```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
 SOCIAL SECURITY ADMINISTRATION'S PROPOSAL TO IMPLEMENT RETURN TO WORK 
                              LEGISLATION

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 28, 2001

                               __________

                            Serial No. 107-3

                               __________

         Printed for the use of the Committee on Ways and Means

                    U.S. GOVERNMENT PRINTING OFFICE
73-529 DTP                  WASHINGTON :  2001
_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
                                 Office
 Internet: bookstore.GPO.gov Phone: (202) 512-1800 Fax: (202) 512-2250
               Mail: Stop SSOP, Washington, DC 20402-0001

                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa                     JOHN LEWIS, Georgia
SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington            MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia                 WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania           XAVIER BECERRA, California
WES WATKINS, Oklahoma                KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
                     Allison Giles, Chief of Staff
                  Janice Mays, Minority Chief Counsel
                                 ------                                

                    Subcommittee on Social Security

                    E. CLAY SHAW, Florida, Chairman

SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               BENJAMIN L. CARDIN, Maryland
KENNY C. HULSHOF, Missouri           EARL POMEROY, North Dakota
RON LEWIS, Kentucky                  XAVIER BECERRA, California
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                              ----------                              
                                                                   Page
Advisory of February 21, 2001, announcing the hearing............     2

                               WITNESSES

Arc of the United States, Marty Ford.............................    54
Consortium for Citizens with Disabilities, and Paralyzed Veterans 
  of America, Susan Prokop.......................................    40
Inter-National Association of Business, Industry and 
  Rehabilitation, Charles Wm. Harles.............................    50
International Association of Psychosocial Rehabilitation 
  Services, Paul J. Seifert......................................    63
Resources for Independent Living, Inc., Frances Gracechild.......     8
S.L. Start & Associates, Stephen L. Start........................    11
Ticket to Work and Work Incentives Advisory Panel:
    Frances Gracechild...........................................     8
    Stephen L. Start.............................................    11

                       SUBMISSION FOR THE RECORD

Stark, Hon. Fortney Pete, a Representative in Congress from the 
  State of California............................................    80

 SOCIAL SECURITY ADMINISTRATION'S PROPOSAL TO IMPLEMENT RETURN TO WORK 
                              LEGISLATION

                              ----------                              

                     WEDNESDAY, FEBRUARY 28, 2001

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                     Washington, DC
    The Subcommittee met, pursuant to notice, at 2 p.m., in 
room B-318 Rayburn House Office Building, Hon. E. Clay Shaw, 
Jr. (Chairman of the Subcommittee), presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 21, 2001
No. SS-1

Shaw Announces Hearing on Social Security Administration's Proposal to 
                  Implement Return to Work Legislation

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing on the Social Security 
Administration's proposed regulation to implement portions of the 
``Ticket to Work and Work Incentives Improvement Act of 1999.'' The 
hearing will take place on Wednesday, February 28, 2001, in room B-318 
Rayburn House Office Building, beginning at 2:00 p.m.
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. Invited 
witnesses will include representatives of the Ticket to Work and Work 
Incentives Advisory Panel, consumer advocates, and rehabilitation 
service providers. However, any individual or organization not 
scheduled for an oral appearance may submit a written statement for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.

BACKGROUND:

    The Social Security Disability Insurance (SSDI) program insures 
working Americans and their families against the loss of income due to 
disability. The Supplemental Security Income (SSI) program supplements 
the income of aged, blind, or disabled individuals with limited income 
and resources. About 6.6 million people now receive SSDI benefits and 
nearly 5.2 million disabled adults and children receive SSI benefits. 
Despite implementation of the Americans With Disabilities Act and 
advances in treatment, rehabilitation, and assistive technology, less 
than one percent of these beneficiaries re-enter the workforce each 
year due to successful rehabilitation.
    The ``Ticket to Work and Work Incentives Improvement Act of 1999'' 
(P.L. 106-170) was designed to assist Americans with disabilities in 
obtaining and keeping jobs through expanded access to a broader range 
of vocational rehabilitation and employment support services and 
extended health care coverage for those who return to work. This Act 
created a Ticket to Work and Self-Sufficiency program which authorizes 
the Commissioner of Social Security to provide SSDI and disabled SSI 
beneficiaries with tickets to use to obtain employment services, 
vocational rehabilitation services, and other services from employment 
networks of their choosing to help beneficiaries re-enter the 
workforce. The Social Security Administration (SSA) will pay employment 
networks for services provided after beneficiaries have returned to the 
workforce or have met other goals designed to prepare them for 
sustained employment.
    On December 28, 2000, SSA published a notice of proposed rulemaking 
to implement the Ticket to Work and Self-Sufficiency program. Public 
comments are due by February 26, 2001.
    In announcing the hearing, Chairman Shaw stated: ``The Ticket to 
Work and Work Incentives Improvement Act represents landmark 
legislation aimed at transforming Social Security disability programs 
from programs of dependency to programs of opportunity. I'm pleased 
that President Bush, through his `New Freedom Initiative' has committed 
to sign an Order to support `effective and swift' implementation of the 
Ticket to Work legislation. The details of how SSA proposes to 
implement this new law will determine its success. I look forward to 
hearing our witnesses' assessment of those details.''
FOCUS OF THE HEARING:
    During the hearing, the Subcommittee will consider the views of 
program experts, consumer advocates, and service providers on SSA's 
proposed regulation to implement the Ticket to Work and Self-
Sufficiency program.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect or MS Word format, with their name, address, 
and hearing date noted on a label, by the close of business, Wednesday, 
March 14, 2001, to Allison Giles, Chief of Staff, Committee on Ways and 
Means, U.S. House of Representatives, 1102 Longworth House Office 
Building, Washington, D.C. 20515. If those filing written statements 
wish to have their statements distributed to the press and interested 
public at the hearing, they may deliver 200 additional copies for this 
purpose to the Subcommittee on Social Security office, room B-316 
Rayburn House Office Building, by close of business the day before the 
hearing.
FORMATTING REQUIREMENTS:
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or 
MS Word format, typed in single space and may not exceed a total of 10 
pages including attachments. Witnesses are advised that the Committee 
will rely on electronic submissions for printing the official hearing 
record.
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                

    Chairman Shaw. Good afternoon. I would begin with welcoming 
our new Subcommittee members, Mr. Lewis of Kentucky and Mr. 
Brady of Texas, Mr. Ryan of Wisconsin--neither of whom is here 
at the moment--and Mr. Becerra of California and Mr. Pomeroy of 
North Dakota.
    Today we convene our first Subcommittee hearing on the 
107th Congress to examine the Social Security Administration's 
proposed regulation to implement portions of the Ticket to Work 
and Work Incentives Improvement Act of 1999.
    This landmark, bipartisan legislation transforms Social 
Security disability programs from programs of dependency to 
programs of opportunity, reducing barriers to equality that 
Americans with disabilities face. As part of President Bush's 
New Freedom Initiative, which will help integrate Americans 
with disabilities into the work force and into community life, 
the President will order effective and swift implementation of 
the Ticket to Work law.
    The effectiveness of the Social Security Administration's 
implementation of this law will ultimately determine its 
success. Recognizing the depth of this challenge, the law 
provided for the creation of a Ticket to Work Advisory Panel to 
advise the Commissioner, the President and the Congress on 
issues related to work incentive programs, including the Ticket 
to Work and Self-Sufficiency program, where we focus our 
examination today.
    This 12-member Panel represents a cross-section of 
individuals, several of whom are former or current 
beneficiaries, with vast experience and expert knowledge in 
employment services and vocational rehabilitation.
    The Panel makes its first appearance before the Congress 
today. I am pleased to welcome two of the House-appointed Panel 
members, Mr. Start and Ms. Gracechild, to discuss the 
outstanding work completed thus far by the Panel.
    Our second witness panel includes consumer advocates and 
representatives of service provider associations, each of whom 
provided this Subcommittee with immeasurable assistance in 
crafting and advancing the Ticket legislation.
    As the old expression says, ``The devil is in the 
details.'' Today we will examine the details of how the agency 
plans to implement the law and whether those details work in 
the eyes of those most knowledgeable about Americans with 
disabilities and the supports they need to achieve financial 
independence.
    We may find a few devils here and there, but I am confident 
that, once appointed, the new leadership of the Social Security 
Administration will closely scrutinize all comments received 
and ultimately implement a Ticket program that achieves 
intended results, namely, opportunity, choice, jobs and 
independence. Americans with disabilities deserve nothing less.
    [The opening statement of Chairman Shaw follows:]

  Opening Statement of the Hon. E. Clay Shaw, Jr., M.C., Florida, and 
               Chairman, Subcommittee on Social Security

    Good afternoon. First, let me say how pleased I am to welcome our 
new Subcommittee Members, Mr. Lewis of Kentucky, Mr. Brady of Texas, 
Mr. Ryan of Wisconsin, Mr. Becerra of California, and Mr. Pomeroy of 
North Dakota.
    Today we convene our first Subcommittee hearing of the 107th 
Congress to examine the Social Security Administration's proposed 
regulation to implement portions of the Ticket to Work and Work 
Incentives Improvement Act of 1999.
    This landmark, bipartisan legislation transforms Social Security 
disability programs from programs of dependency to programs of 
opportunity, reducing barriers to equality that Americans with 
disabilities face. As part of President Bush's ``New Freedom 
Initiative'' which will help integrate Americans with disabilities into 
the workforce and into community life, the President will order 
``effective and swift'' implementation of the Ticket to Work law.
    The Social Security Administration's implementation of this law 
will ultimately determine its success. Recognizing the depth of this 
challenge, the law provided for the creation of a Ticket To Work 
Advisory Panel to advise the Commissioner, the President, and the 
Congress on issues related to work incentive programs, including the 
Ticket to Work and Self-Sufficiency program, where we focus our 
examination today.
    This 12 member panel represents a cross-section of individuals, 
several of whom are former or current beneficiaries, with vast 
experience and expert knowledge in employment services and vocational 
rehabilitation.
    The Panel makes its first appearance before the Congress today. I 
am pleased to welcome two of the House-appointed Panel members, Mr. 
Start and Ms. Gracechild, to discuss the outstanding work completed 
thus far by the Panel.
    Our second witness panel includes consumer advocates and 
representatives of service provider associations, each of whom provided 
this Subcommittee with immeasurable assistance in crafting and 
advancing the Ticket legislation.
    As the old expression says, ``the devil is in the details.'' Today, 
we will examine the details of how the agency plans to implement the 
law and whether those details work in the eyes of those most 
knowledgeable about Americans with disabilities and the supports they 
need to achieve financial independence.
    We may find a few ``devils'' here and there, but I am confident 
that once appointed, the new leadership of the Social Security 
Administration will closely scrutinize all comments received and 
ultimately implement a ticket program that achieves intended results, 
namely: opportunity, choice, jobs, and independence. Americans with 
disabilities deserve nothing less.

                                

    Chairman Shaw. Mr. Matsui.
    Mr. Matsui. Mr. Chairman, I would like to begin by thanking 
you for holding today's hearing. I look forward to working with 
you and members of the disability community, vocational 
rehabilitation providers, and Social Security Administration to 
ensure that the Ticket to Work and Work Incentive Act is 
implemented successfully.
    The 106th Congress made great strides in assisting people 
with disabilities as they return to work by enacting the Ticket 
to Work and Work Incentives Improvement Act. Once fully 
implemented, this act will help disabled Social Security 
beneficiaries to receive rehabilitation services that best meet 
their needs. The act also provides disabled beneficiaries with 
extended Medicare and Medicaid coverage by increasing the 
likelihood that they will be able to remain at work.
    During today's hearing, we will hear from a number of 
witnesses about the Social Security Administration's plans to 
implement the Ticket portion of the act and whether the 
regulations proposed by SSA will maximize beneficiaries' access 
to the services that they need.
    In particular, we will hear from two members of the Ticket 
to Work and Work Incentives Advisory Panel, as the Chairman 
mentioned, Mr. Stephen Start and Frances Gracechild. Ms. 
Gracechild is from my home district in Sacramento, and she is 
the Executive Director of the Resources for Independent Living 
in California, and her talent and leadership has helped many of 
my constituents in California and throughout the State to live 
more fulfilling and self-fulfilling lives. I want to thank both 
of you for your services, obviously, to our communities.
    Since the Advisory Panel first met last July, it has gone 
on to great lengths to solicit the public views about the 
Ticket to Work Act and about what needs to be done to ensure 
that it is implemented properly. I look forward to hearing from 
Mr. Start and Ms. Gracechild about the information, lessons and 
suggestions that they have taken away from these meetings.
    I would also like to welcome the other witnesses and thank 
them for the insights that they will provide on best how to 
implement this act.
    Today's hearing will provide opportunities for the Advisory 
Panel, vocational rehabilitation providers and beneficiary 
groups to describe the specific changes to the proposed 
regulations that are necessary if the Ticket to Work Act is to 
be successful, a goal that certainly every one of us shares.
    I believe that another goal Congress had in mind when we 
passed the legislation was to enable as many of the 
beneficiaries as possible to participate in this program. In 
keeping with that goal, it is imperative that the SSA modify 
the proposed regulations to allow beneficiaries who have been 
designated as Medical Improvement Expected, MIE, to be eligible 
for the Ticket.
    I also am concerned that the payment structure proposed by 
the regulations may discourage vocational rehabilitation 
providers from serving beneficiaries with more complex needs, 
the very people who obviously need the Ticket program the most. 
Not all beneficiaries will be able to reach independence at the 
same period of time, and SSA must be able to make reasonable 
accommodations for the participants whose progress does not 
follow a predetermined path.
    Finally, beneficiaries who find themselves in a dispute 
with the vocational rehabilitation provider must be given 
access to a fair and timely appeals process, including the 
options to request a judicial review.
    So, Mr. Chairman, I again thank you for last year the 
bipartisan spirit that we were able to pass this legislation 
and certainly all of us look forward to working with you. Mr. 
Stark has a statement as well, and he requested that I seek 
permission to introduce it for the record.
    Chairman Shaw. Who was that?
    Mr. Matsui. Mr. Stark.
    Chairman Shaw. Oh, okay. Well, without objection, all of 
the members will have the ability to insert any opening 
statements or remarks that they might wish into the record.
    [The opening statement of Mr. Matsui follows:]

    Opening Statement of the Hon. Robert T. Matsui, M.C., California

    I would like to begin by thanking Chairman Shaw for holding today's 
hearing. I look forward to working with Chairman Shaw, members of the 
disability community, vocational rehabilitation providers, and the 
Social Security Administration to ensure that the Ticket to Work and 
Work Incentives Act is implemented successfully.
    The 106th Congress made great strides in assisting people with 
disabilities as they return to work by enacting the Ticket to Work and 
Work Incentives Improvement Act. Once fully implemented, this Act will 
help disabled Social Security beneficiaries receive the rehabilitation 
services that best meet their needs. The Act also provides disabled 
beneficiaries with extended Medicare and Medicaid coverage to increase 
the likelihood that they will be able to remain at work.
    During today's hearing, we will hear from a number of witnesses 
about the Social Security Administration's plans to implement the 
``Ticket'' portion of the Act and whether the regulations proposed by 
SSA will maximize beneficiaries' access to the services they need.
    In particular, we will hear from two members of the Ticket to Work 
and Work Incentives Advisory Panel--Mr. Stephen Start and Ms. Frances 
Gracechild, from my home district of Sacramento. Ms. Gracechild is the 
Executive Director of Resources for Independent Living in California, 
and her talented leadership has helped many of my constituents to live 
more fulfilling and self-sufficient lives. Ms. Gracechild, thank you 
for your service to our community.
    Since the Advisory Panel first met last July, it has gone to great 
lengths to solicit the public's views about the Ticket to Work Act and 
about what needs to be done to ensure that it is implemented properly. 
I look forward to hearing from Mr. Start and Mrs. Gracechild about the 
information, lessons, and suggestions that the Panel took away from 
those meetings.
    I would also like to welcome our other witnesses and thank them for 
the insights that they will provide on how best to implement the Act.
    Today's hearing will provide the opportunity for the Advisory 
Panel, vocational rehabilitation providers, and beneficiary groups to 
describe the specific changes to the proposed regulations that are 
necessary if the Ticket to Work Act is to be a success--a goal that 
every one of us shares.
    I believe that another goal Congress had in mind when we passed the 
Ticket to Work Act was to enable as many beneficiaries as possible to 
participate in the program. In keeping with that goal, it is imperative 
that SSA modify the proposed regulations to allow beneficiaries who 
have been designated as ``medical improvement expected'' to be eligible 
for a ticket.
    I also worry that the payment structure proposed in the regulations 
may discourage vocational rehabilitation providers from serving 
beneficiaries with more complex needs--the very people who need the 
Ticket Program the most. Not all beneficiaries will be able to reach 
independence in the same time period, and the SSA must be able to make 
reasonable accommodations for participants whose progress does not 
follow a predetermined path.
    Finally, beneficiaries who find themselves in a dispute with a 
vocational rehabilitation provider must be given access to a fair and 
timely appeals process, including the option to request a judicial 
review.
    In conclusion, I would like to note that earlier this month, 
Congressman Pete Stark, the Ranking Member of the Subcommittee on 
Health, and I joined together earlier this month to introduce H.R. 481, 
the ``Disabled Workers Opportunity Act of 2001.'' One of the key pieces 
of the Ticket to Work Act is an extension of Medicare coverage for 
people with disabilities who return to work.
    Many beneficiaries who return to work will continue to struggle 
with serious medical conditions throughout their lives and will require 
seamless health care coverage. In response to this need, H.R. 481 
builds upon the progress made by the Ticket to Work Act and provides 
permanent Medicare coverage for beneficiaries who return to work but 
who continue to experience a disability.

    [The statement of Mr. Stark follows:]

Statement of the Hon. Fortney Pete Stark, a Representative in Congress 
                      from the State of California

    I am pleased to participate in today's hearing on proposed 
regulations for the Ticket-to-Work and Work Incentives Improvement Act. 
This important legislation extends and improves healthcare and 
vocational rehabilitation opportunities for people with disabilities. 
Appropriate regulations are vital to its success and today's hearing 
provides a chance to understand and incorporate key stakeholder 
perspectives.
    While the Ticket-to-Work and Work Incentives Improvement Act has 
the potential to transform many lives, I believe it does not go far 
enough in one fundamental respect. Instead of allowing disabled workers 
to permanently retain access to health insurance, people with 
disabilities who have worked a total of 8.5 years (whether consecutive 
or not) will lose their Medicare benefits under existing law.
    While 8.5 years may sound like a sufficient transition period, 
managing a physical or mental disability is a lifelong process. Someone 
with a spinal cord injury or a serious mental illness can face health 
challenges and vulnerabilities throughout their lives. The original 
version of the Work Incentives bill recognized this fact and there was 
broad bipartisan support for providing permanent coverage under 
Medicare.
    That is why I introduced the Disabled Workers Opportunity Act (HR 
481) together with Rep. Matsui and several additional colleagues. Our 
legislation would improve the Ticket-to-Work and Work Incentive 
Improvement Act by making Medicare coverage permanent for disabled, 
working beneficiaries who qualify for SSDI. This small but critical fix 
will help remove an ongoing barrier facing disabled workers--the threat 
of losing healthcare coverage after returning to work.
    President Bush's New Freedom Initiative shares the same goal as our 
disabled workers bill--to help people with disabilities become 
permanent working members of our community. I look forward to working 
with President Bush and my Congressional colleagues to pass this small, 
but important piece of legislation that would make a real difference in 
the lives of those people on SSDI who are able and willing to remain in 
our workforce.

                                

    Chairman Shaw. To again introduce the first panel, who has 
been introduced twice now, we have Stephen L. Start; he is 
Chief Executive Officer of S.L. Start and Associates, Spokane, 
Washington; and Ms. Frances Gracechild, who is a member of the 
Ticket to Work and Work Incentive Advisory Panel and Executive 
Director of Resources for Independent Living, Inc. in 
Sacramento, California.
    Welcome, both of you. And for all of the witnesses today, 
your full statement will be made a part of the record, and you 
may summarize as you see fit.
    Mr. Start.
    Mr. Start. Chairman Shaw, in preparing my remarks today, 
Frances was given the task of doing a general overview of our 
recommendations, so I would recommend that we start with her 
and then follow with myself, if you don't mind.
    Chairman Shaw. I have no problem with that. Ladies first, 
anyway.
    Ms. Gracechild.

  STATEMENT OF FRANCES GRACECHILD, MEMBER, TICKET TO WORK AND 
    WORK INCENTIVES ADVISORY PANEL, AND EXECUTIVE DIRECTOR, 
 RESOURCES FOR INDEPENDENT LIVING, INC., SACRAMENTO, CALIFORNIA

    Ms. Gracechild. Good afternoon, Chairman Shaw, Congressman 
Matsui and other Subcommittee members and staff who have helped 
make this meeting possible.
    I, first of all, want to thank my beloved Congressman from 
my home district for appointing me to the Panel. We have been 
working hard, and I hope we have a telling report for you 
today.
    Mr. Chairman, you are exactly right, the devil is in the 
details; and it is 31 pages of details which I promise I will 
not read to you today. Your staff will probably be digesting it 
for you. I have the sweet and short comments that will 
highlight our recommendations. Many of them our Congressman 
alluded to, and you will hear them again as I speak them.
    I am Frances Gracechild, and I am pleased to be here. Our 
Panel has been holding official meetings since July of 2000. We 
have held 12 days of public meetings, we have had seven public 
conference calls, and we have provided ample opportunity for 
the public input. We have received over 25 hours of public 
comments and 100 sets of written comments.
    Throughout the country, from our regional meetings and our 
teleconferences, we have been hearing that there needs to be 
much more public outreach and public education. The disability 
community in the 13 roll-out States--and if you need to be 
refreshed on which States those are, I could read them to you 
later, or they are probably in your briefing packets--those 13 
States and other providers have expressed great concern to us 
over the roll-out schedule. They are apprehensive at the 
thought that hundreds of thousands of beneficiaries will be 
receiving a ticket and might not know even what it is or how to 
use it and put it in use. Some comments have even suggested 
that the agency might consider reopening the public comment for 
an additional 60 days and using the first 30 days as a massive 
public education blitz.
    I want to be very careful that you understand this is not 
an official recommendation of the Panel. I am simply the 
messenger here, that we have heard this in several different 
places throughout the country.
    I will give you some very specific and official 
recommendations in a minute, but I did want to get that on 
record.
    It is for these reasons that our chairperson, Sarah Wiggins 
Mitchell, who was appointed by the President and is dearly 
loved by our Panel and is doing an excellent job but was 
unable, because of her other responsibilities, to be here, she 
recently wrote to the Acting Commissioner Halter to express the 
Panel's concerns that Social Security proceed very carefully in 
implementing this first roll-out phase.
    Specifically, the majority of the Panel members believe 
that the agency should delay two things, and I would like to 
read them very slowly to you into the record. One, we would 
like to delay the distribution of tickets until the final rules 
are issued; and, two, we would like to delay the publishing of 
the RFP, the Request for Proposal, for employment networks for 
at least 2 months until after the close of the public comment 
period. Now, you may recall that the public comment period 
closed earlier this week, Monday, February 26th, so we are 
talking about delaying until the end of April.
    In the area of the Ticket to Work and beneficiary use of 
the regulations, the proposed regulations, the Panel is 
proposing the following: We would like you to think carefully 
about not excluding 16- and 17-year-old beneficiaries from the 
Ticket program. This could send the wrong message. Not all 
transition-age youth will want to participate in the program, 
but some might, and some might be prepared to make very good 
use of this program. So we would like you to rethink that. All 
SSA disability beneficiaries with a Medical Improvement 
Expected designation, that is referred to as the MIE that you 
spoke of, Congressman, should be eligible to participate in the 
Ticket program.
    Now, for those of you who may not be familiar with this 
group that I am talking about, it seems to be primarily a big 
group of persons with psychiatric disabilities get assigned 
this. We have some expert testimony that is going to be 
speaking later very detailed-wise on this and how it adversely 
affects persons in mental illness populations, so I won't say 
anything more about that. But I am just highlighting, as you 
did, Congressman Matsui, that we want to talk some more about 
this and have you think about that.
    In the area of employment network requirements and 
qualifications, the Panel is recommending that an employment 
network should be permitted to retain staff with other types of 
qualifications than just the traditional vocational rehab 
counseling qualifications. The Social Security Administration 
should not require licensing andro certification that would 
exclude employers with other types of provider qualifications 
in working with people with disabilities, especially those who 
provide nontraditional supports. I am thinking a good example 
would be independent living centers which might very well be 
able to serve as employment networks.
    In this area of the regulations, the proposed regulations, 
the Panel is also suggesting and recommending that timely 
progress, which is one of the ways we are going to evaluate 
whether or not people are meeting their goals, should be 
defined in the final rules as beneficiary compliance with the 
terms and conditions of their Individual Work Plan, often 
referred to as the IWP. That timely progress would be complied 
with if the participants performed as agreed by the beneficiary 
and the employment network when they signed their Individual 
Work Plan.
    We also believe that timely progress should be reported by 
the EN in their annual report so that people aren't making 
duplicate reporting but that we are able to accomplish all of 
the things we need to in just a few easy tomes of paper.
    Also, Social Security should permit other individualized 
service delivery systems to be used as a substitute to the IWP. 
For instance, if a vocational rehab agency was using their 
particular planning document, their IEP I think they are 
called, Individual Employment Plan, that if it contained all of 
the minimum requirements in the TWWIA statute, then that could 
be the planning document that they would sign that would be the 
contract.
    In the area of dispute resolution, wherever there are human 
beings there are going to be some disputes, so we have worked 
hard on that in making sure that the regulations talk about all 
possible ways that people could dispute and disagree; and our 
first recommendation is that all beneficiaries have access to 
protection and advocacy services and that mediation should be 
available to them, but not mandatory. We also think that all 
decisions by Social Security involving disputes from any of the 
parties, the ENs, the beneficiaries, the providers, the program 
managers, that all parties should be subject to external 
review; and that could be through the in-house exhaustive 
process at Social Security and then on to judicial review, if 
necessary.
    Finally, information about protection and advocacy services 
should be available at any time to all of the beneficiaries. 
There are many different specific junctures in implementing 
this where that would be necessary. As I reminded you, the 
details of when those times might be is in the full 31-page 
report.
    In conclusion, I would like to say that the Panel, we view 
ourselves as a partner with the administration and with you, 
the Congress, and representatives of the Congress, in the 
successful implementation of this important, innovative 
program. We also recognize that the implementation and roll-out 
of the Ticket program poses some pretty tight time frames and 
demands major changes in the infrastructure and new ways of 
doing business. We are impressed with the agency's effort to 
adhere to this tight time frame in the statute. However, at the 
same time, we have become aware of the most recent Social 
Security Advisory Board report that raises a number of 
administrative, resource and infrastructure issues.
    In light of this goal and with our recent report and with 
this testimony you are going to hear today, we want to advise 
the administration and the Congress of our findings thus far in 
order to support a very effective and successful implementation 
for this first year of roll-out States. I believe that if we 
proceed very carefully with the agency and that if we listen to 
the public comments carefully and if people listen to the 
advice of our Advisory Panel that we have an excellent 
opportunity with the Ticket program to give people with 
disabilities in this country a real chance at joining the 
American work force, for many of them for the very first time 
in their lives. And that when we do that it is pretty exciting 
to think that we are taking tax users and making taxpayers out 
of them, and at the same time, while we dramatically improve 
the quality of their lives and their ability to make real 
contributions to our lives, we might even save a little money 
in the Social Security Trust Fund.
    So on that high hope, I am going to pass the microphone on 
to Steve Start.
    Chairman Shaw. Mr. Start.

STATEMENT OF STEPHEN L. START, MEMBER, TICKET TO WORK AND WORK 
 INCENTIVES ADVISORY PANEL, AND PRESIDENT AND CHIEF EXECUTIVE 
     OFFICER, S.L. START & ASSOCIATES, SPOKANE, WASHINGTON

    Mr. Start. Good afternoon, Chairman Shaw, Congressman 
Matsui and members of the Subcommittee. On behalf of the Ticket 
to Work and Work Incentive Advisory Panel, I am pleased and 
honored to appear before you today to talk about SSA's proposal 
to implement return-to-work legislation.
    Specifically, I will address the issue of provider payment 
methods proposed by the agency and summarize the Panel's 
recommendations to the Commissioner on the payment structures 
for the employment networks who will provide services under 
this program. I will condense my remarks compared to those in 
front of you to fit within the allotted time, at least a little 
bit.
    The Ticket program is specifically designed to expand the 
universe of service providers available to beneficiaries. To 
encourage broad participation by the largest number of service 
providers, the rules regulating payment systems must accomplish 
two fundamental objectives. Number one, they must develop a 
payment system that is reasonable, timely and accurate and, 
number two, keep reporting and administrative requirements to a 
minimum.
    A Panel work group on payment methods met with Social 
Security officials and payment method experts to discuss how 
the Panel should address provisions in the notice of proposed 
rulemaking related to the outcome and milestone payment methods 
used within the Ticket program. It is a very unique system 
which pays the outcome piece only after beneficiaries have come 
off the rolls, which is very different than previous 
reimbursement methods. A list of our distinguished experts is 
contained in our written testimony.
    For the most part, there is agreement among the experts 
that the milestone payment system currently proposed is not 
adequate. It is not adequate to create the market incentives 
needed to recruit employment networks. As proposed, the 
milestone payment system is not attractive to potential 
employment networks because it yields a much smaller payment 
than the pure outcome-based system, places a majority of the 
financial burden and risk on the employment networks 
themselves, and requires an unrealistic up-front investment on 
the part of the networks. The experts encouraged a payment 
design that address these issues. Alternate proposals were 
presented. These are reflected in our recommendations that will 
follow and in our written testimony.
    Commenters at public meetings across the Nation concurred 
with the experts. That is, the proposed milestone payment 
system is inadequate. Panel members also heard from advocates 
and providers who successfully operate milestone payment 
systems in such places as Oklahoma and Massachusetts. Their 
experiences have also been included in our recommendations. 
Some commenters advocated for a system that would allow for 
individualized milestones, especially for harder to serve 
populations.
    I am using the phrase ``harder to serve'' to refer to four 
categories of beneficiaries identified in the Ticket 
legislation. They are individuals with a need for ongoing 
support and services, individuals with a need for high-cost 
accommodations, those who earn subminimum wage, and those who 
work and receive partial cash benefits.
    The Panel is of the opinion that a milestone payment system 
with more payments earlier on in the employment process would 
be more attractive to providers of services and, thus, 
increasing consumer choice. A system that pays a greater 
overall percentage compared to the pure outcome-based model 
would be more appealing to employment networks than that 
proposed.
    Individualized milestones could increase the likelihood 
that those harder to serve would be served by networks and 
would, in fact, better match the current work and payment 
rules. This may provide the incentive and support necessary for 
employment networks to serve difficult to serve individuals.
    The Panel in its recent advisory report to the Commissioner 
recommends SSA reevaluate the proposed payment structure to 
determine the feasibility of adopting a system that pays at 
least four milestone payments--I will discuss that later in the 
recommendations--and has a second tier to the milestone system 
that would be individualized for beneficiaries who 
significantly need more support.
    The specific recommendations are:
    A, pay a minimum milestone when a beneficiary and 
employment network signs a written work plan.
    B, pay an additional milestone payment at 12 months of SGA 
equal to the first two proposed by SSA, which are at 3 and 7 
months.
    C, amortize the milestone payment over the entire 60-month 
outcome-only payment period rather than the first 12 months.
    I know this is detailed and I will be glad to answer 
questions about it later, but they are very relevant 
recommendations.
    D, pay a greater overall percentage of the pure outcome-
only payment option under the combined model than the 85 
percent currently proposed.
    E, equalize monthly outcome payments under the milestone 
and outcome combination system payment period rather than use a 
graduated method that is currently included in the regulations.
    F, provide individualized milestones for those who are 
harder to serve. The Panel has reviewed several existing models 
that warrant close review that seem to be working in various 
States.
    Among the various suggestions from the public were payment 
models specifically for SSI beneficiaries. The milestone system 
was designed as a method of sharing risk between SSI and 
providers. Under the proposed system, most of the risk is on 
the employment network. It requires that all cash benefits 
cease before an outcome payment can be made to a network. Under 
this scenario, SSI beneficiaries may be disadvantaged because 
of the current 1-dollar-for-2-dollar cash offset in the SSI 
incentives. This would require SSI recipients to earn 
significantly more than those on SSDI before an outcome payment 
could be received by a network. As a result, employment 
networks may be discouraged from serving the SSI population, a 
group that also has a lower education level and a much weaker 
work history, leaving SSI recipients at a very distinct 
disadvantage in the program.
    The Panel has recommended that SSA consider developing two 
milestone payment systems, one for SSI beneficiaries and 
another for SSDI beneficiaries. The Panel has made other 
recommendations for new studies in its recent report to the 
Commissioner. I will not take your time to go over these today. 
For a full account of the Panel's preliminary recommendations, 
please review the Commissioner's--the report to the 
Commissioner in our written testimony.
    On behalf of the Panel, I thank you for inviting us to 
comment on the implementation of this important legislation. 
Thank you.
    [The prepared joint statement of Ms. Gracechild and Mr. 
Start follows:]

 Joint Statement of Stephen L. Start, Member, Ticket to Work and Work 
 Incentives Advisory Panel; and Founder, President and Chief Executive 
   Officer, S.L. Start & Associates, Spokane, Washington and Frances 
Gracechild, Member, Ticket to Work and Work Incentives Advisory Panel; 
    and Executive Director, Resources for Independent Living, Inc., 
                         Sacramento, California

Background
    Public Law 106-170, The Ticket to Work and Work Incentives 
Improvement Act of 1999, establishes programs that are designed to 
provide SSA beneficiaries with disabilities with a broader array of 
providers and improved access to employment services and supports, 
vocational rehabilitation services and other support services. The 
Ticket to Work and Work Incentives Improvement Act of 1999 (Public Law 
106-170) authorizes the Ticket program to expand the universe of 
service providers available to beneficiaries with disabilities. Social 
Security beneficiaries who are seeking employment services, vocational 
rehabilitation services, and other support services to assist them in 
obtaining, regaining, and maintaining gainful employment can use a 
ticket and other work incentives to secure work.
    The Act also establishes the Ticket to Work and Work Incentives 
Advisory Panel, whose duty is to advise the Commissioner of Social 
Security and report to the President and Congress on issues related to 
work incentive programs, planning and assistance for individuals with 
disabilities and the Ticket to Work and Self-Sufficiency Program 
established under this Act.
    The Panel is composed of twelve individuals, four of whom were 
appointed by the President, four by the Senate and four by the House of 
Representatives. The appointees represent a cross-section of 
individuals with experience and expert knowledge as recipients, 
providers, employers and employees in the fields of employment 
services, vocational rehabilitation and other related support services. 
The majority of the members are individuals with disabilities or their 
representatives. There are several current or former disability 
beneficiaries of Social Security on the Panel as well. A complete list 
of the Panel members and their bios is provided in Appendix A.
    The Panel held its first public meeting July 24-25, 2000 in 
Arlington, Virginia. Since then, the Panel has held 17 public meetings 
(face-to-face and by 800 number conference calls) providing ample 
opportunity at each meeting for public comments from citizens with 
disabilities, their advocates, and other stakeholders. A schedule of 
Panel meetings and other activities is provided in Appendix B. The goal 
of these meetings and calls was to solicit comments and opinions about 
SSA's plans for implementation and first year roll out of the Ticket 
program in 13 states as well as the proposed regulations contained in 
the Notice of Proposed Rule Making (NPRM). In short, the Panel has 
received over 20 hours of public comments and over 80 sets of written 
comments. The list of commenters and their organizational affiliations 
is provided in Appendix C.
    During the past 6 months of Panel activity, specific issues 
relating to implementation and rollout as well as the proposed 
regulations in the NPRM, published in the Federal Register on December 
28, 2000, have surfaced repeatedly in public comment and in Panel 
deliberations. The Panel intends to collect additional information, do 
further analysis and solicit additional public comment in order to 
develop and submit its final advice report on the NPRM to the 
Commissioner in late March or early April 2001.
