Webinars for providers

[Cath] Alright, tēnā koutou katoa, talofa lava.

Welcome to the Disability Support Services information session on the Community Group Home Pricing Model.

Please note we're recording the session for providers who are unable to attend the webinar. We note that there was a read AI admitted to the meeting. If everyone's happy we won't use that function.

We are transcribing the session, so that will be available to you. I'd like to start by acknowledging it's Samoan Language Week, and the theme this week is 'a malu lou sā. Folau i lagimā' which means a well-grounded self is a successful self.

I'll hand over to Sarah to take us through some housekeeping.

[Sarah Morgan] Morena tatou. I can see a lot of familiar names in the list but for those of you I haven't met, I'm Sarah Morgan, I'm a Principal Adviser in the operations team at DSS. Just given the number of people joining today, we're running today's session as a webinar so we can make sure we cover off all the material.

So it'll largely be an opportunity for us to present information to you. Acknowledging it might feel a bit like one-way traffic but we'll have lots more engagement opportunities to work with you directly on what this means for your own organisations.

We'll be using the Q&A function today rather than the chat. You should be able to find it at the top of your screen um it's called Q&A. If you just jump in there feel free to pop questions in as we go and we'll try to answer everything as we can. If there's anything we can't get to, or it's going to be covered in another session, we'll make sure that we get those recorded and come back to you.

I think that's all for housekeeping and I will hand over to you Al.

[Alastair Hill] Just making sure I get my camera and my mic in order. My name is Al Hill, I'm the Programme Director for the DSS taskforce. So it's really great to be here today, and to be able to share with you what we've been working on for the past nine months.

I'm going to run through a bit of backgrounds for the model and then talk a little bit about what's involved in it, how we got to here, the sort of testing and some of the feedback that we got.

And then the team's going to take you through more of the details which I think is where the questions will come out later on down the line, but I'll stick around for the whole call as well and if anyone's got any particular questions I will be very happy to pick those up with you or to pick up a conversation separately if that's useful as well.

So yes, we're here to talk about the - as we're calling it the residential pricing model - the community group homes pricing model.

I start by saying because we've had some feedback around language and the - the thing that we're calling it this is a technical in the background piece of machinery. So it's a descriptive title rather than necessarily a thing that we'll be out talking to the community about.

So I preface this by saying that what we're talking about today is kind of the nuts and bolts of how we make this thing work in a big machine.

When we get to the implementation side of things, we'll be talking more over the coming months about information for the community and forward- facing frontline facing tools and supports as well. So just bear that in mind as we work through this.

So in terms of the sort of background to this, you'll all be familiar by now, I'm sure, with the Independent Review of Disability Support Services that was released last year, and which the government agreed to the findings and recommendations.

Recommendation Two was that there was a requirement on us to undertake an urgent contract and pricing review of residential funding, and that meant that in the meantime the residential funding was frozen at the 2024 levels.

The main reason for that was that despite residential residents being relatively stable, the cost was increasing quite rapidly and it was.. it's already one of the largest areas of expenditure for Disability Support Services. And so it was really trying to understand what was driving that cost increase, so that we could try and better account for it in the pricing model which hasn't been updated since 2016. But also try to make sure that we could better forecast and understand where that was likely to go into the future.

So that was about giving greater assurance to government but also to providers and disabled people alike.

So the aim of the review was a simpler pricing system. It had been built up over time and ended up, as I'm sure you were all aware, with a predominant cost or revenue stream and then all of these other tack-ons along the side, and so it was becoming complex to manage.

We also know that it was completely out of date, right? So it wasn't credible, and there were all sorts of things that were being done to try and make the pricing model work.

We also needed to have greater transparency between costs and the prices paid, which again is that complexity issue. The individual rates that were being paid - and I think there were some thousands of them - were down to individual contract negotiations, and often reflected what providers and NASCs believed was required in order to make good on the services required, rather than necessarily  what any kind of assessment tool or anything was suggesting that should be paid.

That also meant that we had massive inconsistency, so there was no way for us to have a look at it and go "a package here should equal broadly a package here" and account for variables or differences that made any sense. So having a level of consistency that tied needs assessment and allocation was really important for us.

We also wanted obviously to remove the residential funding cap. So in order to be able to provide for that, we had to have a model that met all of those requirements to give the government confidence and return back to a single budget for NASCs, so that there is proper flexibility and choice um both on the NASC and providers part, but also from the disabled person's perspective, and being able to choose a home that makes the most sense for them.

We know that over the past nine months - nearly a year - the funding cap has created instances where people are being put into community packages.

For example, where residential was probably a more sensible choice or a desirable choice but that wasn't able to be made to work.

So this is a good thing in that that that cap will be removed and NASCs and EGL sites will be able to operate under a single budget in the coming year.

In terms of the rapid review itself, the initial pricing model... we've moved to a select number of rates That was a choice for us in terms of how many rates we had applied.

As it says there, we've reduced from over 2,000. We could have gone to any number of regions. We could have gone to any number of bands within that. That kind of made sense for us.

But the modeling showed us that as we've set out there, six prices in each region - 24 rates nationally - made the most sense.

Within that we could capture 90 percent of the residents that are currently within care, and we think that will be the case ongoing. We'll talk a little bit more about the exceptions to that, because there is 5 percent at the bottom end and 5 percent at the top end where there are a number of reasonable exceptions to the model - where it didn't make sense for us to keep trying to create bands for them.

As I mentioned, this part of the simplicity aspect is consolidating multiple revenue streams. And so rather than providers having to manage all of these add-ons and ad hoc payments, and trying to back engineer them into where the residual or the primary price that they've come from, we've been able to roll in the pay equity advanced interim payments for settled pay equity claims, sleepover funding as well into a into a single price.

We'll also talk in a little bit about the RSS component and how we've treated that as well. So rather than having multiple different ways of cutting that we're going to have one going forward.

Again, another component we'll talk about is this does change the way that the price reflects costs? So there is an averaging component to this - costs previous or prices previously weren't actually cost based. As I said, they'd often been reverse engineered or, you know, a function of making allocation tools work.

Now we've been able to build this from the ground up and so it does reflect costs that we have selected based on external reference points. And again, that's another point that I'll talk to. We'll go through what all those components are, and we're also working to create a public resource that shows what those external reference points are as well, so that you can understand them and build those into your own operating and business models.

And the last thing obviously, the increasing transparency and consistency. We want to make sure that you have clarity about what it is that we're paying for, and the prices that we set. So again, that's why it's really important for us to to go through all the different components here. And then the next step will be showing how all those prices or individual price points add together.

I'll talk very briefly just about the testing exercise. This is the first time we've taken providers through the detail, but we did select last year a small number of providers looking at small, medium, large, to try and understand the differences and interest and incentives, and to try and make sure that we were testing assumptions accurately.

We'll just flick over to the next slide... oh too far I think... Provide a feedback slide. Oh no sorry apologies! This is the pricing model testing slide!

So you can see there the pricing assumptions that were tested across three areas. So again, we did not take anyone in advance through a detailed run through of how the model would apply to their own costs or their own residents. We were looking at some of the questions, or as it says, the assumptions around different aspects to try and make sure that we were not creating inequities or, you know, creating a model that only worked for say large providers.

That is one of the aspects when you start looking at averaging it does tend towards a model that has greater scale. But we think we've come up with a model here that works on for small and indeed very small providers as well.

We've got providers that have - at the top end hundreds of residents, and at the bottom end one or one or two. So we think this works across the board for all of those.

Happy to take some questions at a later point perhaps on the assumptions or on the the feedback as well. But I'll run through the feedback very quickly just so you can get a sense of what was said, and then we can kick into a bit more of the detail about it.

The really positive thing I think through all of this is that we've had really good support, and I would say a big thank you to those of you that have participated in the assumption testing.

But also those of you that have feedback on the detail that's been provided so far, it's been really useful to try and calibrate our way through all of this,  and generally I'm hopeful. But I believe that this is a positive thing for the system, and that we've been able to knock this off for the first time since 2016.

And we've got now a model that can be maintained and updated. I think Kath will talk a bit later about how we've built in a regular review cycle to make sure that we maintain credibility with the external prices or reference points for costs, but also be able to provide regular advice to government on the decisions that they might make through the budget process.

Given we're going to release the slides and the transcript later, I don't propose that I go through any of the details there, but you can see some of the some of the points that were fed back, and we've obviously fed that into the the model itself.

