[Federal Register Volume 70, Number 189 (Friday, September 30, 2005)]
[Proposed Rules]
[Pages 57222-57237]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-19530]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 411

RIN 0960-AF89


Amendments to the Ticket to Work and Self-Sufficiency Program

AGENCY: Social Security Administration.

ACTION: Notice of proposed rulemaking.

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SUMMARY: We are proposing to revise our regulations for the Ticket to 
Work and Self-Sufficiency Program (Ticket to Work program), authorized 
by the Ticket to Work and Work Incentives Improvement Act of 1999. The 
Ticket to Work program provides beneficiaries with disabilities 
expanded options for access to employment services, vocational 
rehabilitation services, and other support services. We are proposing 
to make revisions to the current rules to improve the overall 
effectiveness of the program in assisting beneficiaries to maximize 
their economic self-sufficiency through work opportunities. These 
revisions are based on our vision of the future direction of the Ticket 
to Work program, our experience using the current rules, and 
recommendations made by a number of commenters on the program.

DATES: To be sure your comments are considered, we must receive them by 
December 29, 2005.

ADDRESSEES:  You may give us your comments by: using our Internet site 
facility (i.e., Social Security Online) at http://policy.ssa.gov/erm/Rules+Open+To+Comment or the Federal eRulemaking Portal: http://www.regulations.gov; e-mail to <a href="/cdn-cgi/l/email-protection#d0a2b5b7a5bcb1a4b9bfbea390a3a3b1feb7bfa6"><span class="__cf_email__" data-cfemail="e4968183918885908d8b8a97a4979785ca838b92">[email protected]</span></a>; by telefax to (410) 
966-2830; or letter to the Commissioner of Social Security, P.O. Box 
17703, Baltimore, MD 21235-7703. You may also deliver them to the 
Office of Regulations, Social Security Administration, 107 Altmeyer 
Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, between 8 
a.m. and 4:30

[[Page 57223]]

p.m. on regular business days. Comments are posted on our Internet site 
or you may also inspect the comments on regular business days by making 
arrangements with the contact person shown in the preamble.
    Electronic Version: The electronic file of this document is 
available on the date of publication in the Federal Register at http://www.gpoaccess.gov/fr/index.html.

FOR FURTHER INFORMATION CONTACT: Greg Zwitch, SSA Regulations Officer, 
Social Security Administration, 107 Altmeyer Building, 6401 Security 
Boulevard, Baltimore, MD 21235-6401, e-mail to <a href="/cdn-cgi/l/email-protection#64160103110805100d0b0a17241717054a030b12"><span class="__cf_email__" data-cfemail="46342321332a27322f2928350635352768212930">[email protected]</span></a>, or 
telephone (410) 965-1887 or TTY (410) 966-5609 for information about 
these rules. For information on eligibility or filing for benefits, 
call our national toll-free number 1-800-772-1213 or TTY 1-800-325-
0778, or visit our Internet site, Social Security Online, http://www.socialsecurity.gov.


    Note: We plan to hold a series of town meetings to obtain 
additional input on these proposed changes. These meetings, which 
will be open to the public, will be announced in the Federal 
Register in advance. To ensure your comments are considered, please 
provide written comments by the date mentioned in DATES, using the 
method shown in ADDRESSEES.


SUPPLEMENTARY INFORMATION:

Background

The Ticket to Work and Work Incentives Improvement Act of 1999

    Public Law 106-170 established the Ticket to Work program on 
December 17, 1999. This law represented an historic milestone in that 
it was the first time that Congress explicitly recognized that while 
many people receiving disability benefits from Social Security want to 
work, and are able to work, they face a number of significant barriers 
that prevent them from reaching their goals. Congress established the 
Ticket to Work program to provide Social Security beneficiaries ``real 
choice in obtaining the services and technology that they need to find, 
enter, and maintain employment'' by expanding the universe of service 
providers.
    Under the Ticket to Work program, the Commissioner of Social 
Security (the Commissioner) may issue a ticket to Social Security 
Disability Insurance (SSDI) beneficiaries and to disabled or blind 
Supplemental Security Income (SSI) recipients (``beneficiaries''). In 
this voluntary program, each beneficiary who receives a Ticket to Work 
has the option of using his or her ticket to obtain services from a 
provider known as an employment network (EN) or from a State vocational 
rehabilitation (VR) agency. ENs may choose to whom they provide 
services. When the beneficiary and an EN or State VR agency agree to 
work together under the program, the EN or State VR agency will 
provide, without charge to the beneficiary, employment services, 
vocational rehabilitation services, and other support services to 
assist the beneficiary in obtaining or regaining and ultimately 
maintaining self-supporting employment. If the beneficiary achieves 
certain work outcomes, we will pay the EN or State VR agency.
    The SSDI and SSI programs serve a diverse population of individuals 
with disabilities. Our beneficiaries are comprised of people from 
various age groups with different impairments, levels of education, 
work experience, and capacities for working. While many cannot work at 
all on a sustained basis, others may be able to work part-time or full-
time with reasonable accommodations and/or ongoing supports. This view 
is consistent with the assumptions underlying the Americans with 
Disabilities Act. As we develop our return to work initiatives, we are 
also mindful that the unique needs of every beneficiary cannot be met 
by one program.
    On July 27th 2005, the Commissioner announced publication of a 
notice of proposed rule making in the Federal Register which set out 
her plan to improve our disability determination process. As part of 
our plans to improve this process, we intend to conduct several 
demonstration projects aimed at helping people who want to work do so. 
These projects advance the President's New Freedom Initiative and 
provide work incentives and opportunities earlier in the disability 
determination process. Thus, the Ticket to Work program, is an 
important part of a comprehensive SSA initiative dedicated to helping 
people with disabilities who want to work do so to their fullest 
capabilities.

The Current Ticket to Work Regulations

    Public Law 106-170 directs the Commissioner to periodically review 
EN payment systems to ensure that they provide adequate incentives for 
ENs to assist beneficiaries. Based on three years of experience 
administering the program, we are proposing a number of revisions to 
our current rules. We believe that these proposed changes will 
significantly enhance beneficiary choice and improve the likelihood 
that beneficiaries will receive the most effective combination of 
services.

Issues Addressed in These Proposed Rules

State Participation and Beneficiary Choice

    Subpart F of the current Ticket to Work rules (20 CFR 411.350-
411.435) explains how State VR agencies participate in the Ticket to 
Work program. With respect to a beneficiary who holds a ticket, a State 
VR agency may elect, on a case-by-case basis, to participate in the 
program as an EN. If the State VR agency does so, it will be paid under 
an EN payment system it elects pursuant to section 1148(h) of the 
Social Security Act (the Act). With respect to a beneficiary that the 
State VR agency does not elect to serve as an EN, the State VR agency 
shall be paid for services provided to that beneficiary under the cost 
reimbursement payment system applicable under section 222(d) of the Act 
and section 1615(d) and (e) of the Act. Under our current rules, if the 
State VR agency elects to be paid for services under the cost 
reimbursement system, the beneficiary's ticket must be assigned to the 
State VR agency in order for that agency to be paid through that 
system. In addition, when the State VR agency is paid under the cost 
reimbursement system with respect to a ticket, our rules preclude any 
subsequent payment to an EN or a VR agency serving as an EN with 
respect to the same ticket. In September 2002, we clarified some of 
these rules in ``Transmittal 17'' to the Vocational Rehabilitation 
Providers Handbook (chapter 12). This transmittal added background 
information and procedures for State VR agencies to follow regarding 
the Ticket to Work program. If these proposed rules become final, we 
will issue new procedures to replace Transmittal 17.
    We have received many comments that our current policy, which 
precludes further use of a ticket if VR reimbursement has been paid, is 
too restrictive and does not allow our beneficiaries to take advantage 
of the full potential of the Ticket to Work program. After considering 
our experience in implementing the program, we agree. In order to 
expand the opportunities for beneficiaries under this program, we 
propose to make changes to the rules in subpart F to provide that a 
beneficiary's ticket need not be assigned to a State VR agency in order 
for the VR agency to be paid under the cost reimbursement payment 
system. We also propose changes in subpart C to provide that, in such 
cases when the beneficiary is receiving services from a State VR agency 
that has chosen to be paid under the cost

[[Page 57224]]

reimbursement payment system, the beneficiary will be considered to be 
``using a ticket'' as described in that subpart. This means that the 
beneficiary will be afforded protection from the initiation of a 
continuing disability review while receiving services from a State VR 
agency, provided that all the related provisions regarding timely 
progress are met.
    We also propose to make a related change that would allow for 
payment to an EN under a Ticket to Work payment system and to a State 
VR agency under the cost reimbursement payment system with respect to 
the same beneficiary. We believe that these changes would greatly 
expand beneficiary choice and enable beneficiaries to take advantage of 
a more effective combination of services from both a VR agency and an 
EN. For example, the State VR agency could provide the initial, 
intensive rehabilitation services, and an EN could follow up by 
providing the ongoing support many individuals, particularly those with 
psychiatric and cognitive impairments, need to maintain their work 
efforts. We do not, however, permit a beneficiary to assign a ticket to 
an EN while a State VR agency is continuing to provide services.
    We propose to make related changes in subparts B and F with regard 
to ticket assignment. We provide that a beneficiary may not assign a 
ticket to a State VR agency if a State VR agency has provided the 
beneficiary with services and received payment under the cost 
reimbursement system with respect to the services provided to the 
beneficiary. We are making this change to ensure that State VR agencies 
do not potentially receive payments under both payment systems for the 
same beneficiary, which would provide an unfair advantage over ENs.
    Also in subpart F, we propose to explain the limited payment option 
in instances where a beneficiary is receiving services from a State VR 
agency before the beneficiary has a ticket. In these cases, the State 
VR agency will be limited to the cost reimbursement payment system.

