The market-based model relies on funding for disabled people's care driving the growth of service provision, Northern Territory Public Guardian Beth Walker told the disability inquiry on Tuesday.
"The market has not responded and so people's needs are not being fully met because of the lack of availability of services," she said at the hearing in Alice Springs.
"It is difficult for service providers given remote distances and there is market failure."
Ms Walker said communicating with the scheme was difficult.
"The scheme is very transactional and very bureaucratic and can be very difficult to navigate," she said.
"It is often very difficult to find the right person to talk to, to point you in the right direction."
Ms Walker also said overcrowded housing was an issue for many disabled people in remote Indigenous communities.
"When we are talking about people with high disability needs it means that housing is a critical issue," she said.
It also limits access to therapy solutions, with Ms Walker saying medical staff often cannot find suitable accommodation in communities.
The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability is examining the treatment and experiences of thousands of Indigenous people with disabilities in remote communities.
Barriers to accessing the NDIS and disability services are among the issues being covered during the five-day sitting in Alice Springs.
It is also considering whether those hurdles cause or contribute to violence, abuse, neglect and exploitation of Indigenous people with disabilities.
Earlier, the inquiry heard that a wheelchair-bound Indigenous woman's life in a remote community became tougher after the NDIS started.
Mother-of-three Emily Sherwood lives in a one-bedroom flat in Tennant Creek, 510km north of Alice Springs, that is so small her mobility scooter does not fit through the door.
Ms Sherwood, who lost her ability to talk when she had a stroke, was critical of the scheme as she gave evidence by nodding her answers.
She agreed that despite being given a funding plan, no one from the National Disability Insurance Agency, which administers the scheme, had explained it to her or given her the opportunity to make decisions about how the money would be spent.
The inquiry heard Ms Sherwood would like to upgrade her scooter to one that was suitable for rough outback roads.
She agreed her situation had deteriorated since the NDIS started and that she'd had better disability support under the previous model.
Asked whether the "government needs to understand that one size does not fit all", Ms Sherwood agreed with a nod.
She also agreed the NDIA did not understand Indigenous people and what it was like to live in a remote community.
There are about 66,000 Indigenous people with a profound or severe disability in Australia.
Of those, about 11 per cent or roughly 7000 people live in remote or very remote areas, according to the Australian Bureau of Statistics.
The hearing continues.
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