That feedback and the assumptions that we tested were all taken through Cabinet as well, so they informed the the Cabinet-level advice and not just our operational decisions as well.

I'm going to pause there and we'll hand back to Cath to take us through the next points.

[Cath] Thanks Al. So what's the purpose of the new pricing model?

It's really about a simpler pricing system. A simpler pricing system as Al mentioned, particularly around a fair and reasonable cost. So the refreshed pricing system is based on a bottom-up build for a fair and reasonable cost of delivering residential care and community group homes, making the system fairer for disabled people, providers and DSS.

DSS is looking to pay fair prices or funding levels to providers that cover these reasonable costs. As Al said, DSS will pay a provider an average price that should cover the reasonable costs of providing care, but that is not the same as an individual's cost.

Some key points about the community group home pricing model: The refresh pricing model means that there will be one tool that supports nationally consistent residential pricing.

The price DSS pays for care is informed by, but different from, the costs incurred by providers. So prices and funding levels reflect costs on average. As I've mentioned before,

Disabled people in residential care should not notice any changes. The supports provided today will still be available tomorrow.

We expect care standards will remain the same.

We want to be very clear that no provider will receive less funding in the 25/26 financial year through the implementation of the new pricing model.

Please note, there will be some people, as Al mentioned, with exceptional needs or circumstances that require an individual rate. So individual rates will now be an exception. This will still require a discretionary funding approach but that's very important.

We will support providers through the transition to maintain continuity of care and service capacity.

I'll now hand over to Phil who's going to take us through some of the key definitions. Thanks Phil!

[Phil Berghan-Whyman] Thanks Kath. Kia ora everyone, I'm Phil Berghan Whyman, I'm a Principal Adviser in the DSS Taskforce.

So just in the next few slides, we'll just run through some of the key definitions and sort of technical details of what we've done.

So, a few things to cover off to start with. We just want to differentiate between cost and price, right?

Cost is obviously what's incurred by yourselves as providers when you're delivering services for people.

Price is what DSS pays to you for delivering the care.

We've developed a pricing model, so that's essentially what we're going to use to inform and update and set the prices that DSS will pay for the care that you're delivering.

Those prices, they're set out in banded rates, so there's six possible prices in each region. And as at the bottom, there's four different regions. So, Northern, Midland, Central and Southern, which means that as Al said earlier, for about 90 percent of the people, they'll be receiving one of those 24 rates.

And if you're just delivering in one region, essentially most of your people will be receiving one of the six prices in your region.

And in order to allocate those on an ongoing basis, the NASCs will use a tool which is called the band allocation tool or the BAT tool.

The BAT tool is different from the overall pricing model. It's a tool that will allow them to work through a process of determining which of the rates applies to that individual.

All right, so just to work through then, this is a slide which is presenting on what's sort of included in the model, and how that process has worked.

So the model we find works well for about 90 percent of the people who are currently in community residential care. So there's about six and a half thousand odd people.

There are some people who, if you look at the rates across the whole spectrum, have very low rates, and sometimes that's for particular reasons.

So you might have someone who's a got a relatively low level of need and actually half of their costs are being paid by another party, say Health New Zealand, mental health.

On the other end of things, you have people who have very high rates because their needs are very different from anybody else.

And so what we found was with those people in that sort of top 5 percent, because their situation was so different, they didn't fit well into a a sort of a banded rate approach because you'd have sort of very wide differences between the rates, and the sort of unders and overs don't work so well.

But for most people the approach does work well.

And so as we apply that, what we expect then is that the care standards will be maintained, and also there's been a commitment that no provider will be fiscally worse off in the 25/26 financial year.

Now talking to the components you can see on the slide there, so what we've built is firstly a Global Pricing Tool.

So that tool is really about looking at all of the different price combinations that could possibly exist if we look at a range of inputs such as accommodation costs, care costs, the cost of delivering the business itself,  so overheads and such.

And in the next slide, we'll actually talk a lot more about what sort of assumptions we made, and what's in those.

What we did once we had that big list of several thousand different possible prices is we then took the cohort of people who are currently in residential care, and we made assumptions about those people and matched them as best we could to what rate we thought applied to them.

We then took that, and we put it across a curve, and using that third component we essentially looked at where there were natural breaks, and what bands seem to fall out of the existing funding and rates that were already in play.

And that was part of what led us to the decision that there would be six rates and four regions and so on.

Could I have the next slide please?

Okay, so, if you were to look today under the hood of one of the transparent pricing models, or one of the individual rate calculators, what you would see is something that looks quite a bit like the what's in that diagram on the screen right now.

It would have part of, or some of those core cost components.

As Al said earlier though, the existing TPMs or Individual Rate calculators are out of date. Although there's been price uplifts over the years, the structure of those models hasn't been reviewed, and a number of the assumptions are just no longer as up to date as they should be.

The models are also just different. So, some have a component, others don't have a component, and so on.

And then of course the underlying contracted rates for people who aren't on an Individual Rate, those are often quite historical just with price inflation over time.

So, this approach moves all of the pricing to having a sort of consistent basis to work from. So, you'll see looking through there that we've covered off across all of these things like staffing, client related expenses, core housing, maintenance, provider overheads.

Also, what we're doing through this model is we're trying to provide a sort of indication of what fair and reasonable costs would look like, so that those can inform pricing.

The intention of this is to not tell you how much you should spend on food, or laundry, or fit out, or whatever.

The intention there is that you run your business, but this is to give us an indication of what fair and reasonable is, so that we can set fair and reasonable prices.

Right, could I have the next one please?

So, then the next question is how do we match the current cohort of, you know, more than 6,000 people, to these rates without requiring that every person is reassessed by a NASC, which is not a really practical option.

So, what we've done is we've derived a number of assumptions about each of the people who are currently in residential care. Things based on such as address and so on, about what region they're in, what we think the capacity of the house is... Things like rural or urban so on.

And we take that component, and we use the model to see what do we think is the approximate cost of that aspect of the sort of accommodation piece of the rate.

Then we take essentially the rest of what's being paid for that individual, including an assortment of things like the advanced interim payments for pay equity and apportionment of sleepover costs, and that sort of thing, and also an assumption about the client contributions being received from the RSS. [23:27]

We assume that the remainder of that is largely related to sort of variable costs like the care costs, and we use that to match to the closest ratio that would make sense, in order to get an idea of where on the price points someone would sit.

And then from the many price points that are available, each of those then clusters into one of the bands and therefore to the appropriate level in the appropriate region.

Okay, just have the next slide please.

Okay, and so this is sort of giving a visualisation then of that same process.

So as you see, there's each region has six prices. The prices are not dissimilar, but they are different, and that reflects the fact that some of the underlying costs – of say accommodation and housing for example - are higher in some regions on average than they are in other regions.

90 percent of people will match to these prices. For the people who don't match to these prices, there will be the extraordinary rate process, which we'll tell you more about in the future.

All right, um is there another slide for me? There we go...there's a couple. Okay, so I'll just work through a couple of things on this slide and next.

So at the moment there's several different revenue streams that come to you as providers, in addition to the day rates that you're paid. And I'm just going to touch on how those are affected by this.

So the advanced interim payments are the support worker pay equity top-ups for hours of labour. So those will be rolled into the rates that are paid for the service.

The cost model includes the support worker labour costs at the full pay equity labor rates. So we've built that into the rates.

The same also with the sleepover costs.

So the base assumptions in the model are is that every house has a sleepover, and for the purposes of estimating costs we've actually assumed that the people delivering the sleepovers are paid the normal labour rates, rather than the minimum wage which is the assumption at the moment.

So that will mean that there's no longer a requirement for a sleepover top-up payment, and also that there's effectively no real difference um between say a wakeover cost at wage rate and a sleepover cost at minimum wage, because they're now all assumed to be at the labour rate.

The day activity contribution - just for clarity that's the top-up payment of about $31 a day for people who are usually 65 plus and who don't go to day services or vocational services.

So that cost is now covered as part of the model, because the model assumes that although there is a period in the middle of the day which has had  a lower level of activity, there's no longer an assumption that essentially everybody leaves for 6 hours every day, which was sort of one of the underlying assumptions in in the previous pricing.

There's no change to GST treatment or anything like that.