Employment Network Payment Systems

    The rules for EN payment systems are set out in subpart H of part 
411 (20 CFR Sec. Sec.  411.500 through 411.597). Currently Sec.  
411.597(a) states, ``We will periodically review the system of payments 
and their programmatic results to determine if they provide an adequate 
incentive for ENs to assist beneficiaries to enter the work force, 
while providing for appropriate economies.''
    The question of whether the current Ticket to Work program provides 
an adequate incentive for ENs to assist beneficiaries has been studied 
extensively. In an evaluation of the Ticket to Work program by 
Mathematica Policy Research (MPR) in February 2004, MPR reports that 
despite aggressively marketing the Ticket to Work program to over 
50,000 organizations, only about 1000 non-state providers have signed 
up as ENs and only a few hundred are actively participating. Over time, 
organizations have become more reluctant to join the Ticket to Work 
program as service providers. The overall number of service providers 
in the program remains low, with retention a major challenge. The 
financial viability of ENs remains uncertain as ENs report losing money 
on Ticket to Work operations.
    Furthermore, the Ticket to Work and Work Incentives Advisory Panel 
(TWWIAP) and a number of witnesses testifying before the Subcommittee 
on Social Security of the House Committee on Ways and Means have noted 
that the current design of the EN payment systems (see chart I) remains 
a major reason for limited EN and beneficiary participation. They have 
stressed that it is crucial to increase payments to ENs earlier in the 
process, because it is more resource-intensive to assist most 
beneficiaries to obtain jobs.

                                       Chart I.--Current EN Payment Method
----------------------------------------------------------------------------------------------------------------
                                                                    Percent of     SSI  ticket-    SSDI  ticket-
                      Outcome achieved when                            PCB*           holder          holder
----------------------------------------------------------------------------------------------------------------
                                             Outcome--Payment Method
----------------------------------------------------------------------------------------------------------------
Outcome Payments:
    Social Security disability benefits and Federal SSI cash                  40        \1\ $204        \1\ $347
     benefits are not payable to the individual because of work
     or earnings................................................
    Total Outcome Payments Available (60 payments)..............  ..............          12,240         20,820
----------------------------------------------------------------------------------------------------------------
1 Per month.


----------------------------------------------------------------------------------------------------------------
                                     Must occur before the first
                                      Outcome payment month, and    Percent of     SSI  ticket-    SSDI  ticket-
             Milestone                   is achieved when the          PCB*           holder          holder
                                          beneficiary works
----------------------------------------------------------------------------------------------------------------
                                        Outcome--Milestone Payment Method
----------------------------------------------------------------------------------------------------------------
1..................................  1 calendar month above                   34            $173            $295
                                      gross SGA.
2..................................  3 calendar months above                  68             347             590
                                      gross SGA in a 12-month
                                      period.
3..................................  7 calendar months above                 136             694           1,181
                                      gross SGA in a 12-month
                                      period.
4..................................  12 calendar months above                170             867           1,476
                                      gross SGA in a 15-month
                                      period.
                                     Total of the 4 Milestone     ..............           2,081           3,542
                                      Payments Available.
+60 (reduced) Outcome Payments.....  Social Security disability               34    Depending on the number of
                                      benefits and Federal SSI                     milestones achieved, outcome
                                      cash benefits are not                       payments could range from $138-
                                      payable to the individual                    $173 SSI Ticket Holder, $236-
                                      because of work or                             $295 SSDI Ticket Holder.
                                      earnings. Each Outcome
                                      Payment made to an EN is
                                      reduced by an amount equal
                                      to 1/60th of the total
                                      Milestone Payments made to
                                      that EN.

[[Page 57225]]

 
Total Available....................  Added together, the 4        ..............          10,361         17,702
                                      milestone payments plus 60
                                      available months of
                                      reduced outcome payments,
                                      should equal about 85% of
                                      the Outcome Payment System.
----------------------------------------------------------------------------------------------------------------
* The Payment Calculation base (PCB) is the national average disability benefit payable under each of the Social
  Security Administration's two disability programs. PCB for 2005 is based on the Social Security Administration
  formulas for 2004. Each December the Social Security Administration will calculate two PCBs and post them to
  its ``work'' Web site, http://www.ssa.gov/work. PCB for 2005: $868.20 for SSDI and $510.23 for SSI. Individual
  payments have been rounded to the nearest whole dollar. For further explanation of the Final Regulations for
  the Social Security Administration Ticket to Work Program, please visit www.socialsecurity.gov/regulations.

    In addition, at our request, the Disability Research Institute of 
the University of Illinois at Urbana-Champaign convened an Advisory 
Group on the Adequacy of Incentives (AOI Advisory Group) in April 2003. 
Consistent with section 1148(h)(5)(C) of the Act, the AOI Advisory 
Group provided recommendations regarding the adequacy of incentives. 
That section requires that particular attention be paid to:, 
individuals with disabilities with a need for ongoing support and 
services; those with a need for high-cost accommodations; those who 
earn a sub-minimum wage; and those who work and receive partial cash 
benefits. Accordingly, we have decided to propose changes to subpart H 
that are intended to create a greater financial incentive for EN 
participation.
    First, under the current outcome-milestone payment system, the 
current regulations provide that an EN's total potential payment is 
approximately 85 percent of the total that would have been potentially 
payable under the outcome payment system for the same beneficiary. We 
are proposing to increase the total potential payment under the 
outcome-milestone payment system to 90 percent of the total. By 
increasing the total potential payment, we believe that we will 
increase the incentive for small or undercapitalized providers to 
participate as ENs in the program.
    Second, the AOI Advisory Group recommended a payment approach that 
recognizes that the steps leading to maximizing self-sufficiency are 
incremental and may be interrupted periodically, but over time the 
benefits of increasing work activity are significant. Beneficiaries 
face multiple barriers to employment such as: A lack of access to 
training and employment services, loss of ongoing employment supports, 
loss of employment, etc. We are proposing a three-phased payment system 
that parallels the steps beneficiaries take toward self-sufficiency.
    Phase 1 represents the beneficiaries initial efforts at employment. 
Phase 1 is modeled on the Trial Work period provided for SSDI 
beneficiaries. Four milestones will be paid when the beneficiary works 
for a period of time at the trial work earnings level. Phase 1 
Milestones are the only payments that will be the same for both SSI and 
SSDI beneficiaries, based on the higher SSDI payment calculation base. 
This addresses the concern that the initial phase is the most expensive 
for the EN to provide services and without equal payments SSI 
beneficiaries would have difficulty accessing Phase 1 services. The 
Trial Work earnings requirement ($590/mo. for 2005) represents a 
significant work and earnings milestone for beneficiaries as well as an 
attainable payment point for ENs.
    Phase 2 represents a significant additional step toward self-
sufficiency with increased earnings. We anticipate that some 
beneficiaries will progress to Phase 2, increasing work hours and 
earnings to above the SGA level ($830 for 2005). We propose, as the AOI 
Advisory Group recommended, to encourage the use of work incentives 
during this second phase by making payments to ENs based on gross 
earnings before adjustments for work incentives. We anticipate that SSI 
beneficiaries will take longer to complete phase 2, 18 months instead 
of 11 months for SSDI beneficiaries, due to lower levels of work 
experience prior to entering the rolls.
    The final phase is the Outcome payment period where ENs will 
provide services to support retention of employment after the 
beneficiary leaves the SSA rolls. We used the SSDI extended period of 
eligibility (EPE) as the template for the 36 month Outcome payment 
period for SSDI beneficiaries. SSI beneficiaries, having less work 
experience and often more significant disabilities, may need a longer 
Outcome payment period compared to SSDI beneficiaries. Therefore, we 
are leaving the SSI Outcome period at 60 months. This has the 
additional positive effect of roughly equalizing the total Ticket 
payments for SSI and SSDI beneficiaries. This addresses the concern 
expressed by the AOI Advisory Group that total payment amounts be 
equalized in order to remove any financial disincentive for ENs to 
serve SSI beneficiaries.
    Finally, our proposed rule will increase the overall percentage of 
the payment calculation base which is allocated for Ticket payments 
from 40% to 67%. Both the AOI Advisory Group and the TWWIAP expressed 
concerns that current funding levels are inadequate to support the 
consumer driven employment service model that Congress envisioned in 
the Ticket to Work legislation. Congress explicitly permitted the 
Commissioner to review and adjust the 40% funding level set in the Act. 
The 40% funding level proved inadequate to attract sufficient ENs to 
the marketplace to allow for adequate access to services and consumer 
choice. We believe that a combination of: (1) Increasing overall 
funding; (2) reducing the differential between Outcome and Outcome-
Milestone payments; (3) equalizing funding between SSDI and SSI; (4) 
increasing Milestone payments; and (5) providing a shorter timeframe 
for payments to ENs serving SSDI beneficiaries will increase the 
incentive for small or undercapitalized providers to participate as 
ENs. The resulting increased EN participation will improve beneficiary 
access to services and quality providers. The proposed payment rates 
are presented in charts II through IV using the 2005 Payment 
Calculation base.

[[Page 57226]]



                              Chart II.--Proposed Outcome--Milestone Payment Table
                                      [2005 figures for illustration only]
----------------------------------------------------------------------------------------------------------------
                                     Beneficiary
          Payment type                earnings          SSDI amount of  payment      Title SSI amount of payment
----------------------------------------------------------------------------------------------------------------
Phase 1 (120% of SSDI PCB) *
    Milestone 1................  $295 for two weeks  $1,042                         $1,042
                                  work.
    Milestone 2................  $590/mo. x 3        $1,042                         $1,042
                                  months work
                                  (cumulative).
    Milestone 3................  $590/mo. x 6        $1,042                         $1,042
                                  months work
                                  (cumulative).
    Milestone 4................  $590/mo. x 9        $1,042                         $1,042
                                  months work
                                  (cumulative).
                                                    --------------------------------
        Total Phase 1..........  ..................  $4,168                         $4,168
                                                    ================================
Phase 2 (36% of PCB)             Gross
                                  Earnings>$830.
SSDI Milestones 1-11...........  ..................  $313 x 11 = $3,443
SSI Milestones 1-18............  ..................  .............................  $184 x 18 = $3,312
                                                    --------------------------------
        Total Phase 1 + 2        ..................  $7,611 *                       $7,480 *
         Milestones.
                                                    ================================
Outcome Payments (36% of PCB).
    SSDI = 1-36................  >$830/and monthly   $313 x 36 = $11,268
                                  cash benefit not
                                  payable.
    SSI = 1-60.................  Sufficient          .............................  $184 x 60 = $11,040
                                  earnings for
                                  federal cash
                                  benefits = ``0''.
                                                    --------------------------------
        Total milestone and      ..................  $18,879                        $18,520
         outcome payments.
----------------------------------------------------------------------------------------------------------------
* A Lump sum milestone is the remaining total milestones unpaid if the outcome period is reached before all the
  milestones are achieved. This can be any number of the remaining milestones and is paid after the first
  outcome payment is achieved.