SUMMARY AND RECOMMENDATIONS
    A summary of the Panel's initial twenty-two (22) recommendations to 
the Commissioner of SSA on the proposed rules precedes the full report.
SUMMARY OF PANEL RECOMMENDATIONS ON THE PROPOSED RULES
TICKET TO WORK AND BENEFICIARY USE
    Recommendation 1: Sixteen (16) and seventeen (17) year old 
beneficiaries should be eligible to participate in the Ticket program.
    Recommendation 2: All SSA disability beneficiaries with a medical 
improvement expected (MIE) diary should be eligible to participate in 
the Ticket program.
    Recommendation 3: SSA should conduct a cost benefit analysis on the 
feasibility of a beneficiary receiving more than one ticket within a 
period of disability and the agency should assess the potential impact 
of beneficiaries using more than one ticket in its ``Adequacy of 
Incentives'' report due to Congress at the end of the Ticket 
implementation period.
EMPLOYMENT NETWORK REQUIREMENTS AND QUALIFICATIONS
    Recommendation 4: An employment network (EN) should be required to 
retain staff that are otherwise qualified based on education or direct 
services experience, such as employees with a college degree in a 
related field, including but not limited to vocational counseling, 
education, human resources, human relations, social work, teaching, or 
psychology or employees with equivalent experience. SSA should not 
require licensure and/or certification that would exclude employers or 
other types of providers qualified to work with people with 
disabilities such as those who offer non-traditional supports that 
result in employment. SSA should delete Section 411.315(c).
    Recommendation 5: Section 411.325(g) should be deleted from the 
list of EN reporting requirements. Section 411.325(g) currently 
requires ``. . . among other things, submitting to the Program Manager, 
on an annual basis, a financial report that shows the percentage of the 
employment network's budget that was spent on serving beneficiaries 
with Tickets . . .''
    Recommendation 6: The Panel recommends that timely progress be 
defined as beneficiary compliance with the terms and conditions of the 
IWP, as agreed to by the beneficiary and EN and that the reporting 
mechanism be the annual report in Section 411.325(e).
    Recommendation 7: SSA should permit other individualized service 
delivery plans to be used as a substitute to the IWP provided they meet 
the minimum requirements detailed in the statute.
    Recommendation 8: SSA should re-write Section 411.385 to make it 
clear that an SSA beneficiary with a ticket who applies for State 
Vocational Rehabilitation services has a choice in deciding whether to 
assign his/her ticket to the State VR agency, to assign it to another 
EN, or not to assign it at all.
DISPUTE RESOLUTION
    Recommendation 9: All beneficiaries should have access to P&A 
services.
    Recommendation 10: Mediation should be available as an avenue for 
resolving disputes but it should not be mandatory. It should be an 
option available to the parties to the dispute, after the matter has 
been considered for resolution by the Program Manager.
     All parties must agree to enter into mediation.
     Mediation should be external to the Social Security 
Administration and should not be provided or paid for by protection 
advocacy agencies. Mediation is a more efficient and cost-effective way 
to resolve disputes.
     Participation in the mediation process should not bar a 
party's access to further appeals.
     The Social Security Administration should set aside 
additional funds to support the use of mediation for all parties.
     The Social Security Administration should look at other 
successful mediation program models such as those established at EEOC 
and the Department of Justice.
    Recommendation 11: All decisions by the Social Security 
Administration involving disputes between or among all parties should, 
at the option of the parties, be subject to external review by either 
the Social Security Administration's administrative review process and/
or judicial review.
    Recommendation 12: Information about protection and advocacy 
services and how to access them should be available at any time to all 
beneficiaries seeking or using SSA or other work incentive programs, 
including the Ticket. Specifically, a beneficiary should receive a 
formal notice of the availability of protection and advocacy services 
when he or she is issued a ticket and at the following junctures in the 
process:
           When he or she applies to the employment network for 
        services;
           At the signing of his or her individual work plan;
           In the event his or her services are decreased, 
        suspended or terminated; or
           When he or she filed a complaint against the 
        network.
    Recommendation 13: The beneficiary's filing of a complaint against 
an EN should, with the beneficiary's consent, trigger a notice to the 
protection and advocacy agency regarding the dispute to allow for an 
inquiry by the protection and advocacy agency as to the beneficiary's 
wish for protection and advocacy assistance.
    Recommendation 14: Notices from the EN and the protection and 
advocacy agency, the beneficiary's IWP and any other documents should 
be in the beneficiary's primary or accessible language of 
communication.
    Recommendations 15: Timelines for dispute resolution should be as 
follows:
     Employment networks should have fifteen working days to 
resolve a complaint filed by a beneficiary. If not resolved 
satisfactory, the beneficiary should be permitted to request a review 
by the Program Manager.
     The request for review, with the submission of all 
supporting documentation by both parties, should be submitted within 
ten (10) working days after the beneficiary receives the emloyment 
network's decision.
     The Program Manager should complete its review and render 
a decision within fifteen working days, unless the parties agree to 
mediation.
     If the parties agree to mediation, mediation should 
commence within ten (10) working days after the Program Manager 
receives the parties' request for mediation and should be completed 
within twenty (20) working days after it is scheduled.
     The Social Security Administration should have no more 
than twenty (20) working days to resolve individual appeals.
     All disputes involving Employment Networks, State 
vocational rehabilitation agencies, and the Program Manager must be 
resolved within sixty (60) working days, including Social Security 
Administration review and issuance of a decision.
    Recommendation 16: During the appeals process, services and 
supports to the beneficiary should be continued at the same level; that 
is, services and supports should not be reduced or suspended by the 
Employment Network without the beneficiary's consent.
    Recommendation 17: All parties in a dispute should have access to 
all information that is being considered and used to render a decision 
in the dispute.
EMPLOYMENT NETWORK PAYMENT RECOMMENDATIONS
    Recommendation 18: SSA Ticket implementation staff should re-
evaluate the proposed payment structure to determine the feasibility of 
adopting a system that pays at least four milestone payments: (1) at 
the signing of the IWP; (2) at 3 months of SGA; (3) at 7 months of SGA; 
(4) at 12 months of SGA. A second-tier of the milestone system would be 
a system in which milestones would be individualized for beneficiaries 
who need significantly more supports.
    Specifically the system would:
          (a) Pay a minimal milestone when a beneficiary and employment 
        network signs an IWP;
          (b) Pay an additional milestone payment equal to the first 
        two proposed (i.e., 3 and 7 months of SGA) at the end of 12 
        months of SGA;
          (c) Amortize the milestone payments over the entire 60-month 
        outcome-only payment period rather than the 12 months proposed;
          (d) Pay a greater overall percentage of the outcome-only 
        payment option under the milestone/outcome payment option than 
        the proposed 85%;
          (e) Equalize the monthly outcome payments under the 
        milestone/outcome payment period rather than the graduated 
        method proposed in the NPRM;
          (f) Provide individualized milestones for individuals with a 
        need for on-going support services, individuals who need high-
        cost accommodations, individuals who earn a sub minimum wage, 
        and individuals who work and receive partial cash benefits 
        along the lines of systems already in use in Massachusetts, 
        Oklahoma and other states. (These systems use the 
        individualized planning process to determine if and when a 
        different set of milestones is necessary, and establish a plan 
        for payments and accountability for the payments.)
    Recommendation 19: Because the Title II and Title XVI programs are 
distinctly different from each other with differing processes and 
timelines, SSA should develop two milestone payment systems; one for 
SSI beneficiaries and another for SSDI beneficiaries, that take into 
account the differences between the two programs. (See attachment C--
Seifert and O'Brien models.)
    Recommendation 20: SSA should consider applying the same earnings 
level ($740 monthly) for all Ticket users as the threshold for outcome 
payments to employment networks.
    Recommendation 21: SSA should commission a full cost benefits study 
to evaluate the ticket program. Such a study should begin with a more 
complete view of the direct savings to the SSA trust fund, but should 
also consider savings to the Federal treasury and increased 
productivity to the nation as a whole. Such a study would at a minimum 
consider the impact of increased FICA contributions by working 
beneficiaries, reduced use of Medicare, cash trust fund savings by 
beneficiaries who work but who only receive partial cash benefits and 
estimated trust fund savings beyond 60 months. The study should also 
consider reduced use of all other government transfers and increased 
taxes paid. It should consider the addition to net national product of 
increased work. It should evaluate costs and benefits from SSA's point 
of view, from the view of the Federal government, from the view of the 
beneficiary and from society as a whole.
    Recommendation 22: SSA should resolve the conflict between Sections 
411.510 and 411.390 regarding VR's choice of payment systems for 
beneficiaries who are already clients of VR.

  NPRM ISSUES, SUMMARY OF PUBLIC INPUT DISCUSSION AND RECOMMENDATIONS

INTRODUCTION
    The Ticket to Work and Work Incentives Advisory Panel take 
seriously its duty to advise and assist the Commissioner of the Social 
Security Administration and to report to the President and the 
Congress. Because one of the first major tasks outlined in the Ticket 
to Work and Work Incentives Improvement Act (TWWIIA) is to advise the 
Commissioner on the regulations for the Ticket program, the Panel, 
since their initial meeting in July, has focused its attention 
primarily on the Notice of Proposed Rulemaking (NPRM).
    In September, the Panel created four workgroups to focus on certain 
topic areas covered in the NPRM: Ticket to Work and Beneficiary Use of 
Ticket; Employment Network Requirements and Qualification; Dispute 
Resolution; and, Provider Payment. This Preliminary Advice Report 
reflects the work of these workgroups, expert advice from invited 
guests of the workgroups, public input and Panel deliberations.
    The Panel deemed it essential to reach out to a variety of 
constituents and advocates to solicit comments and opinions about the 
NPRM and the Agency's plans for Ticket implementation. To achieve this 
the Panel has conducted eleven (11) days of public meetings and seven 
(7) public conference calls since July 2000. We hosted over twenty (20) 
hours of public comment at those meetings. Additionally, public 
meetings in Phoenix, Minneapolis, Salt Lake, and Atlanta as well as two 
teleconferences in California have been devoted solely to public 
comment on the NPRM. At each meeting citizens with disabilities, their 
advocates, and other stakeholders, were provided ample opportunity to 
comment. Additionally, individual Panel members have attended numerous 
meetings in their home states and have been asked to speak to a variety 
of groups and organizations about the Panel and the Ticket's 
implementation. We have also solicited and received correspondence from 
the public regarding the agency's Ticket implementation plans and the 
NPRM. In sum, the Panel has made a concerted effort to solicit input 
from a broad cross-section of program constituents by holding meetings 
in Washington, D.C., as well as regional meetings and teleconferences 
across the country. The twenty (20) hours of public comments and the 
over eighty (80) sets of comments received by letter and e-mail reflect 
this diversity of input.
    During this first six months of Panel activity, specific issues and 
concerns regarding implementation and rollout of the Ticket program and 
the proposed regulations have surfaced repeatedly in public comments 
and in Panel deliberations. After extensive discussion in our January 
and February meetings, the Panel concluded that a letter outlining key 
implementation issues and concerns should be sent to the Acting 
Commissioner of SSA, prior to close of the NPRM public comment period.
    SSA has provided the Panel regular briefings and updates on the 
NPRM and administrative implementation activities such as evaluation 
plans, contracting, grant-making, and other critical administrative 
rollout activities. The Panel recognizes that the implementation and 
rollout of the new Ticket program pose tight timeframes and demands 
major changes in the culture and business practices of the Agency. 
However, if implemented carefully, with consideration given by the 
agency to public comments and to the input and advice of the Panel, the 
Ticket to Work and Self-Sufficiency program has the potential to 
improve vastly the quality and availability of rehabilitation services, 
employment services and supports, and related health services for this 
country's citizens with disabilities.
TICKET TO WORK AND BENEFICIARY USE
    Issue 1: Should transition-aged youth (16-18) be eligible to 
receive and use a Ticket in the Ticket to Work and Self-Sufficiency 
Program?
    Summary of Input: The Panel received comments from the public that 
overwhelmingly supported providing Tickets to at least 16 and 17 year 
olds. There was consensus that the longer people receive cash benefits 
the less likely they are to be able to achieve independence and become 
self-supporting. The public also agreed that the expectations created 
for a young person with a disability might be the most important factor 
in whether they work or rely on benefits and that allowing them to 
participate in the Ticket program makes another tool available to 
encourage positive expectations. Experts told the Panel that schools 
themselves could potentially be Employment Networks for youth.
    Discussion: Making transition-aged youth ineligible for the Ticket 
program would send the wrong message to youth and could have the effect 
of encouraging lifelong dependency upon benefits. There may or may not 
be a determinable increase in cost to the program in the short-term. 
The long-term benefits to the program and the youth beneficiaries could 
far outweigh those expenditures. Many youth may not choose to 
participate in the program until after they are 18, but those who wish 
to participate should be allowed to do so. Programs and policy in the 
Individuals with Disabilities Education Act and the Workforce 
Investment Act promote seamless programming from school to work for 
students and young adults with and without disabilities.
    The proposed regulations limit participation in the Ticket program 
to disability beneficiaries between the ages of 18 and 64. 18-year-old 
SSI recipients must be determined disabled under adult rules before 
being able to receive a Ticket. As youth prepare to transition out of 
school to the workforce, the Ticket program could be a value-added tool 
to assist them to plan work.
    Recommendation 1: Sixteen (16) and seventeen (17) year old 
beneficiaries should be eligible to participate in the Ticket program.
    Issue 2: Should disability beneficiaries classified with a 
``Medical Improvement Expected (MIE)'' diary be eligible to participate 
in the Ticket program?
    Summary of Input: Public comment supported the inclusion of 
beneficiaries with the MIE diary in the Ticket program. Members of the 
public indicated that services should be available to all disability 
beneficiaries sooner rather than later as policy, since recent research 
supports findings that the longer someone receives cash benefits the 
harder it is for them to become self-supporting. The public also cited 
that most people with MIE diary do not know they have been given that 
designation. Further, testimony to the Panel indicated that in their 
practical experience, people with MIE diaries undergo delayed initial 
Drs often times years after the date on which they are supposed to. 
Concern was expressed by national leaders from mental health and 
national organizations representing people who are developmentally 
disabled, that people with long-term mental illness (such as bipolar 
disorder) and cognitive impairments receive this designation 
disproportionately, often with no real indication that improvement is 
likely. In addition, members of the public were of the opinion that if 
the designation of the MIE diary category for CDRs would be used to 
limit a person's access to a benefit, it must be subject to due process 
review or appeal.
    In addition, agency officials stated that it is not known how many 
beneficiaries have their benefits terminated due to a CDR based on the 
MIE diary, and then reapply based on a decline in their condition and 
then are awarded benefits a second time.
    Discussion: The Panel agreed that limiting a person's access to a 
Federal benefit (i.e. the ticket) without providing for a due process 
review is questionable practice/policy. If this exclusion remains in 
the final rule, it should outline a procedure for timely review and 
appeal. This would increase the administrative burden to SSA, the cost 
of which may outweigh the possible savings to the programs created by 
such exclusion. One likely consequence may be that the length of time 
required to process all appeals, not just MIE cases, will be negatively 
impacted, that is, all appeal cases would take longer given the 
additional caseload.
    If the rule becomes final with its effect to limit a person's 
access to the benefits of the Ticket program, SSA should commit to 
policy and procedures that beneficiaries with the MIE designation 
receive their initial CDR on schedule.
    The exclusion of beneficiaries with the MIE diary from 
participation in the Ticket program does not appear to be justified. 
The SSA program and policy officials were not able to provide the Panel 
with sound statistical analysis to justify this exclusion. The Panel 
was not provided with data on how long it takes for a person with the 
MIE diary to have the initial CDR completed. There was also no 
information that indicated that a significant number of people with the 
MIE designation would be terminated after the completion of their 
initial CDR. There was no evidence to counter the argument that people 
with a MIE designation would be more successful in staying off the 
rolls through being allowed early participation in the Ticket program, 
even if their initial CDR would result in a termination of benefits.
    The proposed regulation state that a person who is awarded benefits 
with an MIE diary for the scheduling of their first Continuing 
Disability Review (CDR) is not eligible for the Ticket program until 
after the completion of their first CDR. A beneficiary with this 
designation is scheduled to have their case reviewed within 6 to 18 
months after receiving benefits. This MIE category was created for the 
sole purpose of determining when the first CDR for a beneficiary should 
be completed.
    In 1999, there were 60,766 DI and SSI adult beneficiaries who were 
classified first time MIEs on the rolls. Data from the disability 
determination services decision files indicate that in 1999, 9,663 
beneficiaries with a MIE diary were ceased for medical improvement. On 
the average, about 16% of initial Titles II and XVII MIE allowances 
that come up for first-time continuing disability reviews (CDRs) are 
ceased, usually 18-24 months after allowance, for medical improvement.
    Recommendation 2: All SSA disability beneficiaries with a medical 
improvement expected (MIE) diary should be eligible to participate in 
the Ticket program.
    Issue 3: Should a person be entitled to more than one ticket within 
a period of disability?
    Summary of Input: Concern was expressed by the public that 
beneficiaries would not be able to find ENs that would provide services 
to them if they have a partially used ticket. Current research (Schur, 
2000) finds that people with disabilities are twice as likely as non-
disabled people to work in part time and temporary work. Concern was 
raised that the program would not work for a large segment of 
beneficiaries particularly those with disabilities that are episodic in 
nature.
    Discussion: Many beneficiaries using the Ticket program are likely 
to go in and out of work, and not transition at first attempt from 
receipt of cash benefits to 60 months of continuous employment. A 
beneficiary whose ticket is partially used and needs other continuing 
support services may have a difficult time finding an EN willing to 
work with them. For example, a beneficiary returns to cash benefits 
after a work stoppage in the ``Easy Back On'' provision of TWWIIA. The 
person wants to return to work again and decides he/she needs support 
services. This consumer will be at a distinct disadvantage even though 
if interested in continuing to work. There is nothing in the statute 
that prevents a beneficiary from receiving a second ticket and there 
may well be unassessed cash savings to SSA programs in allowing two or 
more tickets to a beneficiary, as warranted or appropriate.
    In Section 411.125(b), the proposed rule states that a person can 
have only one ticket during a period of entitlement for which a 
beneficiary is eligible to receive disability benefits. The Panel has 
asked for clarification only have 25 outcome payments left to pay out. 
That is what is being described as a partially used ticket. A related 
issue is whether an EN, new or old, would be willing to provide a full 
array of services to a beneficiary with a partially used ticket and a 
significantly reduced number of payments.
    Recommendation 3: SSA should conduct a cost benefit analysis on the 
feasibility of a beneficiary receiving more than one ticket within a 
period of disability and the agency should assess the potential impact 
of beneficiaries using more than one ticket in its ``Adequacy of 
Incentives'' report due to Congress at the end of the Ticket 
implementation period.
EMPLOYMENT NETWORK REQUIREMENTS AND QUALIFICATIONS
    Issue 4: Who should be in an Employment Network providing services 
to beneficiaries who are Ticket holders?
    Summary of Input: Many of the commenters stated that State 
licensure laws dictate requirements for certain providers so SSA should 
defer to those State rules. Some commenters expressed concern that the 
quality of services may be compromised if provided by less that trained 
personnel, however, they recognized the benefits of allowing support 
and other services by non-credentialed providers if under the auspices 
of an EN who is ultimately accountable for the services provided.
    Discussion: Many people with disabilities have a ``circle of 
support,'' that is, people who they trust to provide additional support 
services. Most often, these individuals are non-credentialed support 
providers. In some instances, they are family members, neighbors, or 
friends who provide needed supports. The final rule regarding EN 
qualifications should be broad enough to accommodate non-traditional 
providers while accomplishing the stated purpose of the Ticket program, 
to ``expand the universe of service providers available to individuals 
who are entitled to Social Security benefits based on disability . . 
.'' Sec. 411.105
    According to the proposed rule, an Employment Network is any 
qualified entity that has entered into an agreement with SSA to 
function as an EN; and assumes responsibility for the coordination and 
delivery of employment services, vocational rehabilitation services, or 
other support services to beneficiaries who have assigned their ticket 
to that EN. The proposed rule would require that an eligible entity 
must assure that it is licensed, certified, accredited, or registered 
if so required by state law to provide these services either directly 
or through arrangements with other entities.
    Recommendation 4: An employment network (EN) should be required to 
retain staff that are otherwise qualified based on education or direct 
services experience, such as employees with a college degree in a 
related field, including but not limited to vocational counseling, 
education, human resources, human relations, social work, teaching, or 
psychology or employees with equivalent experience. SSA should not 
require licensure and/or certification that would exclude employers or 
other types of providers qualified to work with people with 
disabilities such as those who offer non-traditional supports that 
result in employment. SSA should delete Section 411.315(c).
    Issue 5: What financial reporting is needed by the Program Manager 
or SSA from the Employment Network?
    Summary of Input: Many commenters recommended that the agency try 
to ``keep it simple'' and not require reporting that is not necessary. 
Some were concerned that a few of the reporting requirements may place 
an undue administrative burden on ENs and discourage the participation 
of potential providers. Still others in the public and on the Panel 
were of the opinion that it is inappropriate, invasive and unreasonable 
for SSA to require these kinds of reports in an outcome-based program.
    Discussion: While there is a substantive evaluation component in 
the Ticket program, the Panel thinks that using the financial reporting 
requirements in Section 411.325(g) is not the way to collect data for 
it. The requirement will prohibit providers and employers from 
participating who have no intention of adding to the financial 
disclosures they already make to the Federal government.
    Section 411.325 of the NPRM outlines the proposed reporting 
requirements of an EN. One of those requirements is for the EN to 
submit to the Program Manager, annually, a financial report that shows 
the percentage of the Employment Network's budget that was spent on 
serving beneficiaries with tickets.
    Recommendation 5: Section 411.325(g) should be deleted from the 
list of EN reporting requirements. Section 411.325(g) currently 
requires ``. . . among other things, submitting to the Program Manager, 
on an annual basis, a financial report that shows the percentage of the 
employment network's budget that was spent on serving beneficiaries 
with Tickets . . .''
    Issue 6: Should ``timely progress'' toward an employment goal be 
measured by minimum standards for all beneficiaries, or, should the 
terms and conditions agreed to in each IWP determine timely progress?
    Summary of Input: The Panel did not receive extensive public 
comment on this issue, however the Panel did engage in extensive 
discussion and deliberation and they came to a consensus on a 
recommendation.
    Discussion: Beginning with a 24 month review after a Ticket is 
assigned to an EN, the proposed regulations require the Program Manager 
to assess whether a beneficiary is making ``timely progress towards 
self-supporting employment'' which will then keep Continuing Disability 
Review (CDR) suspensions in place. There are no ``timely progress'' 
requirements in the statute. ``Timely progress'' requirements in the 
proposed rule are directly related to the suspension of CDRs for Ticket 
program users. A ticket holder must meet the ``timely progress'' 
requirements to avoid a CDR. One option would be to have the same net 
outcome as the proposed rule for the first three years. It would 
require the same minimum work standards for all Ticket participants in 
years three, four and five of an EN-Ticket contract with a beneficiary. 
The second option, and the option that the Panel is recommending, would 
individualize ``timely progress'' and place the responsibility of proof 
and reporting on the EN with oversight by the Program Manager.
    Another question raised in discussion was, should there be set 
minimum requirements for employment in years four and five of Ticket 
use in order to keep CDR suspensions in place. The statute, and the 
proposed rule in Section 411.325(e), require annual progress reports 
from the EN to the Program Manager using progress tracked in the 
Individual Work Plan.
    Recommendation 6: The Panel recommends that timely progress be 
defined as beneficiary compliance with the terms and conditions of the 
IWP, as agreed to by the beneficiary and EN and that the reporting 
mechanism be the annual report in Section 411.325(e).
    Issue 7: Should the State VR agency be allowed to use the 
Individual Plan for Employment (IPE) as a substitute for the Individual 
Work Plan (IWP)? If so, should other individualized service delivery 
plans be acceptable alternatives, provided they meet the minimum 
standards outlined in the statute for an IWP?
    Summary of Input: The few commenters who touched on this issue 
stated that the IPE or any other work plan that meets the minimum IWP 
standards described in the statute should be an acceptable alternative 
to the IWP. They stressed the need to reduce duplication with the same 
person, eliminate unnecessary paperwork, and reduce administrative 
burden.
    Discussion: If a document already exists that meets the statutory 
requirements of an IWP there should not be a requirement for a 
duplicate document. The proposed regulations recognize this and permit 
State VR agency to use the IPE as a substitute for the IWP. Other 
programs should be permitted to do the same.
    Recommendation 7: SSA should permit other individualized service 
delivery plans to be used as a substitute to the IWP provided they meet 
the minimum requirements detailed in the statute.
    Issue 8: When a SSA beneficiary with a ticket applies to the state 
VR agency for services, should the beneficiary have the option of 
retaining their ticket for use with other ENs?
    Summary of Input: The commenters we heard from are concerned about 
choice, both here and in the connected context of the rule allowing 
only one ticket per eligible beneficiary per period of entitlement for 
benefits. The proposed rule should not presume that an applicant for VR 
services who is a SSA beneficiary would assign their ticket to VR.
    Panel members received widespread comments that VR receives special 
treatment in many respects throughout the rule. In this context, there 
have been comments that Sec. 411.385 needs clarification or change in 
the context of other special arrangements in the rule for the State VR 
agency.
    NPRM Section 411.385 states: ``What does a State VR agency do if a 
beneficiary who is applying for services has a ticket that is available 
for assignment?'' (a) Once the State VR agency determines that 
beneficiary who is applying for services has a ticket that is available 
for assignment (see Sec. 411.140) and the State VR agency and the 
beneficiary have agreed to and signed the individualized plan for 
employment (IPE) required under Section 102(b) of the Rehabilitation 
Act of 1973, as amended, the beneficiary's ticket is considered to be 
assigned.
    Discussion: People with disabilities are eligible for a number of 
public programs that offer counseling, rehabilitation, training, job 
placement, other employment services and support services from a wide 
variety of state and Federal systems and delivered at Federal, state 
and local levels. These systems include Federal housing programs, State 
developmental disabilities services, State mental health services, 
transportation services, one-stop training and employment services, 
independent living services, transition and special education, health 
care and related supports, and assistive technology, just to name a 
few. The intent of the Ticket program was to expand services and 
supports, not to limit them. A ticket should be seen as yet another 
tool that the SSA beneficiary can choose to use to supplement what is 
already available to the individual under current public programs. Use 
of the ticket should improve that individual's chance of success in 
employment.
    Informed choice is a key concern of the Panel. The agency's 
outreach on the Ticket program should inform beneficiaries of the 
choice issues that are raised when they decide to apply for VR 
services. Eligibility for VR services and VR client status should not 
dictate when a beneficiary can use their ticket or where a beneficiary 
can deposit their ticket.
    Recommendation 8: SSA should re-write Section 411.385 to make it 
clear that an SSA beneficiary with a Ticket who applies for State 
Vocational Rehabilitation services has a choice in deciding whether to 
assign his/her Ticket to the State VR agency, to assign it to another 
EN, or not to assign it at all.
DISPUTE RESOLUTION AND MEDIATION
    Issue 9: Should protection and advocacy services be available to 
all beneficiaries of the Social Security Administration regardless of 
whether or not they are Ticket users or living in a Ticket roll out 
state?
    Discussion: Section 1150(a)(b) (1) and (2) of the legislation 
provides that SSA beneficiaries are eligible for obtaining information 
and advice about vocational rehabilitation and employment services and 
advocacy or other services that a disabled beneficiary may need to 
secure or regain gainful employment. There is no requirement in the 
legislation that a beneficiary be a ticket holder or currently living 
in a roll out state in order to be eligible for protection and advocacy 
services.
    Summary of Input: There was substantial public input in support of 
protection and advocacy services being provided to all SSA 
beneficiaries. Additionally, the Panel received substantial public 
comment regarding the fact that beneficiaries face many barriers to 
obtaining needed services and supports to enable them to go to work. 
Commenters stated over and over again that P&A services should be 
available to assist all SSA beneficiaries, regardless of their status 
as a Ticket holder or residence in a Ticket roll out state.
    Recommendation 9: All beneficiaries should have access to P&A 
services.
    Issue 10: Should mediation be a part of the dispute resolution 
process?
    Summary of Input: Commenters agree that voluntary mediation should 
be available to all parties involved in a dispute under the Ticket to 
Work Program and that mediation services should be paid for by the 
agency.
    Discussion: Subpart 1 of the proposed regulations on dispute 
resolution (Section 411.600 et seq.) does not address the use of 
mediation as a means of resolving disputes. Mediation is an informal, 
cost effective means of resolving disputes and should be available on a 
voluntary basis. Neither Section 411.600 et seq. nor Section 411.435 
addresses the use of mediation as a means of resolving disputes. 
Sections 411.660 and 411.630 of the proposed regulations state that 
Social Security Administration makes the final decision in all 
disputes. There is no mention of an opportunity for an external review 
process.
    Recommendation 10: Mediation should be available as an avenue for 
resolving disputes but it should not be mandatory. It should be an 
option available to the parties to the dispute, after the matter has 
been considered for resolution by the Program Manager.
     All parties must agree to enter into mediation.
     Mediation should be external to the Social Security 
Administration and should not be provided or paid for by protection 
advocacy agencies. Mediation is a more efficient and cost-effective way 
to resolve disputes.
     Participation in the mediation process should not bar a 
party's access to further appeals.
     The Social Security Administration should set aside 
additional funds to support the use of mediation for all parties.
     The Social Security Administration should look at other 
successful mediation program models such as those established at EEOC 
and the Department of Justice.
    Issue 11: Should there be an external appeals process for all 
parties? Should there be an opportunity for all parties to a dispute to 
have access to a review of SSA's decision, either through a SSA review 
process or an external judicial review process.
    Summary of Input: Commenters were unanimous in their 
recommendations that all parties to disputes should have the 
opportunity to an external appeal process beyond what is currently 
offered in the regulation. This more fully ensures that fairness and 
impartiality are observed throughout the dispute resolution process.
    Discussion: The Panel was in complete agreement.
    Recommendation 11: All decisions by the Social Security 
Administration involving disputes between or among all parties should, 
at the option of the parties, be subject to external review by either 
the Social Security Administration's administrative review process and/
or judicial review.
    Issues 12-14: At what point or points should a beneficiary receive 
information about the availability of protection and advocacy services 
and in what format should such information and other materials be 
provided?
    Summary of Input: The Panel heard widespread comments that 
beneficiaries should be provided with notice of their right to advocacy 
and representation several times throughout their Ticket experience. 
Beneficiaries will be overwhelmed with information about this new 
program and they should be reminded several times at key points 
throughout their experience of their right to legal advocacy and 
representation, especially, at the time of ticket issuance. All notices 
of this right as well as other materials must be available in the 
beneficiary's primary or accessible communications language the 
individual's primary language and or alternative formats that provides 
effective communication for that individual.
    Discussion: Section 411.465 (regarding requirements for an IWP) and 
Sections 411.605 and 411.610 require notice regarding the availability 
of protection and advocacy assistance in resolving disputes only to 
beneficiaries who become Ticket users. There is no reference in the 
regulations to the need or requirement that all beneficiaries receive 
information regarding protection and advocacy assistance in areas other 
than dispute resolution or to beneficiaries who have not exercised 
their option to use their ticket.
    Recommendation 12: Information about protection and advocacy 
services and how to access them should be available at any time to all 
beneficiaries seeking or using SSA or other work incentive programs, 
including the Ticket. Specifically, a beneficiary should receive a 
formal notice of the availability of protection and advocacy services 
when he or she is issued a Ticket and at the following junctures in the 
process:
           When he or she applies to the employment network for 
        services;
           At the signing of his or her individual work plan;
           In the event his or her services are decreased, 
        suspended or terminated; or
           When he or she filed a complaint against the 
        network.
    Recommendation 13: The beneficiary's filing of a complaint against 
an EN should, with the beneficiary's consent, trigger a notice to the 
protection and advocacy agency regarding the dispute to allow for an 
inquiry by the protection and advocacy agency as to the beneficiary's 
wish for protection and advocacy assistance.
    Recommendation 14: Notices from the EN and the protection and 
advocacy agency, the beneficiary's IWP and any other documents should 
be in the beneficiary's primary or accessible language of 
communication.
    Issues 15-17: Should there be time limits and other requirements 
imposed on all parties involved in the dispute resolution process?
    Summary of Input: Commenters were concerned about the impact on a 
beneficiary once a dispute arises. One aspect of that concern is length 
of time it will take to resolve a complaint and what happens to the 
beneficiary's training and employment status during the complaint 
review process. It was suggested that there should be strict timelines 
to minimize the adverse impact on all parties when a complaint is 
filed.
    Discussion: The Panel hosted lengthy public discussion on this 
topic and they were in agreement that timelines need to be spelled out 
in the final regulations. The proposed regulations either do not 
reflect timelines for a dispute resolution or, where they do, they are 
inadequate. For example, there are no timelines for the employment 
network's internal grievance process or the Social Security 
Administration's review process. (See Sections 411.435, 411.615, 
411.625, and 411.630.)
    Recommendation 15: Timelines for dispute resolution should be as 
follows:
     Employment networks should have fifteen working days to 
resolve a complaint filed by a beneficiary. If not resolved 
satisfactory, the beneficiary should be permitted to request a review 
by the Program Manager.
     The request for review, with the submission of all 
supporting documentation by both parties, should be submitted within 
ten (10) working days after the beneficiary receives the employment 
network's decision.
     The Program Manager should complete its review and render 
a decision within fifteen working days, unless the parties agree to 
mediation.
     If the parties agree to mediation, mediation should 
commence within ten (10) working days after the Program Manager 
receives the parties' request for mediation and should be completed 
within twenty (20) working days after it is scheduled.
     The Social Security Administration should have no more 
than twenty (20) working days to resolve individual appeals.
     All disputes involving Employment Networks, State 
vocational rehabilitation agencies, and the Program Manager must be 
resolved within sixty (60) working days, including Social Security 
Administration review and issuance of a decision.
    Recommendation 16: During the appeals process, services and 
supports to the beneficiary should be continued at the same level; that 
is, services and supports should not be reduced or suspended by the 
Employment Network without the beneficiary's consent.
    Recommendation 17: All parties in a dispute should have access to 
all information that is being considered and used to render a decision 
in the dispute.
EMPLOYMENT NETWORK PAYMENT
    Issue 18: How can the milestone payment system be structured to 
encourage providers to serve all eligible individuals, including those 
who are harder to serve?
    Summary of Input: As proposed, the milestone payment system allows 
two milestone payments to be made before the first outcome payment. 
These milestones recognize that those currently on either SSDI or SSI 
benefits who are provided job related services and return to work do 
not immediately reach a level of employment that makes them ineligible 
for cash benefits and their employment network eligible for outcome 
payments.
    For the most part, there was consensus among commenters and the 
experts consulted that the milestone payment method proposed in the 
notice of proposed rulemaking (NPRM) is not feasible. They encouraged 
the Panel to recommend to the Commissioner a payment design that 
addresses provider choice and capitalization. As proposed, the 
milestone payment structure is not attractive to potential employment 
networks since it yields a smaller total payment than the outcome 
payment system. It places the majority of burden/risk on the EN and, it 
requires an unrealistic up-front investment by the EN. Alternative 
proposals were presented that add additional milestones, spread the 
milestone payments over 5 years, and reduce the 15% penalty incurred by 
ENs who choose milestone payments to 5%.
    Discussion: A milestone payment system that has more payments 
earlier on in the employment process will attract more providers to the 
program and thus afford consumers more choice in service provision. A 
system that pays a greater overall percentage of the outcome-only 
payment option would be more appealing to ENs than that proposed and 
one that provides for individualized milestones could increase the 
likelihood that individuals with significant disabilities would be 
served by ENs. Also, allowing for individualized milestones for 
individuals who are more difficult to serve better matches the current 
work and payment rules and would provide incentives and supports 
necessary for ENs to serve these individuals.
