DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop C2-21-15 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations  
 
                    SMDL #04-003 
 
            March 15, 2004 
 
 
Dear State Medicaid Director: 
 
We are pleased to issue a third-round grant solicitation for the Demonstration to Maintain 
Independence and Employment.  This solicitation is a modification of the versions issued in 
October 2000 and in January 2002.   
 
This demonstration grant provides an opportunity to investigate the question:  can a program of 
medical assistance and other supports forestall or prevent the loss of employment and 
independence due to a potentially disabling and medically determinable physical or mental 
impairment?  We have established four priority areas for possible demonstrations: 
 
1.  Projects that target individuals with job-threatening serious mental illnesses.  Such 
projects could focus on early mental health screening, assessment, and referral, while 
maintaining individuals connections to their employers. 
2.  Comprehensive community-based efforts to assist individuals across disability categories 
and who are at high risk of becoming disabled maintain their employment. 
3.  Projects that target individuals who have progressive impairments that, without early 
intervention and treatment, have a high probability of becoming disabling.  
4.  Demonstrations that provide wrap-around services for individuals with potentially 
disabling conditions who have employer-sponsored private insurance. 
 
The Centers for Medicare & Medicaid Services (CMS) recognizes the severe financial 
constraints that states are facing and will fund 100 percent of the costs of the project, with the 
exception of costs for medical assistance services that could potentially be included as a 
Medicaid-funded service.  For these services, CMS will provide funds that are equivalent to the 
states Federal medical assistance percentage rate.  CMS encourages states to develop innovative 
alternatives to fund the portion of the cost not covered with Federal demonstration funds.  
Demonstrations may be sub-state, statewide, or multi-state in nature. 
 
Proposals are due by July 15, 2004.  You may access our TWWIIA Web site at 
http://cms.hhs.gov/twwiia/default.asp for information on how to apply for this grant. 
 
 
 
 
 
  Page 2 - State Medicaid Director  
 
 
Thank you for your interest in maintaining employment for people with potentially disabling 
conditions. 
 
Sincerely, 
 
            /s/ 
 
Dennis G. Smith 
Director 
 
cc: 
CMS Regional Administrators 
 
CMS Associate Regional Administrators 
   for Medicaid and State Operations 
 
Kathryn Kotula 
Director, Health Policy Unit 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Brent Ewig 
Senior Director, Access Policy 
Association of State and Territorial Health Officials 
 
Jim Frogue 
Director, Health and Human Services Task Force 
American Legislative Exchange Council 
 
Trudi Matthews 
Senior Health Policy Analyst 
Council of State Governments 
 
Andrew Hyman 
Director of Government Relations and Legislative Counsel 
National Association of State Mental Health Program Directors       DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
 
 Center for Medicaid and State Operations 
7500 Security Boulevard 
Baltimore, MD 21244-1850 
 
 
 
 
 
 
 
 
 
 
 
Demonstration to Maintain Independence and Employment 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sponsored By:  
 
The Centers for Medicare & Medicaid Services 
CFDA No. 93.769 
 
March 15, 2004 
 
 
   
PROGRAM ANNOUNCEMENT.............................................................................4 
PART 1:  OVERVIEW INFORMATION..................................................................4 
Agency Name:................................................................................................................4 
Funding Opportunity Title:.............................................................................................4 
Announcement Type:......................................................................................................4 
Funding Opportunity No.:...............................................................................................4 
Catalog of Federal Domestic Assistance No. (CFDA):..................................................4 
Dates:..............................................................................................................................4 
Executive Summary........................................................................................................5 
PART 2:  FULL TEXT OF ANNOUNCEMENT..........................................................7 
I.  Funding Opportunity Description:  Request for Proposals..........................................7 
A.  Purpose....................................................................................................................7 
B.  Background, Goal, and Priorities............................................................................7 
Examples.................................................................................................................9 
Goal.......................................................................................................................10 
Demonstration Priorities.......................................................................................10 
C.  Fundamentals of the Demonstration.....................................................................11 
1.  Problem Statement.............................................................................................11 
2.  Demonstration Design.......................................................................................11 
3.  Participant Recruitment.....................................................................................12 
4.  Determination of Potentially Disabling Conditions...........................................12 
5.  Project Location.................................................................................................12 
6.  Intervention........................................................................................................12 
7.  Non-Federal Funding.........................................................................................12 
8.  Independent Evaluation.....................................................................................13 
9.  Data Collection..................................................................................................13 
10. Annual Report....................................................................................................13 
11. Initial Meeting and Time Table.........................................................................13 
12. Organizational Plan and Staffing.......................................................................14 
13. Budget................................................................................................................14 
II.  Award Information................................................................................................14 
1.  Funding................................................................................................................14 
2.  Maintenance of Effort..........................................................................................15 
III.  Eligibility Information.........................................................................................15 
1.  Eligible Applicants...............................................................................................15 
2.  Cost Sharing or Matching....................................................................................15 
3.  Other: Civil Rights...............................................................................................15 
IV.  Application and Submission Information............................................................16 
1.  Address to Request Application Package............................................................16 
2. Content and Form of Application Submission......................................................16 
3.  Submission Dates and Times...............................................................................16 
4.  Intergovernmental Review...................................................................................16 
5.  Funding Restrictions............................................................................................16 
6.  Intergovernmental Review of Federal Programs.................................................17 
7.  DUNS Number.....................................................................................................17 
8.  Other Submission Requirements..........................................................................17 
V.  Application Review Information..........................................................................18 
  2 1.  Criteria.................................................................................................................18 
a.  Problem Statement (10 Percent).......................................................................18 
b.  Demonstration Design (10 Percent).................................................................18 
c.  Participant Recruitment (5 Percent).................................................................18 
d.  Determination of Potentially Disabling Conditions (5 Percent)......................18 
e.  Project Location (10 Percent)...........................................................................18 
f.  Intervention (10 Percent)..................................................................................18 
g.  Non-CMS Funding (5 Percent)........................................................................18 
h.  Independent Evaluation (15 Percent)...............................................................19 
i.  Data Collection (10 Percent).............................................................................19 
j.  Organization and Staffing (10 Percent)............................................................19 
k.  Budget (10 Percent).........................................................................................19 
2.  Review and Selection Process.............................................................................19 
3.  Anticipated Announcement and Award Dates.....................................................20 
VI.   Award Administration Information......................................................................20 
1.  Award Notices.....................................................................................................20 
2.  Administrative and National Policy Requirements..............................................20 
a.  Waivers............................................................................................................20 
3.  Reporting..............................................................................................................20 
VII.  Agency Contacts.................................................................................................21 
VIII.  Other Information.............................................................................................22 
Appendix One:  Examples of Potentially Severe Physical or Mental Impairments.....22 
Appendix Two:  Application Guidelines......................................................................23 
Proposed Format.......................................................................................................23 
1.  State Medicaid Agency's Cover Letter............................................................23 
2.  Project Abstract................................................................................................23 
3.  Narrative Application.......................................................................................23 
4.  Budget..............................................................................................................24 
5.  Maintenance of Effort Assurance....................................................................24 
6.  Grant Application Kit Standard Forms............................................................24 
Appendix Three:  Grant Application Kit (standard forms)...........................................25 
 