                          Chart III.--Proposed Outcome Only Table--SSDI and Concurrent
                                      [2005 figures for illustration only]
----------------------------------------------------------------------------------------------------------------
                                     Beneficiary         SSDI amount of monthly
          Payment type                earnings                  payment                 SSDI total  payments
----------------------------------------------------------------------------------------------------------------
Outcome payments 1-36 (67% of    >$830.00/and        $582.00                        $20,952
 PCB).                            monthly cash
                                  benefit not
                                  payable.
----------------------------------------------------------------------------------------------------------------


                                Chart IV.--Proposed Outcome Only Table--SSI Only
                                      [2005 figures for illustration only]
----------------------------------------------------------------------------------------------------------------
                                     Beneficiary         SSI amount of  monthly
          Payment type                earnings                  payment                  SSI total  payments
----------------------------------------------------------------------------------------------------------------
Outcome payments 1-60 (67% of    Earnings            $342.00                        $20,520
 PCB).                            sufficient to
                                  ``0'' out SSI
                                  federal cash
                                  benefit.
----------------------------------------------------------------------------------------------------------------

    Definitions and amounts: PCB payment calculation base--average 
benefits payable in calendar year, each title has its own base (2005 
SSDI = $868.20, SSI = $510.23)

Phase 1 Milestones = 120% of PCB *
Phase 2 milestones = 36% of PCB
Outcome payments (out-mile) = 36% of PCB
Outcome only payment = 67% of PCB
(Rounding is to the nearest dollar amount) 2005 SGA = $830, 2005 TWP = 
$590

    * For Phase 1 Milestones ONLY, the payments are calculated for both 
SSI and SSDI beneficiaries using the higher SSDI Payment Calculation 
Base (PCB). This is intended to remove any disincentive to serve SSI 
beneficiaries during the initial high cost phase of services. All other 
payments are calculated based on a percentage of the Payment 
Calculation Base (PCB) for the respective program (SSI or SSDI).

Ticket Eligibility for Beneficiaries Whose Conditions May Medically 
Improve

    The TWWIAP, in its July 26, 2001 report to the Commissioner, 
recommended that ``[a]ll SSI and SSDI adult disability beneficiaries, 
including those with a Medical Improvement Expected (MIE) designation, 
should be eligible to participate in the Ticket program'' and ``sixteen 
(16) and seventeen (17) year-old beneficiaries, including those with an 
MIE designation, should be eligible to participate in the Ticket 
program.'' The TWWIAP reiterated these recommendations in its August 
2002 and May 2003 Annual Reports to Congress and to the President.
    Furthermore, the Government Accountability Office (GAO) in its July 
2003 report entitled ``Social Security Disability: Reviews of 
Beneficiaries' Disability Status Require Continued Attention to Achieve 
Timeliness and Cost-Effectiveness,'' observed that our ``rationale for 
delaying [for three years] issuance of a ticket to beneficiaries 
expected to medically improve, based on the premise that they will 
regain their capacity to return to work without SSA assistance, is not 
well-supported by program experience.''
    We agree with most of these recommendations and have proposed 
changes to the ticket eligibility rules set

[[Page 57227]]

out under subpart B to allow beneficiaries with an MIE designation to 
be eligible for a ticket without first requiring a continuing 
disability review to be conducted.

Other Changes We Propose to Make

    In subpart A, we propose to remove the rules on how we are phasing 
in implementation of the Ticket to Work program, because we already 
have implemented the program on a nationwide basis.
    In subpart E, we are adding a new requirement, that an employment 
network report to the Program Manager each time it requests to take a 
ticket out of assignment.

Additional Matters for Comment

    We invite comments from the public on four additional issues. The 
first issue is whether a beneficiary should be eligible for more than 
one ticket in a period of entitlement for SSDI or SSI benefits. Our 
current rules provide for only one ticket for each period of 
entitlement. Since we published our current rules, we have received a 
number of comments regarding this provision. These comments have noted 
that in order to sustain gainful employment, many beneficiaries require 
ongoing support services beyond the period of time over which Outcome 
or Outcome-Milestone payments are made. For example, beneficiaries with 
physical disabilities may require indefinitely specialized 
transportation services to get to and from the worksite, and thus would 
benefit from a longer period of eligibility for the Ticket to Work 
program.
    The second issue is whether and how we should simplify the 
definition of ``using a ticket'' under the Ticket to Work program. 
Ticket-in-use status ensures that we will not initiate a medical 
continuing disability review (CDR). In the preamble to our current 
rules regarding the suspension of CDRs, we indicated that we sought to 
balance two important needs. First, we sought to define using a ticket 
in a way that minimizes the disincentive brought on by the fear of 
having benefits terminated upon return to work. Second, we need to 
maintain the integrity of the program by ensuring that beneficiaries 
who have medically improved do not continue to receive disability 
benefits for an undue length of time. Maintaining this balance remains 
our goal.
    Because we only recently have begun, through the Program Manager, 
to conduct the reviews to determine if beneficiaries who have assigned 
their tickets are meeting the timely progress requirements, we do not 
have enough information on which to base any changes to our 
regulations. For this reason we are soliciting comments on how we might 
revise the timely progress requirements consistent with the intent of 
legislation. Currently beneficiaries with Tickets assigned must have 3 
months of work activity at the SGA level in the third year their Ticket 
is assigned to maintain Ticket-in-use status. This requirement 
increases to six months in the fourth and fifth years. We specifically 
are interested in receiving comments on the wisdom of this work 
requirement in cases where the State VR agency is providing a 
beneficiary a secondary or post-secondary education. For example, 
should we modify or remove the increasing levels of work activity 
currently required to meet ticket ``in use'' status for beneficiaries 
enrolled as full-time students.
    The third issue is whether the evidence requirements for EN payment 
are unnecessarily burdensome. The current rules require ENs to submit 
primary evidence of work and earnings, such as a pay stub. ENs report 
that they are unable to comply with our evidence requirements in 
certain situations where they believe themselves to be eligible for 
milestone or outcome payments. These situations occur when the EN 
cannot obtain the required documentation because the ticket user and/or 
the employer are unavailable and/or uncooperative, or when the 
available evidence does not satisfy our requirements.
    The proposed accelerated outcome payment period would reduce this 
administrative burden for SSDI beneficiaries, because ENs would be 
required to obtain evidence for the shorter 36-month outcome payment 
period rather than the current 60 month period. We are currently 
considering ways to further relieve this burden. For example, we could 
reverse the timing of payments so that we would pay ENs based on a 
presumption (if other criteria are met) and do a reconciliation when 
the earnings information is available to SSA that might result in the 
EN repaying monies not due.
    The fourth issue is whether there are any circumstances under which 
SSA should pay both Phase 1 and Phase 2 milestones to an EN for 
beneficiaries who assign their ticket after we have made a payment to 
the State VR agency under the cost reimbursement payment system. The 
proposed regulations provide for payment of only Phase 2 milestones in 
this situation. Our intent in that section was to create an incentive 
for EN's to partner with VR to provide ongoing support in order to 
maintain work at or above the SGA level. We are inviting comment on the 
circumstances under which paying Phase 1 milestones would increase the 
likelihood the beneficiary would achieve self-sufficiency, for example 
when the beneficiary lost their job subsequent to the VR reimbursement 
payment.

Issues and Recommendations Not Included in this Regulation

    The Ticket to Work program is now operating in all States and 
territories. We will continually assess and evaluate the program to 
determine what additional changes are needed to enhance its 
effectiveness. We will continue to ensure that the Ticket to Work 
program is an effective component of our overall strategy for improving 
work opportunities for people with disabilities.
    Because of the relative infancy of the program and slow growth in 
participation, we have been impeded in the collection of objective 
information on EN and beneficiary experiences. The proposal discussed 
in this section requires further analysis before we can make a 
confident determination as to its efficacy and propose additional 
program modifications.

Ticket Eligibility for Beneficiaries Who Are Ages 16 and 17

    We also have considered recommendations regarding the current and 
potential effects of the Ticket to Work program on youths with 
disabilities. In the current regulations, we concluded that 
``participation in an employment plan under the Ticket to Work program 
could interfere with their pursuit of an education, completion of which 
many believe should be the primary focus and goal for school-age 
youth.'' We also concluded that it would be premature to offer tickets 
to SSI beneficiaries who received payments prior to age 18, and who 
have since attained age 18 but have not undergone a redetermination of 
their eligibility under the adult standard.
    After carefully reviewing this issue, we continue to believe that 
it would be inappropriate to offer tickets to these groups for the 
reasons previously stated. In the alternative, we have developed a 
youth transition strategy to help young disabled SSDI and SSI 
beneficiaries' transition to adulthood by maximizing their economic 
self-sufficiency. We plan to accomplish this goal by offering and 
testing a variety of new approaches to meet the needs of young 
beneficiaries and their families. For example, we have implemented a 
Youth Transition Demonstration project where six states are developing 
service delivery systems

[[Page 57228]]

to assist youth with disabilities to successfully transition from 
school. In addition, on June 24, 2005, we published final regulations 
governing the continuation of benefits when a beneficiary's impairment 
has medically improved (70 FR 36494). These rules continue benefits to 
SSI students age 18 through 21 who do not meet the adult disability 
standard at age 18 as long as they are participating in an 
individualized education program (IEP) developed under the Individuals 
with Disabilities Education Act (IDEA) before their disability under 
the SSI program ended. We believe that our youth transition strategy 
will provide enhanced opportunities for youth to fully participate in 
the workforce, without interfering with their education.

Regulatory Procedures

Clarity of These Proposed Rules

    Executive Order 12866, as amended by Executive Order 13258, 
requires each agency to write all rules in plain language. In addition 
to your substantive comments on these proposed rules, we invite your 
comments on how to make these proposed rules easier to understand.
    For example:
    <bullet> Have we organized the material to suit your needs?
    <bullet> Are the requirements in the rules clearly stated?
    <bullet> Do the rules contain technical language or jargon that is 
not clear?
    <bullet> Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
    <bullet> Would more (but shorter) sections be better?
    <bullet> Could we improve clarity by adding tables, lists, or 
diagrams?
    <bullet> What else could we do to make the rules easier to 
understand?

Executive Order 12866

    We have consulted with the Office of Management and Budget and have 
determined that these proposed rules meet the criteria for an 
economically significant regulatory action under Executive Order 12866, 
as amended by Executive Order 13258. The Office of the Chief Actuary 
estimates that these proposed rules, if finalized, will result in 
increased program outlays resulting (in millions of dollars) over the 
next 10 years.