    Recommendation 18: SSA Ticket implementation staff should re-
evaluate the proposed payment structure to determine the feasibility of 
adopting a system that pays at least four milestone payments: (1) at 
the signing of the IWP; (2) at 3 months of SGA; (3) at 7 months of SGA; 
(4) at 12 months of SGA. A second-tier of the milestone system would be 
a system in which milestones would be individualized for beneficiaries 
who need significantly more supports.
    Specifically the system would:
          (a) Pay a minimal milestone when a beneficiary and employment 
        network signs an IWP;
          (b) Pay an additional milestone payment equal to the first 
        two proposed (i.e., 3 and 7 months of SGA) at the end of 12 
        months of SGA;
          (c) Amortize the milestone payments over the entire 60-month 
        outcome-only payment period rather than the 12 months proposed;
          (d) Pay a greater overall percentage of the outcome-only 
        payment option under the milestone/outcome payment option than 
        the proposed 85%;
          (e) Equalize the monthly outcome payments under the 
        milestone/outcome payment period rather than the graduated 
        method proposed in the NPRM;
          (f) Provide individualized milestones for individuals with a 
        need for on-going support services, individuals who need high-
        cost accommodations, individuals who earn a sub minimum wage, 
        and individuals who work and receive partial cash benefits 
        along the lines of systems already in use in Massachusetts, 
        Oklahoma and other states. (These systems use the 
        individualized planning process to determine if and when a 
        different set of milestones is necessary, and establish a plan 
        for payments and accountability for the payments.)
    Issue 19: How can SSA restructure the milestone-outcome payment 
system for SSI beneficiaries in order to account for existing work 
incentives?
    Summary of Input: Among the various suggestions to restructure the 
milestone system, the Panel received comments on specific models that 
would allow a distinctly different payment systems for SSI 
beneficiaries and SSDI beneficiaries (See EN Payment Models in Appendix 
C.)
    Discussion: The milestone system was devised as a method of sharing 
risk between SSA and providers. Under the proposed system, most of the 
risk is with the provider and requires that a person not be receiving 
ANY cash benefits before an outcome payment is made. SSI beneficiaries 
are disadvantaged because of the current $1-for-$2 cash offset in SSI 
work incentives. This would require SSI recipients to earn more ($360 a 
month more) than those on SSDI before an outcome payment is paid to an 
EN. As a result, ENs will be discouraged from serving the SSI 
population, a group that has a lower education level and a much weaker 
work history than the SSDI beneficiaries. This would leave SSI 
recipients at a distinct disadvantage in the Ticket program.
    Recommendation 19: Because the Title II and Title XVI programs are 
distinctly different from each other with differing processes and 
timelines, SSA should develop two milestone payment systems; one for 
SSI beneficiaries and another for SSDI beneficiaries, that take into 
account the differences between the two programs. (See attachment C--
Seifert and O'Brien models.)
    Issues 20-21: How can the financial incentives to serve 
beneficiaries be structured to be more equitable?
    Summary of Input: The Panel received briefings and documents from 
senior SSA officials on various return to work programs and studies 
undertaken by the agency, e.g., Gallup poll of potential employment 
networks. The results indicated that there is real interest in the 
program from potential providers but that certain beneficiaries, by 
virtue of their group affiliation (e.g., blind DI beneficiary)--may not 
be served as readily as others. One reason is the length of time from 
the beginning of service provision to the point when payments to the EN 
can start is distinctly longer for some groups. The Panel received 
extensive public comment on this issue and most advocated for a common 
earnings level threshold for outcome payments for all beneficiaries. 
Also, commenters encouraged the Panel to recommend a payment system 
with financial incentives to serve individuals who are harder to serve 
(i.e., individuals with a need for ongoing support and services, 
individuals who need high-cost accommodations, individuals who earn a 
sub minimum wage, and individuals who work and receive partial cash 
benefits.) Further, the Panel heard that it would be prudent of SSA to 
develop a payment system that includes all beneficiaries with 
disabilities to heighten the likelihood of savings to the programs.
    Discussion: Of particular concern to the Panel are the inequities 
in the financial incentives structure to serve certain beneficiaries, 
e.g., SSI beneficiaries and the harder to serve population. As 
proposed, the payment systems discourage ENs from serving SSI 
beneficiaries because the EN would receive a smaller return for similar 
effort and it could take considerably longer for SSI beneficiaries to 
reach the point in employment when ENs can be paid. The Panel is also 
interested in the development of an effective milestone/outcome payment 
structure that would address the barriers to service provision for 
individuals who are harder to serve. A consistent outcome-payment 
threshold for all Ticket users could level the playing field, making 
all Ticket users equally attractive to ENs in the context of when a 
payment can be made.
    Recommendation 20: SSA should consider applying the same earnings 
level ($740 monthly) for all Ticket users as the threshold for outcome 
payments to employment networks.
    Recommendation 21: SSA should commission a full cost benefits study 
to evaluate the ticket program. Such a study should begin with a more 
complete view of the direct savings to the SSA trust fund, but should 
also consider savings to the Federal treasury and increased 
productivity to the nation as a whole. Such a study would at a minimum 
consider the impact of increased FICA contributions by working 
beneficiaries, reduced use of Medicare, cash trust fund savings by 
beneficiaries who work but who only receive partial cash benefits and 
estimated trust fund savings beyond 60 months. The study should also 
consider reduced use of all other government transfers and increased 
taxes paid. It should consider the addition to net national product of 
increased work. It should evaluate costs and benefits from SSA's point 
of view, from the view of the Federal government, from the view of the 
beneficiary and from society as a whole.
    Issue 22: There is an internal conflict in the NPRM between the 
language in Section 411.510(c) and the language in Section 411.390 
regarding the State Vocational Rehabilitation agency's (VR) choice of 
payment methods for beneficiaries who are already clients of VR.
    Summary of Input: There was no public input on this issue.
    Discussion: Section 411.390 of the proposed regulations says that 
the State VR agency may only seek payment under the cost reimbursement 
payment system for beneficiaries already receiving services under an 
IPE. This rule is in direct conflict with Section 411.510(C) that 
states that the state VR agency will notify the Program Manager of the 
payment system election for each such beneficiary. The Panel had no 
opinion about either of the rules but felt that the regulatory 
provisions should be consistent throughout.
    Recommendation 22: SSA should resolve the conflict between Sections 
411.510 and 411.390 regarding VR's choice of payment systems for 
beneficiaries who are already clients of VR.

                               APPENDIX A

         The Ticket to Work and Work Incentives Advisory Panel

Establishment of the Panel
    The Ticket to Work and Work Incentives Improvement Act of 1999, 
Public Law 106-170, established the Ticket to Work and Work Incentives 
Advisory Panel (the Panel) within the Social Security Administration on 
December 17, 1999. Members were appointed by the President, the House 
of Representatives and the Senate during May and June of 2000. The 
Commissioner of the Social Security Administration, Kenneth S. Apfel, 
swore in the Panel on July 24, 2000.
    Panel duties include advising the Commissioner of Social Security 
and reporting to the President and Congress on issues related to work 
incentives programs, planning, and assistance for individuals with 
disabilities and the Ticket to Work and Self-Sufficiency Program 
established under the Ticket to Work and Work Incentives Improvement 
Act (TWWIIA).
    The Panel is composed of 12 members. The President, the Senate and 
the House of Representatives each appointed four. Appointments are for 
four-year terms. Of the members first appointed, one-half are appointed 
for a term of two years and the remaining are appointed for four years.
    The Chair of the Panel is appointed by the President for a 4-year 
term.

                          Members of the Panel

Sarah Wiggins Mitchell, J.D. Chair
    Sarah Wiggins Mitchell, is the President and Executive Director of 
the New Jersey Protection and Advocacy, Inc., the designated protection 
and advocacy system for the State. She was appointed by President 
Clinton to chair the Panel for a four-year term. She is a member of the 
New Jersey and Pennsylvania Bars and has a background in nursing and 
social work.
Richard V. Burkhauser, Ph.D.
    Dr. Richard V. Burkhauser serves as the Professor of Policy 
Analysis and Chair, Department of Policy Analysis and Management at 
Cornell University, Ithaca, NY. He is also active as a consultant, 
writer and researcher, focusing on various economic and social issues 
relating to persons with disabilities.
Thomas P. Golden
    Mr. Golden, is a faculty member of Cornell University's Program on 
Employment and Disability in the School of Industrial and Labor 
Relations in Ithaca, NY. He is currently project director for numerous 
efforts focusing on training and activities relating to work incentives 
for people with disabilities.
Kristin E. Flaten
    Ms. Flaten is an Employment Consultant for Lifetrack Resources, 
Inc., St. Paul, MN. She started her own small business, INITIATIVES, 
dedicated to enhancing the lives of persons with mental illnesses by 
providing educational and support services, advocacy, benefits 
analysis, and work incentive plans.
Frances Gracechild
    Frances Gracechild is the Executive Director, Resources for 
Independent Living, Inc., Sacramento, CA and an instructor at 
California State University at Sacramento. She is also president of 
Health Access of California and served as a commissioner for the 
Commission on Disability, appointed by the former Attorney General of 
California.
Christine M. Griffin, J.D.
    Christine M. Griffin is the Executive Director, Disability Law 
Center, Boston, MA. She is a Trustee for the Paralyzed Veterans of 
America Spinal Cord Research Foundation and is a member of the 
Massachusetts and the Washington, DC Bar.
Larry D. Henderson
    Mr. Henderson is the Executive Director of Independent Resources, 
Inc., Wilmington, DE and chair of the Developmental Disabilities 
Planning Council of Delaware. Prior to his current position he was 
associated with the Salvation Army's Family Service Department.
Jerome Kleckley
    Jerome Kleckley, MSW, CSW, is the Director of Hospital Services for 
the Eastern Paralyzed Veterans Association in Jackson Heights, NY and 
an advocate for veterans with disabilities. He is a veteran of the U.S. 
Navy and has been actively involved in veteran's issues.
Stephanie Smith Lee
    Stephanie Smith Lee is the Governmental Affairs Representative of 
the National Down Syndrome Society and resides in Oakton, VA. She has 
played a key role in the passage of Federal disability legislation and 
has led successful grass roots advocacy efforts at the local, state and 
Federal levels.
Bryon R. MacDonald
    Mr. MacDonald is employed as a Public Policy Advocate with the 
World Institute on Disability, Oakland, CA. He is a Board member at 
large of the National Council on Independent Living and chair of that 
organization's Social Security Subcommittee. For many years, he has 
developed employment support and benefits counseling programs and 
served as a consultant to several advisory committees on employment 
support for persons with disabilities.
Stephen L. Start
    Stephen L. Start is the founder, President and Chief Executive 
Officer of S.L. Start & Associates, Spokane, WA, a company that 
provides professional management, rehabilitation, and residential 
services for people with disabilities, seniors and economically 
disadvantaged individuals. He is a member of numerous national and 
regional residential and rehabilitation boards.
Susan Webb
    Susan Webb is the President, Webb Transitions, Inc. of Phoenix, AZ. 
A former Social Security Disability Insurance beneficiary, she used 
work incentives and vocational rehabilitation services to return to 
work. She has served on the Board of Directors of the National Council 
on Independent Living for three consecutive years, serving as its 
Social Security Subcommittee chair.

                          Advisory Panel Staff

    Marie Parker Strahan, Executive Director; Kristen Breland; Lisa 
Ekman; Mildred Owens; Gordon Richmond; Ilene Zeitzer; Tamara Allen, 
Consultant; and Theda Zawaiza, Ph.D., Consultant.

                               APPENDIX B

            Schedule of Panel Meetings and Other Activities

                   Ticket to Work and Work Incentive

                             Advisory Panel

     1. July 24-25, 2000--2 Day Meeting: 1 hr.
     2. September 11, 2000--Teleconference: 45 min.
     3. September 26-27, 2000--2 Day Meeting: Briefing.
     4. November 8, 2000--Teleconference: 1 hr.
     5. November 13-15, 2000--3 Day Meeting: 1 hr.
     6. November 27, 2000--Teleconference: 1 hr.
     7. December 12, 2000--Teleconference: 1 hr.
     8. December 19, 2000--Teleconference: 1 hr.
     9. January 3, 2001--Teleconference: 1 hr.
    10. January 9-10, 2001--2 Day Meeting: 2 hrs.
    11. January 23, 2001--Teleconference: 1 hr.
    12. February 6-8, 2001--3 Day Meeting: 3 hrs.
REGIONAL MEETINGS
     1. January 22, 2001--Salt Lake City, Utah: 0.
     2. January 24, 2001--Minneapolis, Minnesota: 3 hrs.
     3. January 25, 2001--West Coast Teleconference: 2 hrs.
     4. January 26, 2001--Phoenix, Arizona: 4 hrs.
     5. January 29, 2001--Atlanta, Georgia: 4 hrs.
     6. February 15, 2001--West Coast Teleconference: 2 hrs.

                               APPENDIX C

  Social Security Administration, Ticket to Work and Work Incentives 
           Advisory Panel, Teleconference, September 11, 2000

                           List of Commenters

Ron Calhoun, Office of Vocational and Educational Services for 
        Individuals with Disabilities, New York Department of Education
Jenny Kaufmann, National Senior Citizens Law Center, Washington, DC

  Social Security Administration, Ticket to Work and Work Incentives 
    Advisory Panel, Teleconference, International Trade Commission, 
                    Washington, DC, November 8, 2000

                           List of Commenters

Marty Ford, Director of Government Affairs, ARC of the United States, 
        Washington, DC
Cheryl Bates Harris, NAPAS, Washington, DC
Linda Landry, Disability Law Center, Boston, MA
Ann Maclaine, Director of the Louisiana Protection and Advocacy Agency, 
        New Orleans, LA
Murray Manus, Equip for Equality, Chicago, IL
Aleisa McKinlay, Public Policy Analyst, Advocacy Service, Lincoln, NE
Gary Richter, Indiana Protection and Advocacy, Indianapolis, IN
Edward Wollman, Disability Community Small Business Development Center, 
        Ann Arbor, MI
Dave Ziskind, Director of the Division of Program Administration, RSA, 
        Vocational Rehabilitation Program, Washington, DC
Dave Zehner, Protection and Advocacy for People with Disabilities, 
        Charleston, SC

  Social Security Administration, Ticket to Work and Work Incentives 
   Advisory Panel, Quarterly Meeting, Embassy Suites at Chevy Chase 
             Pavilion, Washington, DC, November 13-15, 2000

                           List of Commenters

Sue Augustus, SSI Coalition, Chicago, IL
Alan Bergman, President and CEO, Brain Injury Association, Alexandria, 
        VA
Kara Freeburg, American Network of Community Options and Resources 
        (ANCOR), Annandale, VA
Marty Ford, Director of Government Affairs, ARC of the United States, 
        Washington, DC
Charles Harles, Executive Director, International Association of 
        Business, Industry and Rehabilitation (IABIR), Washington, DC
Mitch Jessirich, World Institute on Disability, Oakland, CA
Jenny Kaufmann, National Senior Citizens Law Center, Washington, DC
Mary Kelly, National Association of Developmental Disabilities Council, 
        Washington, DC
Dan O'Brien, Oklahoma Department of Rehabilitation Services, Oklahoma 
        City, OK
Mike O'Brien, Oklahoma Department of Rehabilitation Services, Oklahoma 
        City, OK
Katherine Mario, New York Vocational and Educational Services for 
        Individuals with Disabilities (VESID), Albany, NY
Celane McWhorter, Association for Persons in Supported Employment, 
        Alexandria, VA
Susan Prokop, Paralyzed Veterans of America (PVA), Washington, DC
Andrew Sperling, Director of Public Policy, National Association for 
        the Mentally Ill (NAMI), Arlington, VA
Michael Van Essen, AIDS Assistance Organization, Palm Springs, CA

  Social Security Administration, Ticket to Work and Work Incentives 
Advisory Panel, Meeting, Holiday Inn Capitol, Washington, DC January 9-
                                10, 2001

                           List of Commenters

Dennis Born, Program Manager, Supported Employment Consultation and 
        Training Center, Anderson, IN
Paul Seifert, IAPSRS, Columbia, MD
Charles Harles, Executive Director of INABER, Washington, DC
Damon Hicks, Supported Employment Consultation and Training Center, 
        Anderson, IN
Mike O'Brien, DRS, Oklahoma City, OK

                               APPENDIX D

                Two En Milestone Payment Models for SSI

    Prepared by: Paul J. Seifert, Intl'l. Assoc. of Psychosocial 
Rehabilitation Services.
    [APPENDIX D IS IDENTICAL TO THE ATTACHMENT SUPPLIED BY PAUL 
SEIFERT'S TESTIMONY.]

                                

    Chairman Shaw. Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman. Again, I appreciate 
the fact that you are holding this hearing.
    Ms. Gracechild, I want to ask you a series of questions and 
I will try to be reasonably brief, because we do have time 
constraints with all of the members here. I think, from my 
perspective at this moment anyway, the most significant issue 
is the MIEs, and that is Medical Improvement Expected. I am 
hearing all of these acronyms now, and I want to make sure that 
I understand them.
    Ms. Gracechild. Yes.
    Mr. Matsui. You were talking about the people that fall 
under this universe are those that have mental or emotional 
problems, by and large.
    Ms. Gracechild. Disproportionately.
    Mr. Matsui. Disproportionately, right.
    Ms. Gracechild. There are about 43,000 folks with that 
designation on the rolls right now at SSA.
    Mr. Matsui. Right. While they are going through a review 
process, you know, before they become eligible, they don't 
receive benefits. That is the problem. And it is my 
understanding that, what, 84 percent of them eventually are 
eligible for benefits. Could you please discuss that and 
describe exactly what the regulations would do and perhaps 
could be altered to try to alleviate ordeal with this problem, 
if I have it right.
    Ms. Gracechild. Well, I am not so sure I can give you the 
exact expert answer you need on that, so I might defer on that. 
But basically what it means is I think they are receiving 
benefits during that time period, but they are not eligible to 
participate in the Ticket program until their first CDR, and 
the time space on that I am not quite sure on, but I am sure it 
is probably a couple of months or several months at least, 
which could delay, you know, timely progress for them to move 
on in their lives.
    But the main issue is, out of that 43,000 people that have 
that designation, only about 16 percent of them, 16 percent of 
that 43,000, leaving--I did the calculations on my calculator. 
That left 37,000 people that weren't going to medically improve 
who had every right to join the program right away and get 
started. That was a huge amount of people, and that is the 
group we are concerned about.
    I think that you are going to hear from Mr. Paul Seifert 
who is an expert on this particular population and how they 
might be negatively impacted; and, if I might, I would defer my 
comments on that to him until later.
    Mr. Matsui. Okay.
    Ms. Gracechild. Unless somebody else----
    Mr. Matsui. Did you have something to add to that, Mr. 
Start?
    Mr. Start. Well, one of the things, not from the Panel but 
from the research that we participated in several years ago 
from Social Security, we found the group that received the 
highest placement rates back to work were those with Medical 
Improvement Expected, much, much higher than other categories, 
so it was a very productive group to work with.
    Mr. Matsui. Okay. And essentially then, you would like to 
see the regulations changed to allow them to get the Ticket----
    Ms. Gracechild. I would like to see that exclusion----
    Mr. Matsui. To participate in these programs, which 
obviously moves independence much quicker, particularly since 
84 percent of them eventually qualify anyway.
    Ms. Gracechild. Exactly. We would like to see that 
exclusion omitted from the final regulation.
    Mr. Matsui. Right. I guess later we will hear some other 
time from the administration, or from those who have put this 
together, but do you know the reason why those people would be 
excluded from participating in the program when 84 percent of 
them become eligible? What was the rationale?
    Ms. Gracechild. Probably because--I mean, the rationale, 
which doesn't really hold up, but there was a reason why 
somebody thought that that would be reasonable, probably 
because they thought if they were going to medically improve 
then they would be ineligible for the program, but that is not 
in fact what we are finding is happening. And Steve just told 
me something that I didn't know before, that they have the best 
placement rate.
    [The following was subsequently received:]

    Ms. Gracechild is not able to answer the question on behalf 
of the Panel because the Panel has not received an answer to 
that particular question from the Social Security 
Administration agency. We have asked for more information about 
the rationale for the exclusion. The agency has promised a 
response in the near future.

                                

    Mr. Start. There was one other issue raised and that was 
that it might attract people to the program, and it was called 
the woodworking effect, I think, was one of the issues that was 
mentioned, also. But from a rehab point of view of what the 
research is really clear about is the sooner you get people 
headed back to work, the chances of them returning to work are 
geometrically greater than waiting, so all things considered it 
is a better bet I think that the trust fund--to allow that.
    Mr. Matsui. I would hope that this would be one area that 
all of us would look at, because it sounds to me that we are 
actually better off moving people at least toward the 
independence that we are all seeking quicker rather than 
delaying it, given the fact that, as you say, 84 percent of 
them ultimately qualify for the ticket. So I appreciate that.
    One last question, Mr. Chairman, if I may. The issue of the 
dispute and how that is dealt with and resolved, could you 
discuss very briefly the regulations and what changes you would 
like to see and perhaps why you would like to see the changes 
in that area?
    Ms. Gracechild. Well, we want to make sure that protection 
and advocacy services, which are going to be provided in 
dispute situations, are available to all of the beneficiaries 
and that they have adequate awareness of how to use those. So 
we want to make sure that at specific junctures, you know, when 
they first sign their Individual Work Plan, when they maybe 
want to make an amendment to it or change it, or when there are 
significant changes, that they will be then be reinformed that 
they can use protection and advocacy services. Or if they would 
like to take their Ticket and put it in a different employment 
network, if they are unsatisfied with the progress that they 
are making with one provider, that they have options to do 
that, and if those options are denied to them that they have an 
appeals process.
    So we went through and did some very, very careful work in 
our work groups. Sarah Wiggins Mitchell, who is very familiar 
with protection and advocacy as an advocate, worked on that 
subgroup and her recommendations come--they are very good 
recommendations, and if she was here today I know she could 
give you even more information than I can. I don't know if 
Steve has more he would like to add.
    Mr. Start. There was one other point that was paramount and 
that was the current regulations propose using the existing 
administrative process in terms of the conflict resolution or 
dispute resolution, and it is incredibly backed up. You hear 
all kinds of horror stories about 2, 3, and 4 year waits. I 
don't know what the actual average is. SSA does. But that is 
just way too long to interrupt an employment process.
    So part of the thought was, if mediation was made 
available, it could quickly be made available to resolve the 
problem and get back to the plan so that the person can get on 
with their training or their employment or whatever.
    Ms. Gracechild. We didn't want mediation to be mandatory 
but optional, but we also wanted judicial review to be the end 
process of any appeals, so that that--so that an external 
review and judicial review, if necessary, was possible.
    Mr. Matsui. Thank you both very much. I appreciate it.
    Chairman Shaw. Mr. Brady.
    Mr. Brady. Mr. Brady?
    Chairman Shaw. I think that is who you are.
    Mr. Brady. Caught me by surprise, Mr. Chairman.
    I love this program, the goal of it. But in all of our 
programs, I don't know about you, but you find yourself asking, 
does it have to be this complicated? And I guess my question 
is, as we set this up, from the Advisory Panel's standpoint, 
have we done all we can to streamline the paperwork burden and 
the process that goes with this so that we are, one, getting as 
much service as possible to the participant, that we are 
attracting as many private providers to this as we potentially 
can? And did you have a chance to look at if the agency has 
created a paperless or a near paperless option for companies 
that want to transmit information and comply in a good, 
streamlined technology approach?
    So the question is, have we done all we can to reduce the 
administrative burden to attract the best resources we have, 
private and otherwise, out there so that we can train and find 
jobs for folks who truly want them?
    Ms. Gracechild. Well, I wish that I was qualified to say, 
absolutely, you bet, we did it. But, quite frankly, I would 
have to get back to you specifically on that. But I can tell 
you one thing, that is the goal. Because when you are working 
with people with severe disabilities and trying to get them 
into the mainstream of the work force, the more that we 
complicate the problem for them to apply, or for the providers 
to provide, or for the program manager to ensure and evaluate 
and administrate the program, then we complicate it for them. 
So you can bet that myself and all of the members of the 
Advisory Panel, especially Mr. Start who, you know, comes from 
the provider community and he doesn't want a lot of meaningless 
paperwork that gets filed in triplicate and catches dust--so, 
yes, we are.
    One of our very specific recommendations, I will just 
highlight for you that I recommended, was that the program 
manager be able to make their program reports in their annual 
report. What section was that under? That was under--I can find 
it for you in a minute. But everywhere we go, we are trying to 
look where one job will take care of two requirements. I think 
that answers your question. That we are not just going to 
create a lot of bureaucratic jobs for people for filing paper 
in file drawers. Is that what you are worried about?
    [The following was subsequently received:]

    Ms. Gracechild is not able to answer this question on 
behalf of the Panel either. The question is really one that 
must be asked of the Social Security Administration itself and 
not the Panel. The agency has the authority to develop the 
administrative processes for the program, which would include a 
paperless system, not the Panel. However, the Panel has 
recommended that more efficient and less burdensome processes 
be developed.

                                

    Mr. Brady. Yes, but, more importantly, have we tried to 
streamline this so that we attract the most resources from the 
private sector and that, again, every dollar we don't spend 
there obviously we can apply to services?
    Ms. Gracechild. I think it is a goal, but I think it is in 
progress as a goal. I think it is a grand experiment, and as we 
roll out these first 13 States that is the goal.
    Steve, do you want to say a little more on this?
    Mr. Start. Yes. In terms of what we have seen in the 
regulations, they certainly are more onerous than we ever 
thought they would be, those of us that worked on the 
legislation, more voluminous. It is an issue that the Committee 
is watching very, very closely and is very concerned about. A 
lot of that work that you are actually talking about is in 
progress, as I understand it, and MAXIMUS is putting together 
those systems as we speak and they will be brought in for 
review before the panel later on.
    Mr. Brady. If you would just keep your eye on that area, 
because I really think it makes things harder sometimes than 
they need to be for our folks.
    Mr. Start. Yes. It came out with 35 pages of rules about 
expedited reentry into the program. I found it interesting, 
that it took 35 pages to describe the process for that. But it 
is a complicated process.
    Mr. Brady. Thank you, Mr. Chairman.
    Chairman Shaw. Mr. Pomeroy.
    Mr. Pomeroy. Thank you, Mr. Chairman.
    I want to thank the panel for very interesting testimony. I 
am new on the Subcommittee, and really this is the first 
exposure to a very complicated program, trying to advance a 
very important goal of getting people back to work.
    I want to pursue a line of questions asked by Mr. Matsui 
relative to the MIE designation. Basically, the additional test 
was initially advanced in these regulations ostensibly for the 
purpose of making certain that people were not benefiting from 
this graduated entry, the Ticket to Work program, that could 
otherwise just be apparently in the work force without 
additional disability. Is that what the purpose of it was?
    Ms. Gracechild. Let me--you want to understand how people 
get the MIE designation? I just want to understand your 
question.
    Mr. Pomeroy. What was the purpose of it? What was the 
purpose of the----
    Ms. Gracechild. For the exclusion?
    Mr. Pomeroy. Yes.
    Ms. Gracechild. I think Steve alluded to it previously when 
he said they were afraid--what, that it would attract too many 
people to the program?
    Mr. Start. It has been called the woodworking effect. It 
may attract people on to the rolls that don't really need it, 
you are right, so they just get on Social Security so that they 
can get the advantages of the services provided.
    Again, as I understand it, Social Security would go into 
more debt with the administration itself. But another concern 
was in fact that people who weren't really eligible for 
services would be getting kind of a free service. So it was to 
protect the trust fund from abuse.
    Mr. Pomeroy. Do you believe that that designation and the 
additional review then that requires--so once you get--if you 
do have the MIE designation, then you are subject to an 
additional CDR, that is, a Continuing Disability Review?
    Ms. Gracechild. Yes.
    Mr. Pomeroy. Do you believe the prospect of the additional 
CDR has stopped people that might be in that category from 
trying to access to Ticket to Work?
    Ms. Gracechild. Yes. Because, once again, if I refer you to 
the 43,000 I alluded to that have that designation currently on 
the rolls and that only 16 percent of them, which is, you 
know--in other words, 37,000 of them are going to go on with 
their disability designation and be eligible for the program, 
and in order--and of the 16,000 that aren't, you are sort of 
holding back a whole group of worthy participants who need to 
get on with the program and have a right to get on the program.
    Mr. Pomeroy. The group that might be most capable of using 
this Ticket to Work program to its ultimate success?
    Ms. Gracechild. Right. As Steve testified, they have one of 
the better placement records when he works with them.
    Mr. Pomeroy. So we have excluded a group from participating 
that we most really want to participate in terms of outcome?
    Ms. Gracechild. Yes.
    Mr. Pomeroy. And some track record now to demonstrate that 
the 16 percent--there are two sides to this issue, both of them 
have some legitimacy, but we have some track record now to 
review and 16 percent doesn't make a lot of sense.
    Ms. Gracechild. Sure.
    Mr. Pomeroy. You indicate, and here again, this is just a 
reflection of my lack of background, the difference between SSI 
and SSDI in your testimony and that there ought to be separate 
milestone programs created. Would you explain--help me 
understand the basis of that?
    Mr. Start. Well, SSI generally stated and, again, Social 
Security can give you the real in-depth on it, but SSI is based 
more on supporting individuals with disabilities that are 
impoverished or have a low income level. SSDI is primarily an 
insurance program for those that have been employed. Now, it 
pays a whole lot higher rate, SSDI, in terms of monthly stipend 
and has different sets of benefits, et cetera, than the SSI 
program which pays significantly lower, like in our area, $465 
a month I think is what people would get. There are specific 
incentives in the SSI program that when you put it together 
with the Return to Work program here make it more--make it 
disadvantaged for networks to serve them.
    For example, the way the program is set up, providers under 
the outcome payment system don't get paid until a person is off 
the rolls. There is no money going out to that person from SSI 
any more. Then the provider gets a percentage of the savings to 
general revenues fund, which is a very good concept and it is 
fundamental to this bill.
    The problem is, the people on SSI, because there is an 
offset that says, look, for every $2 you make, you only have to 
pay back $1 to general revenues fund, it takes as a practical 
matter much longer for them to get to a point where nothing is 
being paid by SSA.
    Mr. Pomeroy. Essentially we are dealing with individuals 
that perhaps have more issues to deal with before they----
    Mr. Start. Almost on average, for certain. I mean, on 
average----
    Mr. Pomeroy. So is it harder--on the more challenging 
cases, a greater risk that we don't ultimately hit the 
benchmarks, that risk is borne by the employer and, in any 
event, the standard is higher.
    Mr. Start. Right.
    Mr. Pomeroy. That is totally irrational.
    Mr. Start. It is backward. It is not an intentional thing. 
It is one of those unintended consequences that happens. Mr. 
Seifert and Marty Ford are both here representing two of the 
major populations in that group and that is those with mental 
health issues and those with developmental disabilities. They 
are probably the most severely impacted by that, and there are 
some suggestions that were brought forward about how to deal 
with it. That is why we recommend a separate milestone system 
which, frankly, parallels what Mr. Seifert will talk about 
today.
    Mr. Pomeroy. That makes sense. Thank you, Mr. Chairman.
    Chairman Shaw. Mr. Ryan, do you have any questions?
    Mr. Ryan. Sure. Thank you, Mr. Chairman. It is a pleasure 
to be here for the first hearing that I have been able to 
participate in.
    Chairman Shaw. You were welcomed before you got here.
    Mr. Ryan. Thank you.
    I am very proud of the fact that Wisconsin has one of the 
13 pilot programs, and we call it in Wisconsin Pathways to 
Independence in Wisconsin, so we are really eager to see this 
implemented and see how it works, so it is exciting.
    I just wanted to ask you, Ms. Gracechild--did I get your 
name right?
    Ms. Gracechild. That is right.
    Mr. Ryan. You mentioned in your testimony that people 
weren't fully aware of the program and they may not take 
advantage of it. I just have a few questions on that note.
    One, what can SSA do to more effectively reach out to 
educate Americans with disabilities about Ticket to Work? Two, 
what should we be telling beneficiaries about the program and 
what role do the advocates and State vocational rehab programs 
play in getting the word out? Specifically, when you mentioned 
that, that hit home. We are just beginning to do this in 
Wisconsin, and I wonder what are we going to do to get the word 
out to people in Wisconsin? Are we going to miss people? How do 
we address that?
    Ms. Gracechild. Right. Well, thank you for that question. 
It gives me a chance to highlight part of my testimony again.
    Well, first of all, let me just tell you that I work in an 
independent living center in Sacramento and we serve about 
1,200 very severely disabled people each year in services to 
keep them in their home and, if possible, at work, and that 95 
percent of them are on SSI. And people who live on SSI, Steve 
said it earlier in his testimony, that they have not--many of 
them have no previous experience in the work force. They are 
very disadvantaged.
    Some of them may even have problems reading the kind of 
bureaucratese that comes out in memo forms when they get 
eligibility notices. Oftentimes they bring those notices to our 
office so advocates can read them and explain what the jargon, 
the acronyms, the time frames, the expectations mean.
    So there is really a class of people on SSI that are part 
of the underclass in America. In addition to their disability, 
they are severely impoverished in addition to being disabled 
and may have had maybe unequal opportunities in the educational 
system, before we had ADA and IDEA. So we are working with very 
unsophisticated consumers sometimes; and getting the word out 
to them, it has to be told many times in many different ways. 
Maybe people have recommended here that perhaps we reopen that 
60-day comment period and then during the first 30 days have an 
education outreach blitz that includes TV spots, things in the 
newspaper, maybe signs on the buses, all of the different ways 
that sophisticated information experts get the word out.
    So that is what many people think we need, but also time 
for some of these independent living centers, protection and 
advocacy agencies, ARC, other community-based providers in the 
community that are closest to the consumers have a chance to 
tell them about the Ticket to Work program and take away some 
of their fears. Because the greatest fear that our consumers 
sometimes have when they hear from the big agencies is that, 
one, they are going to lose their eligibility status and, two, 
that the check is not going to come or the health care won't be 
there. So we don't want to send scary shock waves through the 
consumer community.
    Did that answer your question?
    Mr. Ryan. Yes. Well, let me just go on to an extension of 
that. Short of having access to advocates, if you are living in 
an area where you just don't have those advocates, how do you 
get the State programs, the State agencies to work with SSA to 
get out there and get the word out? I mean, in our area, I 
worry about this problem; and if there are aren't any advocates 
in the area, how do you get a person who would otherwise be 
eligible that does not know about it, who can't read the jargon 
that you are talking about--can SSA--is there a proposal out 
there for SSA to work with State vocational rehabilitation 
agencies to simplify and make it easier and more digestible 
since there is no advocate out there?
    Ms. Gracechild. There is not a clear one that I am aware of 
at this time.
    Mr. Ryan. Okay. Thank you.
    Chairman Shaw. Mr. Collins.
    Mr. Collins. Thank you, Mr. Chairman.
    The panel has recommended that disputes among employment 
networks and beneficiaries and program managers should have the 
option of having an external review either by the Social 
Security Administration review process--are you suggesting that 
the SSA administrative law judge hear these disputes?
    Ms. Gracechild. Well, that is probably part of the process, 
although these big agencies have internal review appeal 
processes for recipients that are unsatisfied.
    Mr. Collins. But my question is, are you saying that the 
administrative law judges of the Social Security Administration 
should hear these disputes? I mean, they are already backed up 
with a backlog of work.
    Ms. Gracechild. That is why we are recommending mediation 
as an alternative to expedite resolving disputes whatever 
possible, though we are saying it should not be mandatory. It 
is hard to make people mediate and waive rights to external 
judicial review.
    Mr. Collins. And who would do the mediation?
    Ms. Gracechild. Well, we talked about that alot in work 
group. That was not my work group. I was on the who-gets-the-
ticket and how you use them to qualify networks, but, as I 
recall, they were saying that in many different local 
communities there are fee-for-service providers that do 
mediation services. I know in Sacramento we have skilled 
professional, certified mediators that can be purchased and 
that that fee would be paid for by the administration in 
rolling out the program and administering it.
    Mr. Collins. And who would review the mediation process?