 
  3 PROGRAM ANNOUNCEMENT 
 
 
PART 1:  OVERVIEW INFORMATION 
 
Agency Name:     Department of Health and Human Services 
Centers for Medicare & Medicaid Services 
Center for Medicaid State Services 
 
Funding Opportunity Title:   
 
DEMONSTRATION TO MAINTAIN INDEPENDENCE AND EMPLOYMENT 
 
Announcement Type:  MODIFICATION OF EXISTING ANNOUNCEMENT 
 
 
 
Funding Opportunity No.:  CMS-04-002 
 
 
 
Catalog of Federal Domestic Assistance No. (CFDA):   93.769 
 
 
 
Dates:  
   
   
Date of Issue  March 15, 2004 
 
   
Applicants Conference Call  Every 2 weeks during 
solicitation period 
   
Notice of Intent to Apply Due Date  April 15, 2004 
 
   
Proposal Due Date  July 15, 2004 
 
   
Award Announcement  September 15, 2004 
 
   
Demonstration Period  October 1, 2004  September 30, 
2009 
  4 Executive Summary 
 
The Centers for Medicare & Medicaid Services (CMS) is soliciting proposals from states 
to participate in the Demonstration to Maintain Independence and Employment.  This 
demonstration, created by section 204 of the Ticket to Work and Work Incentives 
Improvement Act of 1999 (P.L. 106-170), allows states to provide benefits, equivalent to 
those provided by Medicaid, to the categorically needy, to workers who have physical or 
mental impairments that, without medical assistance, will likely result in disability.   
 
The demonstration was created to further the overall goals of the legislation by 
demonstrating the value of providing health care benefits and other services to support 
individuals with disabilities in employment and independence.  Outcomes that the 
demonstration seeks to measure include:  reliance on cash benefits, employment status, 
changes in health status, cost of health care, and quality of life.  
 
This demonstration grant provides an opportunity to investigate the question:  can a 
program of medical assistance and other supports forestall or prevent the loss of 
employment and independence due to a potentially disabling and medically determinable 
physical or mental impairment? 
 
The CMS, within the Department of Health and Human Services (DHHS), will approve a 
number of demonstration projects that meet the requirements specified in the grant 
solicitation.  
 
Funding for the Demonstration to Maintain Independence and Employment may be 
distributed through 2009, and $250 million in funding has been appropriated for the 
program.  There is no minimum or maximum grant award per state or per project; 
however, CMS reserves the right to negotiate the size of any demonstration project 
proposed by a state.  Medical assistance costs, as defined in sec. 1905(a) of the Social 
Security Act (the Act), will be reimbursed quarterly at a rate equal to the states Federal 
medical assistance percentage (FMAP).  All other necessary expenses associated with the 
demonstration will be paid quarterly with 100 percent Federal funds.  For example, if the 
state can demonstrate that providing a non-medical assistance service constitutes 
reasonable and necessary administrative expenses, e.g., vocational counseling services, 
CMS can fully fund these services.  There is no other match requirement associated with 
this demonstration.  
 
All states are eligible to participate in the Demonstration to Maintain Independence and 
Employment.  For purposes of this program, "state" is defined as any entity qualified to 
submit a Medicaid state plan under title XIX of the Act.  
 
Demonstration proposals must be submitted by the Single State Medicaid Agency and 
funds will be distributed only to the Single State Medicaid Agency.  States are limited to 
one overall Demonstration to Maintain Independence and Employment proposal.  A state 
may choose to work with other states to ensure a larger study population.  In this 
instance, each state should describe its portion of the project and indicate the broader 
partnership in the narrative section of the state's application.   
 
  5 A state may also choose to partner with a foundation, university, Federal agency, or other 
entity that is willing to pay part or all of the cost for demonstration administration or 
services after the FMAP is applied.  While these partnerships are allowable, 
demonstration funding will still be distributed only to the Single State Medicaid Agency.  
The overall purpose of the demonstration, to provide Medicaid equivalent services to 
working people with a condition that is likely to lead to a disability, must also remain 
intact. 
 
CMS anticipates announcing awards on September 15, 2004.  
 
  6 PART 2:  FULL TEXT OF ANNOUNCEMENT 
 
I.  Funding Opportunity Description:  Request for Proposals 
 
A.  Purpose 
 
The CMS is soliciting proposals from states to participate in the Demonstration to 
Maintain Independence and Employment.  This demonstration, created by section 204 of 
the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170), 
allows states to provide benefits at least equivalent to those provided by Medicaid to the 
categorically needy, to workers who have physical or mental impairments that, without 
medical assistance, will likely result in disability as defined in sec. 1614(a) of the Act.  
The purpose of the Demonstration is to determine whether and how the provision of 
medical assistance and related services can assist individuals with potentially disabling 
conditions to remain employed and independent of the income assistance programs--
Social Security Disability Income (SSDI) or Supplemental Security Income (SSI).  
Outcomes that the demonstration is designed to measure include:  reliance on cash 
benefits, employment status, changes in health status, and quality of life. 
 