----------------------------------------------------------------------------------------------------------------
           Fiscal year                 SSDI             SSI          Medicare        Medicaid          Total
----------------------------------------------------------------------------------------------------------------
2006............................              $4              $7  ..............  ..............             $11
2007............................              27              14              $7              $1              48
2008............................              98               8              22               4             132
2009............................             212              10              43              11             276
2010............................             266              18              62              23             369
2011............................             305              19              78              36             438
2012............................             330              37              93              47             507
2013............................             338              32             110              52             532
2014............................             331              26             126              53             536
2015............................             313              19             141              55             528
Totals:
    2006-10.....................             607              57             134              38             835
    2006-15.....................           2,223             190             682             283           3,377
----------------------------------------------------------------------------------------------------------------

Regulatory Flexibility Act

    We certify that these proposed rules would not have a significant 
economic impact on a substantial number of small entities because they 
would primarily affect only individuals and those entities that 
voluntarily enter into a contractual agreement with us. Therefore, a 
regulatory flexibility analysis as provided in the Regulatory 
Flexibility Act, as amended, is not required.

Federalism

    We have reviewed these proposed rules under the threshold criteria 
of Executive Order 13132, ``Federalism,'' and determined that they do 
not have substantial direct effects on the States, on the relationship 
between the national government and the States, or the distribution of 
power and responsibilities among the various levels of government. 
Public Law 106-170 established the Ticket to Work program that will 
complement the existing State VR program. These proposed rules will 
also complement the existing State vocational rehabilitation program.

Paperwork Reduction Act

    These proposed rules contain reporting requirements as shown in the 
following table. A 1-hour placeholder burden is being assigned to the 
specific reporting requirement(s) contained in these rules that are 
cleared through our current Ticket to Work and Self-Sufficiency Program 
Regulations; OMB Control Number 0960-0644.

----------------------------------------------------------------------------------------------------------------
                                                                              Average burden
               Section                 Annual number of     Frequency of       per response     Estimated annual
                                          responses           response          (minutes)        burden (hours)
----------------------------------------------------------------------------------------------------------------
411.145(a); 411.190.................  .................  .................  .................                  1
411.325(a)..........................                 96                  1                  5                  8
411.140(d)(3); 411.365(a); 411.385;   .................  .................  .................                  1
 and 411.390........................
411.575.............................  .................  .................  .................                  1
                                     --------------------
      Total.........................  .................  .................  .................                 11
----------------------------------------------------------------------------------------------------------------

    An Information Collection Request has been submitted to OMB for 
clearance. We are soliciting comments on the burden estimate; the need 
for the information; its practical utility; ways to enhance its 
quality, utility and clarity; and on ways to minimize the burden on 
respondents, including the use of automated collection techniques or 
other forms of information technology. Comments should be submitted 
and/or faxed to the Office of Management and

[[Page 57229]]

Budget at the following address/number: Office of Management and 
Budget, Attn: Desk Officer for SSA, New Executive Office Building, Room 
10230, 725 17th St., NW., Washington, DC 20530. Fax Number: 202-395-
6974.
    Comments can be received for up to 60 days after publication of 
this notice and will be most useful if received within 30 days of 
publication. To receive a copy of the OMB clearance package, you may 
call the SSA Reports Clearance Officer on 410-965-0454.

References

    The sources we consulted while developing these proposed rules are 
cited in the preamble text. These references are included in the 
rulemaking record for these proposed rules and are available for 
inspection by interested individuals by making arrangements with the 
contact person shown in this preamble.

Vocational Rehabilitation Providers Handbook, Transmittal 17 
(available at: http://www.ssa.gov/regulations/program-resources.htm)
Ticket to Work and Work Incentives Advisory Panel, Annual Report to 
the President and Congress: Year Three, May 2003 (available at: 
http://www.ssa.gov/work/panel/panel_documents/reports.html)
Ticket to Work and Work Incentives Advisory Panel, Annual Report to 
the President and Congress: Year Two, August 2002 (available at: 
http://www.ssa.gov/work/panel/panel_documents/reports.html)
Ticket to Work and Work Incentives Advisory Panel, Advice Report to 
the Commissioner of the Social Security Administration: Design 
Issues Related to the Adequacy of Incentives Study, (June 18, 2002) 
(available at: http://www.ssa.gov/work/panel/panel_documents/reports.html)
Ticket to Work and Work Incentives Advisory Panel, Advice Report to 
the Commissioner of the Social Security Administration on the Notice 
of Proposed Rulemaking for the Ticket to Work and Self Sufficiency 
Program (July 26, 2001) (available at: http://www.ssa.gov/work/panel/panel_documents/reports.html)
Government Accountability Office, ``Social Security Disability: 
Reviews of Beneficiaries' Disability Status Require Continued 
Attention to Achieve Timeliness and Cost-Effectiveness,'' GAO-03-662 
(July 24, 2003) (available at: http://www.gao.gov/highlights/d03662high.pdf)
Government Accountability Office, ``SSA Disability: Other Programs 
May Provide Lessons for Improving Return-to-Work Efforts'', GAO-01-
153 (January 12, 2001) (available at: http://www.gao.gov/new.items/d01153.pdf)
Disability Research Institute, Adequacy of Incentives Advisory 
Group, Recommendations for Improving Implementation of the Ticket to 
Work and Self-Sufficiency Program (Regulatory and Administrative 
Changes) (Interim Report No. 1) (September 2003) (available at: 
http://www.dri.uiuc.edu/research/p03-08h/default.htm)
Mathematica Policy Research, Evaluation of the Ticket to Work 
Program; Initial Evaluation Report, (February 2004) (available at: 
http://www.mathematica-mpr.com/publications/PDFs/evalttw.pdf)

    These references are included in the rulemaking record for these 
proposed rules and are available for inspection by interested 
individuals either at the websites listed or by making arrangements 
with the contact person shown in this preamble.

(Catalog of Federal Domestic Program Nos. 96.001, Social Security--
Disability Insurance; 96.002, Social Security--Retirement Insurance; 
96.004, Social Security--Survivors Insurance; and 96.006, 
Supplemental Security Income)

List of Subjects in 20 CFR Part 411

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors, and Disability Insurance, Reporting and 
recordkeeping requirements, Social Security, Supplemental Security 
Income, Public Assistance programs, Vocational Rehabilitation.

    Dated: September 26, 2005.
Jo Anne B. Barnhart,
Commissioner of Social Security.

    For the reasons set out in the preamble, we are proposing to amend 
subparts A, B, C, E, F and H of part 411 of chapter III of title 20 of 
the Code of Federal Regulations as set forth below:

PART 411--THE TICKET TO WORK AND SELF-SUFFICIENCY PROGRAM

    1. Revise the authority citation for part 411 to read as follows:

    Authority: Secs. 702(a)(5) and 1148 of the Social Security Act 
(42 U.S.C. 902(a)(5) and 1320b-19); Sec. 101(b)-(e), Pub. L. 106-
170, 113 Stat. 1860, 1873 (42 U.S.C. 1320b-19 note).

Subpart A--[Amended]


Sec.  411.110  [Removed]

    2. Remove Sec.  411.110.

Subpart B--[Amended]

    3. In Sec.  411.120, revise paragraphs (b) and (c) to read as 
follows:


Sec.  411.120  What is a ticket under the Ticket to Work program?

* * * * *
    (b) The left side of the ticket includes the beneficiary's name, 
ticket number, claim account number, and the date we issued the ticket. 
The ticket number is 12 characters and comprises the beneficiary's own 
social security number, the letters ``TW,'' and a number (1, 2, etc.) 
in the last position signifying that this is the first ticket, second 
ticket, etc., that the beneficiary has received.
    (c) The right side of the ticket includes the signature of the 
Commissioner of Social Security and provides a description of the 
Ticket to Work program. The description of the program will tell you 
how you may offer the ticket to an EN or State VR agency. The 
description will also tell you how the EN provides services to you.
    4. In Sec.  411.125 remove paragraph (a)(3) and revise paragraph 
(a)(2)(ii)(C) to read as follows:


Sec.  411.125  Who is eligible to receive a ticket under the Ticket to 
Work program?

    (a) * * *
    (2) * * *
    (ii) * * *
    (C) Your monthly Federal cash benefits based on disability or 
blindness under title XVI are not suspended (see subpart M of part 416 
of this chapter for our rules on suspension of title XVI benefit 
payments).
* * * * *
    5. Revise Sec.  411.130 to read as follows:


Sec.  411.130  How will we distribute tickets under the Ticket to Work 
program?

    We will give a ticket to you if you are eligible to receive a 
ticket under Sec.  411.125.
    6. Revise Sec.  411.135 to read as follows:


Sec.  411.135  What do I do when I receive a ticket?

    Your participation in the Ticket to Work program is voluntary. When 
you receive your ticket, you are free to choose when and whether to 
assign it (see Sec.  411.140 for information on assigning your ticket). 
If you want to participate in the program, you can take your ticket to 
any EN you choose or to your State VR agency. You may choose to assign 
your ticket to an EN by signing an individual work plan (see Sec. Sec.  
411.450 through 411.470). Alternately, you may choose to take your 
ticket and receive services from your State VR agency by entering into 
and signing an individualized plan for employment. If the State VR 
agency provides services to you, it will decide whether to accept your 
ticket. If it accepts your ticket, you will have assigned your ticket 
to the State VR agency and it will receive payment as an EN. If the 
State VR agency decides to be paid under the cost reimbursement payment 
system, you have not assigned your ticket and you may assign your 
ticket after State VR services end.
    7. In Sec.  411.140, revise paragraphs (a), (d) introductory text, 
(d)(3), and the first

[[Page 57230]]

sentence of paragraph (e) to read as follows:


Sec.  411.140  When can I assign my ticket and how?

    (a) You may assign your ticket during a month in which you meet the 
requirements of Sec.  411.125(a)(1) and (a)(2). You may also assign 
your ticket during the 90 day period your ticket is considered in use 
after State VR services end (see Sec.  411.171(c)(2) and (d)(2)). You 
may assign your ticket to any EN which is serving under the program and 
is willing to provide you with services, or you may assign your ticket 
to a State VR agency acting as an EN. You may not assign your ticket to 
more than one provider of services (i.e., an EN or a State VR agency) 
at a time. You may not assign your ticket if you are receiving VR 
services pursuant to an individualized plan for employment and the 
State VR agency has chosen the cost reimbursement payment system. You 
also may not assign your ticket to a State VR agency if a State VR 
agency has provided you services and received payment under the cost 
reimbursement payment system with respect to the services provided to 
you (see Sec.  411.585(b)).
* * * * *
    (d) In order for you to assign your ticket to an EN or State VR 
agency acting as an EN, all the following requirements must be met:
* * * * *
    (3) A representative of the EN must submit a copy of the signed IWP 
to the PM, or a representative of the State VR agency, acting as an EN, 
must submit the completed and signed form (as described in Sec.  
411.385(a) and (b)) to the PM.
* * * * *
    (e) If all of the requirements in paragraph (d) of this section are 
met, we will consider your ticket assigned to the EN or State VR agency 
acting as an EN.
* * * * *
    8. In Sec.  411.145, revise the section as follows:


Sec.  411.145  When can my ticket be taken out of assignment?