    Ms. Gracechild. I don't--you know, I feel like I am 
probably not able to satisfactorily answer that question for 
you today. I could get it back to you tomorrow. I could go get 
some answers from staff, my executive staff on the panel and 
get that back to you. Would you like that?
    [The following was subsequently received:]

    Ms. Gracechild is not able to answer this question on 
behalf of the Panel because the Panel had not discussed the 
possibility of the external review being done by the SSA 
administrative law judges. This issue, along with other issues 
related to the proposed program regulations, will be discussed 
at the Panel's next meeting in Phoenix next week, March 26-28, 
2001. We will forward the Panel's response to you after their 
meeting in Phoenix.

                                

    Mr. Collins. We would. Thank you.
    Ms. Gracechild. All right.
    Mr. Collins. Thank you, Mr. Chairman.
    Chairman Shaw. Thank you.
    Mr. Start, in your testimony you came up with some ideas or 
suggestions on ways to fix the milestones. Have you run any 
cost analysis on this?
    Mr. Start. On the ones that were specifically recommended, 
we haven't at the panel level. They very closely parallel the 
cost that we used in promoting the original legislation itself. 
I mean, it is very close to the numbers that were used. We had 
a $300 evaluation payment, I remember. We had one at 60 days. 
We had one--there might be one shorter. We had one at SGA, I 
remember.
    So they very closely paralleled what has now turned out to 
be the panel's recommendations, and those were returning cost-
benefit ratios of like $10 to $1 invested or put at risk by SSA 
in a very, very conservative--with a very conservative set of 
assumptions being used. So I feel--I mean, they are very safe 
numbers that the panel has recommended in terms of cost-
benefit.
    I have not seen such a detailed cost-benefit from SSA, and 
we have requested that they do that. Looking realistically at 
how many people stay in the program at each level, how many 
come in, how many actually complete their plans, how many get 
jobs, keep jobs, we have some basic data on that that could be 
used for that kind of modeling.
    Chairman Shaw. Also, you indicate that the draft rules 
appear to favor State vocational rehabilitational programs over 
the private programs, or private providers. Can you tell us why 
and what changes need to be made in order to reverse that?
    Mr. Start. Well, there are a couple of provisions that are 
of concern. One is, essentially says, paraphrased, that any 
individual that uses State agency services, their ticket will 
automatically be transferred to the State agency. Some argue 
that, well, they still have choice, so I guess they can take it 
back. But under the current Federal law, the State agency is 
required to provide services outside of Social Security funding 
to all of these individuals.
    So what the Panel is concerned about is, we have actually 
set up a discriminatory situation that says, because you are on 
Social Security the vocational rehab agency will not have to 
work with you if you don't give them your ticket. So it is a de 
facto kind of way of eliminating choice. So that is a concern 
to folks.
    There is also a concern about the use of the certification 
process. The way the regulations are written, in some States 
the vocational rehab agency actually takes the responsibility 
of certifying who can provide vocational rehab services, so 
they can very conceivably use their certification process to 
block all of the competition, so to speak, and to narrow the 
range of service providers.
    One of the primary drivers for the advocates behind this 
whole bill was to get a much broader opportunity of choice but 
also to get nontraditional providers, not just regular folks 
like my service but employers that would become networks and 
circles of support, and there is a whole variety of different 
ideas about how people can get jobs in a more informal way. And 
they work, by the way. All of those would be excluded by that 
kind of exclusionary certification language, and one facet of 
it is that the VR system would be in charge of its piece of it. 
In reality, there is a sense of competition, unfortunately, 
between the State agencies and the private sector. So there is 
an inherent conflict of interest in that, we feel, and are 
concerned about.
    Chairman Shaw. Is the problem in the regulations or the 
statute, or can you answer that?
    Mr. Start. I think more in the regulations. Yes. I think 
the statute is written to reasonably provide a level playing 
field, reasonably.
    Chairman Shaw. Well, we will have to look into that 
further.
    Mr. Matsui.
    Mr. Matsui. No questions.
    Chairman Shaw. No further questions. Thank you all very 
much. We appreciate not only you being here, but the fine work 
that you have done.
    Mr. Matsui. Mr. Chairman, may I mention to the next panel, 
I think the next panel is coming up, that many of us, if you 
just saw Mr. Pomeroy leave, there is a 3 o'clock meeting that 
some of us must attend, and I really apologize that we have to 
do that. This meeting was called this morning, so we are kind 
of stuck. So I just want to apologize to the people here. You, 
too, Mr. Chairman, because we are going to have to take off.
    Chairman Shaw. Well, I wasn't invited to whatever meeting 
that is.
    Mr. Matsui. Mr. Chairman, you are invited to any meeting 
you want to come to. We would be happy to have you come to our 
meeting. Thank you.
    Chairman Shaw. The next panel, if you would come to the 
table.
    We have Susan Prokop, Associate Advocacy Director of the 
Paralyzed Veterans of America on behalf of the Consortium for 
Citizens with Disabilities; Mr. William Harles, who is 
Executive Director of the Inter-National Association of 
Business, Industry and Rehabilitation; Ms. Marty Ford, Director 
of Legal Advocacy, the ARC of the United States; and Paul 
Seifert, who is the Director of Government Affairs of the 
International Association of Psychological Rehabilitation 
Services from Columbia, Maryland.
    As the previous panel, we have your full statements that 
will be made a part of the record, and you may summarize them 
as you see fit.
    [Questions submitted from Chairman Shaw to the panel, and 
their responses follow:]

          Ticket to Work and Work Incentives Advisory Panel
                                                      April 5, 2001
The Hon. E. Clay Shaw
Chairman, Subcommittee on Social Security
U.S. House of Representatives
Committee on Ways and Means
B316 Rayburn House Office Building
Washington, DC 20515
    Dear Representative Shaw:
    The Ticket to Work and Work Incentives Advisory Panel appreciates 
the recent opportunity for the two of us to give testimony before the 
Subcommittee regarding the Social Security Administration's proposal to 
implement portions of the Ticket to Work and Work Incentives 
Improvement Act.
    We have received your follow up questions and, in the interest of 
time, the following represents our individual responses to your 
questions as only two of the twelve members of the Panel. Where 
possible the answers reflect specific recommendations in the Panel's 
reports and discussions on the general topics relevant to your 
questions. These responses do not reflect the deliberations of the 
Panel as a whole. In some cases, we are unable to answer the question 
at this point because it is too soon in the process or we have not yet 
had an opportunity to gather the data needed, or the Panel has not 
reached a decision on the issue. However, in order for the hearing 
record to be complete, we are submitting them for your consideration at 
this time with the understanding that this is an evolving process.
    To aid in clarity of this response, we have separated the parts of 
the four questions into thirteen (13) individual questions as follows:
1. When will the provider expect to receive payment for services?
    The answer to this question will vary tremendously based upon the 
individual case. The typical best case scenario for providers who are 
utilizing the outcome payment system would be to expect initial payment 
to occur in one year to 14 months after the beginning service to the 
individual. If, when the provider took the ticket, the individual was 
participating in Substantial Gainful Activity (SGA) level activity 
(which may happen in a very small percent of cases) the timeline could 
be shorter than 12 to 14 months.
    For a more average case that requires some level of training and 
job placement it would be reasonable to expect 2 to 3 years of 
involvement with the client until the provider would actually receive 
an outcome based payment.
    For the harder to serve, it would be likely that a small percentage 
(probably under 40%) would ever reach full SGA. For those requiring a 
long training period in such actives as supported employment it could 
easily require 3 to 5 years.
    The most impacted number however, comes from the fact that based on 
current estimates compiled from research and demonstration projects, 
Project Network, and state vocational rehabilitation agency, it is 
estimated that approximately 56% of the individuals served overall will 
not reach a level of SGA sufficient to leave the rolls.
2. How long have services been rendered over time?
    Included in question 1.
3. At what cost to the provider?
    Cost, like timing, will vary dramatically from case to case. It 
costs less to place individuals that require little or no training, 
supplies or equipment. On average the experience of our national 
Projects With Industry (PWI) and some SSA research and demonstration 
projects, it is prudent to predict an average cost of $2,000 to $3,000 
per person during the training and placement period. Based on the 
experience of the state VR agencies, costs for some individuals could 
exceed $10,000 and in a small percentage of cases go to $20,000 plus 
per case. Such expenditures would, in all likelihood, discourage 
Employment Networks (Ens) from serving such clients unless there was 
supplemental funding from other sources. Again, keep in mind that on 
the average, over 50% of the individuals will not reach the SGA level 
necessary to leave the rolls; therefore, the cost borne by the provider 
is essentially doubled.
4. How serious a problem is the milestone payment structure?
    100% of the provider organizations that testified before the panel 
said that the current milestone system is simply unworkable. Anecdotal 
reports from providers across the country indicate a very low interest 
in participating in the system as proposed in the Notice of Proposed 
Rule Making (NPRM). Many say they will sign up to be EN's, but will 
wait until the rates are properly adjusted before actively pursuing 
clients. This is the same strategy that many used in the alternative 
provider program where hundreds of providers signed up, but in the end 
only a very few, under 20 individuals, actually obtained SGA.
5. Will private providers decline to participate in the program?
    From the comments the Panel and SSA have received, we would say 
yes. Based on feedback from testimony and field contact, a 
significantly smaller number of providers will actively participate 
than originally intended to when the legislation was being developed. 
The Panel has heard that even providers who helped develop the 
legislation are now very skeptical.
6. Has the ``risk'' in the milestone payment been heaped upon the EN's 
        by SSA?
    From a provider perspective, SSA has shifted a substantial 
percentage of the risk to the provider. The total amount of payment 
coupled with small milestones and the schedule for payback makes the 
milestone system very unattractive. The milestones have created little 
incentive for EN's to participate, as was the original intent of 
Congress. Based on what we have heard, it has essentially become 
financially punishing to utilize the milestone option.
7. Is this assumption of risk statutory?
    There was no reference in the statute requiring this level of risk 
sharing. In fact, the statute indicates that the milestone system is 
intended to encourage small providers to be able to financially 
participate and to encourage serving more difficult to serve 
individuals. The current milestone system seems to accomplish neither 
of these objectives.
8. Why did SSA choose to set up the milestone payment program so they 
        are spared the risk?
    The Panel has asked SSA that question on several occasions and 
asked for detailed cost analysis of the risk involved to social 
security with this milestone system and alternates proposed by the 
Panel. To date, no such analysis has been received.
9. How does the resource commitment for EN's differ for the HTS 
        population?
    Resources for this population will be affected in several different 
ways. 1. It is highly likely that this population will by definition 
require more supports or equipment and training during the initial 
training and rehabilitation phase. Some of these costs were addressed 
earlier in this memo. 2. Given the episodic or cyclical nature of many 
of the conditions in this category, it is highly likely that it will be 
much longer before the EN's will receive outcome-based payments for 
this group. 3. The two-for-one offset model utilized by SSI 
beneficiaries will substantially increase the number of months required 
for the individual to leave the roles, thus delaying payment of outcome 
payments. 4. While it is not completely clear at this time, it appears 
that offsets created by Plans for Self-Support (PASS) and Impairment-
Related Work Expenses (IRWEs) will further delay payment.
10. What is needed, more money, different timelines, risk sharing?
    The Panel has recommended that there be an overall increase in the 
amount of funds available in the milestone method. It also recommended 
increasing the amount of milestone payments by adding a payment at the 
signing of the individual work plan (IWP) and another upon leaving the 
rolls. These recommendations will effectively improve the timeliness of 
payments, giving providers more financial capital to work with sooner.
    Original proposals developed for the first Ticket to Work bill 
included some provisions whereby SSA would set aside funds to assist 
individuals who have high up-front costs for such items as: power 
wheelchairs; prostheses; and perhaps, initial down payments toward 
specialized transportation vehicles.
    The Panel has recommended some strategies to share the risk. These 
strategies involve a tiered system that has a separate payment 
methodology for the SSI population and allows for partial payment for 
individuals that may not have left the rolls, but have generated some 
savings.
11. Are the majority of 16-18 year old SSA beneficiaries on SSI?
    Yes, almost all beneficiaries in that age group who are receiving 
disability benefits are on SSI benefits. Specifically, according to the 
biannual report of December 2000 on SSI children, from the Office of 
Research, Evaluation and Statistics, SSA, the following numbers of SSI 
youth are on the rolls: 54,930 16-year olds and 51,960 17-year olds.
    As the law specifies that a redetermination must be done upon 
attainment of age 18, the vast majority of 18-year olds who are 
receiving benefits are adults.
12. Do they receive a Continuing Disability Review (CDR) at age 18 to 
        determine if they still qualify for benefits?
    Upon attainment of age 18, they receive a medical redetermination 
(rather than a CDR) to see if they still meet the disability 
requirements. Currently, under the provisions of the Social Security 
Act, an 18-year old recipient whose redetermination results in a 
decision to cease benefits is protected and benefits are continued, 
only if he or she is participating in a vocational rehabilitation 
program.
13. What percent of them are determined to be no longer eligible?
    In 2000, SSA did 51,716 age-18 redeterminations. Of those, 55.8% 
were continued and 44.2% were ceased. However, it should be kept in 
mind that that cessation rate is for the initial age-18 
redetermination, the continuance rate goes up with appeals.
    We greatly appreciate your interest in the Panel's views on the 
implementation of the Ticket Program. We look forward to a continued 
involvement with the Subcommittee on Social Security. We and the Panel 
as a whole are committed to increasing employment opportunities and 
choices for American citizens with disability who receive Social 
Security benefits. Thank you again for this opportunity. If you need 
any further information or clarification, please contact Ilene Zeitzer 
of our staff at 202-358-6436.
            Sincerely,
                                   Steven L. Start
                                           Member
                                   Frances Gracechild
                                           Member

                                

    Chairman Shaw. Ms. Prokop.

    STATEMENT OF SUSAN PROKOP, ASSOCIATE ADVOCACY DIRECTOR, 
  PARALYZED VETERANS OF AMERICA, ON BEHALF OF CONSORTIUM FOR 
  CITIZENS WITH DISABILITIES, TASK FORCES ON WORK INCENTIVES 
  IMPLEMENTATION, SOCIAL SECURITY, AND EMPLOYMENT AND TRAINING

    Ms. Prokop. Mr. Chairman, members of the Subcommittee, I do 
thank you for providing this opportunity for comment on the 
proposed regulations for the Ticket to Work program.
    My name is Susan Prokop, and I am representing the 
Consortium for Citizens With Disabilities Task Force on Work 
Incentives Implementation. We deeply appreciate the time, 
attention and support you and your colleagues gave to the 
creation of this law. However, we feel the proposed rule falls 
short of the positive impact that you meant for this law to 
have for beneficiaries.
    I am just going to highlight a few of these issues in my 
oral comments. You have our more extensive written statement.
    Two areas of great concern, as you have already heard, have 
to do with the eligibility criteria for the Ticket to Work 
program. The regulations would deny tickets to beneficiaries 
categorized as Medical Improvement Expected and who have not 
yet had their first Continuing Disability Review. Denying 
tickets to people simply because their condition might improve 
ignores a large part of the population who could benefit early 
from this program. Forcing people to wait months or even years 
before gaining access to a Ticket seems contrary to a growing 
body of evidence that supports early vocational intervention 
after a disabling event.
    I think somebody had asked how long does it take between 
the MIE designation and the first CDR, and we have heard 
anywhere from 18 months to 3 years before that first CDR takes 
place.
    The proposed rule would also limit beneficiaries to one 
Ticket per period of disability. Disabilities can be sporadic 
and/or recurring. In combination with other Social Security 
policies that allow an individual back on to the benefit rolls 
under their original disability designation, the one Ticket 
limit seems to preclude eligibility for new tickets in the 
future.
    The law protects beneficiaries using a Ticket from 
Continuing Disability Reviews (CDRs). The Social Security 
Administration has established certain time lines for work 
effort that determine what ``using a Ticket'' means. 
Unfortunately, their approach devalues any work that a 
beneficiary may do in the first 24 months of his or her ticket 
and ignores the difficulties that people with disabilities may 
have in keeping to precise time frames for progress. Our 
written statement identifies some alternative ways for 
beneficiaries to demonstrate timely progress toward an 
employment goal.
    The Ticket to Work program is supposed to offer 
beneficiaries wider choice of vocational rehabilitation 
services beyond the traditional models formerly used. Our task 
force has numerous reservations about the regulatory and 
administrative burdens placed by the proposed rule on 
employment networks as well as the inadequacy of the proposed 
payment system to attract prospective providers.
    The fundamental problems with the payment system are too 
extensive to enumerate in this short time. Suffice it to say 
that the payment system SSA has established will not work in 
either the total amount of payment available or payout schedule 
for milestones and outcomes; and it will be particularly 
harmful to those beneficiaries deemed the hardest to serve, 
those on SSI.
    If providers determine that the ticket payment systems are 
insufficient, that the requirements to serve as an employment 
network are too complex and expensive, or if Social Security 
Administration and the program manager just fail to recruit 
enough employment networks, beneficiaries are not going to have 
the choice that the law was meant to give them.
    Other impediments to consumer choice are the proposals for 
automatic assignment of a Ticket to a State's vocational 
rehabilitation agency when a beneficiary seeks services under 
Title I of the Rehab Act and a cancellation of a Ticket 
whenever services are rendered by VR to a beneficiary. At a 
minimum, beneficiaries seeking services from a State vocational 
rehab agency should be informed before they sign any agreement 
with the vocational rehab agency about the impact that this 
will have on his or her ability to use a Ticket in the future.
    Our task force has identified other issues in the proposed 
rule that could affect beneficiaries' ability to take full 
advantage of the Ticket program. These include the need for 
enhanced due process protections in resolving disputes with 
employment networks as well as the critical need for SSA to 
address its inability to track wages and adjust benefit levels 
when working beneficiaries report their earnings. We would also 
draw your attention to our comments about the 2 for 1 
demonstration program and the issues surrounding disabled adult 
children as these too will have a significant impact on the 
success of Public Law 106-170.
    I appreciate your time and attention and interest in the 
implementation of the law, and I will be happy to try and 
answer questions at such time.
    Chairman Shaw. Thank you.
    [The prepared statement of Ms. Prokop follows:]

   Statement of Susan Prokop, Associate Advocacy Director, Paralyzed 
    Veterans Association, on behalf of Consortium of Citizens With 
  Disabilities, Task Forces on Work Incentives Implementation, Social 
                 Security, and Employment and Training

    Mr. Chairman and members of the Subcommittee, thank you for 
providing this opportunity for comment on the proposed regulations for 
the Ticket to Work Program under Public Law 106-170. We, the 
undersigned members of the Consortium for Citizens with Disabilities 
Task Forces on Work Incentives Implementation, Social Security and 
Employment and Training, are pleased to share with you our observations 
concerning the proposed regulations for the Ticket to Work program 
published in the Federal Register on December 28, 2000.
    Our task forces deeply appreciate the time, attention and support 
that you and your colleagues gave to the creation of the Ticket to Work 
and Work Incentives Improvement Act. Like you and all the advocates for 
this legislation, we believe that the objectives of the new Ticket 
program include: encouraging people to work or attempt to work without 
fear of permanently losing needed supports; encouraging providers to 
serve people with Tickets; and expanding the pool of potential 
providers of rehabilitation services, including non-traditional 
providers.
    While we recognize the time pressure under which the Social 
Security Administration operated to produce these proposed regulations, 
we are nevertheless concerned that there are a number of issues 
contained in the regulations that would prevent fulfillment of one or 
more of the important purposes of the program.
(1) Impact of Medical Improvement Expected [MIE] Designation on 
        Eligibility
    The Ticket to Work regulations in Section 411.125 would provide 
tickets to all beneficiaries with disabilities, except for those people 
who are categorized as ``medical improvement expected'' (MIE) and who 
have not yet had their first continuing disability review (CDR) finding 
them still disabled. We find this inappropriate for several reasons.
    Studies overwhelmingly demonstrate the value of returning someone 
to the workforce as soon as possible following a disabling event. This 
was confirmed in a very recent GAO report, SSA Disability: Other 
Programs May Provide Lessons for Improving Return-to-Work Efforts, GAO-
01-153 (Jan. 2001). In addition, Congressional interest in providing 
early intervention was expressed at a House Ways and Means Subcommittee 
on Social Security hearing which was held on July 13, 2000, Challenges 
Facing Social Security Disability Programs in the 21st Century.
    To deny tickets to people simply because improvement in their 
condition is ``expected'' ignores a large part of the population who 
could benefit from the ticket program. This approach is inconsistent 
with the intent of Congress to allow people to get to work as soon as 
possible. The initial draft regulations distributed at the November 
2000 Work Incentives Advisory Panel meeting contained no such exclusion 
of MIE designees from the Ticket program. We are mystified by SSA's 
decision to include this policy in the proposed rule.
    A Work Incentives Advisory Panel working group paper distributed at 
the Panel's February 2001 meeting cited disability determination 
service files showing that approximately 43,000 individuals are 
designated MIE each year. Approximately 6,900 of those beneficiaries 
are ultimately dropped from the benefit rolls for medical improvement 
reasons. This means that over 36,000 beneficiaries remain on the rolls 
after their first CDR. SSA seems intent on denying over 36,000 
beneficiaries the opportunity to access the Ticket program quickly in 
order to avoid the possibility that 6,900 beneficiaries might get off 
the rolls anyway. Adding to the inequity of this policy is the fact 
that many of those 6,900 terminated after their first CDR will 
nevertheless return to the disability rolls at a later date and thus 
qualify for the Ticket program, albeit under circumstances that may 
make it more difficult for them to find employment.
    Furthermore, just because an individual has been designated MIE 
does not mean that he/she can do without the assistance of 
rehabilitation providers to maximize work capacity. The approach 
ignores the rehabilitation benefits that the individual may receive 
from appropriate services. These services may assist the individual to 
acquire work skills and job placement that will be more successful over 
the long run, thus preventing a later return to the disability program.
    Finally, under current law, the designation of MIE has no legal 
implications regarding the granting of benefits to or withholding of 
benefits from an individual. The MIE designation merely triggers the 
timing of a CDR. Indeed, a state agency disability examiner has great 
discretion in scheduling that first CDR, which could occur many years 
after the designation.
    If the MIE designation is going to be used to deny a benefit such 
as the Ticket, further rulemaking will be necessary to better define 
the category and set standards for designation. Otherwise, this rather 
loosely defined and arbitrarily applied standard would have a 
significant effect on the beneficiary regarding whether the right to 
take advantage of the ticket provisions. Additional regulatory changes 
would be required to provide for due process and the right to appeal 
adverse decisions. The MIE designation should be considered an 
``initial determination'' that is subject to administrative and 
judicial review. This would require a change to existing regulations.
(2) Ticket Eligibility for Beneficiaries Under Age 18
    The proposed rule would limit eligibility for Tickets to 
beneficiaries age 18 and older. Numerous questions have been raised 
about statutory redeterminations for 18 year old beneficiaries entering 
the adult SSI system. However, we understand that SSA is evaluating the 
process used by state disability determination services for conducting 
these required redeterminations. This project is being done with the 
American Association of University Affiliated Programs and, until SSA 
has had an opportunity to assess the outcome of the project, we believe 
it may be premature to lower the age of eligibility for tickets. 
Therefore, we believe that, at this time, the ticket eligibility age 
should remain at 18 pending the results of the AAUAP project.
(3) One Ticket Per Period of Disability
    No limits should be placed on the number of Tickets a person can 
receive over the course of a lifetime, as long as a person is not using 
more than one at a time. People eligible for SSDI have very severe 
disabilities preventing them from working consistently or for long 
periods of time the first time they attempt to work. Limiting the 
number of Tickets as proposed in Section 411.125[b] ignores the fact 
that disabilities can be sporadic, episodic, and lifelong. It also 
overlooks the fact that some people will need additional job training 
and placement assistance when unexpected events occur outside their 
control, such as the bankruptcy of an employer, loss of a job through 
lay-off or restructuring, or family re-location.
    The proposed rule appears to allow one ticket during any one period 
of disability. Unfortunately, when this is combined with SSI's 1619[b] 
program and the provision for expedited reinstatement of benefits that 
became effective January 1, 2001, it seems to preclude eligibility for 
new tickets in the future since the individual is ``reinstated'' to the 
benefit rolls under the original disability designation. To ensure that 
this limitation is not read to mean one ticket per individual's 
lifetime, clarification is needed from the Social Security 
Administration (SSA).
    Another troubling aspect of the limitation of one ticket per period 
of disability relates to individuals who have used a substantial 
portion of a ticket and then must return to the disability program. We 
believe there should be, after a reasonable time period, an opportunity 
for a beneficiary to get a fresh start with a new ticket to try again 
to enter the workforce. Otherwise, people with very severe disabilities 
will have only one chance for success, a result we believe is contrary 
to Congressional intent.
(4) ``Timely Progress'' and Continuing Disability Reviews
    The law states that, ``beneficiaries shall not be subject to 
Continuing Disability Reviews as long as they are using (as defined by 
the Commissioner) a Ticket-to-Work.'' Under the proposed rule [Section 
411.191], SSA has established a timeline that determines what ``using a 
Ticket'' means. Once they assign their ticket, beneficiaries have up to 
2 years to prepare for employment and must show they are ``actively 
participating in their Individual Work Plan (IWP) or Individual Plan 
for Employment (IPE) i.e., engaging in activities outlined in one's 
work plan on a regular and timely basis. After 2 years, beneficiaries 
are required to demonstrate increasingly greater levels of employment 
to be considered ``using a ticket'' in order to receive protection from 
CDRs.
    As even SSA acknowledges, progress toward self-sufficiency is not 
always continuous and that for some, self-sufficiency may not be 
attained. Many beneficiaries have disabilities that have cycles of 
relapse and remission. The requirements for only 3 months work at SGA 
out of 12 in the third year and 6 months out of 12 in succeeding years 
recognizes that some beneficiaries may not be able to work on a 
continuous basis.
    Many beneficiaries have episodic and intermittent disabilities. 
Some people may take longer to enter the workforce while others may be 
able to work sooner but may experience difficulties later. It is unfair 
to discount work efforts by those who can work earlier. In addition, 
the proposed rule fails to take into account individuals who may work 
at increasing levels of income or hours, but take longer to reach the 
SGA earnings threshold.
    The Task Force believes SSA should allow beneficiaries to ``bank'' 
months of work that may take place in the first 24 months to count 
towards the work requirements in later years. In year 5 and thereafter, 
we also support allowing work beyond the required six-months to count 
toward the next year's requirement. Finally, we recommend that 
increasing amounts of work or earnings, even if below SGA, be evaluated 
as meeting the definition of ``progressively higher levels of 
employment'' in order for a person to keep their CDR protection.
(5) Employment Networks
    Employment network [EN] qualifications set out in the law are 
fairly general. Those of us who helped to develop the legislation were 
determined not to impose any arbitrary barriers to entities wishing to 
serve an individual who wants to go to work. A major objective of the 
Ticket to Work program was to get away from the heavy reliance on state 
vocational rehabilitation agencies and traditional rehabilitation 
models which, in fact, did not work for many people. It was 
particularly important that ENs not be limited by licensing or 
certification criteria unrelated to their mission.
    Section 411.315, which sets out EN minimum qualifications, has a 
number of troubling aspects as currently constituted. The language 
seems to imply that employment networks must provide health and medical 
services and includes stipulations that an EN must have ``applicable 
certificates, licenses or other credentials if such documentation is 
required by state laws . . .'' Where a profession requires licensing or 
credentialing under state law, such a requirement is certainly 
reasonable. However, SSA should avoid giving the impression that all 
employees or contractors of ENs have to be licensed or credentialed. 
Also reasonable would be any business licensing or regulatory 
requirements ordinarily imposed on an entity that seeks to become an 
EN. For example, proper guidelines regarding proof of the business as a 
taxpaying, registered entity under federal and state law would 
obviously be appropriate.
    SSA should avoid the interpretation that only state certification 
or licensing will qualify an entity as an EN. Instead, SSA should make 
it clear that there are any number of avenues by which a provider can 
qualify as an EN: certification or licensing under applicable state 
law; credentialling under other nationally recognized standards; or 
education or experience in successful employment of people with 
disabilities. What must remain the key criteria is whether the entity 
is capable of successfully providing the service agreed to by the EN 
and the beneficiary.
    Questions have arisen in various discussions about ENs whether 
families or personal support networks could serve as an EN. If the 
family or group of friends can meet the requirements of an EN, then 
they should be able to serve as an EN. However, we suspect that a 
beneficiary's family or friends would be in a better position to 
associate themselves with or subcontract with an EN to provide services 
to an individual, particularly if the extent of their services are 
limited to that individual. We believe that such arrangements should be 
allowed through individual arrangements with an EN.
    Our task force has several reservations about the payment, 
regulatory and administrative burdens placed by the proposed rule on 
prospective ENs that point to an overarching concern about the overall 
adequacy of employment networks available to serve consumers. If 
potential providers determine that the Ticket payment systems are 
insufficient, that the requirements to serve as an EN are too complex 
and expensive or if SSA and the PM simply fail to recruit enough 
providers, beneficiaries will not have the choices that the Ticket 
program was meant to give them. The very first charge given to the 
program manager by PL 106-170 is ``recruitment of employment 
networks.'' We believe that, in addition to the program manager 
evaluation criteria listed in Section 411.250 of the proposed rule, SSA 
should add ``recruiting sufficient employment networks to serve a broad 
spectrum of beneficiaries in each state in which the Ticket is 
operative.'' Clearly, assuring choice of services to beneficiaries is a 
key responsibility of the PM and it should be judged on its success in 
that arena. Furthermore, the proposed rule vests authority for this 
review of the PM solely with a few officials at SSA. We recommend that 
the Work Incentives Advisory Panel be given a specific role in 
evaluation of the PM.
    Section 411.321 of the proposed regulations lists conditions under 
which SSA will terminate an agreement with an EN due to inadequate 
performance. Under the terms of this section, an agreement between SSA 
and an EN may be terminated if the EN fails to fulfill its 
responsibilities outlined under Section 411.320, including achievement 
of ``minimum performance standards relating to beneficiaries achieving 
self-supporting employment and leaving the benefit rolls'' or if the EN 
does not comply with the reporting requirements of Section 411.325. One 
component missing from this list is customer satisfaction. SSA should 
ensure that the views of consumers, through its evaluation process, are 
considered as part of a termination decision.
    Section 411.330 describes how an EN's performance is to be 
evaluated. SSA says it will ``periodically review'' an EN's work ``to 
ensure effective quality assurance in the provision of services'' and 
that it will ``solicit and consider the views of the consumers the EN 
serves and the PM which monitors the EN.'' We believe that SSA should 
elaborate on those quality measures that will be used to assess an EN's 
provision of services and should, instead of ``periodically reviewing'' 
EN work, do so on a specific schedule. Furthermore, we believe that SSA 
should make an effort not only to solicit and consider the views of 
beneficiaries served by the EN but also those rejected by the EN for 
service.
(6) Vocational Rehabilitation Issues
    SSA proposes under Section 411.385 that, when a beneficiary signs 
an individual plan for employment or IPE with a state vocational 
rehabilitation agency [VRA] under the Rehabilitation Act, his or her 
Ticket will be considered ``assigned'' to that agency. SSA further 
proposes at 411.585 that payment for services by a VRA under Title I 
precludes payment for services provided by an EN and that payments to 
an EN cancel out the ability of a beneficiary to have the state VRA pay 
for services needed by that individual.
    The Ticket to Work Program is intended to enhance consumer choice 
and many of our members' are concerned that forcing a beneficiary to 
assign his/her Ticket to a state VRA or prohibiting payments to VRAs or 
ENs when a beneficiary seeks services from either negates that choice. 
In addition, this policy directly conflicts with the voluntary nature 
of the Ticket program stated in Section 411.135. If a beneficiary is 
truly ``free to choose when and whether to assign'' the Ticket, as 
stated early in the proposed regulation, the later sections regarding 
automatic assignment of the Ticket when a beneficiary goes to a state 
VRA seem inconsistent with that principle.
    At a minimum, state vocational rehabilitation agencies should be 
required to inform a beneficiary seeking services from the VRA, prior 
to any signing of an IPE, about the impact that this will have on his/
her ability to use a Ticket in the future. Moreover, beneficiaries 
should be informed that they are entitled to 60 months of services 
under the Ticket whereas VRAs need only provide 9 months of services 
under the cost reimbursement system. This situation, of course, could 
be alleviated by revising the policy governing one Ticket per period of 
disability.
    In addition, SSA would have agreements between ENs and state VRAs 
state ``the terms and procedures under which the EN will pay the State 
VR agency for providing services.'' We disagree with this proposal and 
have urged its removal from the final rule. As written, SSA is assuming 
that ENs will always pay a state VRA for its services when, in fact, 
many VRAs pay contractors for services. In addition, SSA seems to 
assume that the Ticket to Work Program and VRAs pay for identical 
services. This is not the case. As noted above, the Ticket is meant to 
pay for long term supports to help a beneficiary maintain productive 
employment over the course of 60 months. VR considers a case 
successfully closed after 90 days of employment and collects payment 
under the cost reimbursement system after nine months of employment at 
or above SGA. SSA should not dilute the impact of the Ticket by 
continuing this policy.
(7) Payment Systems
    The proposed regulations under Subpart H offer two methods, as 
required by the law, to compensate providers for an individual's 
success at employment by paying them a portion of cash benefits that 
would no longer be paid to the individual. The first method is the 
outcome payment system which pays a provider for months in which 
benefits are not paid to the beneficiary because he/she is earning 
above the substantial gainful activity level [SGA]. A milestone-outcome 
payment system was added to the original Ticket program by 
Congressional authors to encourage providers to serve the ``harder-to-
serve'' population.
    There are numerous fundamental problems with the payment system 
proposed by SSA in its draft rule. First is the very large difference 
in the total payment value of the Ticket between the outcome payment 
method and the milestone-outcome payment method. This differential is 
best illustrated by comparing the overall outcome payment for DI 
beneficiaries at $16,000 and the overall outcome-milestone payment for 
SSI beneficiaries set below $10,000.
    Second, SSA would require that the funds paid out as milestones be 
paid back by the EN within the first 12 outcome payments. Backloading 
the outcome payments in the milestone system means that monthly outcome 
payments in the first year are three times lower than those in the 
fifth year. One result is that, if someone leaves an EN after 45 
months, for example, the EN may lose the bulk of reimbursement from 
SSA. This will discourage smaller, less well-capitalized providers from 
participating. The outcome payments in the milestone system should be 
spread evenly over the five-year period.
    Third, the milestone payments for both SSI and SSDI beneficiaries 
under the milestone-outcome system are far too low. Milestone payments 
were to be set at a total amount below the outcome payment system in 
order to control cost estimates of the legislation as it proceeded 
through Congress. Those of us who participated in the development of 
the Ticket program expected the milestone-outcome payment to be set as 
close as possible to the outcome payment amount. Advocates, and, we 
believe, Congressional drafters, expected the milestone-outcome payment 
to be established as close as possible to the outcome payment amount. 
Since the outcome payment system is initially limited to 40 percent of 
the average disability benefit, the milestone-outcome payment limit 
should have been set at a level reflecting only a minor reduction in 
order to comply with the law. Specifically, the milestone-outcome 
payment would be set at 99 percent of the overall outcome payment, not 
at the 85 percent level set in the proposed regulations (Sec. 
411.525(b)). (Translated to the average benefit level, with the current 
outcome payment set at 40 percent of the average benefit, the 
milestone-outcome payment should be set no lower than 39 percent of the 
average benefit, not the approximately 34 percent level established in 
the proposed regulations.) We have recommended to SSA that the 
milestone-outcome payments be set at a level equal to 99 percent of the 
outcome payment level.
    Both the number and the amount of dollars in the milestones are 
inadequate to attract employment Networks. The first milestone comes 
too late in the process. A more effective arrangement would be a 
milestone after a beneficiary is placed in a job followed with 
milestones based on continuous employment. The milestone payments 
should be of sufficient amount to enable ENs which are not major 
organizations or corporations to bear the risk.
    Additionally, both milestone-outcome and outcome payment systems 
treat SSI and SSDI beneficiaries the same, despite the fact that 
benefits are paid in completely different ways under the two programs. 
