
• Prepare for future changes to assessment processes, including support needs assessments
• Be aware of reductions in social and community participation funding and how this affects clients
• Anticipate tighter rules around plan reassessments and reduced flexibility
• Monitor provider reforms, including registration and pricing changes
• Strengthen reporting to clearly demonstrate functional impact and support needs
• Support participants to navigate both NDIS changes and alternative support pathways

Links
Speech Transcript made by Mark Butler at National Press Club on 22/04/2026: https://www.health.gov.au/ministers/the-hon-mark-butler-mp/media/minister-butler-speech-at-the-national-press-club-22-april-2026?language=en&fbclid=IwY2xjawRVYFdleHRuA2FlbQIxMABicmlkETFzVm1kUkFuUVJGMDBvbEN4c3J0YwZhcHBfaWQQMjIyMDM5MTc4ODIwMDg5MgABHsmjiG7yqVQOEl0d_2wkkwEh2weHvl2Xra9wg4zmbTRx95bkZNBb_MJFWhbq_aem_YgrkLacZXUDHpufvM0KOZA

Securing the NDIS for future generations fact sheet: https://www.health.gov.au/sites/default/files/2026-04/securing-the-ndis-for-future-generations_0.pdf