    (a) If you assigned your ticket to an EN or a State VR agency 
acting as an EN, you may take your ticket out of assignment for any 
reason. You must notify the PM in writing that you wish to take your 
ticket out of assignment. The ticket will be no longer assigned to that 
EN or State VR agency acting as an EN, effective with the first day of 
the month following the month in which you notify the PM in writing 
that you wish to take your ticket out of assignment. You may reassign 
your ticket under the rules in Sec.  411.150.
    (b) If your EN goes out of business or is no longer approved to 
participate as an EN in the Ticket to Work program, the PM will take 
your ticket out of assignment with that EN. The ticket will be no 
longer assigned to that EN effective on the first day of the month 
following the month in which the EN goes out of business or is no 
longer approved to participate in the Ticket to Work program. You will 
be sent a notice informing you that your ticket is no longer assigned 
to that EN. In addition, if your EN is no longer willing or able to 
provide you with services, or if your State VR agency acting as an EN 
stops providing services to you because you have been determined to be 
ineligible for VR services under 34 CFR 361.42, the EN or State VR 
agency acting as an EN, may ask the PM to take your ticket out of 
assignment with that EN or State VR agency. The ticket will be no 
longer assigned to that EN or State VR agency acting as an EN effective 
on the first day of the month following the month in which the EN or 
State VR agency acting as an EN makes a request to the PM that the 
ticket be taken out of assignment. You will be sent a notice informing 
you that your ticket is no longer assigned to that EN or State VR 
agency acting as an EN. You may reassign your ticket under the rules in 
Sec.  411.150.
    (c) For information about how taking a ticket out of assignment may 
affect medical reviews that we conduct to determine if you are still 
disabled under our rules, see Sec. Sec.  411.171(c) and 411.220.
    9. In Sec.  411.150, revise the section heading and the third and 
fourth sentences of paragraph (a) and add a new fifth sentence to 
paragraph (a), and revise paragraph (b)(3) to read as follows:


Sec.  411.150  Can I reassign my ticket?

    (a) * * * If you previously assigned your ticket to an EN, you may 
reassign your ticket to a different EN which is serving under the 
program and is willing to provide you with services, or you may 
reassign your ticket to a State VR agency acting as an EN. If you 
previously assigned your ticket to a State VR agency, you may reassign 
your ticket to another State VR agency acting as an EN or to an EN 
which is serving under the program and is willing to provide you with 
services. You may not reassign your ticket to a State VR agency if we 
previously made payment to a State VR under the cost reimbursement 
payment system with respect to you, and you were considered to be 
``using a ticket'' while you received services from the State VR 
agency.
    (b) * * *
    (3) You must meet the requirements of Sec.  411.125(a)(1) and (2) 
on or after the day you and a representative of the new EN sign your 
IWP or you and a representative of the State VR agency sign your IPE 
and the required form. You may reassign your ticket within 90 days of 
the effective date your ticket was no longer assigned, without meeting 
the requirements of Sec.  411.125(a)(2).
* * * * *
    10. In Sec.  411.155, revise paragraphs (a)(2) and (a)(3), and add 
a new paragraph (a)(4) to reads as follows:


Sec.  411.155  When does my ticket terminate?

    (a) * * *
    (2) If you are entitled to widow's or widower's insurance benefits 
based on disability (see Sec. Sec.  404.335 and 404.336 of this 
chapter), the month in which you attain full retirement age;
    (3) If you are eligible for benefits under title XVI based on 
disability or blindness, the month following the month in which you 
attain age 65; or
    (4) The month after the month in which your outcome payment period 
ends (see Sec.  411.500(b)).
* * * * *

Subpart C--[Amended]

    11. In Sec.  411.165, revise the section heading and the second 
sentence to read as follows:


Sec.  411.165  How does using a ticket under the Ticket to Work program 
affect my continuing disability reviews?

    * * * However, we will not begin a continuing disability review 
during the period in which you are using a ticket. * * * * *
    12. Amend Sec.  411.166 by revising the second sentence of 
paragraph (b), adding a new sentence between the first and second 
sentences in paragraph (d), revising the second sentence in paragraph 
(g), and revising paragraph (h) to read as follows:


Sec.  411.166  Glossary of terms used in this subpart.

* * * * *
    (b) * * * You may be eligible for an extension period if the ticket 
is in use and no longer assigned to an Employment Network (EN) or State 
VR agency acting as an EN (see Sec.  411.220).
* * * * *
    (d) * * * If you have a ticket which is available for assignment 
and are receiving VR services pursuant to an individualized plan for 
employment and the state VR agency has chosen the cost reimbursement 
payment system, the term ``initial 24-month period'' means the 24-month 
period that begins

[[Page 57231]]

with the month following the month described in Sec.  411.170(b). * * *
* * * * *
    (g) * * * We do not count any month during which your ticket is not 
assigned to an EN or State VR agency acting as an EN, or any month 
outside of the period during which you have a ticket which would 
otherwise be available for assignment and are receiving services from 
state VR agency that has chosen the cost reimbursement payment system.
    (h) Using a ticket means: (1) You have assigned a ticket to an EN 
or a State VR agency that has elected to serve you as an EN and are 
making timely progress toward self-supporting employment as defined in 
Sec.  411.180ff. (See Sec.  411.171 for a discussion of when the period 
of using a ticket ends) or
    (2) You have a ticket that would otherwise be available for 
assignment and are receiving VR services pursuant to an individualized 
plan for employment and the state VR agency has chosen to be paid, with 
respect to services that it provides to you, under the cost 
reimbursement payment system. You must also be making timely progress 
as defined in Sec.  411.180ff.
    13. Remove the undesignated centered heading before Sec.  411.170.
    14. Revise Sec.  411.170 to read as follows:


Sec.  411.170  When does the period of using a ticket begin?

    (a) The period of using a ticket begins on the effective date of 
the assignment of your ticket to an EN or state VR agency under Sec.  
411.140.
    (b) If you have a ticket that would otherwise be available for 
assignment and are receiving VR services pursuant to an individualized 
plan for employment and the state VR agency has chosen the cost 
reimbursement payment system, the period of using a ticket begins on 
the later of--
    (1) The effective date of your IPE; or
    (2) The first day your ticket would otherwise have been assignable 
if you had not been receiving services from the State VR agency under 
cost-reimbursement.
    15. Revise Sec.  411.171 to read as follows:


Sec.  411.171  When does the period of using a ticket end?

    The period of using a ticket ends with the earliest of the 
following--
    (a) The month before the month in which the ticket terminates as a 
result of one of the events listed in Sec.  411.155;
    (b) The day before the effective date of a decision under in Sec.  
411.190, in Sec.  411.195, in Sec.  411.200 or in Sec.  411.205 that 
you are no longer making timely progress toward self-supporting 
employment;
    (c) The close of the three-month extension period which begins with 
the first month in which your ticket is no longer assigned to an EN or 
State VR agency acting as an EN (see Sec.  411.145), unless you 
reassign your ticket within the three-month extension period (see Sec.  
411.220 for an explanation of the three-month extension period).
    (d) The close of the 90-day period specified in Sec.  
411.150(b)(3);
    (e) If you are a title II beneficiary (or a concurrent beneficiary 
under title II and title XVI)--
    (1) The 36th month for which an outcome payment is made to an EN 
(including a State VR agency acting as an EN) under subpart H of this 
part; or
    (2) If the State VR agency elected payment under subpart V of part 
404 (or subpart V of part 416) of this chapter, for services provided 
to you, the 90th day after the services end; or
    (f) If you are a title XVI beneficiary--
    (1) The 60th month for which an outcome payment is made to an EN 
(including a State VR agency acting as an EN) under subpart H of this 
part; or
    (2) If the State VR agency elected payment under subpart V of part 
416 of this chapter, for services provided to you, the 90th day after 
the services end.
    16. In Sec.  411.175, revise the section heading and the first and 
fourth sentences of paragraph (a) to read as follows:


Sec.  411.175  What if a continuing disability review is begun before 
my ticket is in use?

    (a) If we begin a continuing disability review before the date on 
which your ticket is in use, you may still assign the ticket and 
receive services from an EN or a State VR agency acting as an EN under 
the Ticket to Work program, or you may still receive services from a 
State VR agency that elects to be paid under the cost reimbursement 
payment system. * * * However, if your ticket was in use before we 
determined that you are no longer disabled, in certain circumstances 
you may continue to receive benefit payments (see Sec. Sec.  
404.316(c), 404.337(c), 404.352(d), and 416.1338 of this chapter). * * 
*
* * * * *
    17. Remove the undesignated centered heading before Sec.  411.180.
    18. In Sec.  411.180, revise paragraph (b)(1) and the first 
sentence of paragraph (c)(1) to read as follows:


Sec.  411.180  What is timely progress toward self-supporting 
employment?

* * * * *
    (b) * * *
    (1) Initial 24-month period means that the 24-month period that 
begins with the month following the month in which you first assigned 
your ticket, or the first month you have a ticket that would otherwise 
be available for assignment and are receiving services under an IPE 
from if the state VR agency that has chosen the cost reimbursement 
payment system. (See Sec. Sec.  411.220(e) and 411.225(c) for when a 
new initial 24-month period may be established for you). We do not 
count any month during which the ticket is not assigned to an EN or 
State VR agency acting as an EN, or any month in which you have a 
ticket which would otherwise be available for assignment and are 
receiving services from state VR agency that has chosen the cost 
reimbursement payment system.
* * * * *
    (c) Guidelines. * * *
    (1) During the initial 24-month period after you assign your 
ticket, or after you have a ticket which would otherwise be available 
for assignment and are receiving services under an IPE from a state VR 
agency that has chosen the cost reimbursement system, you must be 
actively participating in your plan. * * *
* * * * *
    19. In Sec.  411.190, revise the first and third sentences of 
paragraph (a)(1) and the first sentence of paragraph (a)(2)(ii) to read 
as follows:


Sec.  411.190  How is it determined if I am meeting the timely progress 
guidelines?