SSA makes no accommodation for the fact that SSI benefits can be 
partially offset by earnings. Consequently, SSI beneficiaries are 
disadvantaged by the proposed rule.
    The payment system SSA has established will not work in either the 
total amount of payment available or payout schedule for milestones and 
outcomes. Therefore, we recommend that SSA consult with experienced 
milestone payment providers and re-design the milestone-outcome payment 
system. This system must be flexible enough to meet the needs of a 
diverse group of people with differing disabilities. We further 
recommend that SSA consider offering not only a structured milestone 
approach but also allow for individualized milestones approved by the 
Program Manager for individuals for whom the structured milestones do 
not work. SSA must design the milestones in a manner that will attract 
providers to serve people with more severe disabilities and in need of 
greater supports. We have urged SSA to test and experiment in this 
early phase of the Ticket program to determine if the milestones are 
serving their intended purpose.
(8) Outcome Payments Under SSI
    We especially wish to highlight the problem involving the outcome 
payments (including milestone-outcome payments) system as it affects 
SSI beneficiaries. The average federal SSI benefit is substantially 
lower than the average federal SSDI benefit. As referenced in the 
preceding section, the milestone-outcome payments and the outcome 
payments for SSI beneficiaries will be much lower than those for Title 
II beneficiaries. Employment networks may be disinclined to serve SSI 
beneficiaries if SSA does not address this problem in the regulations. 
For example, SSA could use its demonstration authority to test a 
variety of approaches including making the milestone and outcome 
payments ``richer'' for SSI beneficiaries and/or encouraging states to 
contribute a portion of the state share of SSI to the payment.
    SSA should also undertake, as soon as possible, the research 
necessary for the Report on the Adequacy of Incentives. Our task force 
has identified this report as a key initiative to assure that certain 
people with severe disabilities are able to participate fully in the 
ticket program. The four groups of people identified in the law whose 
circumstances must be addressed in this report include: people with a 
need for ongoing supports and services; people with a need for high-
cost accommodation; people who earn a sub-minimum wage; and people who 
work and receive partial cash benefits.
    The information needed for this study must be collected in the 
initial implementation of the Ticket program. By doing so, the final 
report will include valid and reliable data upon which to identify ways 
to adjust payment rates which will offer the desired and necessary 
incentives to providers to serve all individuals eligible for the 
ticket program. For example, SSA could ask the Program Manager to 
collect information from ENs about ticket holders they decline to 
serve, including why the service was declined. If this information 
reveals certain trends in ticket experience of the four groups of 
individuals to be studied, it may help frame constructive solutions to 
any problems identified.
(9) Overpayment Issues
    For the ticket program and all other work incentives to succeed, 
SSA must do something about its current inability to track wages and 
adjust benefit levels when working beneficiaries report earnings. As 
the system now operates, chronic overpayments to beneficiaries 
represent a major threat to the Ticket program. Beneficiaries are so 
fearful of overpayments and the notices from SSA that go with them that 
the ticket program could fail unless SSA can establish a reliable, 
efficient, beneficiary-friendly method of collecting and recording in a 
timely manner information regarding a worker's earnings.
    Under section 411.575, the proposed rule imposes a number of 
reporting requirements on employment networks in order for these 
providers to be paid. These requirements serve to highlight the 
longstanding inability of the agency to track earnings properly and 
quickly and to adjust benefits accordingly. This section offers an 
opportunity to instill greater responsibility on SSA to improve its own 
administrative processes with regard to information concerning 
beneficiary earnings information. Specifically, we believe that 
provider reports sent to the PM on beneficiary income and earnings 
should have to be forwarded by the PM to SSA within 30 days. Once the 
agency receives a request for payment to an EN from the program 
manager, SSA should have no more than 60 days to adjust a Ticketholders 
benefits check and, if called for, make payment to the EN. If the 
agency fails to stop benefits within that timeframe, it cannot hold the 
beneficiary liable for overpayment and it should have to pay the EN as 
though the beneficiary was off the rolls.
(10) ENs Ability to Submit Evidence Against Beneficiary
    We find two issues contained within the section on what an EN can 
do if the EN disagrees with a decision by SSA on a payment request very 
troubling. Section 411.590(d) reads: ``If an appeal by a beneficiary 
regarding entitlement or eligibility for disability benefits results in 
a revised determination, our revised determination could affect the 
EN's payment or result in an adjustment to payments already made to the 
EN. While the EN cannot appeal our determination about a beneficiary's 
right to benefits, the EN may furnish any evidence the EN has which may 
support a change in our determination on the beneficiary's appeal.'' 
(emphasis added)
    First, this indicates that ENs may be subject to overpayments and 
may have to reimburse SSA for payments that were improperly made. As we 
discussed above, unless SSA addresses the serious problems with its own 
deficient income reporting and recording systems, continued 
overpayments to beneficiaries will continue to be a serious 
disincentive to work. Overpayments to ENs may likewise serve as a 
disincentive for providers to serve as ENs.
    However, even more distressing is the encouragement given by SSA to 
ENs to turn against beneficiaries if the ENs are unsuccessful in 
disputes with SSA over whether payments are due to the EN. Should an EN 
lose its dispute with SSA, the only alternative SSA offers is for the 
EN to submit evidence against the beneficiary in the beneficiary's 
claim for cash benefits. This approach creates the potential for a 
serious conflict between the beneficiary and the EN in a contractual 
arrangement where the beneficiary needs to trust that the EN is working 
in the beneficiary's best interest in job preparation, placement, and 
follow-up. Needless to say, beneficiaries and ENs should be expected to 
present truthful information and evidence to SSA at all times and ENs 
should be prepared to submit accurate information whenever requested by 
SSA. However, inclusion of this suggested approach in a section 
regarding ENs' options in case of an unfavorable decision by SSA 
creates an adversarial tone and establishes a fissure in the 
contractual relationship between beneficiaries and ENs at the outset.
(11) Dispute Resolution
    We are concerned that the proposed dispute resolution provisions do 
not adequately protect the due process rights of Ticket-users. The 
provisions give no clear guidance to EN's on what constitutes an 
acceptable or even model grievance procedure. It appears that 
development of a grievance procedure is left to the sole discretion of 
the EN, opening the door for a great deal of variance between EN's. 
This would result in disparate treatment of Ticket-users and require 
the PM to understand and track compliance with potentially thousands of 
different procedures throughout the country. Provision of a model 
grievance procedure that ENs could adopt or adapt [within a framework 
of minimum requirements such as opportunities for face-to-face meetings 
between a beneficiary and EN representative] would ensure consistency 
for Ticket-users. Such a model should be developed bearing in mind its 
use by small ENs.
    We applaud the requirement that EN's provide beneficiaries with a 
copy of the internal grievance procedure initially and when there is a 
dispute (Sec. 411.605). In addition to requiring the EN to inform 
beneficiaries of the availability of assistance from the state P&A in 
resolving disputes, the EN should be required to provide the 
beneficiary with a list of other representation that may also be 
available to them. SSA field offices routinely keep a list of 
representatives that are available in the local community and could 
easily provide their local EN's with this information.
    The provisions related to the PM or SSA review in a dispute are 
extremely worrisome because of the limited interaction with the 
beneficiary. The proposed rules (Sec. Sec. 411.615 and 411.655) merely 
require either the PM or SSA to obtain records from the EN or PM and do 
not require either to directly contact the beneficiary for input. The 
EN and PM are merely required to provide a summary of the positions. 
The EN provides a summary to the PM of a beneficiary's position in the 
dispute. Given that a dispute between the EN and beneficiary already 
exists, a conflict of interest arises in asking the EN to present the 
beneficiary's position. Unlike attorneys and other authorized 
representatives who practice before SSA, not all ENs are subject to 
ethical or professional responsibility rules. Sections 411.615 and 
411.655 should require the PM and SSA to contact the beneficiary for a 
statement of his/her position in the dispute and provide the 
beneficiary and his/her representative an opportunity to review the 
information submitted by the EN and to dispute it.
    In addition, Sec. 411.625(b)(3) should require the PM to provide 
all evidence submitted by the EN and the beneficiary to SSA. The PM 
should not be given the discretion to decide what evidence is relevant 
or what is not. That decision should be left with the final decision 
maker.
    Other concerns we have with the proposed regulations are listed 
below.
     There is no requirement that a beneficiary be provided 
with a face-to-face meeting with the PM or SSA to resolve any disputes. 
Face-to-face meetings can be more meaningful than a paper review of an 
administrative record. Such meetings provide all parties with an 
opportunity to correct any misunderstandings or miscommunication that 
may have arisen and provides a beneficiary with due process provisions. 
While it may be difficult for the PM to provide an opportunity for a 
face-to-face meeting, one could be provided by SSA at the local field 
office, similar to what is provided for overpayments.
     Insufficient time is provided in Sec. 411.625 for a 
beneficiary to file a request for review by SSA with the PM. It may be 
extremely difficult for a beneficiary, especially those with mental 
impairments or developmental disabilities, to request review within 15 
working days or to find representation within such a short period of 
time. The shortened time period for filing a request for review is 
inconsistent with the time standards (60 calendar days) normally used 
by SSA. To avoid beneficiary confusion, the time period for an EN or 
beneficiary to request review should be 60 days. Disputes over the date 
of receipt will arise and this is not addressed by the regulations. 
Given that the PM is located in McLean, Virginia and has not firmly 
announced plans to outstation TTWWIIA specialists in offices across the 
country to handle these disputes, a standard seven-day for receipt of 
mail should be assumed. (The U.S. Postal Service on average, takes five 
to seven days to deliver mail from the east coast to the west coast, 
excluding Hawaii and Alaska.)
     The time periods imposed by SSA on actions taken by the EN 
and PM should be retained and should go further in requiring SSA to 
render its final decision within 60 days. (Sec. 411.630)
    Two other matters we would like to raise with the Subcommittee are 
not directly related to the Ticket regulations. However, they will have 
a significant impact on the success of P.L. 106-170. These are the so-
called 1 for 2 demonstration and the status of disabled adult children 
or DACs under this law.
(12) $1 for $2 Demonstration
    The task force considers this demonstration a critical part of the 
law. For many SSDI beneficiaries, the cash cliff in Title II remains a 
real barrier to work. The demonstration must begin soon if it is to 
provide useful data to help Congress decide whether the sliding scale 
offset should be made available to all Title II beneficiaries with 
disabilities who want to work. There has been some discussion that SSA 
might test the value of starting the $1 for $2 offset below the SGA 
level. If so, we urge that such offset be offered to the beneficiary on 
a voluntary basis. There may be people with disabilities who would 
voluntarily accept the reduction beginning below SGA as a trade-off for 
the security of knowing that their benefits would continue and would 
fluctuate to complement their fluctuating earnings. Otherwise, SSA 
would be reducing benefits to which people are otherwise entitled under 
the current law.
    We hope SSA will move expeditiously to design and implement this 
demonstration program. In addition, we have urged SSA to consult with 
experts in the various disability populations to ensure that the 
demonstration has the capacity to work for the people intended to be 
served.
(13) Disabled Adult Children
    This task force has discussed with SSA on a number of occasions 
several issues involving ``disabled adult children'' or (DACs) must be 
addressed if the Ticket program is to be successful. A ``disabled adult 
child'' who leaves the Title II program as a result of earning above 
SGA after the extended period of eligibility (EPE) has expired loses 
``disabled adult child'' status for life. The benefits earned by the 
parent for the disabled adult child (severely disabled since childhood) 
are permanently lost. There is no re-entry to DAC status under SSA's 
current policy and interpretations. We believe that this must be 
corrected. TTWWIIA clearly meant for disabled adult children to move in 
and out of the program just as other people with disabilities would be 
allowed to do so. Statutory language for disabled adult children is 
reflected throughout TTWWIIA. SSA needs to ensure that its policies 
support that goal.
    We also understand that SSA's interpretation regarding the value to 
be placed on a worker's work effort (regarding whether it exceeds SGA 
or not) is different for people in supported employment depending upon 
whether the individual is supported directly by an employer or whether 
the individual is supported by services from an outside source, such as 
a state-funded supported employment agency. As a result, an 
individual's work effort could be found to exceed SGA when the support 
is from a third party while that same work effort could be found not to 
exceed SGA when the support is from the employer. From the perspective 
of the individual, this is an arbitrary distinction. Further, there may 
be additional complications in that the nature and scope of the support 
provided to the individual may be misunderstood when making the 
valuation of work effort. For instance, while the individual may be 
performing the actual task (bagging groceries, assembling a package, 
etc.), it may be that the individual would be unable to perform the 
task without the help of the job coach in ensuring that the individual 
arrives at work on time properly attired, that he/she interacts 
appropriately with customers and co-workers, and that he/she remains 
focused on the assigned job tasks, among other things. We believe that 
this is an area that also needs further examination if work incentives 
are to work as intended by TTWWIIA.
    Again, on behalf of the CCD Task Forces on Work Incentives 
Implementation, Social Security and Employment and Training, we thank 
you for providing this opportunity for us to comment on the Ticket to 
Work regulations. We look forward to working with this subcommittee in 
the future on efforts to strengthen Social Security and its disability 
insurance programs.

American Association of University Affiliated Programs
American Congress of Community Supports and Employment Services 
        [ACCSES]
American Foundation for the Blind
American Network of Community Options and Resources [ANCOR]
American Occupational Therapy Association
Association for Persons in Supported Employment
Brain Injury Association
Easter Seals
Helen Keller National Center
International Association of Business and Industry [I-NABIR]
International Association of Psychosocial Rehabilitation Services
National Alliance for the Mentally Ill
National Association of Developmental Disabilities Councils
National Association of the Deaf
National Association of Protection and Advocacy Systems
National Council for Community Behavioral Health Care
National DeafBlind Coalition
National Mental Health Association
National Multiple Sclerosis Society
National Organization of Social Security Claimants' Representatives
National Senior Citizens Law Center
NISH
Paralyzed Veterans of America
The Arc of the United States
The Epilepsy Foundation
United Cerebral Palsy Associations

                                

    Chairman Shaw. Mr. Harles.

  STATEMENT OF CHARLES WM. HARLES, EXECUTIVE DIRECTOR, INTER-
 NATIONAL ASSOCIATION OF BUSINESS, INDUSTRY AND REHABILITATION

    Mr. Harles. Good afternoon, Mr. Chairman. My name is 
Charles Harles; and I am the executive director of the Inter-
National Association of Business, Industry and Rehabilitation. 
I-NABIR is made up of about 109 organizations around the 
country that provide training and placement services to persons 
with disabilities, and our members are quite diverse in their 
nature. We have community colleges, we have more traditional 
rehab providers, we have unions, we have employers among our 
membership, and you may have even noticed on our stationery we 
list some of the thousands of businesses who serve on our 
Business Advisory Councils and have actually hired the persons 
from our programs.
    The Ticket to Work and Work Incentives Improvement Act was 
written to remove the most serious disincentives to work and 
give beneficiaries who wanted to work access to the services 
that will help them go to work.
    I guess the real question is, we are--already, 14 months 
after the passage of the bill that you and members of this 
Subcommittee in particular worked so hard to help us achieve, 
we are concerned that the law is really yet to be implemented 
and that there are serious problems that we think have to be 
overcome before the congressional intent of the law can be 
realized. We are hopeful that the Advisory Panel's 
recommendations will be utilized by Social Security 
Administration and that that will, hopefully, go far in meeting 
those needs.
    A couple of the particular issues that we are concerned 
about, though, is the fact that there need to be Qualified 
Employment Networks in place before the Tickets are distributed 
to the beneficiaries; and, number two, as you have heard from a 
couple people already, the milestone/outcome payment must be 
adjusted to meet, again, the original congressional intent.
    It is our understanding that the Social Security 
Administration plans to issue over 2.3 million Tickets to 
beneficiaries over the next several months in the 13 start-up 
States, even though there really is not a way for 
organizations, other than a relatively few alternative 
participants who had qualified under an earlier program and the 
State rehabilitation programs, to become an Employment Network. 
If the tickets are to be distributed now or in the next few 
weeks, only the State vocational rehabilitation agency and that 
small number of alternative participants would be able to 
accept the tickets. We think that to issue tickets without 
sufficient employment networks will only frustrate the 
successful implementation of the Act.
    Even if the Social Security Administration were to begin 
processing the approval of Employment Networks soon, we still 
have concerns about the qualifications that they would require. 
There is clear congressional intent that the universe of 
service providers be expanded and that nontraditional providers 
be included so that all beneficiaries could be given maximum 
choice in who they will go to to get services that will help 
them go to work. What we see in the proposed regulations and in 
a draft request for proposals from Social Security concerns us.
    The proposed regulations would seem to restrict eligibility 
for the Employment Networks to those that meet State 
certification and licensure requirements. The proposed rules 
would tend to restrict Employment Networks to State VR agencies 
and their contractors. State licensure and credentials should 
only be required where such credentialing and/or licensure is 
required to provide specific services to any individual in the 
State. The regulations should differentiate between being 
certified to provide services to those through a State agency 
for licensure from those that would be required for any 
provider.
    The specific education requirements noted in the proposed 
regulations might not be appropriate, for instance, where an 
organization such as many of our members are what we call 
Projects With Industries that are funded by the Department of 
Labor and the Department of Education, and they tend to use 
personnel from the business community, not people that 
necessarily have rehabilitation backgrounds, to be their job 
developers and their job coaches and other really important 
positions. Many of these PWIs have a strong track record in 
successfully placing these persons with severe and multiple 
disabilities. So we want to make sure that these organizations 
that have proven track records but may not be, if you will, 
traditional rehabilitation providers can fully participate in 
the program.
    The milestone payment system as proposed by the Social 
Security Administration just really isn't acceptable. I think 
you have heard that from several people here. The payment 
calculation base that they start from we think is too low. It 
is certainly lower than what we had anticipated when we were 
testifying on this legislation over the past several years.
    The fact that they cut it back to 85 percent of the 
outcome-only system, where the law only required that it be 
less than the outcome payment, we think that that went much 
further than necessary in cutting back the potential payback to 
the Employment Networks who participate in the program. And the 
number of milestones is inadequate in that the amounts payable 
and the fact that you have to repay them during the first 12 
months--even if you get this advance, of these milestones, you 
have to pay them back within 12 months, so you get extremely 
little payment for that first year of outcome payments under 
the scheme that the Social Security Administration has proposed 
at this point.
    We see State vocational rehabilitation agencies as an 
important player in the Ticket to Work program but not at the 
expense of other organizations which beneficiaries may want to 
use in providing services to help them go to work. Social 
Security is proposing that when the beneficiary signs a plan as 
defined under the Rehab Act, the beneficiary has automatically 
assigned the Ticket to the State VR agency.
    Again, the hallmark to the Ticket to Work legislation was 
consumer choice, and we think that it is important that people 
that are going to vocational rehabilitation realize that there 
are options out there beyond just the State vocational 
rehabilitation agency and that they be made aware of that early 
on.
    There is also the situation that I think was referred to 
earlier where they might be eligible for a variety of services 
from State Vocational Rehabilitation, just as a service of the 
Rehabilitation Act, and they shouldn't be forced to use their 
Ticket for those services necessarily when they may be wanting 
to hold their Ticket for some other services from another 
provider.
    We have provided the staff with a copy of our full comments 
to the Social Security Administration on the proposed rules, 
and we would be glad to answer any questions you might have.
    Chairman Shaw. Thank you.
    [The prepared statement of Mr. Harles follows:]

  Statement of Charles Wm. Harles, Executive Director, Inter-National 
          Association of Business, Industry and Rehabilitation

    Good afternoon, Mr. Chairman. My name is Charles Harles. I am 
executive director of the Inter-National Association of Business, 
Industry and Rehabilitation. I-NABIR is made up of 109 organization 
members that provide placement and training services for persons with 
disabilities. They include major international corporations, local 
rehabilitation service organizations, state and regional programs, 
national and local labor organizations, state rehabilitation agencies, 
national trade associations, school transition programs, disability 
specific organizations, and mental health centers. Members run the 
gamut of organizations providing employment related services to persons 
with disabilities, but the business and labor communities are active 
members as well. You may notice that our stationery lists some of the 
thousands of businesses that serve on our members Business Advisory 
Councils or who have hired persons from our member programs.
    I-NABIR was an early proponent of the Ticket to Work provisions 
that became law in December 1999. The Congressional intent was ``right 
on.'' People with disabilities on Supplemental Security Income (SSI) 
and Social Security Disability Income (SSDI) were not getting services 
that could help them go to work, disincentives outweighed incentives in 
the law, and beneficiaries did not have access to providers. Thanks to 
you, other members of this subcommittee and the rest of the House of 
Representatives and the Senate we have a law that can address the 
problems I just mentioned.
    The Ticket to Work and Work Incentives and Improvement Act (TWWIIA) 
was written to remove the most serious disincentives to work and to 
give beneficiaries who want to work access to services that will help 
them go to work.
    Where are we fourteen months after the Act was signed into law?
    We are concerned that the law has yet to be implemented and there 
are serious problems that must be overcome before the Congressional 
intent of the law can be met.
          (1) Qualified Employment Networks (EN) must be in place 
        before ``Tickets'' are distributed to SSDI and SSI 
        beneficiaries, and
          (2) The milestone/outcome payment system must be adjusted to 
        meet the original Congressional intent.
    It is our understanding that the Social Security Administration 
plans to issue ``Tickets'' to over 2.3 million beneficiaries over the 
next several months in the 13 start-up states even though there is 
still no way organizations (other than a relatively small number of 
``alternative participants'') can currently become an EN. If 
``Tickets'' were to be distributed now or in the next few weeks only 
the state vocational rehabilitation agency and the very small number of 
alternative participants would be available to accept the ticket and 
provide services. The primary reason for the ``Ticket to Work'' part of 
the TWWIIA law was that the existing system which used only state 
vocational rehabilitation agencies had not been effective in helping 
beneficiaries go to work. To issue tickets without sufficient 
employment networks will only frustrate successful implementation of 
the Act.
    Even if the Social Security Administration were to begin processing 
the approval of EN's soon we still have concerns as to what 
qualifications they will require. There was clear Congressional intent 
that the universe of service providers be expanded and that non-
traditional providers be included so that beneficiaries be given 
maximum choice in who they will go to get services that will help them 
go to work. What we see in the proposed regulations and in a draft of a 
``request for proposals'' from the Social Security Administration 
concerns us. The proposed regulations would seem to restrict 
eligibility to be an Employment Network to those that meet state 
certification and licensure requirements. The proposed rules would tend 
to restrict EN's to state VR agencies and their contractors. State 
licensure and credentials should only be required where such 
credentialing or licensure is required to provide the specific services 
to individuals in the state. The regulations should differentiate being 
certified to provide services to or through a state agency from 
licensure to provide such services to anybody in the state. In 
addition, the mandate that ENs provide medical and health related 
services is overly burdensome. SSA should limit this provision to those 
entities that choose to provide such benefits.
    Where credentialing or licensure is not an absolute requirement in 
a state, entities should be able to be approved as EN's based on their 
experience and track record. The specific education requirements noted 
in the proposed regulations might not be appropriate for instance where 
an organization such as a Projects with Industry (PWI) program which 
utilizes job developers and placement specialists whose background may 
be from the business sector rather than traditional rehabilitation 
professions. Many PWI's have a strong track record in successfully 
placing persons with multiple and/or severe disabilities into 
employment. Because they have had federal funding from the US 
Department of Education or Labor, and not as a contractor to a state 
vocational rehabilitation agency, they may not have had to have state 
licensure or credentials.
    The Milestone/Outcome payment system as proposed by the Social 
Security Administration is not acceptable. The purpose of having 
Milestone/Outcome payments was to insure that small providers and 
specialized providers who may not have the capital funding to 
underwrite the initial costs of services would still be able to 
participate in the Ticket to Work program. These are also the programs 
that are likely to try and serve the more difficult cases. The proposed 
regulations negate the Congressional intent in several respects:
    (1) The payment calculation base has been set artificially low. 
This will reduce the potential payment to employment networks and 
further reduce the acceptance of beneficiaries who will be harder to 
serve or who will need higher cost services.
    (2) The Milestone/Outcome payments will only be 85% of the outcome 
only payment system. This reduction further reduces the likelihood that 
small or specialized providers will be able to participate in the 
program.
    (3) The number of milestones is inadequate, the amount payable for 
the milestones is inadequate, and the required repayment in the first 
12 months of outcome payments is punitive. SSA should allow several 
milestone alternatives in the first few years of the program to see 
which will result in the most favorable outcomes. The amount of the 
outcome payments should be substantially higher and the ``payback'' 
should be amortized over the remaining years of outcome payments. 
Milestone payments were intended to spread the risk to some extent for 
employment networks. As proposed they will focus the risk on employment 
networks. We, and others, have made suggestions to SSA on alternative 
milestone models. We hope that SSA will reconsider the approach taken 
in the proposed regulations.
    We see state vocational rehabilitation agencies as an important 
player in the Ticket to Work program, but not at the expense of other 
organizations which beneficiaries may want to use in providing services 
to help them go to work. SSA is proposing that when a beneficiary signs 
a plan as defined under Rehab Act (IPE), the beneficiary has 
automatically assigned their Ticket to the state VR agency. This 
section should be struck. The hallmark of the Ticket-to-Work is 
consumer choice. Having a beneficiary's ticket assigned to the 
vocational rehabilitation state agency without the beneficiary being 
fully informed negates that choice. Further, a beneficiary may be 
eligible for VR benefits without having to assign their Ticket and, in 
fact, the Rehabilitation Act as amended in 1998 states that SSI and 
SSDI beneficiaries are ``presumptively eligible'' for VR benefits. 
Making a beneficiary use their Ticket when VR might be required under 
the Rehabilitation Act to serve that individual anyway denies the use 
of the Ticket to beneficiary at a later date. SSA should insure that 
beneficiaries have information about the various employment networks, 
including state vocational rehabilitation agencies, that might be able 
to provide them with services and then allow the beneficiary to make an 
informed. That informed choice should also include those who are 
currently receiving services from state vocational rehabilitation.
    These are our primary concerns. We are providing the Subcommittee 
members and staff with a copy of the comments we submitted to SSA last 
week. They provide more detail of our areas of concern.
    Thank you for this opportunity to share our thoughts with you.
    [ATTACHMENTS ARE BEING RETAINED IN THE COMMITTEE FILES.]

                                

    Chairman Shaw. Ms. Ford.

STATEMENT OF MARTY FORD, DIRECTOR OF LEGAL ADVOCACY, ARC OF THE 
                         UNITED STATES

    Ms. Ford. Thank you Chairman Shaw and members of the 
Subcommittee. Thank you for this opportunity to testify on the 
proposed regulations to the Ticket to Work program.
    The ARC greatly appreciates the efforts of this 
Subcommittee and the full Ways and Means Committee for its work 
on the Ticket to Work and Work Incentives Improvement Act. We 
also appreciate SSA's efforts to develop and publish these 
rules quickly.
    The Act supported the work incentive efforts on behalf of 
people with mental retardation, which is a severe, lifelong 
disability, who wanted to work but were prevented from doing so 
by barriers that existed in the Title II and SSI programs and 
Medicare and Medicaid. However, we believe that certain 
significant changes must be made to the proposed regulations if 
the purposes of the program are to be fulfilled. We urge that 
speedy implementation not come at the expense of ensuring that 
it works for the intended purpose.
    I will focus on just a few of the major concerns that we 
have identified.
    First, we believe there should be no limits on the number 
of Tickets a person can receive over the course of a lifetime. 
People eligible for the program have very severe disabilities 
that may not allow them to work consistently or for long 
periods of time. Often people will need additional job training 
and placement assistance when unexpected events occur such as 
the bankruptcy of an employer, loss of a job or loss of 
transportation support, or family relocation.
    We also question the limitation of one Ticket per period of 
disability. If an individual has used part of a Ticket and 
then, for whatever reason, must return to the disability 
program, SSA should establish a reasonable time period, 
possibly 12 months, after which the person can get a fresh 
start with a new Ticket to try again. Otherwise, people with 
very severe disabilities seem to be allowed only one chance for 
success, a result we believe is contrary to congressional 
intent.
    The measures for timely progress may be appropriate for a 
majority of people and could serve as a useful, easy to 
administer standard. However, SSA should allow a reasonable 
modification of the specific criteria for those people whose 
progress does not exactly fit the established standard. The 
modification could allow the individual's progress to be deemed 
equivalent to the required number of months of work at the SGA 
level.
    For example, in the third year of ticket use, a beneficiary 
must earn at SGA for 3 months. We can envision individuals in 
supported employment who may begin their work efforts at 
subminimum wages and who gradually and steadily increase their 
earnings over a 4- to 5-year period before going off the rolls. 
While not earning at the SGA level for those specified 3 
months, the individual's overall monthly earnings clearly show 
continued progress and increases from the previous year. The 
program manager should be authorized to deem those work efforts 
to meet the timely progress requirement.
    The chronic problem of overpayments to beneficiaries is a 
major threat to the Ticket program. If not addressed, 
beneficiaries will continue to be fearful of working. SSA must 
address its current inability to track wages and adjust benefit 
levels when working beneficiaries report their earnings; and 
SSA must establish a reliable, efficient, beneficiary-friendly 
method of collecting and recording a worker's earnings and 
adjusting those benefits in a timely manner.
    The outcome and milestone payment systems we believe must 
be redesigned. I will skip over my comments on those issues 
because they have been addressed extensively by other 
witnesses.
    I believe that SSA must begin to gather information for the 
report on the adequacy of incentives. This report is critical 
for those people considered harder to serve. They are folks 
with a need for ongoing supports and services, people with a 
need for high-cost accommodations, people who earn a subminimum 
wage, and people who work and receive partial cash benefits.
    We also believe that several issues must be addressed 
specifically for disabled adult children if the Ticket program 
is to be successful. The regulations should allow disabled 
adult children to move on and off the program to the same 
extent that other people with disabilities can do so. 
Otherwise, the purpose of the program will be thwarted for 
those who qualify as disabled adult children.
    Finally, we believe that the $1 for $2 demonstration is a 
critical part of the law, particularly for those whose earnings 
will remain low, and that it should be implemented as soon as 
possible.
    In closing, the Arc urges the Subcommittee to continue its 
oversight and consider amending the law, if necessary, to 
ensure that the purposes of the law are fulfilled. Again, we 
appreciate the opportunity to testify and look forward to 
working further with you on this and other components of the 
program. I look forward to answering questions.
    Chairman Shaw. Thank you, Ms. Ford.
    [The prepared statement of Ms. Ford follows:]

Statement of Marty Ford, Director of Legal Advocacy, Arc of the United 
                                 States

    Chairman Shaw, Rep. Matsui, and Members of the Subcommittee, thank 
you for this opportunity to discuss the proposed regulations for the 
Ticket to Work and Self-Sufficiency Program published December 28, 2000 
in the Federal Register. The Ticket to Work program is one of the major 
components of the (TTWWIIA), P.L. 106-170.
    I am Marty Ford, Director of Legal Advocacy for The Arc of the 
United States. The Arc of the United States is a membership 
organization made up of people with mental retardation, their families, 
friends, interested citizens, and professionals in the disability 
field. Together they form approximately 1,000 state and local chapters 
of The Arc and the largest voluntary organization in the United States 
devoted solely to working on behalf of people with mental retardation 
and related developmental disabilities and their families. The Arc 
works through education, research, and advocacy to improve the quality 
of life for children and adults with mental retardation and their 
families and works to prevent both the causes and effects of mental 
retardation. Many members of The Arc and/or their family members are 
beneficiaries of the Title II Old Age, Survivors, and Disability 
Insurance programs and the Supplemental Security Income program and 
look forward to using the Ticket program.
    The Arc sincerely appreciates the efforts of this Subcommittee and 
the full Ways and Means Committee in passage of the Ticket to Work and 
Work Incentives Improvement Act of 1999. This Subcommittee carefully 
addressed numerous issues over several years to develop a comprehensive 
bill designed to reduce barriers and to increase opportunities. The 
result was a bipartisan bill broadly supported by advocates, Congress, 
and the Administration.
    The Arc supported the work incentives efforts on behalf of people 
with severe, life-long disabilities who wanted to work but were 
prevented from doing so by the barriers that existed in the Title II 
and SSI programs and Medicare and Medicaid. For many, the supports 
provided by these four programs would continue to be necessary due to 
their significant impairments. We believe that the purpose of the bill 
was to ensure that people with severe disabilities would not 
permanently lose the supports they need if they attempted to work and 
to expand the opportunities for them to make those attempts.
    We appreciate the efforts of the Social Security Administration to 
develop and publish these proposed regulations as close to the 
statutory deadlines as possible. We also appreciate SSA's efforts to 
solicit public input about broad issues prior to publication of the 
regulations and to communicate with advocates regularly regarding the 
timeframe of development of the proposed regulations. We believe that 
SSA has shown openness and good faith in attempting to balance all of 
the competing issues that arise in an effort of this magnitude. 
However, we believe that certain significant changes must be made to 
the proposed regulations if the purposes of the program are to be 
fulfilled. We urge that speedy implementation not come at the expense 
of ensuring that it works for the intended purpose.
    The Arc believes that the purposes of the new Ticket program 
include: encouraging people to work or attempt to work without fear of 
permanently losing needed supports (individual eligibility); 
encouraging providers to serve people with Tickets (payment methods); 
and expanding the pool of potential providers of rehabilitation 
services, including non-traditional providers (employment network 
eligibility criteria). In addition, there are necessary infrastructures 
that must be in place to ensure that the system runs smoothly for those 
it is intended to benefit.
MAJOR ISSUES WITHIN THE PROPOSED REGULATIONS
    Following are the major concerns that The Arc of the United States 
has identified in the proposed regulations for the Ticket to Work and 
Self-Sufficiency program. We believe that failure to address these 
issues in a significant way will undermine the potential success of the 
program.
Individual Eligibility
More Than One Ticket per Life/Period of Disability
    There should be no limit on the number of Tickets a person can 
receive over the course of a lifetime, as long as a person is not using 
more than one at a time. People eligible for the program have very 
severe disabilities that may not allow them to work consistently or for 
long periods of time the first time they attempt to work. Limiting the 
number of Tickets would ignore the reality that disability can be a 
sporadic, episodic, lifelong event. It would also ignore that some 
people will need additional job training and placement assistance when 
unexpected events occur, such as the bankruptcy of an employer, loss of 
a job through lay-off or restructuring, loss of transportation, or 
family relocation.
    Technically, the rules appear to be written to ensure only one 
ticket during any one period of eligibility (Sec. 411.125(b)). However, 
when this is combined with the newly effective (January 1, 2001) 
statutory provision for expedited reinstatement (which requires that 
the individual show that the impairment is the same impairment or is 
related to the original impairment), then it appears to block the use 
of new tickets in the future because the individual is ``reinstated'' 
to the program based on his/her original disability. To ensure that 
this limitation is not read to mean one ticket for life, then, at a 
minimum, we have urged SSA to clarify this section.
    Further, The Arc questions the limitation of one ticket per period 
of disability. We have recommended that, if an individual has used a 
substantial portion of a ticket and then finds it necessary to return 
to the disability program, SSA should establish a reasonable time 
period, such as 12 months, after which the individual can get a fresh 
start with a new ticket to try again. Otherwise, people with very 
severe disabilities seem to be allowed only one chance for success, a 
result we believe is contrary to Congressional intent.
Continuing Disability Reviews--``Timely Progress''
    SSA has established a complex measure for determining whether an 
individual is making ``timely progress'' toward accomplishing the goals 
of his/her individual work plan (IWP) (Sec. 411.180(b) and subsequent 
related sections). Beneficiaries who are found to be making timely 
progress on the IWP are exempt from medical continuing disability 
reviews (CDRs). The timely progress standard is intended to be an 
objective measure which looks at numbers of months with earnings at or 
above the substantial gainful activity (SGA) level. The measures for 
timely progress may, in fact, be appropriate for a majority of people 
who use a ticket, and, therefore, may be a useful, easy-to-administer, 
standard for determining timely progress.