The Administrator of CMS within DHHS will approve a number of demonstration 
projects which meet the requirements specified in this grant solicitation.  The 
Demonstration to Maintain Independence and Employment is authorized for 6 years, and 
$250 million in funding has been appropriated for the program.  Payments may not be 
made to states after Federal fiscal year 2009.  There are no minimum or maximum grant 
awards per state or per project; however, because of the potential policy implications of 
this demonstration, CMS is most interested that the demonstrations be of a size and 
quality to ensure significant results.  These grants will be approved for up to 6 years of 
funding.  CMS reserves the right to negotiate the size of any demonstration project 
proposed by a state.  Medical assistance costs, as defined in sec. 1905(a) of the Act, will 
be reimbursed quarterly at a rate equal to the states FMAP.  All other necessary expenses 
associated with the demonstration will be paid quarterly with 100 percent Federal funds.  
There are no other match requirements associated with the demonstration.  
 
B.  Background, Goal, and Priorities 
 
The Ticket to Work and Work Incentives Improvement Act of 1999 seeks to address 
many of the obstacles that people with disabilities face as they seek sustained 
employment.  There is a large health care component of the legislation because people 
with disabilities have continually identified the loss of health care coverage as one of the 
major obstacles they face as they return to work.  The Demonstration to Maintain 
Independence and Employment was included in the legislation to address the needs of 
those people who have physical or mental impairments that have the potential to lead to 
disability as defined by sec. 1614(a) of the Act.  This demonstration authority will allow 
states to assist working individuals by providing the necessary benefits and services 
required for people to manage the progression of their conditions and remain employed.  
The demonstration projects will be used to evaluate the impact of the provision of 
  7 medical and related services and supports on extended productivity and increased quality 
of life. 
 
In addition to the Demonstration to Maintain Independence and Employment, the 
legislation provides states the option of submitting to CMS Medicaid State Plan 
Amendments to offer Medicaid coverage to two working disabled eligibility groups 
(Medicaid Buy-Ins).  The buy-ins represent statewide entitlements to people who are 
capable of meeting the Social Security disability test.  The first is for individuals from 
age 16 through 64 who would meet the eligibility for Medicaid but for excess earnings.  
The second optional group is for people who, at one time, were included as part of the 
first optional group but who are determined to have medically improved at a regularly 
scheduled continuing disability review (CDR).  This demonstration is different and 
separately funded from the Medicaid buy-in opportunities.  It does not have to be 
statewide, it can be targeted, and it is aimed at people who are not yet able to meet the 
Social Security disability test, but are at serious risk of doing so.   
 
Each year over 600,000 American workers leave the labor force to become beneficiaries 
of the SSDI income assistance program.12  An analysis of individual state data (New 
Hampshire, unpublished) suggests that the five most likely groups to become disabled are 
those with mental illness, musculoskeletal disorders, neoplastic disorders, neurological 
disorders, and cardiovascular disorders.  At the same time, an unknown number of 
individuals with equally severe disabling conditions remains employed and independent 
of Federal income assistance programs.  Many programs, such as the Ticket to Work 
(Title I of P.L. 106-170), concentrate on individuals who have already ceased working or 
have reduced their work effort below eligibility thresholds for income assistance.   
 
This demonstration grant provides an opportunity to investigate the question:  can a 
program of medical assistance and other supports forestall or prevent the loss of an 
individuals employment and independence due to a potentially disabling and medically 
determinable physical or mental impairment? 
 
Previous versions of this solicitation concentrated on progressive impairments (e.g., 
HIV/AIDS).  This version adds a new group of individuals:  those with conditions that, 
but for the fact that the individuals are working, would qualify them for Social Security 
disability benefits.  These individuals have a severe disability but are earning above the 
substantial gainful activity (SGA) level set by the Social Security Administration (SSA).  
Section 1614(a) of the Act defines disability as the inability to do any substantial gainful 
activity by reason of any medically determinable physical or mental impairment which 
can be expected to result in death or last for a continuous period of not less than 12 
months.3  The 2004 level for SGA is $810 per month. 
 
This demonstration project may not supplant existing state funds that are provided for 
workers with potentially severe disabilities in effect at the time of the approval of the 
                                                 
1Dale, SB and Verdier, JM.  Elimination of Medicares Waiting Period for Seriously Disabled Adults: 
Impact on Coverage and Costs.  Issue Brief, Task Force on the Future of Health Insurance, The 
Commonwealth Fund.  Available at www.cmwf.org.  (#660). 
2 Social Security Bulletin, Annual Statistical Supplement, 2002, p. 207. 
3 20 CFR 404.1505. 
  8 demonstration project.  For example, individuals eligible for a Medicaid buy-in, 
medically needy, or other Medicaid options, may not be served by this demonstration 
instead of Medicaid.  This grant provides the opportunity to concentrate prevention 
efforts on a sub-state region such as a city, county, or labor market area.  For example, a 
grantee might choose to work with employers and other service providers in a specific 
geographic location.  Yet another possibility is that this demonstration be used as a wrap 
around for employer-provided private insurance plans. 
 
Examples 
 
The following are hypothetical examples of individuals who might benefit from this 
demonstration: 
  
  A man, Dan, is in his early 50s.  Dan had been self-employed as a cabinet-maker 
and made a reasonable living for many years.  Dan began to have serious heart 
problems that were difficult to diagnose and, consequently, to treat because he 
had no health insurance.  Dan was forced to apply for SSDI and consequently for 
Medicare and Medicaid.  He was forced to apply because he was unable to pay 
the medical bills related to his heart condition.  He still does woodworking, but at 
a level below SGA.  If he had medical assistance available after the onset of his 
heart attack, there is a high probability that he could have continued his wood 
working business, perhaps at a somewhat reduced level.  But, he would have 
avoided the stigma of seeking public assistance from his local community and 
applying for SSDI.  Dan is an example of an individual who was forced onto the 
Social Security disability program because he did not have access to health 
insurance.   
 
  Sally is in her 30s.  She has a job as an account executive with an advertising 
agency.  Recently, she has begun to have bouts with severe depression.  
Unfortunately, the company for which she works does not have a mental health 
benefit.  Without psychiatric treatment and support, she is at risk of losing her job 
and having to apply for SSDI and, perhaps, SSI.   
 
