On a very bad day, Nicci Wall feels as if she is being bitten by a thousand little mites. The itching can go on for hours and hours.

She says scratching these "tactile hallucinations" often leaves her covered in bruises.

Diagnosed with bipolar disorder, the 52-year-old has often sought relief at Geelong's SalvoConnect's peer support group and community drop-in centre.

But now these services are closed to her as she doesn't qualify for the National Disability Insurance Scheme. Ms Wall, who is on a disability support pension, was rejected as she was deemed to not meet the criterion that "a person is likely to require support under the NDIS for their lifetime".

"I can't get any services other than mainstream," Ms Wall said.

"So I have got to pay between a $150 and $180 for a psychologist per session. And it already costs me around $300 to $350 for a psychiatrist."

A National Disability Insurance Agency spokeswoman said access to the NDIS was based on functional impairment, not diagnosis.

"The NDIS does not and was never intended to replace other government support systems, such as the mental health system or community-based support or treatment for people living with mental health conditions," she said.

According to a University of Sydney report, Victorians with severe mental illness are set to lose vital community support services as funding is withdrawn from existing programs to pay for NDIS in a "short-sighted, quick fix" deal.

Funded by SalvoConnect and MentalHealth Victoria, Mind the Gap: NDIS and Psychosocial Disability — The Victorian Story, warns critical community mental health services are being decommissioned to fund the NDIS, leaving many people with serious or severe mental health issues without essential services until they need acute or clinical care.

Lead author Dr Nicola Hancock said while the NDIS promised life-changing reform for about 10 per cent of Victorians, many tens of thousands will be worse off.
"It is a critically important scheme, but it needs to be funded in a way that doesn't take away resources that are already too little for the vast majority of people living with mental illness," Dr Hancock said.

Dr Hancock said in some people mental illness fluctuated or was intermittent, but NDIS only catered for those who have a long-term functional disability.

"... which means ... that there is a much larger proportion of people who won't be in that program who still need to access the services and support they need to live a meaningful, valued life," she said.

When asked about the funneling of all funds into NDIS at the expense of the state's community support services, Victorian Minister for Mental Health Martin Foley said where there were gaps in the transition to a national scheme, "we as a nation must work hard to fix them".

"We have made it clear to the commonwealth that the NDIS should not create a gap for people who need psychosocial supports," Mr Foley said.

SalvoConnect Barwon network director Lorrinda Hamilton said they were previously able to provide a flexible response to people with or without a formal diagnosis.

"There might be a rough sleeper with schizophrenia living under a bridge. He is noticed by a person in the community, they ring us, we would send a mental health professional," Ms Hamilton said.

"... whereas now we still get those calls but we are not funded to send a mental health worker out there because the person doesn't have a NDIS plan."
For Ms Wall, the lack of community services is another roadblock to recovery.

"I need these services to manage my illness," she said. "Just so that I can maintain some semblance of stability."