    However, The Arc has recommended that SSA also include a provision 
allowing a reasonable modification of the specific criteria 
constituting timely progress for those people who are, in fact, making 
progress toward their goals, but whose progress does not squarely fit 
the established objective standard. This modification could be approved 
by the program manager (PM) at the request of the employment network 
(EN). The modification could allow the individual's progress to be 
``deemed'' equivalent to the required number of months of work at the 
SGA level. This approach would also serve to somewhat reduce the 
complexity of the timely progress standard for people who are making 
the expected progress outlined in their IWP.
    For example, in the third year of ticket use, an individual must 
earn at or above SGA for three months of the year to show timely 
progress. This may not work for some people in supported employment 
settings where they are supported on the job by a job coach. 
Approximately one-third of supported workers begin their supported 
employment at sub-minimum wages, under a certificate authorized by the 
Department of Labor. We can envision individuals in supported 
employment who may begin their work effort with very low earnings and 
who gradually and steadily increase their earnings over a 4 to 5 year 
period before going off the rolls. In some cases, the individual may 
not earn at the SGA level for the specified 3 months in the third year, 
but his/her overall monthly earnings clearly show continued progress 
and increases from the previous year. At the EN's request, the PM 
should be authorized to deem this individual's work efforts to meet the 
timely progress requirement. Otherwise, those individuals who are 
considered harder to serve will be disadvantaged by the specific 
standard that SSA has devised and ENs will be discouraged from serving 
them.
    Also, in Sec. 411.195 (24-month progress review), the PM will be 
looking at whether the plan calls for 3 months work at the SGA level 
during the next 12 months. We recommended that this section and any 
others similar to it be revised to allow for reasonable modifications 
based on the individual's needs and skills.
Ticket Eligibility--Medical Improvement Expected
    The Ticket to Work regulations would provide tickets to all 
beneficiaries with disabilities, except for those people who are 
categorized as ``medical improvement expected'' (MIE) and who have not 
yet had a continuing disability review (CDR) finding them still 
disabled (Sec. 411.125(a)(3)). The Arc believes that this is 
inappropriate for several reasons and recommended that the limitation 
be removed.
    Studies overwhelmingly show that the best time to get someone 
``back'' into the workforce is as soon as possible following the 
disabling event. To refuse tickets to people who are expected to 
improve is to ignore a large part of the population who could benefit 
from the ticket program. The Arc believes that this approach does not 
fit with Congress's intent to allow people to get to work as soon as 
possible.
    Furthermore, just because an individual has been designated MIE 
does not mean that he/she can do without the assistance of 
rehabilitation providers to maximize work capacity. The approach 
ignores the rehabilitation benefits that the individual may receive 
from appropriate services. These services may assist the individual to 
acquire work skills and job placement that will be more successful over 
the long run, thus preventing a later return to the disability program.
    Finally, under current law, the designation of MIE has no legal 
implications regarding the granting of benefits to or withholding of 
benefits from an individual. The MIE designation merely triggers the 
timing of a continuing disability review (CDR). If, however, the MIE 
designation is going to be used to deny a benefit such as the Ticket, 
further rulemaking will be necessary and we urged SSA to better define 
the category, set standards for designation, and provide for due 
process, including a fair hearing, for adverse decisions. Otherwise, 
this rather loosely defined and arbitrarily applied standard would have 
a significant effect on the beneficiary regarding whether the 
individual could take advantage of the ticket provisions.
    In addition, if the MIE limitation is retained, we have urged that 
every beneficiary be informed of the designation assigned to the 
individual. Further, for the sake of fairness, we urged SSA to impose 
deadlines on the state Disability Determination Services (DDS) so that 
scheduled CDRs are conducted in a timely manner to allow the individual 
the earliest opportunity to take advantage of the Ticket program.
Overpayment Issues
    For the success of the ticket program and all other work incentives 
to be realized, SSA must address its current inability to track wages 
and adjust benefit levels when working beneficiaries report earnings. 
As the system stands now, the chronic problem of overpayments to 
beneficiaries is a major threat to the Ticket program. Overpayments are 
such a nightmare to many people that the program could fail unless SSA 
can establish a reliable, efficient, beneficiary-friendly method of 
collecting and recording information regarding a worker's earnings in a 
timely manner. The Arc recommended that SSA develop and establish a 
reliable, efficient, beneficiary-friendly method of collecting and 
recording information regarding a beneficiary's earnings and adjusting 
benefits appropriately in a timely manner. The system should stop 
punishing the beneficiary for SSA's errors or failures.
Under Age 18
    Numerous questions have been raised about the results of the 
statutory redeterminations for 18-year olds entering the adult SSI 
program. Currently, SSA is conducting an assessment of the process that 
is used by state DDSs for conducting those required redeterminations 
(as well as the process used for assessments of children of all ages). 
The multi-disciplinary assessment project is being conducted through 
the American Association of University Affiliated Programs and, until 
SSA has analyzed the results of the project, it may be premature to 
lower the age of eligibility for tickets (Sec. 411.125(a)(2)(ii)(B)). 
Therefore, The Arc has recommended that SSA not lower the age of 
eligibility for a Ticket at this time.
Payment Methods
Design of Outcome and Milestone Payment Methods
    The law and the proposed regulations set forth two different 
methods of paying providers for an individual's success, measured by 
cash benefits that would no longer be paid to the individual. The first 
is the outcome payment system, designed to reward the provider by 
paying for months where benefits are not paid. Congress added the 
milestone-outcome payment system to the original design of the Ticket 
to Work program as one of the ways to try to address the issue of 
attracting providers to serve the ``harder-to-serve'' population.
    The milestone-outcome payment limit was set at a total amount below 
the outcome payment system in order to ensure that the cost estimates 
of the bill did not rise. Advocates, and, we believe, Congressional 
drafters, expected the Administration to set the milestone-outcome 
payment as close as possible to the outcome payment amount. Since the 
outcome payment system is initially limited to 40 percent of the 
average benefit, our expectation was that the milestone-outcome payment 
limit would be set at a level reflecting only a minor reduction in 
order to comply with the law. This would mean that the milestone-
outcome payment would be set at 99 percent of the overall outcome 
payment, not at the 85 percent level set in the proposed regulations 
(Sec. 411.525(b)). (Translated to the average benefit level, with the 
current outcome payment set at 40 percent of the average benefit, the 
milestone-outcome payment should be set no lower than 39 percent of the 
average benefit, not the approximately 34 percent level established in 
the proposed regulations.) The Arc recommended that SSA set the 
milestone-outcome payments at a level equal to 99 percent of the 
outcome payment level.
    It is critical that SSA design the milestones with a view to the 
intent of attracting providers to serve harder-to-serve people and to 
ensure that the overall payment is not substantially different. It is 
also critical that SSA allow testing and experimentation in the early 
years of implementation to ensure that milestones serve their intended 
purpose. We must avoid past errors in rehabilitation programs created 
through a ``creaming'' trap. We would like these issues to be resolved 
at the outset of the program.
    Numerous experts in milestone payment systems across the country 
have come forward to indicate that the system established by SSA will 
not work in either the total amount available or in the schedule for 
payout of milestones and outcomes. The Arc is concerned that if the 
system itself is not workable for providers, then many people with 
mental retardation will not be able to benefit from the ticket program. 
Therefore, we recommended that SSA consult with experienced milestone 
payment providers and re-design the milestone-outcome payment system to 
be flexible enough to meet the needs of a wide group of people with 
differing disabilities. We also urged SSA to create a structured 
milestone approach AND also allow for individualized ``customized'' 
milestones approved by the Program Manager for individuals for whom the 
structured milestones are inappropriate. This could include the use of 
reasonable modifications by the PM to allow milestone payments to 
exceed the established amount.
    Sec. 411.515(c) indicates that ENs can change their elected payment 
system (from outcome to milestone-outcome or vice versa) only every 18 
months. Coupled with the substantially reduced payment in the 
milestone-outcome system, this is likely to further discourage any ENs 
from electing the milestone/outcome payment system. The Arc urged SSA 
to allow the EN to change its election at least quarterly.
Outcome Payments Under SSI
    There is an additional problem built into the outcome payments 
(including milestone-outcome payments) system. Because the average 
federal SSI benefit is substantially lower than the average federal 
SSDI benefit, the milestone payments and the outcome payments for SSI 
beneficiaries will be much lower than for Title II beneficiaries. SSI 
beneficiaries are at risk of being bypassed by employment networks if 
SSA does not address this problem in the regulations. The Arc 
recommended that SSA use its demonstration authority to test a variety 
of scenarios that level the playing field for the SSI population. These 
could include making the milestone and outcome payments ``richer'' for 
SSI beneficiaries and/or encouraging states to contribute a portion of 
the state share of SSI to the payment. We also recommended that SSA 
consider paying for ``partial'' outcomes where the beneficiary has 
exceeded the SGA level but has not reached the break-even point. This 
would help level the playing field and make it more possible for ENs to 
serve SSI beneficiaries.
    Further, The Arc recommended that SSA begin, as soon as possible, 
to undertake the research and information gathering necessary for the 
Report on the Adequacy of Incentives. This report is critical to 
assuring that certain people are able to fully participate in the 
ticket program. The act identifies the following four groups of people 
who must be addressed: people with a need for ongoing supports and 
services; people with a need for high-cost accommodation; people who 
earn a sub-minimum wage; and people who work and receive partial cash 
benefits.
    The Arc recommended that SSA track necessary information for this 
study during the early implementation of the program so that the final 
report will include valid and reliable data upon which to properly 
identify a method or methods to adjust payment rates which will have 
the desired and necessary impact of incentivizing providers to serve 
all individuals eligible for the ticket program. For instance, ENs 
could be asked to report to Program Managers regarding ticket holders 
whom they decline to serve, including why the service was declined. 
Such information should also track the types of disabilities 
experienced by such individuals. This could provide very useful 
information regarding the ticket experience of the four groups of 
individuals set to be studied and assist in framing a constructive 
solution to any problems identified.
Employment Network Eligibility Criteria
Qualifications of Employment Networks
    The law does not establish who can and who cannot be an employment 
network, other than to set general guidelines and requirements for 
these entities. Advocates and drafters who worked on the legislation 
were clear in that there should be no arbitrary barriers to serving an 
individual who wants to go to work. In addition, part of the purpose of 
the Ticket to Work program was a clear attempt to get away from sole 
reliance on the established rehabilitation models which were, in fact, 
not working for many people. The intent was to ensure that the pool of 
providers, or ENs, would be larger than the traditional rehabilitation 
providers, including the ability to go outside the typical providers 
with accreditation or licensing as rehabilitation providers.
    Sections 411.310 and 315 appear to require more than the statute 
contemplated in the way of licensing, certification, and/or 
accreditation. It is reasonable to expect that where a profession 
requires licensing or credentialing under state law, that requirement 
would be acceptable in that state. However, where such requirements are 
not necessary, the intent was to allow flexibility and not require 
unnecessary credentialing. The Arc recommended that SSA clarify the 
regulations so that they are not read to require credentialing and 
licensing of all ENs and so that it is clear that such standards must 
be met only where required for licensed professionals. In addition, we 
recommended that SSA make it clear that all employees or contractors of 
ENs do not have to be licensed or credentialed. Further, we urged that 
SSA clarify the regulations to avoid the interpretation that only state 
certification or licensing will qualify an entity as an EN. Instead, we 
urged that SSA make it clear that there are any number of avenues by 
which a provider can qualify as an EN: certification or licensing under 
applicable state law; credentialing under other nationally recognized 
standards; or education or experience in successful employment of 
people with disabilities. Of course, guidelines regarding proof of the 
business as a registered entity under federal and state law would be 
expected. What is key here is whether the entity is capable of 
successfully providing the service agreed to by the EN and the 
beneficiary.
    Many questions have arisen in the discussions about ENs regarding 
whether families or a personal support network (including a ``circle of 
friends'') could serve as an EN. The Arc believes that where the 
family/friends can meet the requirements of an EN, then they should be 
able to serve as an EN. However, we expect that it will be more likely 
that family/friends will want to associate themselves with or 
subcontract with an EN to provide services to an individual, 
particularly if the extent of their services are limited to one 
individual. The Arc urged SSA to make it clear that such arrangements 
are allowed through individual arrangements with an EN.
Other Major Issues
Dispute Resolution
    The Arc is concerned that the proposed dispute resolution 
provisions do not adequately protect the due process rights of 
beneficiaries. The provisions give no clear guidance to ENs on what 
constitutes an acceptable grievance procedure. It appears that 
development of a grievance procedure is left to the sole discretion of 
the EN, opening the door for a great deal of variance between ENs. This 
would result in disparate treatment of beneficiaries and require the PM 
to understand and track compliance with potentially thousands of 
different procedures throughout the country. The Arc urged SSA to 
publish a model grievance procedure that ENs could adopt or adapt 
within a framework of minimum requirements such as opportunities for 
face-to-face meetings between a beneficiary and EN representative. We 
also urged SSA to ensure that its model could be used by small ENs, as 
well as larger ENs. This would help to ensure consistency for 
beneficiaries.
    The requirement that ENs provide beneficiaries with a copy of the 
internal grievance procedure initially and when there is a dispute is 
good (Sec. 411.605). In addition to requiring the EN to inform 
beneficiaries of the availability of assistance from the state 
Protection and Advocacy system in resolving disputes, we urged SSA to 
require the EN to provide the beneficiary with a list of other 
representation that may also be available to them. SSA field offices 
routinely keep a list of representatives that are available in the 
local community and could easily provide their local EN's with this 
information.
    Several due process questions arise in the provisions regarding 
dispute resolution between the beneficiary and the ENs or PM. In 
several places, where the program manager (PM) is reviewing a dispute 
between the beneficiary and the EN or where the beneficiary wants SSA 
to review the PM's decision, there is no clear and defined opportunity 
for the beneficiary to present his/her own side of the issue. For 
instance, where the PM is asked to review a dispute, the PM would 
contact the EN for all materials but would not contact the beneficiary 
(Sec. 411.615). The PM would receive only a summary of the 
beneficiary's position, prepared by the beneficiary (or representative) 
but conveyed by the EN. It is also unclear who has the additional 
responsibility or opportunity to convey the ``reasons the beneficiary 
rejected each proposed solution'' (Sec. 411.615(d)). In addition, if 
the PM's recommendation to resolve the dispute is referred to SSA (by 
either the beneficiary or the EN), there is no clear requirement for 
SSA to consider the beneficiary's (or the EN's) own view of the 
dispute. It appears that the PM would prepare all materials for SSA's 
review (Sec. 411.625(b) and 411.655(b)). Finally, SSA's decision is 
considered final and, therefore, not subject to further review (Sec. 
411.630). The Arc recommended that Sections 411.615 and 411.655 be 
amended to require the PM and SSA to contact the beneficiary for a 
statement of his/her position in the dispute and provide the 
beneficiary and his/her representative an opportunity to review the 
information submitted by the EN or PM and to dispute it. The Arc 
recommended that, at a minimum, the regulations be clarified to ensure 
that the beneficiary has the opportunity at all steps to present his/
her own version of the dispute, including reasons for rejecting each 
proposed solution.
EN's Ability to Submit Evidence Against Beneficiary
    There are two disturbing issues contained within the section on 
what an EN can do if the EN disagrees with a decision by SSA on a 
payment request. Section 411.590(d) reads: ``If an appeal by a 
beneficiary regarding entitlement or eligibility for disability 
benefits results in a revised determination, our revised determination 
could affect the EN's payment or result in an adjustment to payments 
already made to the EN. While the EN cannot appeal our determination 
about a beneficiary's right to benefits, the EN may furnish any 
evidence the EN has which may support a change in our determination on 
the beneficiary's appeal.'' (emphasis added)
    First, the section reveals that the ENs may be subject to 
overpayments and have to reimburse SSA for payments that were 
improperly made. As discussed above, unless SSA addresses the serious 
problems with its own deficient income reporting and recording systems, 
continued overpayments to beneficiaries will continue to be a serious 
disincentive to work. Overpayments to ENs may likewise serve as a 
disincentive for providers to serve as ENs.
    However, even more disturbing is that SSA then encourages ENs to 
turn against beneficiaries if they are unsuccessful in their disputes 
with SSA over whether payments are due to the EN. The only alternative 
SSA puts forward to ENs who lose their dispute with SSA is for the EN 
to submit evidence against the beneficiary in the beneficiary's claim 
for cash benefits. This approach creates the potential for a serious 
conflict between the beneficiary and the EN in a contractual 
arrangement where the beneficiary needs to trust that the EN is working 
in the beneficiary's best interest in job preparation, placement, and 
follow-up. Needless to say, beneficiaries and ENs should be expected to 
present truthful information and evidence to SSA at all times and ENs 
should be prepared to submit accurate information whenever requested by 
SSA. However, placement of this statement/approach in a section 
regarding EN's options in case of an unfavorable decision by SSA sets a 
very negative tone and establishes a fissure in the contractual 
relationship between beneficiaries and ENs at the outset. The Arc 
recommended that Sec. 411.590(d) be stricken from the regulations.
State Vocational Rehabilitation Agencies
    We have urged that SSA reconsider the requirement that state 
vocational rehabilitation agencies should take an individual's ticket 
when state VR is providing services under the old reimbursement method 
(Sec. 411.370). Under that method, SSA will pay state VR for services 
provided to a person who earns SGA for 9 months of work. This 9-month-
SGA outcome is very different from the outcome of work that allows an 
individual to leave the disability program for at least 5 years. We 
also urged that SSA, at a minimum, require that state VR agencies 
explain the outcome differences to the individual to ensure informed 
consent when the individual assigns the ticket to VR.
    The concerns that give rise to this issue would be moot, however, 
if SSA would adopt The Arc's recommendation that individuals be allowed 
to have more than one ticket in a lifetime and in a period of 
disability after a reasonable period of time. An individual who has 
been served under the old reimbursement method by state VR and who is 
not able to remain in the workforce would have an opportunity to try 
again. There would not be a problem and a perception that state VR had 
``taken the person's only ticket.'' Therefore, we again urged that SSA 
establish that an individual may use more than one ticket in a lifetime 
and in a period of disability after a reasonable period of time.
Disabled Adult Children
    Several issues must be addressed specifically for ``disabled adult 
children'' (DACs) if the Ticket program is to be successful. For a 
``disabled adult child,'' leaving the Title II program as a result of 
earning above the SGA level after the extended period of eligibility 
(EPE) has expired means the loss of ``disabled adult child'' status for 
life. Our experience under current law indicates that many 
beneficiaries and their families do not understand that the benefits 
that the parent has earned for the disabled adult child (severely 
disabled since childhood) are permanently lost, and there is no re-
entry under SSA's current policy and interpretations. We believe that 
this must be fixed; otherwise, the purpose of the Ticket to Work and 
Work Incentives Improvement Act will be thwarted for those who qualify 
as disabled adult children. We believe that the TTWWIIA clearly 
contemplated the ability of disabled adult children to move on and off 
the program to the same extent that other people with disabilities will 
be allowed to do so. TTWWIIA clearly cites the statutory language for 
disabled adult children throughout. The Arc urged SSA to ensure that 
its policies support the goal of providing disabled adult children full 
access to all of the provisions of the Ticket to Work and Work 
Incentives Improvement Act, including re-entry to the program and to 
disabled adult child status.
    In addition, we understand that SSA's interpretation regarding the 
value to be placed on a worker's work effort (regarding whether it 
exceeds SGA or not) is different for people in supported employment 
depending upon whether the individual is supported directly by an 
employer or whether the individual is supported by services from an 
outside source, such as a state-funded supported employment agency. Due 
to this distinction, an individual's work effort could be found to 
exceed SGA when the support is from a third party while that same work 
effort could be found not to exceed SGA when the support is from the 
employer. From the perspective of the individual, this is an arbitrary 
distinction because these workers have no control over who provides 
these supports. Further, there may be additional complications in that 
the nature and scope of the support provided to the individual may be 
misunderstood when making the valuation of work effort. For instance, 
while the individual may be performing the actual task (bagging 
groceries, assembling a package, etc.), it may be that the individual 
would be unable to perform the task without the help of the job coach 
in ensuring that the individual arrives at work on time properly 
attired, that he/she interacts appropriately with customers and co-
workers, and that he/she remains focused on the assigned job tasks, 
among other things. We urged SSA to clarify and simplify its policies 
regarding such work so that results that appear arbitrary are 
eliminated and so that the work incentives function as intended and 
complement, rather than undermine, TTWWIIA and supported employment.
$1 for $2 Demonstration
    The $1 for $2 Demonstration is a very important part of the law, 
especially for people who will likely earn low wages for long periods 
of time. For them, the cash cliff in Title II remains a real barrier to 
work. It is important that the demonstration begin soon and provide 
useful data to allow Congress to decide whether the program should be 
made available to all Title II beneficiaries with disabilities who want 
to work. There has been some discussion that SSA might test the value 
of starting the $1 for $2 offset below the SGA level. If so, we urge 
that such offset be offered to the beneficiary on a voluntary basis so 
that choosing to work does not disadvantage the beneficiary. There may 
be people with disabilities who would voluntarily accept the reduction 
beginning below SGA as a trade-off for the security of knowing that 
their benefits would continue and would fluctuate to complement their 
fluctuating earnings. Otherwise, SSA would be reducing benefits to 
which people are otherwise entitled under the current law.
    We urged SSA to move expeditiously to design and implement this 
demonstration program. In addition, we urged SSA to consult with 
experts in the various disability populations to ensure that the 
demonstration has the capacity to work for the people intended to be 
served.
           * * * * * * *
    In addition to the above comments on major issues, we have also 
submitted comments to SSA which are related to specific sections in the 
proposed regulations.
    Finally, we have urged SSA to remain open to changes after the 
first three years of the program. Given that the Ticket program is a 
wholly new program within SSA, it is important for SSA to schedule a 
re-assessment as the entire program is implemented and experience 
begins to inform beneficiaries, ENs, the Program Manager, and SSA about 
areas that will need adjustment in order to work. In addition, the 
question of providing Tickets to 16- and 17-year old beneficiaries 
should be addressed again at that time.
    Again, on behalf of The Arc of the United States, we appreciate the 
opportunity to testify about our concerns today and look forward to 
working further with you on this and other components of P.L. 106-170. 
We urge the Subcommittee to continue to closely monitor implementation 
of the Ticket to Work and Self-Sufficiency Program and other components 
of P.L. 106-170. If you have any questions on the above, please do not 
hesitate to contact me at The Arc Governmental Affairs Office, (202) 
785-3388.

                                

    Chairman Shaw. Mr. Seifert.

 STATEMENT OF PAUL J. SEIFERT, DIRECTOR OF GOVERNMENT AFFAIRS, 
   INTERNATIONAL ASSOCIATION OF PSYCHOSOCIAL REHABILITATION 
                  SERVICES, COLUMBIA, MARYLAND

    Mr. Seifert. Thank you, Mr. Chairman, members of the 
Subcommittee.
    It was roughly 5 years ago that work began on this 
legislation. It started off with Mr. Bunning and then followed 
by you and Mr. Matsui; and of course, in the Senate, Mr. 
Jeffords and Mr. Kennedy added significantly to this 
legislation. There were high expectations in the disability 
community and I think among Members of Congress regarding the 
success of this program, and I think that is reflected by the 
near unanimous support this legislation received when it passed 
just about a year ago. Therefore, it is with a great deal of 
disappointment and concern that we must state that the Ticket 
program as laid out in the current regulatory scheme developed 
by the Social Security Administration will fail.
    After reviewing the published notice, IAPSRS believes that 
the proposed rule is so flawed that its implementation should 
be delayed until after all the comments have been received, 
major revisions made, and an interim final rule published. If 
this program starts up in the flawed manner in which it is now 
proposed under the rules published by the Social Security 
Administration, it will fail, and it will be viewed by the 
disability community as just another failed Social Security 
program. That would be unfortunate.
    We have identified no less than 14 major flaws in the 
Social Security Administration's proposed rule. They are listed 
in some detail in our testimony and also in our comments that 
were submitted to the Social Security Administration. They 
include eligibility issues, payment issues around the Outcome 
and Milestone/Outcome systems, the CDR protections, and certain 
provisions around the interaction between providers and the 
State Vocational Rehabilitation Agencies.
    I want to talk in some detail about a couple of those 
issues, starting with the MIE provision or Medical Improvement 
Expected provision. The medical improvement categories are a 
matter of administrative convenience. There is no law, there 
are no regulations that govern who does or does not get an MIE 
categorization. There are some subregulatory provisions that 
field offices can use, but, generally, it is a hit-or-miss 
thing, depending on the attitude of the disability 
determination officer who makes that determination.
    There are about equal numbers of people on the last figures 
I have seen of people with schizophrenia and people with lower 
leg fractures who are determined ``Medical Improvement 
Expected.'' Now, I don't think it takes a lot of explaining to 
reveal that there is a great difference between schizophrenia 
and a lower leg fracture and that medical improvement between 
those two groups of people would be vastly different. 
Schizophrenia is a lifelong illness. It generally lasts most of 
the adult life of the individual. A lower limb fracture, 
however, I speculate is, though it may be severe at the time, 
something that medical improvement and recovery is almost 
always anticipated within a short period of time.
    These medical improvement categories are merely used to 
determine how frequently a person gets a Continuing Disability 
Review. The more certain your medical improvement is, the more 
likely and the more frequent you will get a CDR performed on 
you by the Social Security Administration to determine whether 
or not you have medically improved.
    Given the numbers that we have heard here today, we know a 
couple of things: Eighty-four percent of the MIE people 
continue on the rolls after the first CDR. My only question is, 
how many of the ones who don't continue reapply and are found 
eligible later on? I think that is probably another number that 
needs to be revealed by the Social Security Administration. How 
many of those folks win on appeal?
    So I think that the use of the MIE category in the proposed 
regulation is just too crude a tool, and a slightly more 
sophisticated approach would ensure that tens of thousands more 
people become eligible for the Ticket program and go back to 
work.
    I want to talk about overpayments. Currently, the Social 
Security Administration has no way of tracking work and 
earnings in the DI program. They have a system in the SSI 
program, and it works fairly well. But for those on DI, there 
is no way for Social Security to track your earnings and stop 
your benefits. Consequently, Social Security continues to pay 
checks to beneficiaries who should not be getting them because 
of worker earnings. This is a problem. It is a long-noted 
problem and Social Security has not done anything to fix it.
    Now with the Ticket program and the payments to the 
providers dependent on those checks stopping, this program's 
very existence is threatened by the fact that Social Security 
can't stop checks to beneficiaries who aren't supposed to get 
them. Beneficiaries will keep getting checks and providers will 
not get paid, despite the fact that, in the proposed 
regulations, the Social Security Administration turns the 
provider into an agent for reporting earnings to the Social 
Security Administration, something we think is problematic.
    So unless a major reform of the benefits'/earnings tracking 
system is made, and the employment tracking system within the 
Social Security Administration is made, the Ticket program 
won't even get off the ground.
    Finally, on the CDR provisions, SSA has proposed a time 
line for ``timely progress,'' as Marty Ford pointed out, that 
quite frankly is unrealistic for people whose disabilities are 
long term. No matter how much you work in the first 2 years 
that you use a Ticket, none of that work counts towards the 
requirement in the later 3 or 4 years that you have to work. So 
a beneficiary could work 26 months above SGA, off the rolls, 
never getting a benefit; you get into that third year of use of 
your ticket and you don't quite make that 3 months of work, you 
get a CDR. That, to me, seems a little unfair, that 26 or 27 
months of work wouldn't count for anything for the purposes of 
this protection.
    If beneficiaries could bank their work so that prior work 
would count towards future protections under the CDR provision, 
we think that would go a long way to improving this benefit, 
this provision in the law, and not do a great deal to undermine 
the purpose of the CDR or the CDR protections in the law.
    With that, Mr. Chairman, I would be glad to answer any 
questions you may have.
    Chairman Shaw. Okay.
    [The prepared statement of Mr. Seifert follows:]

     Statement of Paul J. Seifert, Director of Government Affairs, 
   International Association of Psychosocial Rehabilitation Services

    Mr. Chairman, Mr. Matsui, members of the Subcommittee, my name is 
Paul J. Seifert. I am the Director of Government Affairs for the 
International Association of Psychosocial Rehabilitation Services 
(IAPSRS). Our members are individuals, consumers, and community-based 
programs that provide rehabilitation services for people with severe 
and persistent mental illnesses.
    The goal of our members is to help people with mental illness live 
better lives in our community and IAPSRS is a recognized leader in the 
effort to advance employment opportunities for people with mental 
illness. IAPSRS has been involved in the development of this 
legislation since 1995 and has on several occasions provided witnesses 
and written testimony to this subcommittee on the issue of employment 
and work opportunities for people with mental illness.
    With a great deal of support from the disability community and 
almost near unanimous, bi-partisan support in both the House and 
Senate, Congress enacted and President Clinton signed into law the 
Ticket-to-Work and Work Incentives Improvement Act (TWWIIA). This 
legislation was designed to expand the rehabilitation services and 
health care coverage for Social Security beneficiaries who want to go 
back to work. A key component of the TWWIIA legislation is the Ticket-
to-Work and Self-Sufficiency Program.
    There are high expectations for this legislation in both the 
disability community and among members of Congress for this new 
program.
    Therefore, it is with a great deal of disappointment and concern 
that we must state that the Ticket Program, as laid out in the current 
regulatory scheme developed by SSA, will fail.
    On December 28th, 2000, the Social Security Administration 
published the Notice of Proposed Rulemaking (NPRM). After reviewing the 
published notice, IAPSRS believes that the proposed rule is so flawed 
that its implementation should be delayed until after all comments are 
received, major revisions made, and a final or interim final rule 
published. Let me be clear, if this program starts up in the flawed 
manner it is now proposed, it will be viewed by the disability 
community as ``just another failed Social Security program.'' That 
cannot be allowed to happen.
    IAPSRS has identified no less than 14 major flaws in SSA's proposed 
rule. They are listed below along with a brief description of how SSA 
should correct them.
Eligibility Issues
            (1) Misuse of the MIE category to determine who gets a 
                    Ticket and when they get a Ticket
    SSA should examine, on a disability-by-disability basis, which 
people determined MIE are likely to remain on the roles after the 
initial CDR and issue those people a Ticket. Further, SSA should 
examine, on a disability-by-disability basis, which people are likely 
to come back on the roles even if they are determined to have medically 
improved in the first CDR, and issue those people a Ticket.
            (2) Concerns about the denial of Tickets to those between 
                    16 and 18 years old
    Rather than a blanket denial to all those on disability who are 
under 18, Social Security should determine, on a disability-by-
disability basis, which people under 18 are most likely to be eligible 
for benefits once they turn 18 and issue these individuals a Ticket.
            (3) Limiting a person to one Ticket per period of 
                    disability
    IAPSRS believes a person should be eligible for another Ticket when 
the cash value of the first Ticket has been exhausted.
Payment System Issues
            (4) Too large a disparity in the total payments under the 
                    Outcome and Milestone-Outcome payment methods
    IAPSRS recommends that the payment disparity between the Outcome 
and Milestone-Outcome systems be eliminated except for a minor 
reduction in the Milestone system in order to comply with the law.
            (5) Inadequate value and placement for the Milestone 
                    payments under the payment method for SSDI
    IAPSRS recommends that the value of the milestone payments be 
increased as follows for SSDI and SSI/SSDI beneficiaries:
          $500 the day the person starts work;
          $1,000 after three months of work regardless of earnings 
        level;
          $1,500 after six months of work, regardless of earnings 
        level;
          $2,000 after nine months of work and the person begins their 
        EPE.
    Total Milestone Payments: $5,000; 60 months of outcome payments 
follow.
            (6) A completely inadequate payment method for SSI
    IAPSRS recommends that SSA restructure the milestone-outcome system 
for SSI beneficiaries in order to account for the existing work 
incentives. IAPSRS recommends that SSA allow outcome payments when an 
SSI beneficiary partially reduces their SSI check because of earnings 
or income. (See attached comments for more detail.)
CDR Protections
            (7) An arbitrary and unnecessarily rigid timeline for 
                    determining ``timely progress'' under the CDR 
                    protections
    IAPSRS supports allowing beneficiaries to ``bank'' work months in 
the first two years to count towards the work requirements in later 
years. In year 5 and beyond, IAPSRS supports allowing work in excess of 
the six-month requirement to count toward the next year's requirement. 
Further, IAPSRS recommends that increasing amounts of work or earnings, 
even if below SGA, be evaluated as meeting the definition of 
``progressively higher levels of employment'' in order for a person to 
keep their CDR protection.
Provider Reporting and Qualification Issues
            (8) Eligibility criteria for providers (employment 
                    networks) that will unnecessarily constrict the 
                    array of providers and consequently limit consumer 
                    choice
    IAPSRS recommends that the broadest discretion be given to ENs 
regarding how to comply with these requirements. IAPSRS also recommends 
that state law not become a barrier to participation by ENs by allowing 
the Commissioner to suggest alternative means of qualifying if an 
entity cannot or does not meet state requirements. In addition, IAPSRS 
is concerned about the mandate that ENs provide medical and health 
related services and suggest limiting this provision to those entities 
that already provide such benefits.
            (9) Reporting requirements on providers that are 
                    unnecessarily burdensome and could violate consumer 
                    privacy
            (10) Provider reporting requirements on beneficiary 
                    earnings and work that establish potentially 
                    adversarial situations between the provider and the 
                    beneficiary
            (11) SSA decisions to externalize the overpayment problem, 
                    in particular the decision to turn providers into 
                    SSA income verification agents; and no guarantee 
                    that SSA will handle requests for payments by ENs 
                    anymore expeditiously than they handle similar 
                    reports by beneficiaries themselves, something SSA 
                    doesn't do at all for SSDI beneficiaries and only 
                    poorly for SSI beneficiaries
    The income reporting requirements externalize a long-standing 
problem at SSA--mainly the agency's inability to accurately and 
expeditiously track earnings and adjust benefits. IAPSRS opposes 
turning ENs and their staff into accountants and employees of the 
agency. IAPSRS recommends that an EN's report to the PM on a 
beneficiary's income and earnings be given by the PM to SSA within 30 
days, and if within 60 days of the PM's report to SSA, SSA has failed 
to appropriately stop or adjust a beneficiary's check, SSA cannot hold 
the beneficiary liable for overpayments and SSA must make payment to 
the EN as though the benefit has been adjusted or ceased.
            (12) No indication of how providers will be evaluated, or 
                    the criteria on which SSA will base that evaluation
    Consumer satisfaction measures and the ability to inform Ticket 
holders of the quality of ENs in their area is critical. Measuring 
consumer satisfaction through a survey is only one such way to 
accomplish this goal, but IAPSRS also urges SSA to examine employment 
outcomes, including types of placements and income levels of the 
placements. However, since many ENs will serve only one disability 
population, IAPSRS cautions against comparing ENs across disability 
groups.
State VR Agency Issues
            (13) An automatic assignment of a Ticket to a State VR 
                    Agency without any ``informed choice'' requirements 
                    to protect beneficiaries
    SSA is proposing that when a beneficiary signs a plan as defined 
under Rehab Act (IPE), the beneficiary has automatically assigned their 
Ticket, regardless of whether the VR agency is an employment network. 
IAPSRS opposes this requirement and recommends that it be struck.
            (14) A provision in the State VR-EN agreement provision 
                    that slants the arrangement in favor of the State 
                    VR Agency
    SSA is proposing that as part of the broad agreement between ENs 
and State VR agencies, that the agreement must stipulate ``the terms 
and procedures under which the EN will pay the State VR Agency for 
providing services.'' IAPSRS opposes this requirement and recommends 
that it be struck.
    Certainly, there are many more problems with the proposed rule, 
however we believe that the flaws mentioned above are both contrary to 
Congressional intent and doom this program to failure before it even 
starts.
    Mr. Chairman, the comments submitted to SSA on behalf of IAPSRS are 
included separately, and some have been summarized in this document as 
part of our testimony.
    That concludes my testimony, Mr. Chairman, and I welcome the 
opportunity to answer any questions that you, Mr. Matsui, and any 
Subcommittee members may have.
    Thank you.
          * * * * * * *

       Comments of the International Association of Psychosocial 
  Rehabilitation Services On the Proposed Rule for the Ticket-to-Work 
                                Program

Eligibility to Receive a Ticket to Work
(1) Proposed Rule--No Ticket for those under 18
    The Social Security Administration (SSA) has proposed that those 
under 18 will not receive a Ticket-to-Work. They cite the fact that 
those under 18 who are on disability must undergo a Disability Review 
before becoming eligible for benefits after they turn 18. Issuing 
Tickets to the under 18-age group would possibly lead to issuing 
Tickets to people who would not qualify for benefits after they turn 
18.