  Joe is 21 years old and has been working as an apprentice to an electrician.  Joe 
was recently diagnosed with paranoid schizophrenia.  He was initially 
hospitalized for several days and is receiving ongoing psychiatric services under 
his parents health plan.  However, his health benefits will run out when he turns 
22 in a few months.  Joe loves his work and wants to someday obtain his 
electricians license.  He currently lives at home with his parents, who help him 
stay organized and get to work on time.  Joe appreciates the support, but plans on 
moving into his own apartment soon.  His parents are worried they will not be 
able to continue to provide their daily support when he moves and are trying to 
convince him to stay.  The stress generated by the pending lack of insurance and 
Joes desire to move has exacerbated the symptoms of his illness.  He has begun 
to socially withdraw again, and takes more days off from work due to the stress.  
His boss is generally supportive, but is concerned that Joes productivity is falling 
off.   Joe believes that if he could move into his own apartment, continue to see 
his doctor, and receive some daily support, he would be able to stay employed and 
  9 obtain his electricians license.  Without medical and other support, Joe is at risk 
of reducing his employment in order to qualify for Medicaid assistance based on 
SSI eligibility. 
 
  Ray works as a construction worker for a small general contractor.  He has 
recently had severe back problemsso severe that he cannot do his job.  His 
employer cannot afford to carry him so he has been laid off.  Unless he can get his 
back condition under control quickly, he will be forced to apply for SSDI and 
possibly SSI.   
 
Goal 
 
The goal of this solicitation is to demonstrate the effects on their continued 
employment and independence by providing medical assistance and other 
supportive services to individuals with potentially disabling conditions. 
 
Demonstration Priorities 
 
The CMS is especially interested in demonstrations that address the following priority 
areas.  The demonstration may be sub-state, statewide, or multi-state in nature. 
 
1.  Projects that focus on individuals with job-threatening serious mental 
illnesses.  Such projects would focus on early mental health screening, 
assessment, and referral while maintaining individuals connections to 
their employers. 
2.  A comprehensive community-based employment maintenance effort 
for individuals across disability categories at high risk of becoming 
disabled (i.e., becoming unemployed). 
3.  A targeted impairment model that focuses on individuals who have 
progressive impairments that, without early intervention and treatment, 
have a high probability as becoming disabling.  
4.  Demonstrations that provide wrap-around services for individuals with 
potentially disabling conditions who have employer-sponsored private 
insurance. 
 
Proposals must clearly indicate which of these priorities they are addressing.  In addition, 
CMS will give special consideration to proposals from states that are not participating in 
other Ticket to Work incentive programs. 
  10 C.  Fundamentals of the Demonstration 
 
1.  Problem Statement 
 
Describe the population that is the focus of the demonstration.  Discuss its potential for 
becoming disabled.  Include incidence and prevalence statistics for the target area to the 
extent they are available.  The applicant must clearly define the participants to be served 
by the project in terms of their current employment situation, demographics, and 
geographic location.  Those applications that are addressing Priority 3 must describe the 
specific impairment(s) to be included.  If the impairments are not listed in Appendix One, 
provide evidence that the impairment is likely to lead to a potentially severe disability.  
Examples of evidence include:  decreased life expectancy, appearance on the SSA 
listings used as part of the disability determination process (described in 20 CFA 
404.1525 Appendix 1, printed in SSA Pub. No. 64-039), or the likelihood of disabling co-
morbidity factors. 
 
2.  Demonstration Design 
 
As a demonstration, rigor is expected in the planning, conduct, and evaluation of these 
projects.  Successful projects may become models for replication and further legislation.  
While CMS recognizes there are practical realities to operating a demonstration program 
in a natural setting, attention to design is critical.  Which priority(s) has been selected?  
How are the effects of the demonstration to be evaluated?  The proposal should describe 
the type of evaluation design to be used (i.e., experimental, quasi-experimental, or non-
experimental).  CMS does not support one approach over another; however, the approach 
selected must be well reasoned and robust.  
 
Applicants should provide evidence that the pool of potential demonstration participants 
within the proposed project area is adequate to provide for a project that will reach valid 
conclusions about the effectiveness of the intervention.  Further, the applicant must 
provide for a valid comparison or control group against which to contrast the 
intervention.  A statistical power analysis should also be provided.  Participants and 
comparison group members must be employed at intake into the project.  Proponents that 
do not use control or comparison groups must provide justification for the efficacy of the 
alternative approach.  Applicants must define their employment criteria.  Employment 
can either be defined as not less than 40 hours per month at Federal minimum wage or an 
acceptable equivalent.  Equivalent definitions of employment may include clearly defined 
ramp-up periods in order to allow participants to meet the minimum employment level or 
grace periods for temporary loss of employment (e.g., for short-term hospitalization).  
States may set a higher minimum income threshold for participation (e.g., SGA); 
however, they may not propose a maximum earnings threshold. 
 
 
 
  11 3.  Participant Recruitment 
 
Key to this demonstration is the strategy to recruit and retain participants.  This is true of 
treatment, control, and comparison groups.  Proponents will be expected to have a well-
thought-out method for recruiting and retaining participants and control group members.  
To the degree that third parties are involved in recruitment, their roles must be specified 
and letters of commitment attached. 
 
4.  Determination of Potentially Disabling Conditions 
 
Individuals who participate in the demonstration must have a medically determinable 
physical or mental impairment that is potentially disabling.  The applicant must describe 
the medical process for making these determinations for both the participant and the 
comparison or control groups and keep in mind that participants will not usually have 
gone through the Social Security or Medicaid disability determination process. 
 
5.  Project Location 
 
The applicant should describe the project and comparison (control) group catchment 
areas.  CMS is particularly interested in the employment opportunities, economic climate, 
and employment support infrastructure within the areas selected.  The proponent should 
indicate partnerships that are integral to the demonstration within this section.  Applicants 
should explain the rationale for choosing the project location and provide evidence that 
any control/comparison location will provide a valid comparison. 
 