Lastly, the client contribution treatment does change for some regions or some providers. So at the moment we have two different treatments in play

- client contribution exclusive where the rate is simply the rate and the contribution paid by a client through the RSS scheme is additional to that, and so you get both.

We're moving to client contribution inclusive. So what that means is that the rate that's set by us assumes that is the full amount that's being paid as the price. So if the price was say $400 per day, what it assumes is that what DSS will pay is $400, less the client contribution amount.

If the client has a benefit and that's paying say $50 a day towards the care, then DSS would pay the difference $350.

If the client's not eligible for a benefit and therefore has no RSS payment, we would pay the full $400. 

And we think this is quite a positive change because if you had the exclusive arrangements prior, then if the person had no eligibility for a benefit you basically didn't receive any funding to cover off costs from them.

All right, could I have the next slide?

Okay so last couple of things from me.

Just to be clear, there's no impact from this work on facility based respite costs. And also just to give clarity, the day activity contribution cost changes as per the previous slide, but there's no impact on day services or the MSD funded vocational services. So those are still separate contracts. They're still separately allocated supports.

That's me, thank you.

[Rachael Burt] Um kia ora koutou everyone. Nice to see many familiar names online, but for those of you that I don't know, I'm Rachael Burt. I'm the Group Manager of Operations and Enabling Good Lives for Disability Support Services.

I'm just going to take you through a little bit of a recap of what the previous presenters have already taken you through, but just really what does this mean for you. What does the new pricing model mean for you as providers?

So the new model is based on fair and reasonable costs of delivering residential support. This is so providers can have more confidence in the pricing tools.

As you know, the current tools have not been substantively updated in many years.

There will also be a clearer link between prices paid and the services being delivered, which is a positive step forward.

This will also give us a chance to reset and strengthen the commercial and contractual relationship between you as providers and Disability Support Services.

You as providers will have more flexibility to tailor support to people you support from within your overall residential funding, rather than rates being linked to a specific individual.

And because the costs have been re-baselined there will now be greater financial certainty and consistency for everyone involved.

So our approach to the transition to the new pricing model is guided by a set of core principles.

First: continuity continuity of care is key.

People who are supported in residential care will continue to receive safe, high quality support in homes they are familiar with.

We're also focused on maintaining service capacity so disabled people and their whānau can keep making choices about where and how they live.

We will ensure you as providers will be supported to transition to the new model, and the new pricing model is designed to improve efficiency and avoid adding any new complexity, which will help to stabilise the wider disability support system.

It also needs to be affordable and practical to roll out.

And finally, by simplifying the pricing structure we're aiming for a system that's fairer, more consistent and transparent.

The model will allow to be ready to support future improvements without locking us into one way of doing things.

Also the Minister of Disability Issues has committed that no provider will be financially worse off in the coming financial year with the implementation of the new pricing model.

We will continue to work with you as providers on what this means for your organisation.

And you will be aware that current residential contracts expire on the 30th of November 2025.

Disability Support Services will be issuing new contracts which will reflect the new pricing model.

We will be providing more information about the new procurement approach in the session on the 10th of June which you should already have an invite for. This session will also be recorded for those of you that are unable to make it.

If you have any further questions between now and then I'd really encourage you to contact your Portfolio manager.

And again, I just want to encourage you to join the meeting if you're able to on the 10th of June where you'll be able to find out more information including our procurement approach and panel approach.

Now I'm going to hand over to Sarah Morgan who is going to lead some of our Question and Answer sessions from what you've posted in the question and answer chat. Thank you.

[Sarah] Okay. I'm just going to go back down here and see what questions we haven't answered yet.

There's a few questions around "I didn't see the cost of compliance reflected in the tool" and also a question around a lot of reference to cost. Where is the provider margin built in? I'm going to call Phil - is that something that you could speak to because I cannot?

[Phil] Yeah, I'm happy to. So we considered building an overt margin into the model and we decided that strategically that wouldn't be a great approach - not least because overt margins like that are often the first place that will be looked to if there's savings required in the future.

So what we've done instead is we've tried to make reasonably generous assumptions about the costs.

So for example, the food costs don't assume you know 2-minute noodles and so on, it assumes a reasonable sort of household food level.

So we've made generous assumptions and we believe that leads to there being a reasonable margin within those rates without there needing to be an overt assumption.

[Sarah] Thanks. And I think you may have answered this one full already but how are vacancies reflected in the tool? Might be of interest to people.

[Phil] Sure. There's essentially a vacancy margin that's been built into the rates. So um if there are vacancies for a a reasonable period of time, then that should be able to be managed within a sort of overs and unders of the rates that you're receiving.

If you had very long-term vacancies over a period then you might want to start considering whether that's the best way to use the housing stock.

[Sarah] Got another question in here. When will providers be able to see “under the hood” As Al indicated? Al do you know any kind of expected time frame around when we might be able to provide some more information that we discussed earlier?

[Al] Yeah like within a couple of weeks. So we've got all the price components, I really just need my team to pull together a little resource that makes sense. So, we'll have that out to you ASAP in, you know, days or weeks not months.

[Sarah] Cool.

"So is it correct to assume that a separate tool for the individual rate, and therefore what are the time frames and process around that?" So that's probably a good place to start is the band allocation tool is kind of still in development from the 1st of July. You won't see any changes until kind of new contracts are in place in on the 1st of December. So that the band allocation tool and then what happens with individual rates is still in development. Don't have an exact time frame on that, but that that's that's being developed as we go.

"Any information about how providers can support and assist with the banding tool?" 

There will be some kind of testing phases, but I think that's all still kind of in finalisation stages of what the exactly the process is going to look like.

"What assumptions have been made in terms of people in a home eg: the old model always assumed four people which was not sustainable for many people?" Phil,  do you want to talk about talk to the assumptions around house size etc?

[Phil]: Sure, so the model has a a range of different assumptions. So it has different assumptions that range from a house that essentially has the capacity to support a single person through, you know 2, 3, 4, 5 plus people in a house.

There's also assumptions that relate to both the size of the house, like it may be a three-bedroom house, but also the capacity of the house to support people. So it might be that three person house can support two people because the other room is required for staffing and sleepovers and other sorts of stuff. So it has a has a lot more ability to manage different situations than the previous models.

[Sarah] And there's a few questions in here around payments until 1st of December. So yeah, you'll continue to receive the current funding that you do both through daily rates, and things like pay equity and sleepover payments until the current contracts end on the 30th of November.

And we're just working through finalising... you should expect some letters in the coming days or week, I assume, around how we're going to manage transition to that model for the period 1 July to 30 November, and that will be kind of specific to your organisations.

We're just flicking through these now to see what else...

[Al] Sarah, there's a couple of comments in there related to the transition and payments. I just thought it might be worth highlighting a couple of points around that and then I'll hand over others to get into more of the technical detail.

In developing the model and then understanding what the implications are for each of the individual providers. There are 89 providers that are delivering services, and as I said that we've sort of grouped those from very small, small medium, large, very large to try and make sure that we understood the implications of the model across all those different sizes and the makeup of the residents and the homes that you run.

For the 89 providers, under the new model, I think from memory - someone will correct me if I'm wrong - we've got 71 providers who will see a material uplift in the in the amount that we will pay, based on what we understand from the current resident mix. And I think about five providers are sort of net zero, so there are there are a small number - about eight - that receive a reduction, and we've spoken to those providers, and are working through within what that looks like over the coming year.

As Cath or Sarah said earlier, the minister's directed that no one receives any less funding in the current year. So that's what the rates indicate, but we'll make sure that we make good on um that cost equalisation for those providers.

For the rest it does provide a material uplift, which I think to Phil's point shows that the assumptions that have gone into the model, the assumptions that have gone into each of the individual cost components, and where we've priced those, indicate that it does create an uplift.

On the transition point, so we've done an assessment which we need to update for the latest possible data, but on the assessment that was done at the time, the indication as I said is that 71 providers get an uplift for those providers, because the model doesn't come into place in terms of the actual rate structure, the contracts reflecting those and the systems being able to match people through the band allocation tool and onto those rates until the 1st of December, we're looking at a transition repayment structure.

So rather than backdating which we could have done, we could have waited until the whole thing lit up, up and down the country, and then tried to make backdated payments, we want to make good on the on the prices as we best understand them.