IAPSRS Comment
    Rather than a blanket denial to all those on disability who are 
under 18, Social Security should determine, on a disability-by-
disability basis, which people under 18 are most likely to be eligible 
for benefits once they turn 18 and issue these individuals a Ticket.
Rationale
    Evidence points to the fact that earlier rehabilitation 
interventions result in better return-to-work outcomes for disabled 
beneficiaries (GAO Report to Congress, Improving Return-to-Work 
Efforts, GAO-01-153, Jan. 2001, pg 13-24). GAO also criticizes SSA for 
not incorporating Return-to-Work efforts in the eligibility and 
assessment process. SSA should allow under-18 individuals access to a 
Ticket, particularly those whose disabilities are likely to result in 
them continuing on the rolls.
(2) Proposed Rule--No Ticket for those determined MIE until after their 
        first CDR
    Once an individual is determined eligible for SSI or SSDI, the 
state Disability Determination Service (DDS) assigns the person to one 
of three categories, Medical Improvement Expected (MIE), Medical 
Improvement Possible (MIP), or Medical Improvement Not Expected (MINE). 
These categorizations are merely administrative conveniences that 
determine the frequency of a beneficiary's Continuing Disability Review 
(CDR). MIEs receive CDRs more frequently than MIPs or MINEs. There are 
no rules or regulations that determine how a person is assigned to a 
medical improvement category. The determination is solely based on the 
discretion of the Disability Determination Service personnel.
    SSA has proposed that people on disability who are determined as 
Medical Improvement Expected (MIE) be denied a Ticket to Work until 
after their first CDR. SSA cites the fact that those determined as MIE 
are expected to medically improve within a short period of time and 
they are subject to CDRs more frequently. SSA argues that to issue a 
Ticket to these individuals who might be terminated after only a short 
stay on the roles would: 1) allow these individuals to avoid the CDR 
and thus allow people who have medically improved to keep benefits they 
wouldn't ordinarily receive; and 2) allow providers to collect payments 
from SSA for people who would have returned to work and left the roles 
anyway.
IAPSRS Comment
    SSA should examine, on a disability-by-disability basis, which 
people determined MIE are likely to remain on the roles after the 
initial CDR and issue those people a Ticket. Further, SSA should 
examine, on a disability-by-disability basis, which people are likely 
to come back on the roles even if they are determined to have medically 
improved in the first CDR, and issue those people a Ticket.
Rationale
    Using the broad brush of the MIE category is too crude a tool to 
deny beneficiaries immediate access to a Ticket. For example, such a 
rule does not distinguish between a person who is 25 years old and has 
schizophrenia and is determined MIE and a person who is 25 years old 
and has a lower limb fracture and is determined MIE. Almost equal 
numbers of people with schizophrenia and people with lower limb are 
determined MIE. Furthermore, because there are no rules or regulations 
that govern the DDS's determination of medical improvement, the 
variations in standards will not only differ from office to office, but 
within the offices. One DDS staffer may place a disproportionately high 
number of people in the MIE category while another DDS staffer in the 
same office will place more people in the MIP or MINE category. 
Consequently, one person with schizophrenia may get an MIE assignment, 
while another person with the same illness might get an MIP or MINE 
assignment, all based on who the DDS staffer happens to be.
    Also, as pointed out in the previous comment GAO has criticized SSA 
for not incorporating return-to-work efforts earlier in the 
determination process. Adopting the above comment would bring a more 
sophisticated and effective approach to SSA's return-to-work program.
(3) Proposed Rule--One Ticket per Period of Disability
    SSA has proposed that a person can receive only one ticket per 
period of disability. A ``Period of Disability'' begins when the person 
is awarded benefits and ends when the person's entitlement to benefits 
end.
IAPSRS Comment
    IAPSRS believes a person should be eligible for another Ticket when 
the cash value of the first Ticket has been exhausted.
Rationale
    The Ticket-to-Work provides payments for up to 60 non-consecutive 
months of payments to providers for each month during which benefits 
are not payable to a beneficiary due to earnings. The Ticket-to-Work 
legislation provides for a 60-month Expedited Reinstatement that 
follows the termination of benefits due to work.
    Expedited Reinstatement allows a beneficiary to be automatically 
reinstated to benefits pending a CDR after six months. SSA may 
determine that a person who uses the Expedited Reinstatement provision 
has ``continued'' the same period of disability, even though their 
entitlement to benefits has ceased. For SSDI beneficiaries, the 
Expedited Re-entry provision allows people to come back on the rolls 
for up to five years after the EPE under the same ``period of 
disability.'' This provision will prevent a person from getting a new 
Ticket after the first one is paid out and could mean a person is 
eligible for only one Ticket in their lifetime.
    SSI beneficiaries retain ``eligibility'' for benefits under 1619(b) 
even though they are not receiving any cash benefits. The Ticket could 
be fully paid out in this situation and the person come back into 
payment status and not be able to get another Ticket because they are 
still considered in the same ``period of disability.''
    Finally, people with high upfront rehabilitation costs who are 
served by the state VR agency will have little chance to fully benefit 
from a Ticket if VR chooses the ``cost-reimbursement'' method. Under 
cost reimbursement, VR can get reimbursed for the full costs of 
services, even if the cost is higher than the total value of the 
Ticket, as long as a person achieves nine months of SGA. Since nine 
months of SGA still leaves a person eligible to receive SSI or SSDI the 
person will still be on the rolls, still not have achieved full 
independence, and no longer have access to services because they will 
not have a Ticket.
Payment System
    The Ticket program provides for two payment methods for Employment 
Networks (ENs), an outcome payment method and a milestone-outcome 
payment method. According to the law, the outcome payment method shall 
``provide a schedule of payments to an employment network . . . for 
each month . . . for which benefits are not payable because of work or 
earnings.'' The law says that the milestone-outcome method ``shall 
provide one or more milestones that are directed toward the goal of 
permanent employment.''
(4) Proposed Rule--Outcome and Milestone-Outcome Systems
    SSA has proposed the following Outcome Payment structure:
    Outcome Payments for SSDI Beneficiaries and Dually Eligible 
Individuals--
    Payment to an EN would begin the month in which benefits are not 
payable to the beneficiary, meaning the first month in the SSDI 
Extended Period of Eligibility that beneficiary earned above SGA ($740 
in 2001). The amount of that monthly payment would be $277 and for each 
month during the next 60 (not necessarily consecutive) months an 
individual did not receive benefits the EN would receive $277. In 2000, 
the total amount an EN could get under this method is $16,620.
    Outcome Payments for SSI Beneficiaries--
    Payment would begin the month in which benefits are not payable, 
meaning the first month earnings completely offset their benefits under 
the SSI $2-for-$1 cash offset. On average this means an SSI beneficiary 
would have to earn more than $1,000 a month before any outcome payments 
would be paid, compared to $740 in earnings for an SSDI beneficiary. In 
2000, the total amount an EN could get under this method is $10,560.
    SSA has proposed the following Milestone-Outcome Payment structure:
    Milestone-Outcome Payments for SSDI Beneficiaries and Dually 
Eligible Individuals--
    Two milestone payments have been proposed, the first payment of 
$470 when the individual has achieved 3 months of earnings above SGA 
within a 12-month period, the second milestone payment of $940 is paid 
when the beneficiary achieves the 7th month of earnings above SGA in a 
12-month period. The 3 months from the first milestone can be part of 
the 7 months used to reach the second milestone. The total milestone 
payments are $1,410 and the combined total milestone-outcome amount an 
EN could get under this method in 2000 is $14,127.
    Milestone-Outcome Payments for SSI beneficiaries--
    The milestones will be reached the same way as with SSDI, the first 
milestone of $300 is paid after 3 months of earnings above SGA in a 12-
month period, the second milestone of $600 is paid after 7 months of 
earnings above SGA in a 12-month period. The total amount of milestone 
payments is $900 and the combined milestone-outcome amount an EN could 
get in 2000 is $8,976.
IAPSRS Comments
    IAPSRS recommends that the payment disparity between the Outcome 
and Milestone-Outcome systems be eliminated except for a minor 
reduction in the Milestone system in order to comply with the law.
    IAPSRS further recommends that the outcome payments in the 
Milestone system be spread evenly over the five-year period.
Rationale
    The huge disparity between the total payments in the Outcome system 
vs. those in the Milestone-Outcome system will discourage the use of 
the Milestone system. While the law says the Milestone payment system 
must be less than the Outcome system, the 15% reduction proposed by SSA 
is too great to attract smaller providers. Worse, back loading the 
outcome payments in the milestone system means that monthly outcome 
payments in the first year are 3 times lower than those in the fifth 
year. Again, this discourages smaller, less well-capitalized providers 
from participating.
IAPSRS Comment
    IAPSRS recommends that the value of the milestone payments be 
increased as follows for SSDI and SSI/SSDI beneficiaries:
          $500 the day the person starts work;
          $1,000 after three months of work regardless of earnings 
        level;
          $1,500 after six months of work, regardless of earnings 
        level;
          $2,000 after nine months of work and the person begins their 
        EPE.
    Total Milestone Payments: $5,000; 60 months of outcome payments 
follow.
    If the person enters their EPE before all the milestones are paid 
out, the remainder amount of milestones are folded into the outcome 
payments.
Rationale
    The value of the milestone payments is far too low. Several states 
in SSA's State Partnership Initiative (SPI) Program have run 
demonstrations on milestones, the most prominent being Oklahoma. In 
Oklahoma and in the other SPI states, experience tells us that a total 
milestone system that pays less than $3,500 will not attract providers. 
Ideally, to attract the maximum number of providers, the total 
milestone payment should be between $4,000 and $5,000 for SSDI and 
concurrent SSDI/SSI.
    The milestone system was devised as a method risk sharing between 
SSA and providers. Under SSA's proposal SSA shares no risk, all the 
risk is on the provider.
    Also, requiring an individual work at or above SGA in order for a 
milestone payment to be paid is an inappropriate standard. If person 
has used up most or all of their Trial Work Period under the SSDI 
program before depositing their Ticket, the case will arise where the 
milestone system has no impact, because as soon the individual earns 
above SGA the outcome payments will start. In this case, will ENs lose 
the amount contained in the milestones, or will they be folded into the 
Outcome payments. Or, will ENs be paid the milestone payments first, a 
lesser amount than the Outcome payments would have generated under the 
same circumstances, before receiving the Outcome payments?
IAPSRS Comment
    IAPSRS recommends that SSA restructure the milestone-outcome system 
for SSI beneficiaries in order to account for the existing work 
incentives. IAPSRS recommends that SSA allow outcome payments when an 
SSI beneficiary partially reduces their SSI check because of earnings 
or income. The amount paid would still be based on the maximum of 40% 
of the portion of the benefit not paid. Such a proposal might pay a 
$500 milestone in the first month an SSI beneficiary work earned over 
$125 in gross income. A second milestone would be paid in the next 
month the SSI beneficiary earned over $325 in gross income. In any 
month after the second milestone was paid that the SSI beneficiary's 
income was between $326 and $550, SSA would pay an outcome payment of 
$53. In any month after the second milestone was paid in which the 
beneficiary's income was between $551 and $750, SSA would pay an 
outcome payment of $93. In any month that earnings were between $751 
and $1,002, SSA would pay $138. This is calculated using average 
federal SSI payment as determined by SSA in calculating the payment 
calculation base for SSI. The amount of the outcome payment would be 
paid according to the 40% maximum allowed under the law.
Rationale
    Again, the milestone system was devised as a method of sharing risk 
between SSA and providers. Under SSA's proposal SSA shares no risk, all 
the risk is with the provider.
    Further, SSA's proposal is prejudiced against SSI beneficiaries 
because SSA has interpreted the law to require that a person not be 
receiving ANY cash benefits before an outcome payment is made. SSI 
beneficiaries are disadvantaged because the $2-for-$1 cash offset in 
SSI (a work incentive) requires them to earn more ($360 a month more) 
than those on SSDI before an outcome payment is paid to an EN. As a 
result, ENs will be discouraged from serving the SSI population, which 
typically, but not always, is less well educated and has a much weaker 
work history than the SSDI population.
    The law states that the outcome payment method shall ``provide a 
schedule of payments to an employment network . . . for each month . . 
. for which benefits are not payable because of work or earnings.'' 
IAPSRS believes that if a person on SSI earns enough so that their SSI 
check is partially reduced, this reduction equals ``a benefit that is 
not payable because of work or earnings.'' Further, the law does NOT 
require a total elimination of ALL cash benefits. Had Congress intended 
this they would have said something such as: ``provide a schedule of 
payments to an employment network . . . for each month . . . for which 
NO benefits are payable because of work or earnings.'' IAPSRS believes 
that the law is flexible enough to allow an outcome payment when an SSI 
beneficiary reduces their SSI check because of work.
Continuing Disability Reviews
(5) Proposed Rule--Timely Progress
    The law states that, ``beneficiaries shall not be subject to 
Continuing Disability Reviews as long as they are using (as defined by 
the Commissioner) a Ticket-to-Work.'' SSA has set up a timeline that 
determines what ``using a Ticket'' means. After assigning a ticket, 
beneficiaries are allowed up to 2 years to prepare for employment. They 
must show they are ``actively participating in their Individual Work 
Plan (IWP) or Individual Plan for Employment (IPE)'' i.e., engaging in 
activities outlined in one's plan on a regular and timely basis.
    After 2 years, beneficiaries would be required to meet 
progressively higher levels of employment to continue to be considered 
``using a ticket'' in order to receive protection regarding non-
initiation of continuing disability reviews.
    In the 3rd year of participation in the Ticket to Work program, 
beneficiaries would be required to work at least 3 (not necessarily 
consecutive) months in a 12-month period at the Substantial Gainful 
Activity (SGA) level (currently set at $700 for non-blind 
beneficiaries).
    In the 4th year of participation in the program, the beneficiary 
would be required to work at least 6 (not necessarily consecutive) 
months during a 12-month period at the SGA level.
    In the 5th and succeeding years, in order to be considered to be 
using a ticket, beneficiaries would be required to work at least 6 (not 
necessarily consecutive) months in each year and have earnings in each 
such month that were sufficient to eliminate the payment of SSDI 
benefits and Federal SSI benefits.
    SSA explains that progress toward self-sufficiency is not always 
continuous and that for some, full self-sufficiency may not be 
attained. Many beneficiaries have disabilities with cycles of relapse 
and remission. The requirements for only 3 months out of 12 in the 
third year and 6 months out of 12 in succeeding years recognizes that 
some beneficiaries may not be able to work on a continuous basis.
IAPSRS Comment
    IAPSRS supports allowing beneficiaries to ``bank'' work months in 
the first two years to count towards the work requirements in later 
years. In year 5 and beyond, IAPSRS supports allowing work in excess of 
the six-month requirement to count toward the next year's requirement. 
Further, IAPSRS recommends that increasing amounts of work or earnings, 
even if below SGA, be evaluated as meeting the definition of 
``progressively higher levels of employment'' in order for a person to 
keep their CDR protection.
Rationale
    Many beneficiaries have disabilities that are episodic and 
intermittent. While some people may not be able to work right away, 
others might be able to work sooner but may experience difficulties 
later. It is not fair to those who can work earlier to penalize them 
because their work effort did not fall precisely within the stringent 
timeframe established in the regulation. Further, the rule ignores that 
many people may work at increasing levels of income or hours, but never 
reach the SGA earnings threshold.
(6) Proposed Rule--Eligibility Criteria
    An entity applies by responding to a Request For Proposal (RFP) 
issued by SSA. The entity must assure that it is qualified to provide 
employment services, vocational rehabilitation services, or other 
support services to disabled beneficiaries either directly or through 
contract or other arrangement. For example, the entity must assure that 
it is licensed, certified, accredited or registered to provide these 
services or is able to arrange for other entities to provide these 
services.
    To serve as an employment network, an entity must meet and maintain 
compliance with both general and specific selection criteria.
    General selection criteria include (but are not limited to) having 
systems in place to ensure confidentiality of personal information, 
physical and program accessibility, the existence of nondiscriminatory 
policies, practices, and procedures (based on beneficiaries age, 
gender, race, color, creed, or national origin), having adequate 
resources to perform activities, and implementing fiscal control and 
fund accounting procedures.
    Specific criteria include (but are not limited to) use of qualified 
staff and providing medical and related health services under the 
formal supervision of licensed persons.
    Any entity must have applicable certificates, licenses, or other 
credentials if state law requires such documentation.
IAPSRS Comment
    IAPSRS recommends that the broadest discretion be given to ENs 
regarding how to comply with these requirements. IAPSRS also recommends 
that state law not become a barrier to participation by ENs by allowing 
the Commissioner to suggest alternative means of qualifying if an 
entity cannot or does not meet state requirements. In addition, IAPSRS 
is concerned about the mandate that ENs provide medical and health 
related services and suggest limiting this provision to those entities 
that already provide such benefits.
Rationale
    IAPSRS is concerned that credentialing requirements could exclude 
smaller or niche providers that serve specific populations. Any 
credentialing requirement must be broad enough to ensure the fullest 
array of providers. IAPSRS is particularly concerned that states could 
levy requirements intended to give state VR agencies exclusive domain 
in determining who is and is not an EN. IAPSRS is also concerned that 
requirement that ENs provide medical and related health services is 
overly burdensome to smaller providers.
(7) Proposed Rule--Reporting Requirements
    The following reporting requirements are placed on entities that 
wish to participate in the Ticket to Work program as employment 
networks:
     Report to the Program Manager each time it accepts a 
ticket for assignment.
     Submit to the Program Manager a copy of each signed 
individual work plan and copies of amendments thereto.
     Submit to the Program Manager a copy of any agreement the 
employment network has established with a state VR agency regarding the 
provision of VR services.
     Report to the Program Manager the specific outcomes 
achieved consistent with a national model to be prescribed by the SSA.
     Provide a copy of most recent annual report on outcomes to 
each beneficiary and ensure that copy available to public while 
ensuring confidentiality of personal information.
     Meet financial reporting requirements, such as 
demonstrating the percentage of the employment network's budget that 
was spent on serving beneficiaries with tickets (including the amount 
spent on beneficiaries who return to work and those who do not return 
to work).
     Collect and record all data required by SSA.
     Adhere to all statutory and regulatory requirements.
    Further, the proposed rule requires ENs to report to the PM 
regarding a beneficiaries earnings and income in order to be eligible 
for an outcome payment. This includes submitting documentation such as 
earnings slips or pay stubs, and the SSA Form 821 that is completed by 
the beneficiary.
IAPSRS Comment
    The income reporting requirements externalize a long-standing 
problem at SSA--mainly the agency's inability to accurately and 
expeditiously track earnings and adjust benefits. IAPSRS opposes 
turning ENs and their staff into accountants and employees of the 
agency.
Rationale
    The income reporting rules require the EN to collect and report 
information that the EN may not have access to and might violate a 
beneficiary's privacy if requested by the EN from either the 
beneficiary or the employer.
Overpayments
    Currently, SSA does not have the means to intake and track earnings 
of beneficiaries who work. Frequently, beneficiaries who work continue 
to receive disability checks despite the fact that their earnings have 
made them ineligible for benefits. Further, SSA takes months, usually 
years, to ``catch up'' with a beneficiary who should have had their 
checks stopped. When SSA does catch up with a beneficiary, the person 
usually owes thousands, and maybe tens of thousands, in overpayments. 
This creates havoc with a beneficiary who in the course of attempting 
to work finds themselves financially worse off. SSA ignores this 
problem despite the impact on individuals. However, with the payment to 
ENs and the CDR protection now dependent on SSA stopping checks in a 
timely fashion, this problem has become catastrophic.
(8) Proposed Rule--None
    Although SSA has not proposed a rule on this issue, this matter is 
critical to the success of the Ticket program. SSA must address this 
issue. IAPSRS Comment IAPSRS recommends that an EN's report to the PM 
on a beneficiary's income and earnings be given by the PM to SSA within 
30 days, and if within 60 days of the PM's report to SSA, SSA has 
failed to appropriately stop or adjust a beneficiary's check, SSA 
cannot hold the beneficiary liable for overpayments and SSA must make 
payment to the EN as though the benefit has been adjusted or ceased.
Rationale
    SSA must act immediately to reform and improve income-reporting 
systems, or not hold beneficiaries and ENs responsible for the failings 
of the agency. Further, if ENs must report incomes and earnings to the 
PM, along with the SSA Form 821, then SSA must have an incentive to 
prioritize these reports.
(9) Proposed Rule--Evaluation of ENs
    SSA will periodically review the results of the work of each 
employment network to ensure effective quality assurance in the 
provision of services to ticket holders. In conducting these reviews, 
SSA will solicit and consider the views of the consumers of the 
employment network and the Program Manager that monitors the employment 
network. Results of these reviews must be made available to the 
disabled beneficiaries. IAPSRS Comment Consumer satisfaction measures 
and the ability to inform Ticket holders of the quality of ENs in their 
area is critical. Measuring consumer satisfaction through a survey is 
only one such way to accomplish this goal, but IAPSRS also urges SSA to 
examine employment outcomes, including types of placements and income 
levels of the placements. However, since many ENs will serve only one 
disability population, IAPSRS cautions against comparing ENs across 
disability groups.
State Vocational Rehabilitation Agencies
(10) Proposed Rule--Automatic Assignment of a Ticket to VR
    SSA is proposing that when a beneficiary signs a plan as defined 
under Rehab Act (IPE), the beneficiary has automatically assigned their 
Ticket, regardless of whether the VR agency is an employment network.
IAPSRS Comment
    IAPSRS opposes this requirement and recommends that it be struck.
Rationale
    The hallmark of the Ticket-to-Work is consumer choice. Requiring a 
beneficiary to assign their Ticket to VR, whether they choose to or 
not, negates that choice. Further, a beneficiary may be eligible for VR 
benefits without having to assign their Ticket and, in fact the Rehab. 
Act as amended in 1998 states that SSI and SSDI beneficiaries are 
``presumptively eligible'' for VR benefits. Making a beneficiary use 
their Ticket when VR might be required under the Rehab. Act to serve 
that individual anyway denies the use of the Ticket to beneficiary at a 
later date. If VR chooses the cost reimbursement system for a higher 
cost individual, this person would find themselves without a Ticket and 
still on benefits since VR is only requirement to show nine months of 
work above SGA. That is a far lower employment goal than for other ENs.
(11) Proposed Rule--Agreements between State VR Agencies and ENs
    SSA is proposing that as part of the broad agreement between ENs 
and State VR agencies, that the agreement must stipulate ``the terms 
and procedures under which the EN will pay the State VR Agency for 
providing services.''
IAPSRS Comment
    IAPSRS opposes this requirement and recommends that it be struck.
Rationale
    SSA should not be establishing the terms of the agreement in the 
regulations. These agreements should be arrived at openly and freely 
without one side or the other having the weight of regulation on their 
side. Stipulating that ENs will be paying VR presumes that this will 
always be the case. In fact, with many populations it is VR that pays 
ENs for services. Presuming in the regulation that ENs will be paying 
VR for services assumes that VR and the Ticket pay for the same 
services. In fact they do not. VR's standard to achieve a closure is 90 
days of employment, and to collect under the cost reimbursement system 
is nine months of employment at or above SGA, while ENs under the 
ticket must wait at least 60 months for their payment. The Ticket is 
meant to help pay for long-term supports that VR agencies are unable to 
pay for. Making ENs pay VR out of the Ticket renders useless that 
critical role of the Ticket. Finally, this language was struck from the 
final version of the bill before it passed the House in October of 
1999. SSA, RSA, Dept. of Education, House Ways and Means Committee 
staff and disability groups all participated in a 1999 meeting where it 
was agreed that this language was inappropriate. It should not now be 
resurrected in the regulations.

                               SSA's PROPOSED SSI MILESTONE-OUTCOME PAYMENT SYSTEM
----------------------------------------------------------------------------------------------------------------
                                           Amount of                            Monthly
       Monthly Earnings         Countable   Benefit    SSI Cash   Milestone     Outcome         SSA Breakeven
                                 Income      Offset    Payment     Payment    Payment Amt
----------------------------------------------------------------------------------------------------------------
$1 to $85....................  $0          $0         $459       ..........  $0             ....................
$100.........................  $15         $7.50      $451.50    ..........  $0             ....................
$125.........................  $40         $20        $439       ..........  $0             Under this scenario,
                                                                                             SSA breaks even at
                                                                                             dollar one
$150.........................  $65         $32.50     $426.50    ..........  $0             ....................
$175.........................  $90         $45        $414       ..........  $0             ....................
$200.........................  $115        $57.50     $401.50    ..........  $0             ....................
$225.........................  $140        $70        $389       ..........  $0             ....................
$250.........................  $165        $82.50     $376.50    ..........  $0             SSA shares no risk
                                                                                             under this scenario
$275.........................  $190        $95        $364       ..........  $0             ....................
$300.........................  $215        $107.50    $351.50    ..........  $0             ....................
$325.........................  $240        $120       $339       ..........  $0             ....................
$350.........................  $265        $132.50    $326.50    ..........  $0             ....................
$375.........................  $290        $145       $314       ..........  $0             ....................
$400.........................  $315        $157.50    $301.50    ..........  $0             ....................
$425.........................  $340        $170       $289       ..........  $0             ....................
$450.........................  $365        $182.50    $276.50    ..........  $0             ....................
$475.........................  $390        $195       $264       ..........  $0             ....................
$500.........................  $415        $207.50    $251.50    ..........  $0             ....................
$525.........................  $440        $220       $239       ..........  $0             ....................
$550.........................  $465        $232.50    $226.50    ..........  $0             ....................
$575.........................  $490        $245       $214       ..........  $0             ....................
$600.........................  $515        $257.50    $201.50    ..........  $0             ....................
$625.........................  $540        $270       $189       ..........  $0             ....................
$650.........................  $565        $282.50    $176.50    ..........  $0             ....................
$675.........................  $590        $295       $164       ..........  $0             ....................
$700.........................  $615        $307.50    $151.50    ..........  $0             ....................
$725.........................  $640        $320       $139       ..........  $0             ....................
$740.........................  $655        $327.50    $131.50    $300/3      .............  ....................
                                                                  months
                                                                 $600/7
                                                                  months
$750.........................  $665        $332.50    $126.50    ..........  $0             ....................
$775.........................  $690        $345       $114       ..........  $0             ....................
$800.........................  $715        $357.50    $101.50    ..........  $0             ....................
$825.........................  $740        $370       $89        ..........  $0             ....................
$850.........................  $765        $382.50    $76.50     ..........  $0             ....................
$875.........................  $790        $395       $64        ..........  $0             ....................
$900.........................  $815        $407.50    $51.50     ..........  $0             ....................
$925.........................  $840        $420       $39        ..........  $0             ....................
$950.........................  $865        $432.50    $26.50     ..........  $0             ....................
$975.........................  $890        $445       $14        ..........  $0             ....................
$1,000.......................  $915        $457.50    $1.50      ..........  $0             ....................
$1,003.......................  $918        $459       $0.00                  Year       1     2     3     4
                                                                                                    5
                                                                             $57  $141  $150  $158  $167
----------------------------------------------------------------------------------------------------------------

                                    ALTERNATIVE SSI MILESTONE-OUTCOME SYSTEM
----------------------------------------------------------------------------------------------------------------
                                           Amount of
       Monthly Earnings         Countable   Benefit    SSI Cash   Milestone    Monthly Outcome    SSA Breakeven
                                 Income      Offset    Payment     Payment       Payment Amt
----------------------------------------------------------------------------------------------------------------
$1 to $85....................  $0          $0         $459       ..........  $0                  ...............
$100.........................  $15         $7.50      $451.50    ..........  $0                  ...............
$125.........................  $40         $20        $439       $500        $0                  25 months
$150.........................  $65         $32.50     $426.50    ..........  $0                  ...............
$175.........................  $90         $45        $414       ..........  $0                  ...............
$200.........................  $115        $57.50     $401.50    ..........  $0                  ...............
$225.........................  $140        $70        $389       ..........  $0                  ...............
$250.........................  $165        $82.50     $376.50    ..........  $0                  ...............
$275.........................  $190        $95        $364       ..........  $0                  ...............
$300.........................  $215        $107.50    $351.50    ..........  $0                  ...............
$325.........................  $240        $120       $339       $1,000      $0                  13 months
$350.........................  $265        $132.50    $326.50    ..........  $53                 11 months
$375.........................  $290        $145       $314       ..........  $53                 ...............
$400.........................  $315        $157.50    $301.50    ..........  $53                 Total payment
$425.........................  $340        $170       $289       ..........  $53                 $4,680
$450.........................  $365        $182.50    $276.50    ..........  $53                 milestone
                                                                                                  $1,500
$475.........................  $390        $195       $264       ..........  $53                 outcome $3,180
$500.........................  $415        $207.50    $251.50    ..........  $53                 ...............
$525.........................  $440        $220       $239       ..........  $53                 6 months
$550.........................  $465        $232.50    $226.50    ..........  $93                 10 months
$575.........................  $490        $245       $214       ..........  $93                 ...............
$600.........................  $515        $257.50    $201.50    ..........  $93                 Total payment
$625.........................  $540        $270       $189       ..........  $93                 $7,080
$650.........................  $565        $282.50    $176.50    ..........  $93                 milestone
                                                                                                  $1,500
$675.........................  $590        $295       $164       ..........  $93                 outcome $5,580
$700.........................  $615        $307.50    $151.50    ..........  $93                 ...............
$725.........................  $640        $320       $139       ..........  $93                 ...............
$750.........................  $665        $332.50    $126.50    ..........  $93                 6 months
$775.........................  $690        $345       $114       ..........  $138                7 months
$800.........................  $715        $357.50    $101.50    ..........  $138                ...............
$825.........................  $740        $370       $89        ..........  $138                ...............
$850.........................  $765        $382.50    $76.50     ..........  $138                Total payment
$875.........................  $790        $395       $64        ..........  $138                $9,780
$900.........................  $815        $407.50    $51.50     ..........  $138                milestone
                                                                                                  $1,500
$925.........................  $840        $420       $39        ..........  $138                outcome $8,280
$950.........................  $865        $432.50    $26.50     ..........  $138                ...............
$975.........................  $890        $445       $14        ..........  $138                ...............
$1,000.......................  $915        $457.50    $1.50      ..........  $138                5 months
$1,003.......................  $918        $459       $0.00      ..........  $150                5 months
                                                                             5 months
                               ..........  .........  .........  ..........  milestone outcome   Total payment
                                                                             $1,500 + $9,000     =$10,500
----------------------------------------------------------------------------------------------------------------

                                

    Chairman Shaw. Mr. Brady.
    Mr. Brady. Thank you, Mr. Chairman.
    Obviously, there seems to be a consistent request that the 
timetable be slowed down a bit so that we can do it right. And 
one of those issues that has been raised by almost everyone is 
that because the key to finding jobs that people are qualified 
for and enjoy doing, the key to that is attracting a broad 
number of providers with different skill levels beyond just the 
State vocational institute; is that right? And under the 
current timetable and some certification, licensing proposals, 
the fear is that it is burdensome, it is time consuming, that 
it is going to discourage people from stepping forward. Is that 
correct as well?
    Mr. Seifert. Yes.
    Mr. Brady. Can I ask a question of Charles, Mr. Harles? 
Your members many of them already provide services of some type 
to clients right now, is that correct?
    Mr. Harles. Yes. We place approximately 10,000 persons with 
disabilities per year.
    Mr. Brady. I am new to the Committee, so this is naive, but 
do you have--do your members have a paperless or an electronic 
option when filing reporting and compliance documents with the 
Social Security Administration?
    Mr. Harles. Well, currently, one of the problems is none of 
our members can work with the Social Security Administration 
because there is no way for them to participate--there is, I 
guess on paper, if you will, an alternative participant program 
that only a handful of organizations have been able to get 
referrals from. So currently our members don't work directly 
with Social Security. They work primarily with, in our case, 
quite a few of them, directly with the U.S. Department of 
Education and the U.S. Department of Labor but also with a 
variety of State agencies.
    Mr. Brady. Well, I ask this mainly because I am still 
concerned about us attracting the broadest range of providers, 
the burdens have--one, we need compliance, we need standards, 
but we want to streamline the administrative burden, and it 
seems like in this day and age, as a government, we ought not 
ever roll out a program that doesn't have an electronic 
opening, a paperless option that allows companies to comply 
electronically. Not only does it remove the administrative 
burden, but it sends a signal that we have thought through this 
problem and want to make that burden as light as possible, but 
still requiring the information we need to run the program. So 
that is where I was headed with that.
    Mr. Harles. I really appreciate that.
    At the same time, Social Security and the MAXIMUS 
organization that will be actually running the program need to 
focus that the concept here is you pay for outcomes and not for 
process. A lot of times the paperwork that they are requiring 
you to do is process oriented and not necessarily outcome 
oriented.
    Mr. Brady. Agree, it just seems like a concern for many 
companies. Normally, when they ask can I do this 
electronically--can we do this electronically, the response is: 
We are just not set up to do that. It seems like in this day 
and age, we ought not to have any new programs that are not set 
up that way to attract good providers, that could mean good 
jobs for our folks who are our future workers.
    That is all. Thank you, Mr. Chairman.
    Chairman Shaw. I have a couple of short questions, and 
these are directed to anyone on the panel that cares to reply 
to it. It is based on the concerns that each of you have raised 
in your testimony.
    Would you recommend that the acting commissioner hold off 
implementation until the regulations can be fixed? I know that 
each one of you have been critical. And elaborate as to the 
advantages or disadvantages of moving forward.
    Ms. Prokop. Since I am representing the CCD task force, I 
do not think we have had an opportunity to discuss amongst 
ourselves how much of a delay or whether one ought to be placed 
on the implementation of regs.
    There are pros and cons to both sides of the argument. Some 
people say if things are delayed too much, then there are 
certain reports that have to be made within the time lines of 
the law that may not be done in a timely fashion. The fear is 
that the data collection that needs to be done will be 
ineffective if you don't get the program going. On the other 
hand, we have all heard today a number of concerns about 
getting the program going without certain structures in place 
that are appropriate to make it work effectively.
    I would be interested in what my colleagues have to say 
about this.
    Mr. Harles. Well, I guess my primary comment would be that 
I am a little afraid of going down the route of seeing when 
final regulations are published, given how long it has taken 
not just the Social Security Administration, but a number of 
Federal agencies, to get final regulations out. I don't want to 
come back a year from now saying that we still do not have the 
regulation.
    On the other hand, there are some serious concerns about 
the regulations and maybe there is something in between. 
Someone used the words ``interim final regulations'' that we 
might have by a certain date or something and still leave it 
open for possible future changes for some of the more difficult 
problems. But I think our position would be that we do need to 
move toward implementation but also try to address some of the 
serious problems that we have identified.
    Ms. Ford. Well, from the perspective of the consumer, I 
think that the disadvantages include massive confusion and 
eventually distrust of the Social Security Administration if 
the program is rolled out before some pretty significant 
changes get made, or at least that we hope get made. And I 
agree with Charlie that it may not make sense to wait until the 
actual final regs, because we know how long it took between 
when those proposed regs were ready last summer and when they 
were actually published in December.
    So perhaps it would be appropriate to roll out the program 
when it reaches the point of final design of the program; 
because to go too soon, to go now or in the next 2 months, 
would imply that some of these serious issues are not being 
taken into consideration, and I would want to see the changes 
made or incorporated before the program is rolled out.
    Mr. Seifert. Well, as I said in my testimony, we think they 
ought to wait until they have reviewed all the comments and fix 
the problems with this program.
    I think the reason is that there is already a pretty long 
history of Social Security not doing things very well, 
overpayments being one, rep payees being another, the alternate 
provider program being another. If the Ticket program rolls out 
without these problems fixed and the first splash is, well, it 
just did not work, sorry, then the rest of the States, the 
other 30-some-odd States where this has to roll out, the well 
is going to be poisoned. The word is going to be out that it 
did not work in the 13 States. It is not going to work here. 