6.  Intervention 
 
The proposal should clearly describe the interventions proposed.  They may range from 
the provision of basic Medicaid services as provided for in the states Medicaid plan, to 
the provision of a comprehensive system of services and supports.  As mentioned above, 
an option a state may propose is to provide wrap-around benefits to individuals 
qualifying for the states Medicaid buy-in program.  The proposal should describe the use 
of premiums and other financial mechanisms as part of the intervention. 
 
7.  Non-Federal Funding 
 
CMS will provide 100 percent funding for all administrative, support, evaluation, and 
other costs, except for medical assistance services included in the states Medicaid plan 
for the optionally categorical needy population.  These medical assistance costs will be 
reimbursed at a rate equal to the states FMAP for its Medicaid program.  The grantee is 
responsible for paying for the remainder of the medical assistance costs from other 
sources.  The applicant must provide evidence with supporting documentation as to how 
this obligation will be met.  CMS is interested in innovative approaches including 
premiums, co-pays, other cost shares, employer contributions, private foundation 
participation, municipal contributions, in addition to state funds.  So long as not required 
for match, other non-Medicaid Federal funds may be used as well.  Clear documentation 
and approval by the Federal agency would be required prior to approval of the proposal. 
 
  12 8.  Independent Evaluation 
 
States must prove in their application that the evaluation is being conducted by an 
organization that has the necessary expertise and independence from those, conducting 
the demonstration to ensure a high quality evaluation.  For an outline of CMS 
expectations for an independent evaluation, please refer to the CMS Web site 
http://cms.hhs.gov/twwiia/default.asp.  The prospective evaluator should develop this 
section of the proposal and be integrally involved in the overall design of the proposed 
project to ensure that it meets generally accepted criteria for demonstration project 
evaluations. 
 
9.  Data Collection 
 
The applicant and the evaluator must demonstrate that they can collect, maintain, and 
access person-specific data in order to evaluate the project.  Note that CMS may want 
access to these data for purposes of project-to-project comparisons and further evaluation 
using national databases (e.g., Medicaid, SSA, Medicare).  For each participant and 
comparison (control) group member, the grantee must provide wage and employment 
information for the prior 2 years including name of employer, employer type, job type, 
and quarterly wages.  Person level data on health care and other support costs must be 
provided by source of payment, also on a quarterly basis.  These data should come from 
administrative records and, generally, not be self-reported.  Generally, demographic 
information will need only be provided at enrollment and will include, name, address, 
SSN, date of birth, race, ethnicity, disabling condition(s), and any prior public assistance.    
Use and access to these data will be limited to the specific research purposes of these 
projects and shall adhere to CMS provisions concerning data release policies, the Privacy 
Act of 1974, and the Health Insurance Portability and Accountability Act of 1996. 
 
10. Annual Report 
 
Grantees must electronically file an annual report according to an outline to be provided 
by CMS.  Each report shall include enrollment and financial statistics on the total 
population of workers with potentially severe disabilities served by the demonstration 
project, including comparison group members.  Quarterly progress reports must be 
provided electronically.  States must certify that the expenses related to the annual report 
are less than 0.8 percent of the CMS-provided funding for the year covered by the annual 
report. 
 
11. Initial Meeting and Time Table 
 
Within the first 2 weeks of grant awards, each grantee and his or her independent 
evaluator must attend an in-person meeting in Baltimore, Maryland with CMS personnel 
to review the designs, implementation strategies, data collection, and evaluation plans of 
each grant.  All plans must be agreed to prior to beginning operations.  Grantees will have 
90 days after this conference to begin operation of the demonstration.  Grants will operate 
for up to 5 years from the date of award, and grantees will have 6 months after the end of 
the operational phase to produce final data submissions and reports.  Proponents should 
  13 include a timetable for implementation, operation, and reporting of results of the 
demonstration.   
 
12. Organizational Plan and Staffing 
 
Provide a description of the Medicaid agency's capacity and commitment to this 
demonstration.  If the applicant will require legislation for demonstration medical 
assistance funding, describe the likelihood that it will be supported.  Describe how other 
agencies and organizations will participate in the demonstration.  List key staff, their 
organizational affiliations, the role they will play, and the percentage of their time 
committed to the project.  Describe how the various organizations will interact 
contractually and programmatically.  
 
13. Budget 
 
In preparing budget form 424A, Section A should be completed using the following 
activities:  1. Medicaid-Eligible Services; 2.  Other Services and Supports; 3.  Evaluation 
and Data Collection; and, 4.  Administration and Management.  Use the same 
breakdowns in Section B.  In the two service costs sections, provide cost estimates for the 
maximum number of participants in the demonstration project and their projected annual 
service costs.  If the applicant has chosen to require premiums or employer contributions, 
indicate the expected program income in Section B.  Please indicate the CMS and non-
CMS share of each budget category and provide evidence of funding commitments for 
the non-CMS share.  Indicate any additional actions that are required to secure non-CMS 
funding (e.g., legislative appropriation, approval of a pending grant).  A detailed budget 
narrative is required to support the 424A.  
 
 
II.  Award Information 
 
Funding for the Demonstration to Maintain Independence and Employment may be 
distributed through 2009 and $250 million in funding has been appropriated for the 
program.  There are no minimum or maximum grant awards per state or per project; 
however, CMS reserves the right to negotiate the size of any demonstration project 
proposed by a state.  
 
1.  Funding 
 
The Demonstration to Maintain Independence and Employment was funded by Congress 
for 6 years, from Federal fiscal years 2001 through 2006.  Funding may be carried over 
by CMS (as available) through fiscal year 2009, after which no new payments may be 
made.   
 
With the exception of services equivalent to those included in the states Medicaid plan 
for optionally categorical needy populations, all costs including administration, non-
covered medical services, other services and supports, outreach and recruitment, and 
other necessary costs will be covered at 100 percent reimbursement.   
 
  14 2.  Maintenance of Effort 
 
Federal funds paid to the states under this demonstration may be used to supplement, but 
not supplant, state funds expended for workers with potentially severe disabilities at the 
time the demonstration project is approved.  As indicated in Appendix Two, states 
receiving awards must provide annual assurances that the level of state spending on 
workers with potentially severe disabilities is being maintained throughout the life of the 
demonstration.   
 