So we'll be working with providers to make an upfront payment for those first five months basically, as best we've assessed it. So we'll be in touch, as Sarah said, with with each of you to run you through what that looks like, and how that payment will be made.

And that means that in the meantime, the prices that we're paying the additional pieces like the sleepover rates and all the rest of it can continue as is. And we just we make good on the difference. Hopefully that makes sense.

[Sarah] Uh and I guess just kind of summarising a couple of these questions in here, I think I can cover them off with one answer, is that essentially the current processes for either new people entering residential care, or having reviews done on current funding where people's needs have changed - that will continue with the current processes until 30 November.

So keep engaging with the local NASCs or EGL sites and they'll continue using current tools and rates to review until the new kind of "system" is administrable as of the 1st of December.

Um yeah so it's kind of business as usual until then.

[Cath] Sarah are you just happy for me to jump in?

[Sarah] Of course.

[Cath] Great. just circling back to something that Al mentioned earlier, we do have an annual review of costs embedded into our commissioning process and approach moving forward to inform our funding decisions.

So that's an annual review of costs using the pricing model of course um that I just wanted to explain. Thanks.

[Sarah] There's a question in here around how is a person living alone with one to one support handled.

I think Phil kind of touched on that a bit, is that the pricing model and bands do and the band allocation tool will account for things like house size and capacity. So if that capacity of that house regardless of the bedrooms is for one person because of their support needs, the allocation tool will shift towards that, or allow for that to be accounted for in the allocation to the rate

[Phil] Yep that that's correct. And just also, if there are situations where a person is living alone with very high support needs, it is possible that that's the sort of situation where an extraordinary rate might be necessary. Depending on how that relates, to the level six rate and so on. So the tool will ultimately tell us whether one of the banded rates is appropriate, or direct as to whether an extraordinary rates required.

[Sarah] There's a question in here when can providers expect to find out what their new funding will be. I think like we've said, we've done an initial kind of estimation exercise,  so that will be covered in at a high level kind of percentage in dollars wise in the letters that will come out to you soon. But we need to do some more validation prior to the actual translation closer to the time, closer to 1 December. And further validation exercise to test some of our assumptions on that. Does anyone from DSS on the call know when a time frame of when we might be able to get that kind of information out to providers?

[Cath] I anticipate that that will be in the next one to two weeks.

[Sarah] The letters, yeah. But I mean the the more final versions of people's... more final versions of the impacts would be in the later months, once we've done the validation?

[Phil] Yes that that's right. So there there's various pieces of information where in doing the development work we made assumptions, so now before we finalise the mapping of people, for example, to rates, and the finalisation of exactly what those rates are, we want to validate and check a lot of the information, so that we can be sure for example that say where we've assumed a house is a three-bedroom house that it's not in fact a five- bedroomed room house or similar vice versa. And so once we're able to validate that information and a number of other things with you, then what we'll do is we will finalise the rates, or finalised the matching so that process will happen simultaneously.

[Sarah] There's a question here around will the service specifications be reviewed to take account of changes in client need? At this stage through the implementation of the pricing model, we're not proposing any significant changes to kind of service requirements or the service specifications at this point in time.

There's another question in here around are NASCs and EGL sites now allowed to refer to residential care? And I think Al touched on that because we're now implementing the new pricing model in this financial year, the residential funding hold will be lifted from 1 July. Essentially that means that NASCs will have more flexibility within their overall funding to to allocate between residential and community based supports.

[Al] Yeah, a couple of points of clarification in there. There was never a restriction on NASCs being able to refer. The funding freeze related to the funding that the NASCs had available to place people.. to coordinate services for people, and so they've had to manage within that. They still have to manage within an overall budget, but they've already had their budgets for the coming year communicated, including the increased funding through Budget 2025.

Um a couple of points there, just for interest, because I think it's been missed through some of the media commentary. Budget 25 provided a billion dollars over the funding period, so $250 million a year.

Again, I think that's a real vote of confidence in the services being provided, but also in this pricing model that's given the government confidence and assurance to be able to release the funding freeze, and provide new funding into the system.

The $250 million is broadly broken down in $60 million for this model, and some some other residential services, but the vast majority of that is for the implementation of this pricing model. What that does is it enables us to shift existing residents onto the new pricing bands, cover the transition costs and pay the new bands right through the rest of the year.

The remaining money - so $190 million per year - provides for increased volume composition, all those kinds of things, right? So we know that more people are coming into services. It enables the NASCs to use that money to coordinate services, and whether that be residential or in the community. The vast vast majority of that $190 million has gone out to NASCs and EGL sites. There's some contracts that we coordinate centrally, so there is some funding for that but I think the figures are about $144 million of that has gone out into NASCs.

And as Sarah said they'll only have one budget to manage too, one central budget, so they'll be able to work out what the best mix of services are for individuals and place people accordingly.

And that's baseline funding as well. The $60 million for residential, the way that we're managing that is through the transition payments to start with. So again, we'll talk to providers about what those individual transition payments for the period 1 July to 30 November are. We'll make those payments directly.

From 1 December, they'll be rolled out through the banded rate structure via  the NASC reassessment process. So essentially all of that money is going out through into the the regional allocations, but we're just holding it centrally for now while we work through the implementation of the pricing model.

There's a couple other questions I've noticed in the Q&A. "So does the lift of the freeze also mean people can shift from NASC residential funding into EGL in demonstration regions?"

Again, there was no restriction on that movement previously, other than people being able to manage within their within their budgets. There was a guideline - part of the guidelines - that were written around interim transfers for residential. The principle there was largely that the the funding... in simple terms the funding followed the person and in setting the new NASC and EGL budgets we've accounted for those um those formalised transfers that will continue as well.

So the the new guidelines are being updated, and will be communicated very soon if they haven't already. There was a question about the banded rates being reviewed annually.

So the pricing model and the components within it will be reviewed, and then based on that we'll review the rates.

So there is a process for that but it's not an automatic x + y equals z. We'll need to refer to those external sources again to have a look at what's changed, take into account things like CPI and wage inflation and whatever else. What we want to avoid - I mean this is kind of an obvious example, but the reason why we retain the ability to review and then make decisions separately, part of that is the government budget process.

And also part of that is consideration of, for example, what happens in times where you've got negative growth. We don't necessarily want to be in a situation where either the rates just automatically ratchet, or where you've got an automatic process that means they go up and then down and suddenly you're having to cut costs because of that. So there will be an annual review process, but there is a separate decision-making point then and that will link into the government budget process as well.

"Are the people in residential care already in their new bands or does this happen closer to  1st December?"

We have assessed what we think people would be assessed at on the bands for those already in care, so we'll do a sort of broad translation .That's what will drive those transitional payments that we'll make to you, so we've made some assumptions around that. We'll make a payment on that basis or we'll be covering those providers who are assessed... the very small number, the eight who have been assessed at a at reduction from 1 December. People will be moved on to the new bands formally, and anyone that goes through an assessment new into the into the service, or a reassessment, will be put onto onto those.

Bands - I'm just checking to see if there's anything else I can answer quickly in there.

[Sarah] There's one but probably will be for Phil. "What are the support staff wage rates that have been used? Is it based on the previous pay equity levels or will they be entitled to a pay rise?"

[Phil] So a couple of things in answering that. So this the last part of the question - "Will they be entitled to a pay rise?" DSS doesn't set the pay rates for support workers. They're employed by you, and you have that relationship. Obviously appreciating that there are various processes but we don't intend to tell you what to pay your staff.

Secondly, the assumptions we've made in the model for support workers.

We started from the support worker pay equity rates - we included the increases over the years and also the sort of semi increase that was agreed in the tripartite negotiations in 2024. So that agreed sort of a pseudo uplift on those rates, that wasn't part of the legislation. So we've included those, and as with most of the components, we've then tried to bring the rates up to date as well. So the rates are fully in line with the last support worker pay equity agreement.

Oh sorry - they they also include assumptions about ongoing costs as well, which we've tried to make as accurate as we could.

[Sarah] Phil, do you want to stay on because I think I can answer this but you might be able to supplement. "For those with changing need or risk within a group whare setting, pre and post funding freeze or pricing freeze, and require extra staffing support eg. one to one, has this been included into the price average or will NASCs allow for flexi funding or short-term additional support?"

