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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4230 Introduced in House (IH)]

104th CONGRESS
  2d Session
                                H. R. 4230

 To amend title II of the Social Security Act and the Internal Revenue 
   Code of 1986 to make improvements in the rehabilitation programs 
    provided for disabled individuals under such Act, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 27, 1996

  Mr. Bunning of Kentucky (for himself, Mr. Jacobs, Mr. Gibbons, Mr. 
Crane, Mr. Thomas, Mr. Shaw, Mrs. Johnson of Connecticut, Mr. Camp, Mr. 
    Sam Johnson of Texas, Mr. Collins of Georgia, Mr. Portman, Mr. 
Laughlin, Mr. English of Pennsylvania, Mr. Christensen, and Ms. Dunn of 
 Washington) introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
 To amend title II of the Social Security Act and the Internal Revenue 
   Code of 1986 to make improvements in the rehabilitation programs 
    provided for disabled individuals under such Act, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rehabilitation and Return to Work 
Opportunity Act of 1996''.

SEC. 2. REHABILITATION SERVICES UNDER REHABILITATION AND RETURN-TO-WORK 
              PROGRAM.

    (a) In General.--Section 222 of the Social Security Act (42 U.S.C. 
422) is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Rehabilitation and Return-to-Work Program.--
            ``(1) In general.--There is established under the Social 
        Security Administration a Rehabilitation and Return-to-Work 
        Program.
            ``(2) Assessment of capability for vocational adjustment.--
        Under the Program, each determination under section 221 or 
        sections 1631(c) and 1633(a) that an individual is under a 
        disability shall be accompanied by a determination, by the 
        officials making such determination under section 221 or 
        sections 1631(c) and 1633(a), of whether or not the individual 
        is capable of vocational adjustment. The individual shall be 
        determined to be capable of vocational adjustment if such 
        officials determine that there is a reasonable possibility that 
        the individual will be capable, upon provision of vocational 
        rehabilitation services to the individual under the Program or 
        under a State plan approved under title I of the Rehabilitation 
        Act of 1973, to perform substantial gainful activity. 
        Participation in the Program or such a State plan by 
        individuals determined capable of vocational adjustment shall 
        be mandatory, until a determination is made by a provider of 
        rehabilitation services, in the course of employment evaluation 
        under paragraph (5)(B) or during the implementation of the 
        employment plan under paragraph (5), that the individual is no 
        longer capable of vocational adjustment or that the original 
        determination that the individual is capable of vocational 
        adjustment was in error. Nothing in this paragraph shall be 
        construed to preclude voluntary participation in the Program by 
        any individual determined to be under a disability under 
        section 221 for whom participation is not mandatory.
            ``(3) Regional administrators.--
                    ``(A) Service regions.--The Program shall provide 
                for the division of the geographic area of the United 
                States into specified service regions for purposes of 
                the Program.
                    ``(B) Selection and assignment to service 
                regions.--Under the Program, the Commissioner of Social 
                Security shall enter into agreements with organizations 
                in the private sector to serve as regional 
                administrators of the Program for each service region. 
                Regional administrators shall be selected for each 
                region by means of a competitive bidding process, from 
                among organizations in the private sector with 
                substantial expertise and experience in the field of 
                vocational rehabilitation or Federal contract 
                management. Such organizations may serve as regional 
                administrator for any number of service regions, except 
                that not less than 2 qualified organizations may serve 
                at any time as regional administrators under the 
                Program.
                    ``(C) Tenure, renewal, and early termination.--Each 
                agreement entered into under this paragraph shall 
                provide for service by regional administrators limited 
                to terms of 5 years, subject to renewal. Such 
                agreements shall provide for early termination upon 
                failure to meet performance standards which shall be 
                specified in the agreement and which shall be weighted 
                to take into account any performance in prior terms. 
                Such performance standards shall include (but are not 
                limited to)--
                            ``(i) measures for timely operation of 
                        provider payment systems,
                            ``(ii) measures for ease of access by 
                        recipients to vocational rehabilitation 
                        services, and
                            ``(iii) measures for determining the extent 
                        to which failures in obtaining vocational 
                        rehabilitation for participants for each 
                        service region, and in relation to other 
                        service regions, fall within acceptable 
                        parameters.
                    ``(D) Preclusion from direct participation in 
                delivery of services in own service area.--
                            ``(i) In general.--Agreements under this 
                        paragraph shall conform to requirements which 
                        shall be provided in regulations prescribed 
                        under this section which preclude--
                                    ``(I) direct participation by the 
                                regional administrator for any service 
                                region in the delivery of vocational 
                                rehabilitation services to participants 
                                in such region, and
                                    ``(II) the holding by regional 
                                administrators of financial interests 
                                in network coordinators and service 
                                providers under their administration.
                            ``(ii) Delivery of services in other areas 
                        permitted.--No agreement under this paragraph 
                        shall limit the ability of a regional 
                        administrator for any service region to operate 
                        as a service provider under the Program in any 
                        other service region not under its 
                        administration.
                    ``(E) Referral of beneficiaries and applicants to 
                providers.--The regional administrator for each service 
                region shall provide for expedited referral of 
                beneficiaries and applicants to providers of vocational 
                rehabilitation services in the service region. The 
                regional administrator shall ensure that each 
                beneficiary or applicant is allowed changes in 
                providers for good cause without being deemed to have 
                rejected services under the Program, under standards 
                which shall be provided in regulations prescribed under 
                this section in order to promote the mutual 