III.  Eligibility Information 
 
1.  Eligible Applicants  
 
All states are eligible to participate in the Demonstration to Maintain Independence and 
Employment.  For purposes of this program, state is defined as any entity qualified to 
submit a Medicaid state plan under title XIX of the Act.  Demonstration proposals must 
be submitted by the Single State Medicaid Agency and funds will be distributed only to 
the Single State Medicaid Agency.  States are limited to one overall Demonstration to 
Maintain Independence and Employment proposal.  A state may choose to work with 
other states to assure a larger study population.  In this instance, each state should 
describe its portion of the project and indicate the broader partnership in the narrative 
section of the state's application. 
 
A state may also choose to partner with a foundation, university, Federal agency, or other 
entity that is willing to pay part or all of the cost for demonstration administration or 
services after the Federal medical assistance percentage is applied.  While these 
partnerships are allowable, demonstration funding will still be distributed only to the 
Single State Medicaid Agency.  The overall scope and purpose of the demonstration, to 
provide Medicaid equivalent services to working people with a condition that is likely to 
lead to a disability, must also remain in tact. 
 
2.  Cost Sharing or Matching  
 
Medical assistance costs, as defined in sec. 1905(a) of the Act, will be reimbursed 
quarterly at a rate equal to the states FMAP.  All other necessary expenses associated 
with the demonstration will be paid quarterly with 100 percent Federal funds.  For 
example, if the state can demonstrate that providing a non-medical assistance service 
constitutes reasonable and necessary administrative expenses, e.g., vocational counseling 
services, CMS can fully fund these services.  There is no other match requirement 
associated with this demonstration. 
 
3.  Other: Civil Rights 
 
All grantees receiving awards under this grant program must meet the requirements of 
Title VI of the Civil Rights Act of 1964; section 504 of the Rehabilitation Act of 1973; 
the Age Discrimination Act of 1975; Hill-Burton Community Services nondiscrimination 
provisions; and, Title II, Subtitle A, of the Americans with Disabilities Act of 1990.   
 
  15  
 
IV.  Application and Submission Information 
 
1.  Address to Request Application Package  
 
All materials including this solicitation are available through the CMS Web site.  The 
URL address is:  http://cms.hhs.gov/twwiia/default.asp. 
 
2. Content and Form of Application Submission  
 
The narrative application should provide a concise and complete description of the 
proposed project.  The complete narrative application is limited to 35 typewritten double-
spaced pages.  Those applying under priority 3 should provide narrative sections for each 
physical or mental impairment, clearly separated so that they may be evaluated 
individually.  If necessary, appendices may be attached to each narrative section but 
please do not rely on appendices to describe key details.  The narrative sections should 
contain the information necessary for reviewers to fully understand the proposed project 
and should be organized according to the topics in Section I. C. (Demonstration 
Requirements). 
 
3.  Submission Dates and Times 
 
   
Date of Issue  March 15, 2004 
 
Applicants Conference Call  Every 2 weeks during 
solicitation period. 
   
Notice of Intent to Apply Due Date  April 15, 2004 
 
Proposal Due Date  July 15, 2004 
 
Award Announcement  September 15, 2004 
 
Demonstration Period  October 1, 2004  September 30, 
2009 
 
4.  Intergovernmental Review 
 
Executive Order 12372 or Intergovernmental Review of Federal Programs (45 CFR 
Part 100) is not applicable to this demonstration program.   
 
5.  Funding Restrictions  
 
The number of projects selected for funding will be determined by the number, scope, 
and uniqueness of the proposals submitted as well as by the availability of funding.  The 
Federal share of benefits paid and expenses incurred for all demonstration projects is 
  16 limited to $42 million for each of fiscal years 2001 through 2004 and $41 million for 
years 2005 and 2006.  CMS will place a limit on each project's budget to assure that the 
total funding is not exceeded. 
  
If CMS judges that it has received more applications that merit funding than funding 
permits, alternates will be selected.  These alternates will be eligible to receive funding if 
demonstration award winners fail to develop their proposals. 
 
6.  Intergovernmental Review of Federal Programs 
 
Executive Order 12372 or Intergovernmental Review of Federal Programs (45 CFR 
Part 100) is not applicable to this demonstration program.   
 
The number of projects selected for funding will be determined by the number, scope, 
and uniqueness of the proposals submitted as well as the availability of funding.  The 
Federal share of benefits paid and expenses incurred for all demonstration projects is 
limited to $42 million for each of fiscal years 2001 through 2004 and $41 million for 
years 2005 and 2006.  CMS will place a limit on each project's budget to assure that the 
total funding is not exceeded. 
  
If CMS judges that it has received more applications that merit funding than funding 
permits, alternates will be selected.  These alternates will be eligible to receive funding if 
demonstration award winners fail to develop their proposals.   
 
7.  DUNS Number 
 
Beginning October 1, 2003, applicants are required to have a Dun and Bradstreet 
(DUNS) number to apply for a grant or cooperative agreement from the Federal 
Government.  The DUNS number is a nine-digit identification number, which uniquely 
identifies business entities.  Obtaining a DUNS number is easy and there is no charge.  
To obtain a DUNS number, access the following Web site: www.dunandbradstreet.com 
or call 1-866-705-5711.  This number should be entered in the block with the applicant's 
name and address on the cover page of the application (Item 5 on the Form SF-424, 
Application for Federal Assistance), with the annotation DUNS followed by the DUNS 
number that identified the applicant.  The name and address in the application should be 
exactly as given for the DUNS number. 
 
 
8.  Other Submission Requirements 
 
Please include brief biographies (approximately one-half page) of key project staff. 
 