    (a) During the initial 24-month period. (1) General. During the 
initial 24-month period you assigned your ticket, or after you have a 
ticket which would otherwise be available for assignment and are 
receiving services under an IPE from a state VR agency that has chosen 
the cost reimbursement system, you must be actively participating in 
your employment plan as defined in Sec.  411.180(c). * * * If you or 
your EN or State VR agency acting as an EN report to the PM that you 
are temporarily unable to participate or are not actively participating 
in your employment plan during the initial 24-month period you assigned 
your ticket, or during the initial 24-month period or after you have a 
ticket which would otherwise be available for assignment and are 
receiving services under an IPE from a state VR agency that has chosen 
the cost reimbursement system, the PM will give you the choice of 
placing your ticket in inactive status or resuming active participation 
in your employment plan.
    (2) * * *
    (ii) If your ticket is still assigned to an EN or State VR agency, 
acting as an EN,

[[Page 57232]]

or you have a ticket which would otherwise be available for assignment 
and are receiving services under an IPE from a state VR agency that has 
chosen the cost reimbursement system, you may reactivate your ticket by 
submitting a written request to the PM. * * *
* * * * *


Sec.  411.191  [Removed]

    19. Remove Sec.  411.191.
    20. Revise Sec.  411.210 paragraphs (b)(1)(ii), (b)(2)(ii), 
(b)(3)(ii), (b)(4)(ii), (b)(5)(ii), and the fourth sentences of both 
paragraphs (c)(1) and (c)(2) to read as follows:


Sec.  411.210  What happens if I do not make timely progress toward 
self-supporting employment?

* * * * *
    (b) * * *
    (1) * * *
    (ii) When you have satisfied this requirement, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency acting as an EN, or you have a ticket which 
would otherwise be available for assignment and are receiving services 
under an IPE from a state VR agency that has chosen the cost 
reimbursement system. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
* * * * *
    (2) * * *
    (ii) When you have satisfied this requirement, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency acting as an EN, or you have a ticket which 
would otherwise be available for assignment and are receiving services 
under an IPE from a state VR agency that has chosen the cost 
reimbursement system. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
* * * * *
    (3) * * *
    (ii) When you have satisfied this requirement, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency acting as an EN, or you have a ticket which 
would otherwise be available for assignment and are receiving services 
under an IPE from a state VR agency that has chosen the cost 
reimbursement system. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
* * * * *
    (4) * * *
    (ii) When you have satisfied this requirement, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency acting as an EN, or you have a ticket which 
would otherwise be available for assignment and are receiving services 
under an IPE from a state VR agency that has chosen the cost 
reimbursement system. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
* * * * *
    (5) * * *
    (ii) When you have satisfied this requirement, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency acting as an EN, or you have a ticket which 
would otherwise be available for assignment and are receiving services 
under an IPE from a state VR agency that has chosen the cost 
reimbursement system. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
* * * * *
    (c) * * *
    (1) * * * If the PM decides that you have satisfied the 
requirements for re-entering in-use status (including the requirement 
that your ticket be assigned to an EN or State VR agency acting as an 
EN, or that you have a ticket which would otherwise be available for 
assignment and are receiving services under an IPE from a state VR 
agency that has chosen the cost reimbursement system), you will be 
reinstated to in-use status effective with the date on which the PM 
sends the notice of the decision to you. * * *
    (2) * * * If we decide that you have satisfied the requirements for 
re-entering in-use status (including the requirement that your ticket 
be assigned to an EN or State VR agency acting as an EN, or you have a 
ticket which would otherwise be available for assignment and are 
receiving services under an IPE from a state VR agency that has chosen 
the cost reimbursement system), you will be reinstated to in-use status 
effective with the date on which we send the notice of the decision to 
you.

Subpart E--[Amended]

    21. In Sec.  411.325, revise paragraph (a) to read as follows:


Sec.  411.325  What reporting requirements are placed on an EN as a 
participant in the Ticket to Work program?

* * * * *
    (a) Report to the PM in writing each time the EN accepts a ticket 
for assignment or the EN no longer wants a ticket assigned to it.
* * * * *

Subpart F--[Amended]

    22. Revise Sec.  411.350 to read as follows:


Sec.  411.350  Must a State VR agency participate in the Ticket to Work 
program?

    A State VR agency may elect, but is not required, to participate in 
the Ticket to Work program as an EN. The State VR agency may elect on a 
case-by-case basis to participate in the Ticket to Work program as an 
EN, or it may elect to provide services to beneficiaries and be paid 
under the cost reimbursement payment system, referenced in Sec. Sec.  
404.2101 and 416.2201 of this chapter.
    23. In Sec.  411.355, revise the section heading, the third 
sentence in paragraph (a) and the last sentence of paragraph (c) to 
read as follows:


Sec.  411.355  What payment options does a State VR agency have?

    (a) * * * On a case-by-case basis, the State VR agency may 
participate either--
* * * * *
    (c) * * * When serving a beneficiary who does not have a ticket 
that can be assigned pursuant to Sec.  411.140 of this chapter, the 
State VR agency may seek payment only under the cost reimbursement 
payment system.
* * * * *


Sec.  411.360  [Removed]

    24. Remove Sec.  411.360.
    25. In Sec.  411.365, revise the section heading and paragraph (a) 
to read as follows:


Sec.  411.365  How does a State VR agency notify us about its choice of 
a payment system for use when functioning as an EN?

    (a) The State VR agency must send us a letter telling us which EN 
payment system it will use when it functions as an EN with respect to a 
beneficiary who has a ticket.
* * * * *
    26. Revise Sec.  411.370 to read as follows:


Sec.  411.370  Does a State VR agency ever have to function as an EN?

    No. A State VR agency may choose to be paid under the cost 
reimbursement system under Sec.  411.355.
    27. In Sec.  411.385, revise paragraph (a) introductory text, 
remove paragraph (a)(1) and redesignate paragraphs (a)(2) and (a)(3) as 
(a)(1) and (a)(2), respectively to read as follows:

[[Page 57233]]

Sec.  411.385  What does a State VR agency do if a beneficiary who is 
eligible for VR services has a ticket that is available for assignment 
or reassignment?

    (a) Once the State VR agency determines that a beneficiary is 
eligible for VR services, the beneficiary and a representative of the 
State VR agency must agree to and sign the individualized plan for 
employment (IPE) required under section 102(b) of the Rehabilitation 
Act of 1973, as amended (29 U.S.C. 722(b)). The State VR agency must 
submit the following information to the PM in order for the 
beneficiary's ticket to be considered in use:
* * * * *
    28. Revise Sec.  411.390 to read as follows:


Sec.  411.390  What does a State VR agency do if a beneficiary to whom 
it is already providing services has a ticket that is available for 
assignment?

    If a beneficiary who is receiving services from the State VR agency 
under an existing IPE becomes eligible for a ticket that is available 
for assignment, the State VR agency must submit the information 
required in Sec.  411.385(a) to the PM. We require this information in 
order for the beneficiary's ticket to be considered in use. If a 
beneficiary who is receiving services from the State VR agency under an 
existing IPE becomes eligible for a ticket that is available for 
assignment and decides not to assign the ticket to the State VR agency, 
the State VR agency is limited to the cost reimbursement payment 
system.

Subpart H--[Amended]

    29. In Sec.  411.500, revise paragraphs (b), (c), (e), and (f) to 
read as follows:


Sec.  411.500  Definitions of terms used in this subpart.

* * * * *
    (b) Outcome Payment Period means a period of 36 months (or a period 
of 60 months for a title XVI disability beneficiary who is not 
concurrently a title II disability beneficiary), not necessarily 
consecutive, for which Social Security disability benefits and Federal 
SSI cash benefits are not payable to the beneficiary because of the 
performance of substantial gainful activity (SGA) or by reason of 
earnings from work activity. The outcome payment period begins with the 
first month, after the month the ticket was first assigned to an EN (or 
to a State VR agency acting as an EN), for which such benefits are not 
payable to the beneficiary because of the performance of SGA or by 
reason of earnings from work activity. The outcome payment period ends 
as follows:
    (1) For a title II disability beneficiary (including a concurrent 
title II/title XVI disability beneficiary), the outcome payment period 
ends with the 36th month, consecutive or otherwise, ending after the 
date on which the ticket was first assigned to an EN (or to a State VR 
agency acting as an EN), for which Social Security disability benefits 
and Federal SSI cash benefits are not payable to the beneficiary 
because of the performance of SGA or by reason of earnings from work 
activity.
    (2) For a title XVI disability beneficiary who is not concurrently 
a title II disability beneficiary, the outcome payment period ends with 
the 60th month, consecutive or otherwise, ending after the date on 
which the ticket was first assigned to an EN (or to a State VR agency 
acting as an EN), for which Federal SSI cash benefits are not payable 
to the beneficiary by reason of earnings from work activity.
    (c) Outcome Payment System is a system providing a schedule of 
payments to an EN (or a State VR agency acting as an EN) for each 
month, during an beneficiary's outcome payment period, for which Social 
Security disability benefits and Federal SSI cash benefits are not 
payable to the beneficiary because of SGA or earnings from work 
activity.
* * * * *
    (e) Outcome Payment Month means a month, during the beneficiary's 
outcome payment period, for which Social Security disability benefits 
and Federal SSI cash benefits are not payable to the beneficiary 
because of SGA or earnings from work activity.
    (f) Outcome-Milestone Payment System is a system providing a 
schedule of payments to an EN (or State VR agency acting as an EN) that 
includes, in addition to any outcome payments which may be made during 
the beneficiary's outcome payment period, payments for completion by a 
disability beneficiary of up to four Phase I milestones and up to 
eleven Phase 2 milestones (or up to eighteen Phase 2 milestones for a 
title XVI disability beneficiary who is not a concurrent title II 
disability beneficiary) directed toward the goal of self-supporting 
employment. The milestones for which payments may be made must occur 
prior to the beginning of the beneficiary's outcome payment period.
    (1) Phase I Milestones are based on the beneficiary achieving a 
level of earnings that reflects initial efforts at self-supporting 
employment. They are based on the earnings threshold that we use to 
establish a trial work period service month as defined in Sec.  
404.1592(b) of this chapter. We use this threshold amount as defined in 
Sec.  404.1592(b) of this chapter in order to measure whether the 
beneficiary's earnings level meets the milestone objective.
    (2) Phase 2 Milestones are based on the beneficiary achieving a 
level of earnings that reflects partial efforts at self-supporting 
employment. They are based on the earnings threshold that we use to 
determine if work activity is SGA. We use the SGA earnings threshold 
amount in Sec.  404.1574(b)(2) of this chapter. We use the SGA 
threshold amounts in order to measure whether the beneficiary's 
earnings level meets the milestone objective.
    30. Revise Sec.  411.505 to read as follows:


Sec.  411.505  How is an EN paid?