So I think that kind of talks to a little bit... some of the increased flexibility with the pricing model, in we'll provide a price for each person that you're supporting, that reflects an average cost. You'll have more flexibility within this model to work within your overall funding pool, so I guess that allows you to be a bit more responsive to changes in short-term changes in support needs for people. So rather than some people potentially will be paid at a higher rate, because it's based on averages.

You can speak to this better than I can Phil. Averages some will be higher, some will be lower and you'll be able to manage flexibly within that.

[Phil] Exactly. So what we how we see this is that rather than assuming that each person is receiving a discrete pool of money that in theory is to only be used for them, when in practice we know that you're in fact delivering care within a pool of funding, this makes a bit more overt that assumption.

So each individual will be assessed, and they'll be allocated a rate which relates to their level of need, and the setting that they'll be living in. You'll receive a total amount of funding from across all of those people, and then our expectation is that you'll deliver services that relate to the people's needs within the specifications, and the other expectations, and that you'll be able to use the unders and overs between people to deliver appropriate care.

[Cath] Okay, thank you very much everyone, I'm just conscious of time. We appreciate you being available for this information session. We do have another information session on the 10th of June around procurement, and we look forward to talking to you then. I'd like to just advise you if you have any other questions, please email us on this email address - dss_commissioning@msd.govt.nz. I'll now close with a karakia.

[Sarah] Can can I just quickly say as well for any of the questions that we haven't been able to cover in the chat yet, we'll make sure to come back to you with answers.

[Cath] (Karakia) Great. Thank you very much for your time.

[Catherine] Welcome everyone to the Disability Support Services webinar about our procurement approach for Residential Support Services. Please note, we are recording this session  to share with people who are unable to attend today. Your voice and face will not be recorded but your team's avatar and name might show on screen. Please feel free to not attend today if you do not consent to this recording - we will be able to share the content with you after the session. A reminder to not disclose any personal information within the webinar Question and Answer chat, and we do anticipate having time at the end of the session for questions and answer via the chat function. I'd like to start by opening with a karakia. 

(Karakia)

My name is Catherine Poutasi. I'm the Director of Commissioning at Disability Support Services for the Ministry of Social Development. I'm also joined today by Michael Hiscox, who's our Director of Commercial, and Nila Panko who is our Procurement and Commercial Lead. I'd like to start by just running through what we will be covering in the webinar today. We'll talk briefly about the new commercial model, we'll then go through the procurement and application process, and finally we'll end with some information that you need to know. 

I just want to start by providing some context as a commissioner, funder and steward. We had seven principles that we considered when we were planning our approach. One of the principles was continuity of care, so our focus is on disabled people in residential care continuing to receive quality and safe care in their usual place of residence. The second principle was service capacity is maintained so disabled people their whānau can maintain choice and control about where they want to live. The third was transition is supported. Providers will be supported to transition to a new pricing model. The fourth was system efficiency is improved. The design of the new pricing model will contribute to stabilising the Disability Support Services by promoting efficiencies. Five was sustainable funding. The sixth principle was everything being realistically deliverable, and the seventh was  sustainable funding. I'll now hand over to Mike to take us through the commercial model.

[Mike] Cool, thanks Cath. My name is Mike Hiscox, I'm the Director Commercial for Disability Support Services, so that kind of looks across procurement and the contracts that we have in place and are managing. Moving forward, as Cath mentioned, we're going to cover this in two sections today,or two main sections. 

The first one is around the commercial model, so that really is where we're going how do we want to structure the contracts etc in the future. And then the second part will be about how we get to that, so how are we going to go about procuring that over the next several months before the contracts current contracts expire at the end of November.

So jumping straight into the commercial model part, some of you will have seen in the letters that we sent out and some of the previous coms that we've done um alongside the pricing model that we've been referring to this thing called a panel contract, and so I'll talk a little bit about what that means, and and why we're going about that sort of model.

Essentially, a panel contract is a group of providers, so in this case it would be group of residential services providers who have been approved, and have been taken through a kind of standard process and a standard set of assessments, so have proved that everybody meets a standard, and everybody's then engaged against a common set of terms and conditions that can be managed at a central level, be managed as kind of one consistent base of terms and conditions. How that looks is  I'll step through these five different boxes, but what that really means is that any provider who meets those standards can join the panel. So those standards - we'll talk to a little bit as we go through this presentation, but what it means is that we can set the standard, and then if maintain those standards over time and if providers then drop in certain areas then we have mechanisms in place there that we can manage.

The component that's called Open Panel also means that it's open for the long term so we can use this panel to engage other providers in the market where there might be gaps or where we know that there's an area that needs additional services. So we can use this panel as a mechanism to bring on other providers if needed as well. Some key parts are that it is against a common set of terms and conditions, so it's everybody or every member of the panel will be using the same contract. We have that consistency in those obligations, everybody knows that you're comparable against other people who are providing services under the panel. And as I mentioned that we intend to manage this in a central manner, so we say holistic but what we mean really is centrally so that we can make sure that everybody is being engaged in a consistent manner by DSS, but also that we can roll out improvements and changes over time as well. So that might mean that something crops up that we need to update the service schedules or a safeguarding requirement, and we can do that as a cohort of providers and against a cohort of contracts, as opposed to having to go out and agree 90 different sets of contracts. It's more managed in that central way. 

One of the other key benefits that we're looking at as well is that obviously this is community residential to start off with, based on the scope of the community group home pricing model. But over time, and as we'll get to some of the duration pieces a bit later, over time we might look to introduce other residential services as well and we can then use this panel as a base mechanism of being able to do that, so whether it's bringing in other types of service we currently have, under which are in that kind of residential category of work, or whether it's about creating other new services that might fill gaps in our service offering, it creates a foundation and a base for us to be able to do that moving forward.

If we jump on to the next slide, okay? This is a kind of very high level picture of what I've just said. This isn't a gospel picture, it's just something we've scribbled on a whiteboard a bunch of times to illustrate the same points on the previous page, but really that bottom half of the the slide is describing the panel model. So as you see treated as one group of providers, where new providers can come on board, or the number isn't a fixed number so people come on board and leave or depart the market as well, which are established by DSS we have a mechanism for bringing people in, and then that mechanism for managing off if things go don't go particularly well, and we also have mechanisms for improvements and managing the performance across that panel as well. 

What it essentially means is that if you are a member of that panel, then as we move forward, that means that NASCs will be able to refer those services, or refer send referrals to people on that panel. And so it will create that standard that if you want to be able to provide these services moving forward,  this is the mechanism that we will be using. 

 So if we jump on to the next slide, we've got a little bit of info about the structure of the contract, and what it will look like. This is reasonably comparable to how we contract at the moment, but I'll talk through this, because there is a little bit of nuance to it. This is very high level, but it's more just categorised, so that when you do see these sorts of things in the coming weeks, you'll hopefully be able to see where they slot in.  The first part is what we're calling the panel agreement, so this is essentially the piece of the contract that you'll all sign as we move through. And so this details the specifics of the individual providers that will be providing the service, and some  specifics around that. What it then does is point to all the different parts of the contract that you're signing up to, effectively what we have so that so that would be kind of comparable to an outcome agreement in today's - in the kind of current language.

What we then have is just the panel terms and conditions. Essentially this is the kind of long form contract that you'd be more used to seeing in the background, around the framework terms and conditions, and those sorts of things. This is where we spell out all the different obligations that we've got, whether it's from entry exit and how things are managed. It will point to the different schedules, for example, around pricing and and the specifications etc, but these are going to be consistent terms and conditions across all providers, it creates that just base contract. And then obviously we then have the service specifications which are being updated to a small extent at the moment, but no material changes is probably the the key message there.

So it will point to that as being part of the contract, as well as you see down that side as well, we've said those open panel terms and conditions, and the service specifications as we currently have now as well, those are the things that will be posted online. They'll be open so everybody knows that you're against the same conditions. It makes it really easy for us to maintain that as well, in the event that we need to update something if there's a law change or a policy change etc.  It makes it quite straightforward for us to be able to manage that. That's a very high level picture of what it will look like, and as we move through the process in the coming weeks,  you'll see much more detail as we spell out what those different parts of the contract are.

If we jump on to the next slide, this is the "why are we doing this ?" slide, the benefits that we're trying to achieve from a DSS perspective essentially. So I'll just step through these. One of the key benefits we're looking at is providing that that long-term commitment to the market, or to providers, and I'll talk a little bit about that on the next slide as well. But having that long-term commitment providing that certainty out to providers, but also having that ability to adapt and improve the service offering, and how we engage, is really key to what we see in the future. 