  17 V.  Application Review Information 
 
1.  Criteria  
a.  Problem Statement (10 Percent) 
 
The application should provide a clear statement of the problem to be addressed.  It 
should be quantitative as well as qualitative.  It should demonstrate that the applicant has 
a strong grasp of the situation. 
 
b.  Demonstration Design (10 Percent) 
 
The application should describe an overall program design that leads to a strong 
evaluation design.  The design should be of a quality that the findings will clearly 
demonstrate that the intervention was or was not successful.  The design should clearly 
address the question:  can a program of medical assistance and support forestall or 
prevent the loss of employment due to a medically determinable physical or mental 
impairment?   The design should also be achievable considering the resources allocated 
to the project, the locations proposed, and the availability of program participants.   
 
c.  Participant Recruitment (5 Percent) 
 
Is the proposed strategy for recruiting participants (treatment, control, comparison, etc.) 
effective and practical?  To the extent that third parties are involved, is their commitment 
assured?  Will the strategy generate sufficient participants to meet the evaluation design 
requirements? 
 
d.  Determination of Potentially Disabling Conditions (5 Percent) 
 
Is the means of determining the potentially disabling conditions sufficiently rigorous to 
ensure that individuals selected have medically determined diagnoses that have a high 
probability of leading to SSA-defined disability? 
 
e.  Project Location (10 Percent) 
 
Does the applicant have an in-depth understanding of the project catchment area?  If 
using another geographic area as a comparison, are the two areas, indeed, equivalent? 
 
f.  Intervention (10 Percent) 
 
Is the intervention well-planned?  Is it realistic, and are all of the resources, including 
other organizations, in place to provide the best chance for the intervention being 
successful?  Has provision been made for start-up problems that might adversely affect 
outcomes?   
 
g.  Non-CMS Funding (5 Percent) 
 
Are the commitments in place for non-CMS funding to address the remainder of the costs 
of medical assistance services?  Is the plan realistic and clearly explained? 
  18  
h.  Independent Evaluation (15 Percent) 
 
Does the evaluation design ensure that the impacts of the demonstration can be clearly 
determined?  Are the procedures in place for the evaluator to access data in a timely way?  
Does the evaluation plan address the key dependent and independent variables associated 
with the project?  How well is the evaluation plan integrated into the overall proposal?  
Do the evaluators have the necessary background to evaluate the project?  Are they truly 
independent of those operating the intervention? 
 
i.  Data Collection (10 Percent) 
 
The key to the evaluation of the demonstration projects lies in the ability to acquire high 
quality data about participants (and control and comparison group members).  Are Data 
collection strategies regarding quantitative employment, health care, and other service 
provision clear and objective?  Does the applicant have access to the data systems 
necessary to supply the data?  Are qualitative data collection strategies carefully planned?  
Have provisions been made to comply with all privacy and informed consent 
requirements? 
 
j.  Organization and Staffing (10 Percent) 
 
Does the applicant have the organizational structure, staff, and inter-agency agreements 
in place to successfully carry out the demonstration?  Are the organization and staff 
qualified to carry out the goals and objectives of the project? 
 
k.  Budget (10 Percent) 
 
Is the budget well-formulated and adequate to complete the demonstration?  Does the 
applicant clearly understand budgeting?  Is the budget excessive?    
 
2.  Review and Selection Process  
 
An independent review of all applications will be conducted by a panel of experts 
including members of the disability community, experts in the clinical conditions, and 
staff from Federal agencies including CMS.  The review panel will assess each 
application to determine the merits of the proposal and the extent to which it furthers the 
purposes of the demonstration program.  The panel will evaluate each application for 
further review by CMS.  CMS reserves the right to request that states revise or otherwise 
modify certain sections of their proposals based on the recommendations of the panel and 
the budget.  A low score in one or two areas, even if offset by high scores in other areas, 
may result in a rejection of the proposal.  Final approval of demonstration projects will be 
made by the Administrator of CMS after consideration of the comments and 
recommendations of the review panelists, program office recommendations, and the 
availability of funds.  CMS reserves the right to approve or deny any or all proposals for 
funding.  
  
  19 3.  Anticipated Announcement and Award Dates  
 
   
Date of Issue  March 15, 2004 
 
Applicants Conference Call  Every 2 weeks during 
solicitation period. 
   
Notice of Intent to Apply Due Date  April 15, 2004 
 
Proposal Due Date  July 15, 2004 
 
Award Announcement  September 15, 2004 
 
Demonstration Period  October 1, 2004  September 30, 
2009 
 
VI.   Award Administration Information 
 
1.  Award Notices  
 
Award notices will be made in writing to the State Medicaid Director. 
 
2.  Administrative and National Policy Requirements  
 
a.  Waivers 
 
The Demonstration to Maintain Independence and Employment provides Medicaid-
equivalent services to non-Medicaid eligible individuals.  It is not authorized under  
title XIX of the Act, and as such it is not bound by the Medicaid requirements for 
statewideness in sec. 1902(a)(1) of the Act and comparability in sec. 1902(a)(10)(B) of 
the Act.  There is no need for a state to submit waivers to these traditional Medicaid 
requirements.  The demonstration may be operated on a less than statewide basis.  The 
service package is defined in statute as equal to what the state provides to Medicaid-
eligible individuals under sec. 1902(a)(10)(A)(ii)(XIII) of the Act.  If a state does not 
cover individuals under sec. 1902(a)(10)(A)(ii)(XIII) of the Act, a state must propose 
services that are an appropriate equivalent to the services that would be offered under sec. 
1905(a) of the Act to individuals who would qualify for SSI.  For purposes of this 
demonstration, equivalent services are those that are equal to or greater in amount, 
duration, and scope than those offered under the state plan for individuals qualifying for 
SSI.  As part of the demonstration proposal, the state must define the geographic 
participation in the demonstration and list the services that will be offered under the 
demonstration.   
 
3.  Reporting  
 
Grantees must electronically file an annual report according to an outline to be provided 
by CMS.  Each report shall include enrollment and financial statistics on the total 
  20 population of workers with potentially severe disabilities served by the demonstration 
project, including comparison group members.  Quarterly progress reports must be 
provided electronically.  States must certify that the expenses related to the annual report 
are less than 0.8 percent of the CMS-provided funding for the year covered by the annual 
report. 
 