    An EN (including a State VR agency acting as an EN) can elect to be 
paid under either the outcome payment system or the outcome-milestone 
payment system. The EN will elect a payment system at the time the EN 
enters into an agreement with SSA. (For State VR agencies, see Sec.  
411.365.) The EN (or State VR agency acting as an EN) may periodically 
change its elected EN payment system as described in Sec.  411.515.
    31. In Sec.  411.510, revise paragraph (c) to read as follows:


Sec.  411.510  How is the State VR agency paid under the Ticket to Work 
program?

* * * * *
    (c) If a beneficiary who is receiving services from the State VR 
agency under an existing individualized plan for employment becomes 
eligible for a ticket that is available for assignment, the State VR 
agency will notify the PM of the payment system election for such 
beneficiary.
    32. In Sec.  411.515, revise paragraph (b) to read as follows:


Sec.  411.515  Can the EN change its elected payment system?

* * * * *
    (b) After an EN (or a State VR agency) first elects an EN payment 
system, the EN (or State VR agency) can choose to make one change in 
its elected payment system at any time prior to the close of the 12th 
month following the month in which the EN (or State VR agency) first 
elects an EN payment system.
* * * * *
    33. In Sec.  411.525, revise paragraphs (a)(1)(i), (a)(2), (b) and 
(c) to read as follows:

[[Page 57234]]

Sec.  411.525  How are the EN payments calculated under each of the two 
EN payment systems?

    (a) * * *
    (1)(i) Under the outcome payment system, we can pay up to 36 
outcome payments to the EN (or State VR agency acting as an EN) for a 
title II disability beneficiary (including a concurrent title II/title 
XVI disability beneficiary). We can pay up to 60 outcome payments to 
the EN (or State VR agency acting as an EN) for a title XVI disability 
beneficiary who is not concurrently a title II disability beneficiary. 
For each month during the beneficiary's outcome payment period for 
which Social Security disability benefits and Federal SSI cash benefits 
are not payable to the beneficiary because of SGA or earnings from work 
activity, the EN (or the State VR agency acting as an EN) is eligible 
for a monthly outcome payment. Payment for an outcome payment month 
under the outcome payment system is equal to 67 percent of the payment 
calculation base for the calendar year in which such month occurs, 
rounded to the nearest whole dollar (see Sec.  411.550).
* * * * *
    (2) Under the outcome-milestone payment system, we can pay the EN 
(or State VR agency acting as an EN) for up to four Phase 1 milestones 
achieved by a disability beneficiary who has assigned his or her ticket 
to the EN (or State VR agency acting as an EN). We can also pay the EN 
(or State VR agency acting as an EN) up to eleven Phase 2 milestones 
achieved by a title II disability beneficiary (including a concurrent 
title II/title XVI disability beneficiary) or up to eighteen milestones 
achieved by a title XVI disability beneficiary (who is not concurrently 
a title II disability beneficiary) who has assigned his or her ticket 
to the EN (or State VR agency acting as an EN). The milestones for 
which payment may be made must occur prior to the beginning of the 
beneficiary's outcome payment period and meet the requirements of Sec.  
411.535. In addition to the milestone payments, monthly outcome 
payments can be paid to the EN (or State VR agency acting as an EN) 
during the outcome payment period. If the beneficiary's outcome payment 
period begins before the beneficiary has achieved all Phase 1 and Phase 
2 milestones, then we will pay the EN a final milestone payment equal 
to the total amount of the remaining unpaid milestones, based on the 
payment calculation base for the calendar year in which the first month 
of the beneficiary's outcome period occurs, rounded to the nearest 
whole dollar.
    (b) The outcome-milestone payment system is designed so that the 
total payments to the EN (or the State VR agency acting as an EN) for a 
beneficiary are less than the total amount that would have been paid if 
the EN were paid under the outcome payment system. Under the outcome-
milestone payment system, the total payment to the EN (or the state VR 
agency acting as an EN) is about 90 percent of the total that would 
have been potentially payable under the outcome payment system for the 
same beneficiary.
    (c) We will pay an EN (or State VR agency acting as an EN) to whom 
the beneficiary has assigned a ticket for milestones or outcomes 
achieved only in months prior to the month in which the ticket 
terminates (see Sec.  411.155). We will not pay a milestone or outcome 
payment to an EN (or State VR agency acting as an EN) based on an 
beneficiary's work activity or earnings in or after the month in which 
the ticket terminates.


Sec.  411.530  [Removed]

    34. Remove Sec.  411.530.
    35. Revise Sec.  411.535 to read as follows:


Sec.  411.535  What are the milestones for which an EN can be paid?

    (a) Under the outcome-milestone payment system, an EN can be paid 
up to four Phase 1 milestones achieved by title II and title XVI 
beneficiaries and up to eleven Phase 2 milestones achieved by a title 
II beneficiary or up to eighteen milestones for a title XVI beneficiary 
who has assigned his or her ticket to the EN (or State VR agency acting 
as an EN). The milestones must occur after the date on which the ticket 
was first assigned and after the beneficiary starts to work prior to 
the beginning of the beneficiary's outcome period (see Sec.  
411.500(b)).
    (1) There are four Phase 1 milestones. The first Phase 1 milestone 
is met when a beneficiary has worked at least two weeks and earned 50% 
of the amount of a trial work period service month as defined in Sec.  
404.1592(b) of this chapter. The second Phase 1 milestone is met after 
a beneficiary has retained a job for three months and has gross 
earnings in each of those months equal to a trial work period service 
month as defined in Sec.  404.1592(b) of this chapter. The third Phase 
1 milestone is met after a beneficiary has retained a job for six 
months and has gross earnings in each of those months equal to a trial 
work period service month as defined in Sec.  404.1592(b) of this 
chapter. The fourth Phase 1 milestone is met after a beneficiary has 
retained a job for nine months and has gross earnings in each of those 
months equal to a trial work period service month as defined in Sec.  
404.1592(b) of this chapter.
    (2) A Phase 2 milestone is met for each calendar month in which the 
beneficiary has worked and has gross earnings from employment (or net 
earnings from self-employment as defined in Sec.  404.1080 of this 
chapter) in that month that are more than the SGA threshold amount.
    (3) If the beneficiary does not achieve all Phase 1 and Phase 2 
milestones prior to the beginning of the beneficiary's outcome period, 
then we will pay the EN ( or State VR agency acting as an EN) the final 
milestone payment equal to the total amount of the remaining unpaid 
Phase 1 and Phase 2 milestones. This payment will be based on the 
payment calculation base for the calendar year in which the first month 
of the beneficiary's outcome period occurs, rounded to the nearest 
whole dollar.
    (4) If the State VR agency has already received payment for 
services under the cost-reimbursement system, the EN can be paid for up 
to eleven Phase 2 milestones achieved by title II beneficiaries or for 
up to eighteen milestones achieved by title XVI beneficiaries. In this 
situation, we would not pay Phase 1 milestones under Sec.  
411.135(a)(1).
    (b) An EN (or State VR agency acting as an EN) can be paid for a 
milestone only if the milestone is attained after a beneficiary has 
assigned his or her ticket to the EN. See Sec.  411.575 for other 
milestone payment criteria.
    36. Revise Sec.  411.540 to read as follows:


Sec.  411.540  What are the payment amounts for each of the milestones?

    (a) The payment amount for each of the Phase I milestones for both 
title II and title XVI is equal to 120 percent of the payment 
calculation base for title II (as defined in Sec.  411.500(a)(1)) for 
the calendar year in which the month of attainment of the milestone 
occurs, rounded to the nearest whole dollar.
    (b) The payment amount for each of the Phase 2 milestones:
    (i) For title II beneficiaries (including concurrent title II/title 
XVI disability beneficiaries) is equal to 36 percent of the monthly 
payment calculation base as defined in Sec.  411.500(a)(1) for the 
calendar year in which the month of attainment of the milestone occurs, 
rounded to the nearest whole dollar;
    (ii) For title XVI beneficiaries (who are not concurrently title II 
disability beneficiaries) is equal to 36 percent of

[[Page 57235]]

the monthly payment calculation base as defined in Sec.  411.500(a)(2) 
for the calendar year in which the month of attainment of the milestone 
occurs, rounded to the nearest whole dollar.
    37. Revise Sec.  411.545 to read as follows:


Sec.  411.545  What are the payment amounts for outcome payment months 
under the outcome-milestone payment system?

    (a) The amount of each monthly outcome payment under the outcome-
milestone payment system:
    (1) For title II beneficiaries (including concurrent title II/title 
XVI disability beneficiaries) is equal to 36 percent of the payment 
calculation base as defined in Sec.  411.500(a)(1) for the calendar 
year in which the month occurs, rounded to the nearest whole dollar;
    (2) For title XVI beneficiaries (who are not concurrently title II/
title XVI disability beneficiaries) is equal to 36 percent of the 
payment calculation base as defined in Sec.  411.500(a)(2) for the 
calendar year in which the month occurs, rounded to the nearest whole 
dollar.
    (b) The following chart provides an example of how an EN would 
receive milestone and outcome payments.

                                    Proposed Outcome--Milestone Payment Table
                                      [2005 figures for illustration only]
----------------------------------------------------------------------------------------------------------------
                                     Beneficiary
          Payment type                earnings          SSDI amount of  payment      Title SSI amount of payment
----------------------------------------------------------------------------------------------------------------
Phase 1 (120% of SSDI PCB) *
    Milestone 1................  $295 for two weeks  $1,042                         $1,042
                                  work.
    Milestone 2................  $590/mo. x 3        $1,042                         $1,042
                                  months work
                                  (cumulative).
    Milestone 3................  $590/mo. x 6        $1,042                         $1,042
                                  months work
                                  (cumulative).
    Milestone 4................  $590/mo. x 9        $1,042                         $1,042
                                  months work
                                  (cumulative).
                                                    --------------------------------
        Total Phase 1..........  ..................  $4,168                         $4,168
                                                    ================================
Phase 2 (36% of PCB)...........  Gross
                                  Earnings>$830.
SSDI Milestones 1-11...........  ..................  $313 x 11 = $3,443
SSI Milestones 1-18............  ..................  .............................  $184 x 18 = $3,312
                                                    --------------------------------
        Total Phase 1 + 2        ..................  $7,611 *                       $7,480 *
         Milestones.
                                                    ================================
Outcome Payments (36% of PCB)
    SSDI = 1-36................  >$830/and monthly   $313 x 36 = $11,268
                                  cash benefit not
                                  payable.
    SSI = 1-60.................  Sufficient          .............................  $184 x 60 = $11,040
                                  earnings for
                                  federal cash
                                  benefits = ``0''.
                                                    --------------------------------
        Total milestone and      ..................  $18,879                        $18,520
         outcome payments.
----------------------------------------------------------------------------------------------------------------
* A Lump sum milestone is the remaining total milestones unpaid if the outcome period is reached before all the
  milestones are achieved. This can be any number of the remaining milestones and is paid after the first
  outcome payment is achieved.