So we don't want to build something now, and then in 3 years time it's out of date. We need that ability to have that flexibility as we go through the process, or go through the engagement. Longer term, one of the other key benefits is really around that consistency and clarity across all the providers that are providing this service for us, and for disabled people, in that at the moment there are a range of different forms of contract. It's not heaps of different ones, but there are kind of some specific elements that differ depending on how long people have been providing services etc. So what this does is it really sets a base that we can have everybody against the same terms and conditions, and then kind of create that flexibility in the future that if we need to change and tweak things with the cohort of providers, we can do that with ease. 

It gives us the opportunity really to reset things as well. We're bringing out the new  pricing model, so it's really giving us that opportunity to start afresh and go, "well okay we had all those contracts before, they're under different models now, we're under this new model". It's a clear start that takes us through a bit of a process to get there, but it really resets that relationship, and helps us to embed that new pricing model and some of the other things that we're wanting to do in the broader DSS environment. 

And the other piece is that it allows us to onboard new providers against that same standard that we'll on board current providers to as well. Because as we know, in 2 years, 3 years time, there might be a need in an area that we need to step into, and we want to be able to identify providers if that's something we need to do, that we can then provide more services in that space, or a new provider comes along - we want to be able to bring them on board. We've got mechanisms in place to be able to do that, and have that choice element there really as well. So that's the benefit from our perspective. The key benefits we've got, or we're considering from the provider perspective, it's on this side really. As I mentioned, we're providing that long-term certainty to the market or to providers in this space. 

One of the key things that we've managed to achieve here is a really long-term duration of that commitment on these contracts. So starting off with a 10 and then two 5-year rights of renewal built into this panel contract really means that we can provide that certainty and that commitment to the providers that join the panel. That's a massive win from our perspective, because it means that we can signal to you that we're in this for the long haul, and it also then means that you as providers have that ability to see that long-term commitment and be able to make improvements that might happen over a period of time - whether it's investing using capital or those sorts of things. It just provides that ability to invest and make those improvements over time. And hopefully, by moving away from kind of short-term extensions, it will it create that improvement, and allow you a bit more flexibility and certainty in the way that you run your organisations. 

That's a huge win from our perspective to be able to get that commitment out there for all the providers, that clarity on how you're being engaged, so making it really clear that everybody is being engaged in the same way, being engaged against the same terms and conditions, the same processes. That's largely the same at the moment, but it's just being really transparent about those sorts of things as we move forward, and having that real clarity that we're being clear on this is how we expect to engage with this portion of the market providing services with us. 

Another key part that we want to do is provide that clear performance and reporting expectations. Obviously over time that might need to flex and adapt, so we might need to change reporting needs etc. But we can do that centrally, and work with the cohort providers in that space, but it's making it really clear that everybody's being held to that same standard. And also by putting in this new model, it makes it a lot more straightforward in terms of rolling out the new pricing model, as we talked about last week, in a kind of clear manner. Everybody's against the same contract etc, so it gives us that ability to set that date and roll the the pricing model out from that that point onwards. 

So that's that's the kind of whistle stop tour of the panel contract, and the model that we're wanting to move to. What you'll see in the kind of the next piece is how we're going to get to that, but we wanted to talk to where we want to get to first. So it's clear that we're talking about this new contract, this new model, and then we can talk about the process now as to how we'll how we'll get there. 

Just a reminder as well that if you do have questions, or you do want to know anything, feel free to chuck them into the Q&A part of the Teams call, and we'll try and answer them at the end. It's really useful if there are things that you need clarifying, or things weren't quite clear as we stepped through that. We can either try and provide that clarity, or it will help us when we provide the information in the future as well.

So in this section, I'll really step through what we're doing, or how we're going to go about procuring this new contract. What I wanted to start off with saying though is that as Cath mentioned right at the start, one of those key principles that we've got is that continuity of care. Really what that means is that we want to be able to support our providers through this process, so I just want to make it really clear that this isn't an exercise of market consolidation, or reducing suppliers in that perspective. This is about us getting to a new model and a new contractual approach, not about trying to drive any other outcomes in that space. 

So I know there'll be a bit of nervousness as we sort of step through what this phase looks like, but I just wanted to make that part really clear, as right from the outset that this is about continuity of care as we move through. We've sort of the very high level phasing and the approach that we've got. To get us to that new contract that will start on the 1st of December is that we're obviously right at the outset of the process. We're developing the documents, we're working through the approach etc, providing briefings and information sessions. What that's leading to is what we're calling a request for application process. This request for application process will start next week so on the 16th of June, and it will be open for applications to be received for a period of 6 weeks.

I will step through that in a fair bit more detail in the coming slides, so just signaling that what we'll then be doing is assessing the different applications that we receive against the standards, and we'll be undertaking a level of due diligence against that. Some of this is just the standard kind of due diligence that we need to provide now that we're within MSD, and that we've got that we'll be signing up to new contracts, so we need to go through a a kind of formal level of due diligence as good funders. Then ultimately what that leads to is awarding the contracts, and moving into that new environment which will start on the 1st of December. Our key aim is that it will be a seamless transition for those who are continuing from the 30th of November to the 1st. So it should feel reasonably seamless, but that 1st of December is really when the new pricing model comes in, and all sorts of other elements, so we've got that target with lots of these phases and pieces of work that we've got going on are aiming for  that key date. 

That's the big picture sector, and I'll kind of step through some of those in more detail in the next slides. If we jump onto the next one, so the request for application process. We were very cautious we didn't want to go out and say this is a big tender process, and a big "we're seeking proposals" etc - we're very clear that this is an application process. We want providers to go through a straightforward process in order to join this contract, and so what you'll see next week when we release it is it'll get released on the Government Electronic Tender System as a mechanism of making sure it's out there, but it will point us to the DSS website where all the documentation will be held. We'll also send out emails and there'll be information in the provider newsletter etc at the right periods there. But the information that you'll need will be available on the DSS website in order to apply to join this contract effectively. 

I'll go into what those documents look like in the next slides, but what what it looks like is a series of questions against four key areas. So these are the business requirements and service sustainability, so these are some of the key requirements that we have, quality requirements so that includes things like audits and safeguarding type requirements - we're just asking a few questions around those, and then health and safety information, security some kind of key things that we've just got to ask providers, that we want to ask providers that we're contracting with. 

So it should be a straightforward set of questions for people to be able to answer. What you'll see is the RFA includes all that information that you need to know in order to apply, including how to get in contact with us, information about the contract etc, all those sorts of things. We've got a key part there that both the incumbent providers -  so those providers on this call who currently provide services -  and any prospective providers or new providers, anybody can apply through this process but obviously we we will be prioritising and supporting incumbents going through that process. So what that might mean is if we get a whole heap of prospective providers coming through, that we might sequence some of this in a slightly different way, but the priority is to take the incumbent providers through that process. 

At the outset, one of the key things that we've got as well is to ensure that we're following a good diligent process, we have engaged an independent property auditor, so they're just really making sure that we're following good procurement practice, and that good robust process that we've set out at the outset that we've had approved through the MSD boards etc, that we are acting in a kind of fair and transparent manner throughout this process, and the way that we make decisions and engage with the market as well.

So that should provide some confidence that we've got mechanisms there to keep us on task in that space as well. If you jump to the next slide, we've got a more detailed look as to what you'll actually see in terms of what we release next week. So there'll be a document called the Request for Applications. This is essentially an instruction document. It will include information about the process, and how we'll engage through that process - what you need to do, how to seek clarification if things aren't clear,  where do you send the application, all of that kind of stuff. All the time frames piece is going to be in that document - it's basically a short instruction document as to what you need to do. 

The key part is the what we call the response form, so this is basically an application form but it includes all the stuff like all those questions are kind of mentioned. And I'll jump into on the next slide, but we have the "what's your name?"  "where do you come from?" kind of information in there, but also then spaces to answer the questions that we ask so it takes us through those different sections.

And then we've got a supporting documentation piece which is going to be where we provide the information about the contract. We talked about that model, provide all that contract information, we have things like the service specification that's been updated etc, all those sorts of elements will be in the supporting documentation to the request for applications.