VII.  Agency Contacts 
 
An original proposal should be sent with two copies to:  
 
Attn:  Judith Norris  
Centers for Medicare & Medicaid Services 
OOM, AGG, Grants Management Staff 
Mailstop C2-21-15 
7500 Security Boulevard 
Baltimore, MD 21244-1850 
Phone:  (410) 786-5130 
E-mail:  jnorris1@cms.hhs.gov
 
Program Office Contact 
 
Attn:  Carey Appold 
Centers for Medicare & Medicaid Services 
Center for Medicaid State Operations 
Disabled and Elderly Health Programs Group 
7500 Security Boulevard 
Baltimore, MD 21244-1850 
Phone:  (410) 786-2117 
 
Additional Information
 
For additional Information regarding this demonstration program, please send an e-mail 
to the following address:  DMIE@cms.hhs.gov. 
 
Include DMIE in the subject line. 
 
Information is also available on CMS dedicated Ticket to Work and Work Incentives 
Improvement Act Web site at the following address:  
 
http://cms.hhs.gov/twwiia/default.asp. 
  21 VIII.  Other Information  
 
Appendix One:  Examples of Potentially Severe Physical or Mental 
Impairments 
 
Chronic Diseases
 
  Diabetes 
 
Neurological Diseases
 
  Stroke 
  Brain Injury 
  Multiple Sclerosis 
  Parkinson's  
  Epilepsy 
 
Mental Illness
 
  Depression 
  Bipolar Disorder (both I & II) 
  Schizophrenia and other Psychotic Disorders 
  Anxiety Disorders 
  Anorexia Nervosa 
 
Communicable Diseases
 
  HIV/AIDS 
  Hepatitis C 
 
Respiratory Diseases
 
  Chronic Obstructive Pulmonary Disease 
  Asthma 
  Congestive Heart Failure 
 
Musculo-skeletal Diseases 
 
  Rheumatoid Arthritis 
Cancers 
 
  22 Appendix Two:  Application Guidelines 
 
The following guidelines are intended to assist states in preparing applications for 
funding under the Demonstration to Maintain Independence and Employment.  
Applications must be submitted in hard copy format although electronic versions of 
proposals that receive funding may be requested later.  
 
  The narrative portion of the proposal should not exceed 35 double-spaced typewritten 
pages.  Of this limit, the evaluation and data collection sections should not exceed 10 
pages.  Please use 1-inch margins and 12-point font.  This page limit does not include 
the cover letter, project abstract, budget, maintenance of effort assurance, standard 
forms, or letters of support.  Appendices to the proposal can be used for additional 
supporting, but non-critical, information. 
 
  Additional documentation may be appended; however, material should be limited to 
information relevant to the specific scope and purpose of the demonstration project.  
Please do not include critical details in an appendix as appendices will not be scored. 
 
  Please do not staple, bind, or use dividers with the application in any way that would 
inhibit copying of the application.   
 
Proposed Format 
 
A complete proposal consists of one or more narrative application(s) plus the required 
material noted below.  Application materials should be organized as follows:  
 
1.  State Medicaid Agency's Cover Letter 
A letter from the Director of the State Medicaid agency is required identifying the 
principle contact person, the focus of the project, the maximum number of individuals 
with each impairment that will be enrolled, the duration of the project and the total 
anticipated budget.   
 
2.  Project Abstract 
A project abstract limited to one page should follow the State Medicaid agency's cover 
letter.  The abstract should serve as a succinct description of the proposed project and 
should include:  
 
  A succinct description of the demonstration including the goals, the measures, and the 
research questions to be addressed. 
 
  Annual services and administrative costs. 
 
3.  Narrative Application 
The narrative application should provide a concise and complete description of the 
proposed project.  The complete narrative application is limited to 35 typewritten double-
spaced pages.  Those applying under priority 3 should provide narrative sections for each 
physical or mental impairment, clearly separated so that they may be evaluated 
  23 individually.  If necessary, appendices may be attached to each narrative section but 
please do not rely on appendices to describe key details.  The narrative sections should 
contain the information necessary for reviewers to fully understand the proposed project 
and should be organized according to the topics in Section III (Demonstration 
Requirements). 
 
4.  Budget 
In addition to Form 424A (See Appendix Three), include a detailed annual budget 
divided into Medicaid plan services, other medical services, other services and supports, 
administration, evaluation, and other costs.  In each service costs section, provide cost 
estimates for the maximum number of participants in the demonstration project and their 
projected annual service costs.  If the state has chosen to require premiums, indicate the 
expected premium collections.  Additionally, provide an administrative budget including 
routine administration and monitoring activities directly related to the provision of 
services and benefits.  Finally, provide an estimate of the cost of the evaluation activities 
the state is proposing.  Please indicate the CMS and non-CMS shares of each budget 
category and provide evidence of the commitment of the state to support the non-CMS 
share of the Medicaid plan services.  Indicate any additional actions that are required to 
secure state funding (appropriation by the legislature, etc.) 
 
5.  Maintenance of Effort Assurance 
States must provide an assurance that state funds used on the Demonstration to Maintain 
Independence and Employment are being used to supplement rather than supplant state 
funds used for people with potentially disabling physical or mental impairments as of 
October 1, 2003.  Please provide a letter summarizing any funding for such individuals as 
of that date.  The letter should testify that these funds will not be used for the 
Demonstration to Maintain Independence and Employment and that this level of state 
spending will be maintained for unrelated programs over the lifetime of the 
demonstration.  States receiving awards will be required to submit an annual report of the 
amount of state spending on unrelated programs for people with potentially disabling 
physical or mental impairments, assuring that this funding is not being supplanted by the 
demonstration.  
 
6.  Grant Application Kit Standard Forms 
Appendix Three contains the standard forms which must be completed and enclosed as 
part of the application.  Copies of these forms are available through CMS Grants Office 
or on the Web.  The URL address is: http://cms.hhs.gov/twwiia/default.asp. 
  24 Appendix Three:  Grant Application Kit (standard forms) 
 
 
Please complete the attached forms:  
 
  SF-424:  Application for Federal Assistance 
 
  SF-424A:  Budget Information 
 
  SF-424B:  Assurances-Non-Construction Programs 
 
  SF-LLL:  Disclosure of Lobbying Activities 
 
  Biographical Sketch 
 
  Additional Assurances 
 
Web Instructions:  To access these forms, return to the Demonstration to Maintain 
Independence and Employment Main Page and click on Grant Application Kit 
(standard forms). 
  
 
  25