The National Disability Insurance Scheme (NDIS) continues to evolve, and the latest legislative amendments—particularly those to Section 33—signal a significant shift in how funding is allocated, managed, and monitored. 

These changes, effective from 19th May 2025, are designed to improve NDIS budget management, transparency and accountability, but they also introduce new risks and operational challenges for providers.

What’s changed in Section 33?

Section 33 now mandates that NDIS participant plans must include a total budget amount, funding component amounts, and funding periods.

While total NDIS plan funding amount will not be affected, a funding period will “usually be 3 months” duration.  

In practice, this means:

  • Tighter controls on when funds can be used, with no flexibility for interpretation.
  • Increased scrutiny from the NDIA on provider claims and participant outcomes.

Understanding the new funding structure: From amount to components to periods

The updated Section 33 introduces a tiered funding structure that flows from a high-level total amount down to specific components and time-based funding periods. Here’s how it works:

  1. Total Funding Amount: At the top level, each participant plan includes a total budget—this is the full amount of NDIS funding approved for the plan duration. It represents the maximum funding available for all supports deemed reasonable and necessary.
  2. Funding Components: This total amount is then divided into components, which correspond to the three main support categories:
    • Core Supports: Everyday activities and assistance.
    • Capacity Building: Skill development and long-term independence.
    • Capital Supports: Equipment, home modifications, and assistive technology.

Each component has a specific allocation and is not interchangeable—funds allocated to Capacity Building, for example, cannot be used for Core Supports.

  1. Funding Periods: Finally, each component will be further segmented into funding periods—typically 3 months, but sometimes shorter or staggered. These periods define:
    • When funding becomes available (e.g., quarterly releases)
    • How long the funding must last
    • What timeframe services must be delivered within to be claimable.

Key risks for providers

While the intent is positive, the implications for providers are complex. Here are the top risks:

  1. Potential Revenue Loss and Cash Flow uncertainty: With funding now tied to specific components and periods, providers may face delays or denials in payments if claims don’t align precisely with the plan structure.  If a participant overspends the 3-month budget, any overspent services will not be claimable. The shift from annual to periodic funding reduces the ability to forecast long-term service delivery and staffing needs. Providers may struggle to plan ahead without knowing how much funding will be available in future periods.
  2. Compliance Exposure: Misinterpreting the new funding rules could lead to unintentional non-compliance, triggering audits, repayments, or even sanctions.
  3. Operational Overhead: Providers will need to invest in systems, training, and plan interpretation to ensure accurate service delivery and billing across 3-month funding periods. There is an added complexity to scheduling, invoicing, and reporting, particularly for those managing multiple clients with different plan cycles.
  4. Participant Confusion and increased administrative load: Participants may struggle to understand their new budgets particularly those without plan managers or support coordinators, leading to increased reliance on providers for guidance—adding to administrative burden of managing the changes effectively.
  5. Participant Risk: Participants who may not be funded appropriately in the first instance or who are in crisis will be unable to access their full plan funding to address the shortfall, while awaiting NDIS access or plan review decisions.  This will increase the risk of participants requiring critical services, with no NDIS funding coverage. Similarly, if a participant’s funding for a period runs out, providers may need to pause or reduce services, even if the participant’s overall plan budget is sufficient.

New challenges: The business impact

The shift to more prescriptive funding plans means providers must now operate with greater precision and agility. Key challenges include:

  • Plan Management Complexity: Providers must now plan and track not just total funding, but how it is segmented and time bound.
  • Service Adaptability: Supports must be tailored to fit within the new budget structures, potentially requiring services and supports redesign.
  • Data and Reporting: Enhanced reporting capabilities will be essential to demonstrate compliance and value.

Getting on the front foot: Strategic actions for providers

To stay ahead, providers should take a proactive approach. Here’s how:

  1. Audit Your Current Processes: Review your billing, service delivery, and compliance systems to identify gaps against the new Section 33 requirements.
  2. Training and Upskill Staff: Ensure frontline and administrative staff understand the new funding structures and how to interpret participant plans in the context of your business’ administrative needs.
  3. Upgrade Your Systems: Consider digital tools that can track funding components, automate compliance checks, and generate real-time reports. For example: use automated alerts for funding period expirations to avoid service disruptions. This can also assist with tracking service utilising in real time to avoid under- or over-servicing.
  4. Engage Participants Early: Help participants understand their new plans and how to use their budgets effectively. Collaborate with Participants’ plan managers and support coordinators to ensure transparency and alignment. This builds trust and reduces confusion.
  5. Scenario Planning: Model different funding scenarios to understand how changes in plan structures could impact your revenue and service delivery. Consider diversification of service offerings. This might include a mix of short- and long-term services to adapt to varying funding cycles. Or consider bunding services or offering flexible use packages which align with funding periods.
  6. Strengthen Financial Planning and Cash Flow Management: Forecast revenue based on shorter funding periods (e.g., quarterly). Build financial buffers to manage potential delays or gaps in participant funding. 

The Section 33 changes are a clear signal that the NDIS is entering a new era of fiscal discipline and accountability. For providers, this is both a challenge and an opportunity. Those who adapt quickly—by embedding compliance into their operations and focusing on participant outcomes—will not only survive but thrive in the evolving NDIS landscape.

At RSM Australia, we’re already working with providers to navigate these changes and build more resilient, future-ready businesses. If you’d like to discuss how your organisation can respond strategically, we’re here to help.

 

 FOR MORE INFORMATION

To learn more about RSM's specialist services for NDIS providers, contact Andrew Sykes or Kirsty McGovern-Hooley.

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