    38. Revise Sec.  411.550 to read as follows:


Sec.  411.550  What are the payment amounts for outcome payment months 
under the outcome payment system?

    Under the outcome payment system, the payment for an outcome 
payment month is equal to 67 percent of the payment calculation base 
for the calendar year in which the month occurs, rounded to the nearest 
whole dollar (see charts III and IV for an example of the proposed 
Outcome payment system for title II and title XVI).
    39. Revise Sec.  411.555 to read as follows:


Sec.  411.555  Can the EN keep the milestone and outcome payments even 
if the beneficiary does not achieve all outcome months?

    (a) Yes. The EN (or State VR agency acting as an EN) can keep each 
milestone and outcome payment for which the EN (or State VR agency 
acting as an EN) is eligible, even though the title II beneficiary does 
not achieve all 36 outcome months or the title XVI beneficiary does not 
achieve all 60 outcome months.
    (b) Except as provided in paragraph (c) of this section, payments 
which we make or deny to an EN (or a State VR agency acting as an EN) 
may be subject to adjustment (including recovery, as appropriate) if we 
determine that more or less than the correct amount was paid. This may 
happen, for example, because we determine that the payment 
determination was in error or because of an allocation of payment under 
Sec.  411.560.
    (c) If we determine that an overpayment or underpayment to an EN 
has occurred, we will notify the EN (or State VR agency acting as an 
EN) of the adjustment. We will not seek an adjustment if a 
determination or decision about a beneficiary's right to benefits 
causes an overpayment to the EN. Any dispute which the EN (or State VR 
agency) has regarding the adjustment may be resolved under the rules in 
Sec.  411.590(a) and (b).
    40. Revise Sec.  411.560 to read as follows:


Sec.  411.560  Is it possible to pay a milestone or outcome payment to 
more than one EN?

    Yes. It is possible for more than one EN (including a State VR 
agency acting as an EN) to receive payment based on the same milestone 
or outcome. If the beneficiary has assigned the ticket to more than one 
EN (or State VR agency acting as an EN) at different times, and more 
than one EN (or State VR agency) requests payment for the same 
milestone or outcome payment under its elected payment system, the PM 
will make a determination of the allocation of payment to each EN (or 
State VR agency acting as an EN). The PM will make this determination 
based upon the contribution of the services provided by each EN (or 
State VR agency acting as an EN) toward the achievement of the

[[Page 57236]]

outcomes or milestones. Outcome and milestone payments will not be 
increased because the payments are shared between two or more ENs 
(including a State VR agency acting as an EN).
    41. Revise Sec.  411.565 to read as follows:


Sec.  411.565  What happens if two or more ENs qualify for payment on 
the same ticket but have elected different EN payment systems?

    We will pay each EN (or State VR acting as an EN) according to its 
elected EN payment system in effect at the time the beneficiary 
assigned the ticket to the EN (or the State VR agency acting as an EN).
    42. Add Sec.  411.566 to read as follows:


Sec.  411.566  May an EN use outcome or milestone payments to pay 
bonuses to the beneficiary?

    Yes, an EN may use outcome or milestone payments to provide bonuses 
to the beneficiary, subject to other applicable Federal, State, or 
local laws that may govern an EN's use of these payments.
    43. In Sec.  411.575, revise the introductory text; paragraph 
(a)(1) introductory text; and paragraphs (a)(1)(i), (a)(2), (b)(1) 
introductory text, (b)(1)(ii), and (b)(2) to read as follows:


Sec.  411.575  How does the EN request payment for milestone or outcome 
payment months achieved by a beneficiary who assigned a ticket to the 
EN?

    The EN (or State VR agency acting as an EN) will send its request 
for payment, evidence of the beneficiary's work or earnings, and other 
information to the PM.
    (a) Milestone payments. (1) We will pay the EN (or State VR agency 
acting as an EN) for milestones only if
    (i) The outcome-milestone payment system was the EN's (or State VR 
agency's) elected payment system in effect at the time the beneficiary 
assigned a ticket to the EN (or the State VR agency acting as an EN);
* * * * *
    (2) The EN (or State VR agency acting as an EN) must request 
payment for each milestone achieved by a beneficiary who has assigned a 
ticket to the EN (or State VR agency acting as an EN). The request must 
include evidence that the milestone was achieved and other information 
as we may require to evaluate the EN's (or State VR agency's) request. 
We do not have to stop monthly benefit payments to the beneficiary 
before we can pay the EN (or State VR agency acting as an EN) for 
milestones achieved by the beneficiary.
    (b) Outcome payments. (1) We will pay an EN (or State VR agency 
acting as an EN) an outcome payment for a month if--
* * * * *
    (ii) We have not already paid for 36 outcome payment months (or a 
period of 60 outcome payment months for a title XVI disability 
beneficiary who is not concurrently a title II disability beneficiary) 
on the same ticket; and
* * * * *
    (2) The EN (or State VR agency acting as an EN) must request 
payment for outcome payment months. Along with the request, the EN (or 
State VR agency acting as an EN) must submit evidence of the 
beneficiary's work or earnings (e.g., a statement of monthly earnings 
from the employer or the employer's designated payroll preparer, or an 
unaltered copy of the beneficiary's pay stub). After we have started 
paying outcome payments to an EN (or State VR agency acting as an EN) 
based on evidence of the beneficiary's earnings, the EN (or State VR 
agency) must provide documentation of the beneficiary's continued work 
or earnings in such a manner or form and at such time or times as we 
may require, when requesting payment for additional outcome payments 
months with respect to that beneficiary. Exception: If the EN (or State 
VR agency) does not currently hold the ticket because it is unassigned 
or reassigned to another EN (or State VR agency), the EN (or State VR 
agency) must request payment, but is not required to submit evidence of 
the beneficiary's work or earnings.
    44. Revise Sec.  411.580 to read as follows:


Sec.  411.580  Can an EN receive payments for milestones or outcome 
payment months that occur before the beneficiary assigns a ticket to 
the EN?

    No. An EN (or State VR agency acting as an EN) may be paid only for 
milestones or outcome payment months that are achieved after the first 
day on which the ticket is assigned to the EN (or State VR agency 
acting as an EN).
    45. Add a new Sec.  411.581 to read as follows:


Sec.  411.581  Can an EN receive milestone and outcome payments for 
months after a beneficiary takes his or her ticket out of assignment?

    Yes. If a beneficiary whose ticket is assigned to an EN (or State 
VR agency acting as an EN) takes his or her ticket out of assignment 
(see Sec.  411.145), the EN (or State VR agency) can receive payments 
under its elected payment system for milestones or outcome payment 
months that occur after the ticket is taken out of assignment, as long 
as the ticket has not terminated for any of the reasons listed in Sec.  
411.155. See Sec.  411.560 for situations in which payment may be made 
to more than one EN or State VR agency based on the same milestone or 
outcome.
    46. Add a new Sec.  411.582 to read as follows:


Sec.  411.582  Can a State VR agency receive payment under the cost 
reimbursement system if a continuous 9-month period of substantial 
gainful activity is completed after the ticket is assigned to an EN?

    Yes. If a State VR agency provides services to a beneficiary under 
34 CFR 361.12, and elects payment under the cost reimbursement system, 
under subpart V of part 404 (or subpart V of part 416) of this chapter, 
the State VR can receive payment under the cost reimbursement system 
for services provided to the beneficiary if all the requirements under 
subpart V of part 404 (or subpart V of part 416) of this chapter are 
met.
    47. Revise Sec.  411.585 to read as follows:


Sec.  411.585  Can a State VR agency and an EN both receive payment for 
serving the same beneficiary?

    Yes. A State VR agency and an EN can both receive payment for 
serving the same beneficiary.
    (a) A State VR agency may act as an EN and serve a beneficiary. In 
this case, both the State VR agency acting as an EN and another EN may 
be eligible for payment based on the same ticket (see Sec.  411.560).
    (b) If the beneficiary had a ticket in use when receiving services 
from a State VR agency (see Sec. Sec.  411.166-411.171) and the State 
VR agency received payment under the cost reimbursement system under 
subpart V of part 404 (or subpart V of part 416) of this chapter, the 
beneficiary may assign his or her ticket to an EN after completing 
services with the State VR agency, other than a State VR acting as an 
EN. The EN can then be paid for milestone payments and outcome payments 
under the outcome-milestone payment system or for outcome payments 
under the outcome payment system. See Sec.  411.535.
    (c) If the beneficiary first assigns a ticket to an EN, but not a 
State VR agency acting as an EN, the EN can be paid pursuant to the 
elected EN payment system. If the ticket becomes unassigned, and a 
beneficiary chooses to receive services from a State VR agency, the 
State VR agency may choose to be paid under the EN payment or the cost 
reimbursement system.

[[Page 57237]]

Sec.  411.587  [Removed]

    59. Remove Sec.  411.587.
    60. In Sec.  411.590, revise paragraph (d) to read as follows:


Sec.  411.590  What can an EN do if the EN disagrees with our decision 
on a payment request?

* * * * *
    (d) Determinations or decisions we make about a beneficiary's right 
to benefits may cause payments we have already made to an EN (or denial 
of payment to an EN) to be incorrect, resulting in an underpayment or 
overpayment to the EN. If this happens, we will make any necessary 
adjustments to the payments (see Sec.  411.555). (See Sec.  411.555(c) 
for when we will not make an adjustment in a case in which an 
overpayment results from a determination or decision we make about a 
beneficiary's right to benefits.) While an EN cannot appeal our 
determination about an individual's right to benefits, the EN may 
furnish any evidence the EN has which relates to the issue(s) to be 
decided on appeal if the individual appeals our determination.

[FR Doc. 05-19530 Filed 9-29-05; 8:45 am]
BILLING CODE 4191-02-P


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