Nobody will sign up. Nobody will use a ticket.
    And I think then you are coming back and doing a major 
legislative revamp 3 or 4 years from now. And I think that is a 
pretty ugly hearing, actually, when somebody from Social 
Security has to come up here and testify about why this program 
did not work.
    Chairman Shaw. Okay. The second question that I have, I am 
getting the sense that, in general, SSA has designed a draft 
rule which tries to fit too many different types of shapes into 
one round hole. I believe you testified to that. In other 
words, different disabilities require different supports and 
different time frames to transition into a work environment. I 
am hearing that SSA needs to try to individualize its approach 
to different types of disabilities. How does the agency do that 
without creating unmanageable administrative burdens?
    Ms. Ford. I will start. I think that the Agency could use 
the system it has designed, with a program manager and the 
employment networks that work together with the individual to 
achieve some of that individualization that needs to go on.
    I think it makes sense to have a general rule, because you 
can handle a lot of cases, if not most cases, with a general 
rule if it works, and then have individualized approaches where 
it is necessary. And that is why in a couple of places in my 
testimony we talk about allowing the employment network in 
concert with the program manager to deem somebody's work effort 
to be equivalent to the general rule, for example for meeting 
``timely progress.''
    There are ways that you could build some of this structure 
into the individualized work plan process. That plan is 
basically the contract between the individual and the 
employment network that has to be approved by the program 
manager. There are three players there, and SSA can use that 
structure to help design some of the individualized or 
customized approaches where the rigid standard does not work 
for a particular person in particular circumstances.
    Ms. Prokop. The same holds true in the pieces about dispute 
resolution. We have made the suggestion that a model dispute 
resolution grievance procedure should be provided to employment 
networks. Then, if there is a problem, and there was 
flexibility to tailor that procedure according to the type of 
employment network involved, at least these would be a 
foundation so that everybody has a general sense of what rules 
they are playing with. But, again it should still be flexible 
enough to allow for differences among beneficiaries and 
employment networks.
    Mr. Harles. I have another related issue to do with 
milestone payments. One of the suggestions that we have made is 
that Social Security could use the ramp-up period the first 
couple of years to look at utilizing several different models 
to see which in fact actually, proved to be most helpful kind 
of thing in that process. Right now they just start off with 
one program that is virtually untested. I think that they have 
got an opportunity, if they will take it, to come up with 
several possible different milestones, maybe even to be used in 
different States or whatever, to see which systems might work 
best.
    Mr. Seifert. I think on the issue of the MIEs, and the CDR 
timely progress requirements, I don't think that would be a 
very complicated thing for Social Security to do at all. I 
mean, clearly we know from the numbers that very few 
beneficiaries are terminated before their first CDR. I do not 
see how that dramatically affects the financial situation of 
the program.
    However, on the issue of overpayments, and Social 
Security's inability to track earnings for the DI population, 
that is nothing less than a systems problem and will require 
substantial resources for them to bring that up to par with 
what they should be able to do under the Ticket program, much 
less what they should be able to do generally for beneficiaries 
who work.
    What they have done here in this proposed regulation is 
externalized that problem to the employment network and made 
them the agent for doing their work, with no real guarantee 
that if the provider does make the report and does verify the 
earnings, that once it lands in the SSA field office, that 
anything will happen to it.
    So I think there's a mutter around some of these issues 
that are just going to require better financing and 
restructuring of their systems.
    Chairman Shaw. I have one further thing. Ms. Ford, in your 
testimony you talked about--I am pretty sure you are the one--
you were talking about the limitation of the tickets and that 
you think--and did I understand you to say that there should be 
no limitation?
    Ms. Ford. Well, first of all in the way the Arc reads the 
regulation, it could be read to say you get one ticket per 
life. In conversations--obviously off-the-record conversations 
because they don't ultimately count--with folks in the SSA, I 
understand that that was not necessarily the intent. But then 
to step backwards, it is clear that they do mean at least only 
one ticket per period of disability.
    And for our folks, people with mental retardation whose 
impairment is lifelong and quite severe, that also does not 
make sense because the period of disability is more or less 
lifetime. And if you do have an individual successfully leaving 
the program through the use of a ticket, who goes to work, and 
then something occurs and they have to go back in the system, 
they may be using the expedited reinstatement, and that 
reinstates them to their original disability.
    So technically, there are some problems here, and in terms 
of congressional intent, I don't think that it was anticipated 
that an individual would just get one chance. I think these are 
folks with very severe disabilities who are going to encounter 
all sorts of things that happen in life and additional things 
that do not happen to most people. And they are going to need 
additional chances. So I think the one ticket per period of 
disability is also far too limiting.
    Chairman Shaw. So you are telling me once they get into the 
workforce, they drop out of the workforce, and then do it 
again, that they can't get back in the program?
    Ms. Ford. That is how I read it.
    Chairman Shaw. Is that what is happening?
    Ms. Ford. That is how I read the proposed regulations.
    Chairman Shaw. Well, that does require some help from us.
    Thank you all very much. We appreciate the work that you 
have done and the time that you have given us this afternoon. 
Thank you.
    [Whereupon, at 3:40 p.m., the hearing was adjourned.]
    [Questions submitted from Chairman Shaw to the panel, and 
their responses follow:]

                  Consortium for Citizens with Disabilities
                                       Washington, DC 20005
                                             March 30, 2001
Hon. E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
U.S. House of Representatives
Washington, DC. 20515
    Dear Mr. Chairman: 
    This is in response to your letter of March 8th seeking additional 
information on the testimony presented on behalf of the Consortium for 
Citizens with Disabilities Task Forces on Employment and Training, 
Social Security and Work Incentives Implementation. Your subcommittee's 
questions and our responses are presented below.
    1. The Advisory Panel testified that feedback received in their 
regional meetings showed a great deal of confusion in the minds of even 
sophisticated beneficiaries and their advocates regarding various 
aspects of the new law, such as health care coverage, and using the 
ticket in conjunction with other work incentives. Do you agree with 
this statement? If so, what should be done?
    CCD agrees that there is considerable confusion among many 
beneficiaries and advocates over the work incentives law. Although the 
Ticket to Work and Work Incentives Improvement Act represented a major 
advance in giving Social Security disability beneficiaries additional 
tools to go to work, it was acknowledged from the beginning that this 
would not necessarily simplify the way the system works. Added to this 
has been the troubling aspects of the proposed rule.
    There is particular concern that individuals with significant 
disabilities and their families may hold expectations about the new law 
that may remain unfulfilled due to certain facets of the proposed 
regulations--e.g. inadequate employment network payments or the CDR 
protection rules for ``timely progress.'' In addition, many 
beneficiaries are under the mistaken assumption that they have to 
participate in the ticket program to take advantage of the health care 
provisions of PL 106-170.
    Under TTWWIIA, benefits-protections for returning to work are 
sometimes conditional and difficult to explain meaningfully to 
beneficiaries. For example, beneficiaries in some states will have 
access to the Medicaid buy-in provisions while others will not. The 
Medicare extension is available only to those whose extended period of 
eligibility [EPE] began after June 1997. Long term beneficiaries who 
viewed TTWWIIA as a long overdue opportunity to leave the benefit rolls 
with health care protection will be sadly mistaken. In addition, the 
NPRM suggests that individuals must be in current cash benefits status 
to take part in the Ticket program. Thus, people who are using the 
1619[b] program or who are in their EPE would be ineligible for the 
vocational and employment guidance offered by ENs that might help them 
attain greater levels of self-sufficiency.
    These circumstances point to the importance of the Benefits 
Planning Assistance and Outreach [BPAO] program which has provided 
grants to numerous local advocacy organizations around the country to 
help beneficiaries navigate the complexities of the new law. SSA's 
Employment Support Representative [ESR] initiative which is now being 
pilot tested in a number of SSA offices around the country is another 
means to educate beneficiaries about TTWWIIA. The BPAO program must be 
funded at an adequate level and SSA should be encouraged to increase 
placements of ESRs to assure that these guidance services are widely 
available to SSI and SSDI recipients. An important technological tool 
that should be promoted for use by ESRs and BPAO counselors is the 
WorkWorld software developed by Virginia Commonwealth University. This 
software can assist beneficiaries in making informed decisions about 
work and its impact on a range of supports including their eligibility 
for Social Security, housing, state assistance, and many other 
benefits.
    2. You caution against lowering the age of beneficiaries who may 
participate in the Ticket program to 16 until the multi-disciplinary 
assessment project being conducted through the American Association of 
University Affiliated Programs has been analyzed by SSA. What is the 
purpose of this assessment and when will the findings be released? What 
concerns do you have about lowering the age?
    The AAUAP project is part of SSA's efforts to examine whether it is 
evaluating properly those children who apply for disability benefits or 
who already receive such benefits. Estimated time for release of 
preliminary results is slated for the fall 2001 conference sponsored by 
SSA and the National Academy of Social Insurance.
    Many members of CCD with particular involvement in childrens' 
disability issues believe that lowering the age for Ticket eligibility 
should be carefully considered in light of large numbers of 18 year 
olds who are terminated from the rolls once they apply for adult 
benefits. Many of these terminations involve children with significant 
disabilities. If 16 year olds are encouraged to work using a Ticket, 
that work effort could be used to deny them Medicaid and other income 
supports that they will continue to need after they reach adulthood. 
CCD does not believe this ``Catch 22'' was intended but it is a factor 
that must be taken into account.
    Furthermore, the Individuals with Disabilities Education Act [IDEA] 
of 1997 calls for increased collaboration between school systems and 
vocational rehabilitation agencies on transition planning at younger 
ages. Vocational rehabilitation agencies are supposed to be involved in 
the development of a child's individual education plan [IEP]. Given the 
proposed Ticket regulations, this raises the issue whether a child's 
ticket becomes automatically assigned to the VR agency. If, as the 
proposed rule suggests, the ticket is automatically assigned to the VRA 
once that agency enters the picture, might the VRA pressure the student 
to begin work as quickly as possible so as to collect on the ticket 
rather than pursuing additional education that might pay off for the 
student in the long run?
    CCD feels that questions such as these surrounding 16 to 18 year 
old beneficiaries need to be examined before broadening Ticket 
eligibility to this cohort.
    3. In your testimony, you state that no limits should be placed on 
the number of tickets a person can receive over the course of a 
lifetime. You give the example that some beneficiaries have conditions, 
which are sporadic, episodic, and lifelong. Do you know the cost of 
continued issuance of a ticket for this group of individuals? Do you 
think that these individuals could benefit from a different program to 
help them transition to the workforce? What type of program would that 
be?
    One problem with the proposed rule is that the limit of one Ticket 
``per period of entitlement'' in combination with the expedited reentry 
provisions seems to preclude a beneficiary from getting another Ticket 
once he/she returns to the rolls after a work attempt. Fixing this 
anomaly, however, would not preclude SSA from determining that an 
individual is eligible to receive only one Ticket--period.
    Such a limit also fails to account for the fact that some former 
beneficiaries may need additional job training and/or placement 
counseling if they lose their jobs because of an employer's bankruptcy 
or closure or through layoffs or restructuring. While it could be 
argued that unemployment compensation and displaced worker programs can 
help under those circumstances, these programs may not offer the kind 
of assistance that former SSDI and SSI beneficiaries need to maintain 
their economic independence.
    The Social Security Administration may be able to supply data on 
numbers of SSDI and SSI beneficiaries who return to the rolls after 
going off cash benefits, what the average benefit of these returnees 
may be and how long they remain on the disability rolls or how many 
transfer into the Social Security retirement program. From such 
figures, a general estimate could be made as to the likely costs of 
people NOT getting off the rolls. At the very least, the Committee 
could then consider whether it is better to effect some savings in the 
trust funds versus no savings in the trust funds.
    Before considering another program for individuals who use the 
Ticket program or other work incentives to enter the workforce and then 
return to the benefit rolls, efforts should be applied to making PL 
106-170 work for them.
    4. You stated that family and personal support networks could serve 
as an employment network should they meet the requirements. You also 
said that they would also be in a better position to subcontract with 
an employment network. What type of services could the family or 
support network provide that an employment network or a state 
vocational rehabilitation agency could not? If the family or support 
network subcontracts with an employment network, how would their 
payment be determined? What safeguards would be put in place to ensure 
that families and personal support networks were complying with SSA's 
guidelines for employment networks?
    Families or other individual support networks are often in a better 
position to understand an individual's needs and to work with that 
individual and service providers to meet those needs. Families and 
friends are intimately familiar with a beneficiary's strengths and 
weaknesses, interests and capabilities and would be expected to 
consider first the beneficiary's vocational wishes rather than trying 
to steer the beneficiary in a particular direction out of a desire to 
complete a case. Few people get 100% unqualified support from 
vocational programs like they might from family and friends.
    If a family subcontracts with an EN, payment issues should be 
detailed in that contract as well as in the individual work plan [IWP]. 
As to safeguards, if the EN is accountable for its subcontractors, it 
should make sure that the family support network abides by whatever 
rules are needed to assure that accountability. The key principle in 
this is to promote diversity and innovation of vocational 
rehabilitation approaches as was intended by the law.
    Thank you, again, for giving CCD the opportunity to share its 
thoughts with you and the members of the subcommittee. Please feel free 
to contact me if you have additional questions.
            Sincerely,
                                       Susan Prokop
                                Co-Chair, CCD Task Force on
                                     Work Incentives Implementation

                                

                     Inter-National Association of Business
                                Industry and Rehabilitation
                                Washington, DC 20003 March 30, 2001
Hon. E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
Ways and Means Committee
U.S. House of Representatives, Rayburn House Office Building
Washington, DC 20515

Attn: Kim Hildred.

    Dear Mr. Chairman:
    Following are my answers to the questions you sent me as a followup 
to my testimony before the Subcommittee. I have repeated the questions 
and my answers follow.
    1. The Advisory Panel testified that feedback received in their 
regional meetings showed a great deal of confusion in the minds of even 
sophisticated beneficiaries and their advocates regarding various 
aspects of the new law, such as health care coverage, and using the 
ticket in conjunction with other work incentives. Do you agree with 
this statement? If so, what should be done?
    Yes, the new law can be confusing but it's not just the new law. 
The interaction of Social Security, health insurance and other benefits 
has always been confusing. The benefits planning and outreach aspects 
of TWWIIA are intended to address the confusion and give beneficiaries 
good advice. However, the program is underfunded. Funding should be at 
least double the amount allocated for FY 2001 and training for all 
rehabilitation professionals and other interested persons should be 
made more widely available.
    2. You are very concerned that not enough employment networks are 
available to service ticket holders and that certain groups may get 
left out due to SSA's rules. Why do you think SSA developed the rule in 
such a manner when the clear intent of the law is to encourage greater 
numbers of innovative services? If those new networks are not developed 
through more innovative services, will there ever be enough services 
for the kind of success the legislation envisioned?
    Far be it for me to try and guess why SSA wrote a proposed rule 
that we think limits, rather than expands the universe of employment 
networks. Whether there will be enough EN's is dependent upon SSA and 
Maximus, the program manager, developing a fair and easy method to 
become an EN. The more pressing problem is the low `payment calculation 
base' that SSA plans to use and the milestone payments. The figures and 
methods proposed by SSA will severely limit the TWWIIA program.
    3. You caution against SSA's plan to issue tickets in 13 States, 
stating that there are not sufficient employment networks. You 
indicated a concern as to the qualifications that SSA will require to 
become an employment network. First, why is there such a shortage of 
employment networks at this time? What is needed to correct the 
situation? What qualifications do you believe should be included for an 
employment network?
    The shortage of EN's is due to the fact that over a year after 
passage of TWWIIA there is still not in place a procedure to qualify as 
an EN. As for qualifications, there should be evidence of experience 
and success in providing training and placement and follow up services 
to persons with disabilities. SSA is placing too much emphasis on state 
cerification and educational qualifications. Ticket to Work is supposed 
to be based on outcomes--not procedures.
    4. You state in your testimony that the intent of Congress was that 
the universe of service providers be expanded and that non-traditional 
providers be included so that beneficiaries will be given maximum 
choice in who they will go to get services that will help them go to 
work. Can you give us examples of non-traditional providers, and 
whether under the draft rules these types of providers would be 
expected to participate?
    Among our membership some non-traditional organizations include: 
Union programs such as IAMCARES; Employer foundations such as Marriott 
Foundation; Community colleges; Project with Industry programs (funded 
by US Dept of Education); and State associations of rehabilitation 
providers.
    5. You indicate that the mandate that employment networks provide 
medical and health related services is overly burdensome and should 
apply only to those entities who choose to provide those services. What 
will happen if only a few employment networks choose to provide those 
services? Are employment networks unwilling to subcontract for these 
services?
    People on SSI/SSDI will have Medicaid and/or Medicare coverage to 
cover most medical services. I don't think Congress intended the TWWIIA 
program to provide medical services. The level of outcome funding is 
not adequate to include any meaningful level of medical services that 
might not be included in Medicaid or Medicare. It would be more 
appropriate to have EN's refer beneficiaries to appropriate medical 
providers.
    6. One of the other witnesses stated that family and personal 
support networks could serve as an employment network should they meet 
the requirements. The witness also stated that the families and 
personal support networks would be in a better position to subcontract 
with an employment network. In your opinion, what type of services 
could the family or support network provide that an employment network 
or a state vocational rehabilitation agency could not? If the family or 
support network subcontracts with an employment network, how would 
their payment be determined? What safeguards would be put in place to 
ensure that families and personal support networks were complying with 
SSA's guidelines for employment networks?
    Our programs have not been involved in situations involving family 
and personal support systems. We can see where such supports can be 
very helpful. Exactly what those services could be and how they could 
be paid for would have to be a matter of negotiation between a 
qualified EN and the support system.
    I hope these answers have been helpful. Please let me know if there 
is anything further I can do.
            Sincerely,
                                         Charles Wm. Harles
                                                 Executive Director

                                

                               The Arc of the United States
                                       Washington, DC 20003
                                            March 30, 2001.
Hon. E. Clay Shaw, Jr.,
Chairman, Subcommittee on Social Security
U.S. House of Representatives
 Washington, DC 20515
    Dear Chairman Shaw:
    This is in response to your letter of March 8 requesting additional 
information on The Arc's testimony regarding the Social Security 
Administration's proposed regulations to implement portions of the 
Ticket to Work and Work Incentives Improvement Act. You asked for more 
information in five areas. I will address each question in turn.
    1. The Advisory Panel testified that feedback received in their 
regional meetings showed a great deal of confusion in the minds of even 
sophisticated beneficiaries and their advocates regarding various 
aspects of the new law, such as health care coverage, and using the 
ticket in conjunction with other work incentives. Do you agree with 
this statement? If so, what should be done?
    I agree that there is significant potential for confusion among all 
beneficiaries, sophisticated or not. While the provisions of the Ticket 
to Work and Work Incentives Improvement Act are important improvements 
to work incentives, they were not necessarily simplifications in the 
way the Social Security systems and programs work. In fact, adding new 
work incentives to the already existing ones probably increased the 
complexity of the programs for many people. An important aspect of the 
new law which is designed to help beneficiaries through the maze is the 
grant program for benefits planning and assistance. The disability 
community supported this program for the very reasons identified in 
your question. People will need assistance in identifying the work 
incentives appropriate to their situations and in maneuvering through 
the various programs, old and new, available to them. In addition, SSA 
is required to establish within its own ranks a corps of trained, 
accessible, and responsive work incentives specialists. Technical 
assistance from the SSA specialists will be important in ensuring that 
the benefits planning grants are successful. In addition, on-going 
training and cooperation between the SSA specialists and the benefits 
planners will be essential. We urge that the benefits planning and 
assistance program and the SSA Limitation on Administrative Expenses be 
funded at levels adequate to ensure that beneficiaries receive the 
assistance they need prior to making important decisions.
    2. You caution against lowering the age of beneficiaries who may 
participate in the Ticket program to 16 until the multi-disciplinary 
assessment project being conducted through the American Association of 
University Affiliated Programs has been analyzed by SSA. What is the 
purpose of this assessment and when will the findings be released? What 
concerns do you have about lowering the age?
    The assessment is part of SSA's ongoing work to ensure that it is 
appropriately assessing children who apply for the SSI program or 
already receive disability benefits. For children turning age 18, their 
eligibility will be redetermined based on the SSI adult program rules. 
Preliminary information on the first two years of the project has been 
discussed at joint meetings of SSA and the National Academy of Social 
Insurance. Preliminary information on the project's third year (18 year 
olds have only been included in Year 3 thus far) will likely be 
discussed at the SSA/NASI conference targeted for the fall of 2001.
    Our concerns about lowering the age are somewhat related to the 
high numbers of 18 year olds who have been denied adult SSI benefits at 
redetermination. While some cessations are likely due to improvements 
in a child's condition, many advocates are concerned that there are 
other factors leading to a high percentage of cessations. What those 
factors are and whether they are appropriate are unknown. We believe 
that it is premature to encourage these children to use the work 
incentives if, in fact, work effort before age 18 serves to make them 
ineligible for needed long term supports through SSI and Medicaid. It 
is unfortunate that we find it necessary to be so cautious, but it 
relates to the way in which public policy in this area has evolved. For 
some children, income supports and Medicaid long term supports will be 
necessary throughout their lives, even though they may work to their 
greatest capacity to increase their financial independence and 
security. For those children, it can be very risky to produce earnings 
before the redetermination, or initial application, at age 18. This is 
most likely an unintended consequence of the way the eligibility, 
redetermination, and work incentives rules interact, but it is a 
reality that must be considered.
    There are some additional considerations, as well, based on the 
current structure of the proposed regulations. Local education agencies 
and state vocational rehabilitation agencies are under statutory 
mandates to work cooperatively on behalf of children in special 
education in preparing them for the work world. SSA's entry into this 
cooperative arrangement would be as a bill-payer only. The school 
systems and state vocational rehabilitation agencies have a very spotty 
record on assisting children with the transition to work. Given SSA's 
redetermination record, the school/VR record on transition, and the 
newness of the Ticket program, we urge a very cautious approach. We 
also question whether it is a good use of SSA resources to pay for 
services that a child may be already eligible for from another source, 
especially when so many advocates read the proposed Ticket rules to 
allow only one Ticket per period of disability and that state VR will 
be required to use the Ticket for payment. It seems that a Ticket would 
be more useful to the person later in their work-life, if they need it, 
when the school system is no longer available to them.
    3. You mention past errors in rehabilitation programs created 
through a ``creaming'' trap. What is the ``creaming'' trap and could 
you elaborate as to the types of errors you are referring to?
    ``Creaming'' within rehabilitation programs is the practice of 
serving those individuals with disabilities whose conditions are not 
severe and who are most likely to successfully complete their 
rehabilitation and be placed into employment. Such a practice often 
left unserved those individuals with severe and/or multiple 
disabilities whose rehabilitation would take longer, cost more, and be 
more risky in terms of an employment outcome. We want to avoid such 
results in the Ticket to Work program and believe that SSA has several 
mandates to address the needs of those who are harder to serve, more 
costly to serve, or whose employment outcome is less certain.
    4. In your testimony, you are concerned that the agency does a poor 
job tracking earnings. Would you share with us some of your 
recommendations how SSA could improve their method of collecting and 
recording?
    In testimony before the Subcommittee on Human Resources on ``SSI 
Fraud and Abuse'' (Feb. 3, 1999) on behalf of the Consortium for 
Citizens with Disabilities Task Force on Social Security, I made 
several recommendations regarding the need for SSA to address the 
problems with collection of earnings reports and adjustments of 
benefits payments. First, CCD noted that SSA has no specific way for 
earned income reports to be made; they can be made in writing, by 
calling the 800 number, or by stopping by to report at an SSA field 
office. There is no particular form to file and no official record for 
the beneficiary to use to prove the report was made. In addition, there 
appears to be no effective internal system for recording the income 
which beneficiaries report. Finally, we noted that the program rules 
and formulas are so complex that, when an individual reports income and 
there is no change in the benefit amount, the individual may not be 
aware that an overpayment is occurring. As a result, the possibility of 
overpayments is a disincentive for work.
    These complaints are not new to SSA. Over the years, advocates have 
urged SSA to take several steps. One step would be to ensure that 
recording of earnings becomes one of the work tasks for which SSA staff 
receive credit in their employee evaluations. Until they are held 
accountable for this task, it is difficult for staff to place the 
proper priority on this work task. Another step would be to issue a 
``receipt'' to beneficiaries each time they report earnings. SSA should 
keep electronic copies of these receipts so that SSA's own records 
reflect the reports and beneficiaries should be able to use the 
receipts to prove that they have made proper and timely reports 
regardless whether SSA has actually adjusted benefits based on the 
reports. We have also urged that SSA develop a process for allowing 
beneficiaries to report earnings electronically and to use technology 
to assist staff in improving the response to earnings reporting.
    Ultimately, we believe that it will be necessary to reinforce the 
importance of this aspect of SSA's duties through legislation which 
requires SSA to minimize overpayments by notifying beneficiaries of 
overpayments in a timely manner. A reasonable time period should be 
allowed for SSA to notify the beneficiary and correct the overpayment. 
Where there is no suggestion of fraud, overpayments which are not 
corrected and for which beneficiaries are not notified within the time 
limits should be waived. I urge the Subcommittee to consider such 
legislation.
    5. You stated that family and personal support networks could serve 
as an employment network should they meet the requirements. You also 
said that they would also be in a better position to subcontract with 
an employment network. What types of services could the family or 
support network provide that an employment network or a state 
vocational rehabilitation agency could not? If the family or support 
network subcontracts with an employment network, how would their 
payment be determined? What safeguards would be put in place to ensure 
that families and personal support networks were complying with SSA's 
guidelines for employment networks?
    We believe that family and personal support networks are in a 
position to assist a person in ways that are more sensitive to the 
particular needs of the individual. Familiar people can be more attune 
to the nuances of what is or is not working for a person with 
significant disabilities and can play an important role in ongoing 
encouragement and support of the individual. For some people with 
significant impairments, the ability to trust in familiar people, 
rather than in strangers, will be the key to success. If a family or 
personal support network contracts with an employment network, the 
payment arrangements, as well as the roles and responsibilities of each 
party, should be spelled out in the contract. Under such contracts, the 
EN would retain responsibility for complying with SSA's guidelines, as 
it would with its subcontracts with any other provider. If the personal 
support network were itself an EN, then it should be expected to comply 
with SSA's guidelines, as would all ENs.
    Thank you for this opportunity to provide additional information. 
Please let me know if The Arc of the United States can provide any 
further information or assistance.
            Sincerely,
                                                 Marty Ford
                                         Director of Legal Advocacy

                                

                               International Association of
                       Psychosocial Rehabilitation Services
                       Columbia, Maryland 21044-3357 March 30, 2001
Hon.  Clay Shaw Jr.
Chairman
House Social Security Subcommittee
Rayburn House Office Building
Washington, DC 20515
    Dear Mr. Chairman:
    I appreciate the opportunity to respond to your questions regarding 
my recent testimony on the Social Security Administration's Proposed 
Rule on the Ticket-to-Work Program.
    1. The Advisory Panel testified that feedback received in their 
regional meetings showed a great deal of confusion in the minds of even 
sophisticated beneficiaries and their advocates regarding various 
aspects of the new law, such as health care coverage, and using the 
Ticket in conjunction with other work incentives. Do you agree with 
this statement? If so, what should be done?
    Confusion about Social Security work incentives pre-date the 
Ticket-to-Work legislation. It is for that reason that disability 
advocates pushed for inclusion of the Benefits Planning, Outreach and 
Assistance (BPO&A) Program, as well as the cadre of SSA work incentives 
specialists. There are several things Congress and SSA could do to 
further assist beneficiaries in understanding work incentives. First 
Congress should increase the authorization and funding for the BPO&A 
Program and the cadre of work incentives specialists. The current 
funding level for BPO&A program is less than adequate to address all 
the needs of beneficiaries. Second, SSA needs to aggressively promote 
all aspects the Ticket-to-Work Program, including information on the 
health care provisions. SSA should be congratulated for the meetings 
they held earlier to promote the Medicaid buy-in and other parts of the 
bill. But this effort needs to continue and be stepped up. Third, SSA 
needs to engage in an aggressive public advertising campaign to promote 
work generally and work incentives, including the Ticket, specifically. 
Beneficiaries can't use a program that they don't know about. SSA has 
developed a brochure to promote the Ticket and this is good first step. 
More such efforts will be needed.
    2. You indicate that a beneficiary should be entitled to another 
Ticket when the cash value of the first Ticket has been exhausted. How 
long should taxpayers support the effort of an individual in their 
attempt to work in your view?
    First of all, this recommendation was made in the context of two 
critical circumstances that justify a beneficiary receiving a second 
Ticket. The first circumstance is when the beneficiary deposits their 
Ticket with a State VR Agency and the State VR Agency requests payment 
under the Cost-reimbursement method rather than the Milestone/Outcome 
or Outcome method. The Cost-reimbursement method, which only State VR 
agencies can select, pays VR when a beneficiary achieves nine (9) 
months of SGA. Once SSA pays under this method the cash value of Ticket 
would most likely be exhausted. However, in neither the SSDI or the SSI 
program does nine months of SGA result in a beneficiary leaving the 
cash benefit roles. Consequently, there is little if any savings to the 
program because a person in this case would STILL be on benefits, they 
would not be able to get another Ticket from SSA, and neither State VR 
nor a private provider will be able serve them because they will not 
get paid.
    The second circumstance under which a beneficiary should be 
eligible for a second ticket occurs when the beneficiary has gone off 
the rolls, and the first Ticket has been fully paid out over the 60 
months of payments, and yet the person comes back on the rolls using 
the Expedited Re-entry benefit provided under the Ticket law. SSA's 
proposed regulation says a person cannot get another Ticket if they are 
``under the same period of disability.'' The Expedited Re-entry 
provision allows a person to apply to come back on the rolls for up to 
60 months after benefits are terminated ``under the same period of 
disability'' and they continue on the rolls pending a CDR. 
Unfortunately, under SSA's proposed rule they couldn't get another 
Ticket. As a result a person with a very successful and recent work 
effort and who had to come back on benefits would be denied a Ticket 
and would therefore be unable to access a private provider or State VR. 
Without access to services though the Ticket they would have little 
choice but to remain on benefits.
    This same situation affects SSI beneficiaries in particular because 
the existing 1619(a) & (b) provisions allow a person to maintain SSI 
eligibility even though they may not be receiving SSI cash benefits.
    3. In your opinion, the SSA rule favors assignment of individuals 
to state vocational rehabilitation agencies over private service 
providers. What would other employment networks provide that state 
vocational programs do not? What kind of outcomes for the individuals 
with disabilities can we expect if the only choice is state vocational 
programs versus other employment networks? Does this mean that the 
disabled will not be able to access innovative programs?
    We did not mean to suggest that private providers would in all 
cases provide services that VR agencies would not, in fact, VR agencies 
might be better able to provide the kinds of high cost items, such as 
specially adapted wheelchairs, modified vans, etc, that a private 
provider could not pay for under the Ticket alone. What we do object to 
SSA proposing that when a beneficiary signs a plan as defined under 
Rehab Act (IPE), the beneficiary has automatically assigned their 
Ticket, regardless of whether the VR agency is an employment network. 
The hallmark of the Ticket-to-Work is consumer choice. Requiring a 
beneficiary to assign their Ticket to VR, whether they choose to or 
not, negates that choice. Further, a beneficiary may be eligible for VR 
benefits without having to assign their Ticket and, in fact the Rehab. 
Act as amended in 1998 states that SSI and SSDI beneficiaries are 
``presumptively eligible'' for VR benefits. Making a beneficiary use 
their Ticket when VR might be required under the Rehab. Act to serve 
that individual anyway denies the use of the Ticket to beneficiary at a 
later date. If VR chooses the cost reimbursement system for a higher 
cost individual, this person would find themselves without a Ticket and 
still on benefits since VR is only required to show nine months of work 
above SGA. That is a far lower employment goal than for private 
providers.
    4. You state that the reporting requirements on providers are 
unnecessarily burdensome and could violate consumer privacy. Could 
expand on this, especially how you feel the requirements could violate 
consumer privacy?
    One of our main concerns is that SSA is shifting the burden of 
tracking income and earnings onto the employment networks. SSA has 
failed miserably in the task of tracking earnings and adjusting or 
stopping a person's benefits because of earnings. Now, rather than 
tackle this assignment, SSA seeks to externalize it to employment 
networks by making them report a person's earnings in order to get 
paid. Also, the proposed regulation specifically suggests that an EN 
not get earnings information from the beneficiary, but instead contact 
the person's place of employment and request this information. 
Apparently, employment network will have to do this every two or three 
months. It is a clear invasion of privacy for an EN to contact a 
person's employer. Without clear legal authority, employers will be 
extremely reluctant to divulge this information. Further, if the person 
has a disability, like a mental illness, that they have not disclosed 
to employer for fear of being discriminated against, contact by a 
rehabilitation agency would reveal the existence of a disability, and 
more than likely, the nature of the disability. If SSA does not fix 
this problem, Congress should take immediate action to prevent it. In 
any event, Congress must act to make sure SSA has the resources and 
systems to track earnings and adjust benefits in a timely fashion. We 
propose that Congress enact legislation to protect beneficiaries and 
employment by requiring that an EN's report to the PM on a 
beneficiary's income and earnings be given by the PM to SSA within 30 
days, and if within 60 days of the PM's report to SSA, SSA has failed 
to appropriately stop or adjust a beneficiary's check, SSA cannot hold 
the beneficiary liable for overpayments and SSA must make payment to 
the EN as though the benefit has been adjusted or ceased.
    In addition, the proposed rule established several vague and 
undefined requirements that we assume SSA would provide more detail on 
in the future, yet seem to be relatively unnecessary. These include 
financial reporting requirements, such as demonstrating the percentage 
of the employment network's budget that was spent on serving 
beneficiaries with tickets (including the amount spent on beneficiaries 
who return to work and those who do not return to work).
    5. In your testimony, you state that there is no indication 
regarding how providers will be evaluated or what criteria SSA will use 
to evaluate them. Can you provide the criteria you think should be used 
to evaluate the success of employment networks in providing services?
    We believe that employment outcome evaluations are critical. The 
type and duration of employment is a key factor in assessing the 
quality of a provider and bear significantly in person's choice of 
provider. Obviously general consumer satisfaction is criteria that 
should be part of this evaluation. In addition, SSA might consider 
including what other non-employment services are provided, such as 
housing, which might affect a person's decision in choosing a provider. 
In any case, SSA must be careful NOT to compare outcomes across 
disability types.
    6. One of the witnesses stated that family and personal support 
networks could serve as employment networks should they meet the 
requirements. The witness also stated that families and personal 
support networks would be in a better position to subcontract with an 
employment network. In your opinion, what type of services could the 
family or support network provide that an employment network or state 
vocational agency could not? If the family or support network 
subcontracts with an employment network, how would payment be 
determined? What safeguards would be put in place to ensure families 
and personal support networks were complying with SSA guidelines for 
employment networks?
    A family or other support network would provide the kind of 
intangible, personalized, positive reinforcement for the beneficiary 
that a third party provider is unlikely to provide in every 
circumstance. Families and friends are intimately familiar with a 
beneficiary's strengths and weaknesses, interests and capabilities and 
would be expected to consider first the beneficiary's vocational wishes 
rather than trying to steer the beneficiary in a particular direction 
out of a desire to complete a case. For example, the pressure on state 
vocational rehabilitation counselors to achieve ``26 closures'' lead 
many people with disabilities feeling like the state vocational 
rehabilitation counselor seemed to give up on them, whereas friends and 
family can encourage a person to complete college and pursue a career. 
Few people get 100% unqualified support from vocational programs like 
they might from family and friends. We would presume that if a family 
subcontracted with an EN, payment issues would be spelled out in the 
contract. As to safeguards, if the EN is accountable for its 
subcontractors, it is going to make sure that the family support 
network abides by whatever rules are needed to assure accountability.
    Again, IAPSRS appreciates the opportunity to comment on this 
important issue. Feel free to call on us anytime we can be of 
assistance and we look forward to working with you in the future.
            Sincerely,
                                           Paul J. Seifert,
                                    Director of Government Affairs.
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