If we jump to the next slide, this is basically an overview as to to what sorts of things we're going to be asking in that application process. Obviously there's the key bits, like "what's your organisation name?", "what's your point of contact?" etc, but then we move into questions really around "what's your service delivery model?" so you just describe your organisation to to a certain level of detail. 

We've then got those questions around business requirements, so this is 
"how do you manage and govern key components of your organisation?". We then have those audit type questions, and the quality service type questions, whether there's finding some audits and those sorts of things that we just need to be aware of. We got the health and safety pieces which is the mechanisms you have in place to ensure that you're providing a service that aligns with good health and safety practices, and then information security which is a big hot topic for government contracts at the moment around how we are protecting personal information. 

And then there's a bunch of stuff which will be supporting information, which should be quite straightforward to be able to provide, like financial information that we just have to do some base checks on. What we've tried to do in this - at last count I think it was it was definitely less than 20 questions - but it's about you know 18, 19 questions covering all of those areas so it's not a huge proposal document like in other parts of government. This is straightforward. You provide these sorts of information that are useful for us to be able to undertake a bit of assessment there.

Once you've provided those applications, we're going to start assessing the applications. If you provide that information early, we'll then start those assessments early so we've got some flexibility on how we go about doing that.

If you jump on to the next slide.. okay this talks through really the key areas that we're going to be assessing against, and so it's those same four areas. We're trying to be really easy, like really straightforward in the way that we ask the information, and then what we take through and assess. So we'll be considering those four different areas, making sure that we've got the right information there from providers. But then the other part is really that we might look to undertake some other due diligence - whether it's reference checks or some checks of some of the audit findings, and those sorts of things. That just gives us that opportunity to have other conversations with you if we need to, or if we just need to check some other things as well.

In terms of what that means in terms of the assessing the applications, is there's really three tiers of result that we'll show on the next slide, which is essentially we use the red / amber / green rating. 

If you want to jump to the next slide - so basically if everything comes through and it's it's all good and you're considered to be a green rating, then really it might be just some base due diligence and then we can progress to contract award.  We're anticipating that being both incumbent and prospective providers will go through that sort of process. 

If through the assessment process we identify some areas - maybe areas of weakness or areas where we think there are some things that need improving, what we didn't want to do is just kind of go "it's a binary, you're in or out" - what we've done is create this mechanism that means we can still award a contract to providers, but it might be contingent on an improvement plan, which we will jointly develop with providers that we identify these challenges or just areas of improvement with. And what that really means is that when we sign up to the contracts, we just know that there's some things that we're either keeping an eye on, or we want to kind of progress. And these could be across a whole range of different areas, but the example that always comes to mind is if a if a safeguarding risk is identified, then we might need to have some improvement in terms of how do we make sure there are practices being improved in that space. It just gives us that mechanism to ensure that continuity of care, but make sure that we are able to improve the performance if needed. 

What we've said there is that we only really see incumbent providers going through that process in the first instance. So this is part of that piece I mentioned around supporting the current providers to be able to join this new contract is that we really want to create that mechanism that we can take everybody forward. And then there's obviously people that apply that if there's just either major risks, or we aren't able to contract with them, that's the third option there, that we won't progress. What that may mean is that we provide some feedback to people. What this might be is that a new provider turns up isn't quite ready to start, but we provide some feedback, and then they come and apply again later, and they may have improved etc so that's how we'll be assessing people. 

Moving providers through that process in terms of the time frames, so a bit more of a detailed jump through those time frames. What we're doing right now is obviously the information sessions, the briefing sessions. We did the one on Friday which was about the pricing model, and the one today, so this is just signaling our intentions and where we're going here. Then as I mentioned on the 16th, so next week, we will be releasing the request for application process. That's where you'll be able to see where all these questions are, and what you need to do to be able to apply.

What we then wanted to do was have another session, probably similar to this, another webinar where there's the opportunity to ask questions where we can step through those questions in a bit more detail, and we can provide that nuance if needed, or provide that clarity if things have been asked already. So we're we're currently planning that at the moment, but it will be that likely that week of the 30th of June. So that be that first week of July effectively. We'll send out invites for that at the same time as the RFA, so that you know how to join, but it will be a similar forum to this I expect.

And then we've put the deadline as a 6 weeks later, so we've got the ability to receive all the proposals, so we can then take everybody through the process and start awarding those contracts for later in the year. So we'll be doing that due diligence, that assessment, as soon as we start to receive the proposals effectively. So if you get in on Week One, then great, we'll have a look, but we'll be doing that through the month following the receipt of all the applications. 

We'll come out and notify people if we need more information, if we need to develop plans etc, and then we'll start awarding the contracts ready to live from from the end of October is our current intention. So that means that there's lots of run-in really before that 1st of December. You should know ahead of that where things are at, but we do acknowledge at the same time as that that there's not heaps of time to get there so it's going to be quite a rapid process for us to get through this as well.

So this is more the summary couple of slides. I know there's there's quite a lot of information in there, and if there are questions, then please do drop them into the chat and we'll see whether we can answer them, or whether it's just things we need to provide in the process. But really onto the next slide please Cath. 

The key messages are that obviously we're moving to this new open panel model - that's from the 1st of December so ensuring that continuity of care is key for us through that process. But  that panel is going to enable us to manage and improve these services over time. There's a huge long-term commitment within that panel, so initially 10 years but up to 20 year period, so that really signals that we're in this for the long haul with providers, so we see this as a really positive model as we move into it. 

In order to get there, there's those middle three points which are around the application process that I've just gone through, so all providers will need to go through that application process. In order to to award contracts in the future, we will need to undertake some form of assessment and due diligence of all those providers, so this application process is really that mechanism that's allowing us as good funders to be able to do that. 

But really I want to acknowledge that we will support providers as we go through that process, so if there are things that aren't clear when they come out, or if you need support, you want to clarify things, there will be methods for doing that. And we're committed to making sure that people have the information they need in order to go through this process. And then the other key thing - it's just that email address if you have anything please reach out. It's much better to fire off a question and let us know that there's either things that we haven't considered, or things that we're not being clear on. It's really helpful if you can just fire those things in, and if we have to set up a chat or a conversation, we're more than happy to do that as well, as we kind of step through this process. 

So I know that that's quite a lot of information, and a bit of a whistle stop tour. Feel free to chuck questions in - I've seen a few come in, not that I've read them - they just pop up on the side, but we can jump in now and answer any of the questions that might be coming through. We also have on on the line Sarah and Phil, who, if there are some specific technical questions from that side, or things that are bubbling away from last week as well, they might be able to provide some clarity there too. And I can see that people have been answering some of these questions as we go through as well. 

[Sarah] There's a question in here Mike, around an estimated amount of time that it might take for a provider to put together an application, and I think you kind of spoke to that a little bit around - it's not a full kind of request for proposal, we've tried to make it as - I don't know if simple is the right word, but as simple as possible so that providers can put this together more easily than a full RFP process usually would be.

[Mike] yeah absolutely. It's quite hard - it's a bit of a "how long's a piece of string?" in some ways, but we have limited the number of questions, we've tried not to ask any questions to things that we already have the information for - you know, those sorts of things, because we don't want to cause unnecessary work here. We've really provided that 6 week period because we do acknowledge that there are some internal processes that a lot of organisations need to go through as well, and in terms of releasing this sort of information or application, so it provides that time to to get your own sign-offs etc as well in there. But it's quite hard to say an exact amount of time without just saying "it won't take too long". 

But yeah, we expect that some providers will be able to submit applications quite quickly in that first week, because the questions shouldn't be seeking essay type responses. They should be quite short and putting quite clear limits on the level of information we need. And if you are ready to submit it early, then please feel free to. We will start to assess them as we go through that process.

[Sarah] Another question in here. Will the RFA be against NZBN? That is, if a provider operates across the country do they apply as a single entity or could they choose to regionalise/disagregate their RFA? 

[Mike] We've set it up in a way that it can be done just once so by a single provider, and our intention there was to be able to just contract in that method as well. So you would be awarded a single contract, and then in line with the pricing model, there's regional bands and those sorts of things. There's the ability to have different prices and those elements across those regions. However, if there are kind of key splits in organisations -  if there's some sort of legal structure that you need to have these contracts in four different forms for example, or various different forms, then yeah, we're open to that in terms of the way that we place the contract. At that back end is probably more where that comes into it. We would encourage just having single applications though. It's much more straightforward, and if there's an issue there around how we award those contracts, or how we place those contracts with different legal entities or something at the back end, we can step through that, definitely.

