Functional Capacity Assessments (FCAs) have been one of the most lucrative revenue streams in allied health over the past five years. A single FCA can generate $1,500–$4,000 in billable time. For practices with high NDIS caseloads, FCAs became a significant portion of revenue — sometimes 20–30% of total billings.
That model is changing. The 2026 NDIS reform legislation has put FCAs directly in the crosshairs, and the financial implications for allied health practices that have built revenue around them are significant. This is what you need to understand — and what to do about it.
What’s Changing with NDIS FCAs
The Securing the NDIS for Future Generations Bill introduces three changes that directly affect FCA revenue:
- Unscheduled plan reassessments restricted: From seven days after Royal Assent, only participants (not providers) can request unscheduled plan reassessments. The provider-initiated reassessment model — where a practice writes an FCA recommending more therapy hours, then delivers those hours — is effectively ended.
- New evidence hierarchy: From 1 February 2027, the NDIA must consider published, peer-reviewed research first. FCAs built primarily on clinical observation will face a structural challenge if the recommended supports lack a published evidence base.
- Budget resets: Capacity Building Daily Activity (CBDA) budgets are being cut 10% from 1 October 2026. Participants have less to spend on therapy, which reduces the commercial case for high-cost FCAs.
The Financial Impact on Your Practice
If FCAs represent 20% of your practice’s NDIS revenue, and NDIS represents 60% of total revenue, then FCAs are 12% of your total revenue. The question is: how much of that FCA revenue was driven by provider-initiated reassessments?
For practices where the answer is “most of it,” the revenue impact is material. Here’s how to model it:
- Calculate your FCA revenue for the last 12 months
- Identify what percentage was for new plans vs reassessments
- Of the reassessment FCAs, identify what percentage were provider-initiated
- That number is your at-risk revenue from the legislative change
For a practice generating $200,000 in annual FCA revenue with 60% from provider-initiated reassessments, the at-risk revenue is $120,000. At a 20% EBITDA margin, that’s $24,000 in EBITDA at risk — and at a 3× valuation multiple, $72,000 in practice value.
Tax and Structure Implications
FCA revenue has specific tax characteristics that practice owners need to understand as this revenue stream changes:
- GST treatment: NDIS-funded FCAs are GST-free. If you diversify into private FCAs (WorkCover, insurance, private clients), those are subject to GST. A shift in revenue mix changes your GST position.
- Trust distributions: If FCA revenue was a significant driver of trust income, a reduction in FCA revenue means lower distributions. Review your distribution strategy before 30 June.
- Contractor arrangements: Many practices use contractor psychologists or OTs for FCAs. If FCA volume drops, contractor arrangements that were commercially viable may become loss-making. Review contractor agreements now.
What to Do Now
- Model your FCA revenue exposure using the framework above
- Diversify into participant-initiated FCAs, private assessments, and WorkCover
- Review contractor arrangements that depend on FCA volume
- Ensure your FCA reports integrate published evidence — the new evidence hierarchy rewards this
- Take the free CARE Assessment to score your practice’s Risk & Resilience dimension and identify your NDIS reform exposure
See also: NDIS Pricing 2026-27 Financial Impact | Should My Practice Register with the NDIS?
