Changes to the National Disability Insurance Scheme to rein in costs will boot 160,000 people from the scheme by the end of the decade, with all participants to undergo renewed eligibility assessments.
NDIS Minister Mark Butler is bracing for a fight as states and territories shoulder responsibility for those shifted off the scheme.
"I don't pretend - I've been around politics long enough to know - that there won't be some stoush, some continuing arm-wrestle," Mr Butler said in Canberra on Thursday.
"Of course, we're not going to change eligibility and move people off the scheme before we're confident, and we know the community is confident, there are other systems of support in place."
Mr Butler hinted states and territories could be brought into line through the latest five-year public hospital funding agreement, which boosted federal funding by $25 billion.
Under the deal, governments jointly committed $10 billion over five years to fund supports outside the NDIS, including $4 billion for the Thriving Kids program from October.
"We've put billions on the table to support those foundational support systems, but governments just have to get on with this," Mr Butler said.
States have complained about the reforms shifting the cost burden.
NSW Premier Chris Minns said his state's public health system would not be able to provide the same level of care to those forced off the NDIS.
"We don't have the money to do it," he said.
Anthony Albanese said his government would work with states, territories, providers and the disability community to deliver "appropriate care".
He guaranteed public support systems would be up and running before the 2028 deadline for reassessing scheme participants.
"We think we've got it right. This is well thought through," he said.
Mr Butler insists the changes are necessary to ensure the viability of the scheme, which is set to cost more than $50 billion this year.
NDIS integrity chief John Dardo on Thursday said recipients on $700,000 plans were effectively being "held hostage" by providers manufacturing evidence.
"Our investigators were walking through the door into rooms that were uninhabitable," he told a parliamentary committee.
"These people were not getting $700,000 supports and their needs were not $700,000.
"We took them out of these unsafe settings where they were being held hostage effectively and put them into safe settings and dropped their plans to $200,000."
Mr Dardo cited another example of a recipient who supposedly required 24/7 care walking in and out of airports and argued booting such people would bolster the scheme's sustainability and social licence.
The government's proposal is slated to save the scheme $15 billion by 2030.
Another measure will cap the overall cost of social and community participation programs to 2023 funding levels, reducing the average participant's yearly spend from $31,000 to $26,000.
Disability activist Jarrod Sandell-Hay, who relies heavily on the NDIS to manage his cerebral palsy, said the reduction would affect his quality of life.
"When it rains in Melbourne, I am unable to use my electric wheelchair because if it gets wet, it will stop working, so I rely on support workers to drive me to places," the 37-year-old told AAP.
Going to work, grocery shopping and "all these very basic everyday things" would be in jeopardy for him and his wife, who was also on the scheme, Mr Sandell-Hay said.
Martin Laverty, one of the NDIS's architects, called for patience while an expert panel and the disability community drew up the renewed eligibility guidelines.
Opposition Leader Angus Taylor has vowed bipartisanship on the legislative reforms to make the NDIS sustainable.
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