[Sarah] There's another one (question). Are you anticipating incumbents will be in the red zone? I think you spoke to that as well.

[Mike] Yeah, I hope not. We don't anticipate people being in that space, it's more just if the process identifies something major, then there is that opportunity for that to happen. What we would rather have is that incumbents are in that improvement zone -well  obviously our preference would be that everybody gets through in the green zone - but if we need to, it's most likely going to be in that improvement zone if there are challenges that are found. 

[Sarah] Will organisations still have portfolio managers as per the current process?

[Mike] So it's a yes, there's no change to that at the moment. So this is more that contractual change in the background. We are aware that there's a lot of providers, and there's a lot of people that it takes to manage the interactions, so yeah, that structure will still be in place. There may just be some additional things where there's a central point of contact, or a way of supporting those portfolio managers in the background. But yeah, we anticipate that it will be a kind of similar process to now.

[Sara] "Will providers need to be health certified?" We're not proposing any changes to that current certification, I don't think, so we're not proposing any changes to the act which requires certification.

[Mike] That's correct. You see the current position there will continue as we move through. Some of the things that we are looking at doing though, and this is broader and was in some of the Budget announcements, is around how how we operate that audit program from a DSS perspective into the future. There's some scoping work going on at the moment in terms of what is the right model for DSS, so although the health cert piece will definitely continue, there may be additional pieces or additional things we can do in order to to fill the gaps between where we have the health cert programme now, and where we know there's gaps in what we can see effectively. But all that information will be will be coming out soon, I believe.

[Sarah] There's another question in here - "will there be one contract for providing services to people with physical disabilities and intellectual disabilities?" I think we briefly covered this in this last session, but essentially the pricing model will be common, so there'll be one pricing model for all of those services, but we still intend to differentiate the contracts between community residential services for physical disability and intellectual disability.

[Sarah] Sorry, a lot of questions coming in now, I'm just scrolling down to see which ones we haven't answered.

"How will you assess quality of new entrants?" is one of the questions there, means new providers potentially.

[Mike] We have some standard questions which you'll be seeing through the RFA process. What we also anticipate in that piece where we said there would be further due diligence and potentially further things being required is that if there's a complete unknown provider to us - we've never engaged with them before -  the likelihood that we would undertake additional due diligence is quite high, and that may include things like whether we go out and visit sites, or whether we undertake early or short form audits, or those sorts of things just because we would have to be really comfortable bringing new providers in that we had gone through some of those checks. If they're providers that provide services to other agencies, for example, we would engage with those other government agencies and talk to them about service offering, and standards and all those sorts of elements, so it's quite likely that there would be additional due diligence in that space needed, just because we wouldn't necessarily have that historical relationship there.

[Sarah] There's another question in here: "Will we have to submit an RFA for both ID and PD contracts?"  So I think the answer is you'd only have to submit one, but indicate which, if you were essentially applying for both, or either of those contracts.

[Mike] Yeah that's correct, so we would only want to receive one application there, just to keep it straightforward. In those upfront questions, we do ask about the the service model that you have, so you'll be able to describe and talk to how that split would work. That's the key part - we're trying to keep it as straightforward as possible, so we don't want to duplicate work in that sense

[Sara] Will residential rehabilitation be included in the new contract process? At this stage, this is just relating to the Community Group Home, or sorry Community Residential Services only, so things like residential rehabilitation, aged residential care, supported living - those types of kind of other contracts, choice and community living won't be included in this process. 

[Mike] Yeah that's right. The key part there in my mind is that although this part of the process is around the community residential aspect, as I mentioned through those panel contract slides, it does give us that opportunity that if it would make sense to, we can introduce other services under the under the panel agreement, so some of those other services that Sarah went through, there might be logic in including that as a separate service specification and engaging providers so that we've got that consistency in terms and conditions across a whole cohort of providers. But that isn't something that we're doing from Day One, and there'll be a lot of engagement if we were to be expanding that or bringing in new services as well.

[Sarah] There's another question here - "do the people we support have any say if providers will remain with a contract?" Service continuity is one of key principles that we have through this process, plus there's some consideration in there for things like complaints and other sort of feedback that we'll consider as mechanisms.

[Mike] Yeah and again, the same piece around that further due diligence -  if a risk was identified, or we knew there was a risk in that space, then we may choose to engage and do some checks in that environment. But this is really about how do we engage with yourselves as providers, so how do we set up that right funding and contract mechanism in that sense.

[Sarah] "How do we know which contracts are covered? It's not clear from your descriptions today." So the the contracts that are covered in this new contracting approach will be community residential support services for people with intellectual disabilities, and physical disabilities only. 

[Mike] So this is a key focus around residential services, um and the services that Sarah mentioned but we do acknowledge that there are a range of services delivered under some contracts, and so individual providers might have we might have to have one-on-one conversations just to work through where things might be grouped up in different contracts in certain ways. 

We are aware that there are people are different situations in terms of how people are currently contracted to deliver services, and so one of the things we're doing there is identifying what is the right thing to contract under this new model, and what would we do under  a different model moving forward. So we're working through some of that in the background at the moment from our perspective, but it will absolutely require conversations with providers, and that I expect will happen probably once the application process is done so we kind of know where we're at with some of these things.

Then how do we move forward from that as well, because equally there's continuity of care challenges and other service lines that we've got too, so we need to be cognizant of all of that work too.  So where there are other service lines, like say supported living, that are currently part of your community residential contract, we'll work with you on a what that means for your organisation, and how we'll manage that contracting post 1 December. 

There's another question here -  "if a provider has recently been awarded an MSD contract, like community participation, would we still need to go through this assurance process?"

The short answer is yes, because we are likely asking slightly different things. We obviously do have the connections with broader MSD in that space, so if there are things like references or checks that we need to do, we can talk to those parts of the wider organisation, particularly if it's like if you're providing an example and you want us to see that example in practice. Or you know those sorts of things, then yeah we would definitely talk to other parts of the business in that space. But yeah because the for this new contract the risks that we're managing are slightly different, so we would need to take you through a specific set of due diligence questions in that sense.

I just wanted to jump in and just say in terms of hearing from the voice of the people, part of our requirements in the RFA will be around quality and checking to see how providers actually reflect the person's voice in terms of how they deliver a service, so that's part of our quality assessment in the RFA application.

There's another question in here - "how will we get a sense of improved financial viability before we commit to the RFA?" 

So providers will very shortly over the coming week or so receive a letter on the estimated kind of overall financial implications of moving to the new pricing model, and as we discussed at the last session, we're also putting together a bit of an information packet which talks through the assumptions in the costs in the pricing model, so that should also be coming out shortly for you to get a better understanding of what the pricing is going to look like going forward with the new pricing model

Yeah, just building on that, just to be clear that what we'll be sending out in short order is about the estimated difference. There's obviously some... as we mentioned last week... some validation work that we need to do to 100% confirm what those things are moving forward. So there'll be another stream of work in that space that we're doing, but yeah you you'll get a very clear sense based on the estimates that we've got as to what the impact will be moving forward, and in addition to that, Al mentioned last week that there will be an annual review of pricing embedded into our process, so that's part of our process moving forward.

Excellent, there's just one more question - "how will that pricing model be shared i.e email or website?"

I think we're anticipating that most of this information will be available on our website but if it's information specific to you as a provider, obviously that'll be shared confidentially with you.

Yeah, so each provider will be receiving a a letter with the estimated impact of the model, and then we will be building out the information that we are sharing publicly around what the actual model is, and those things similar to what we shared last week but yeah there'll be more information available on the website

Really excellent. My notifications appear to have stopped pinging into in the bottom corner so um pass back to Cath for any closing remarks if you'd like to make any Cath?
 
[Cath] Just so you can see that we are strengthening our commissioning approach as a steward, commissioner and funder, and part of that commissioning approach is looking at the mechanisms we have to do better and improve our services, improve the quality of services, and ensure value for money moving forward. 

This is one of those mechanisms and I'd just like to thank you very much for your time today, and if you have any other questions, as Mike said please feel free to contact us at dss_commissioning@msd.govt.nz. We are here to support you through this process and transition into using the Community Group Home Pricing Model.

 I'll close with a karakia, thank you.

Transcript will be available soon.