                responsibility of the provider of such services and the 
                recipient of such services to avoid unnecessary 
                disruption in the delivery of such services by the 
                provider. The regional administrator for each service 
                region shall establish and maintain lists of providers 
                of vocational rehabilitation services eligible for 
                referrals in the service region and shall make such 
                lists generally available to the public.
                    ``(F) Quality assurance.--The regional 
                administrator for each service region shall enter into 
                arrangements providing at least annually for such 
                reviews by consumer groups and private auditing firms 
                as are necessary to provide for effective quality 
                assurance in the provision of services by providers in 
                the service region and in the administration of the 
                milestone payment system prescribed pursuant to 
                paragraph (6) with respect to such providers. The 
                primary focus of such reviews shall be on the extent to 
                which the required components of employment evaluation 
                under paragraph (5)(B) and of individual employment 
                plans under paragraph (5)(C) are reflected in the files 
                of the recipients of vocational rehabilitation under 
                the Program. Such reviews shall also determine the 
                extent to which such recipients have received 
                information required under the Program relating to the 
                availability of the services of providers of core 
                services, providers of support services, and providers 
                of specialized services, and the extent to which such 
                recipients have been given the opportunity of personal 
                choice regarding the selection of providers and of 
                their own employment goals and objectives. The regional 
                administrator shall publish locally the results 
                obtained from the arrangements entered into under this 
                subparagraph, in accordance with regulations prescribed 
                under this section, so as to effectively educate 
                prospective recipients of vocational rehabilitation 
                services as they select their providers.
                    ``(G) Dispute resolution.--Under regulations which 
                shall be prescribed under this section, the regional 
                administrator for each service region--
                            ``(i) shall afford to any party to a 
                        dispute arising under the Program a reasonable 
                        opportunity for a full and fair review by the 
                        regional administrator of the matter in 
                        dispute, and
                            ``(ii) shall afford to all parties to the 
                        dispute an opportunity to submit the dispute to 
                        arbitration by a third party selected by the 
                        parties from persons determined by the regional 
                        administrator as qualified to serve as an 
                        independent arbitrator.
                An award by an arbitrator pursuant to arbitration 
                entered into under this subparagraph shall be final and 
                binding between the parties to the arbitration but 
                shall have no force or effect on any other person. 
                Nothing in this subparagraph shall be construed to 
                otherwise limit the application of subsections (b) and 
                (g) of section 205 and sections 221, 1631(c), and 
                1633(a) with respect to any beneficiary or applicant.
            ``(4) Network coordinators.--
                    ``(A) Hiring by regional administrators.--The 
                regional administrator for each service region under 
                the Program shall recruit, hire, monitor, and authorize 
                the compensation by the Social Security Administration 
                of such network coordinators for the service region as 
                are necessary and appropriate to ensure that adequate 
                choices for vocational rehabilitation services are made 
                available to recipients of such services under the 
                Program.
                    ``(B) Qualifications for network coordinators.--The 
                network coordinators referred to in subparagraph (A) 
                shall consist of organizations which have substantial 
                expertise and experience in the field of vocational 
                rehabilitation.
                    ``(C) Ensuring availability of adequate services.--
                In accordance with regulations which shall be 
                prescribed under this section, each network coordinator 
                assigned to a service region shall ensure that--
                            ``(i) a comprehensive array of vocational 
                        rehabilitation services are available 
                        throughout the service region, including rural 
                        areas, and
                            ``(ii) such services are provided by both--
                                    ``(I) providers who are generalists 
                                with respect to all populations, and
                                    ``(II) providers who are 
                                specialists with respect to particular 
                                populations, which may include 
                                specialists in mobility, cognitive, 
                                sensory, and mental impairments and 
                                other areas specified in such 
                                regulations.
                A network coordinator may meet the requirements of this 
                subparagraph by providing vocational rehabilitation 
                services directly, or by entering into agreements with 
                other vocational rehabilitation service providers.
                    ``(D) Reasonable access to services.--Under 
                standards which shall be provided in regulations 
                prescribed under this section, each network coordinator 
                shall take such measures as are necessary to ensure 
                that each beneficiary or applicant has reasonable 
                access under the Program to vocational rehabilitation 
                services, including career planning, career plan 
                development, vocational assessment, job training, 
                placement, and follow-up services and such other 
                vocational rehabilitation services as may be specified 
                in regulations issued under this section as core 
                services.
                    ``(E) Requirements relating to provision of 
                services.--Each network coordinator shall take such 
                measures as are necessary to ensure that--
                            ``(i) providers of vocational 
                        rehabilitation services made available by the 
                        network coordinator meet specific service 
                        delivery program expectations which shall be 
                        set forth in regulations prescribed under this 
                        section,
                            ``(ii) such providers serve minimum 
                        geographic areas and populations which shall be 
                        specified in regulations prescribed under this 
                        section, and
                            ``(iii) such providers are required to 
                        meet, and maintain compliance with, both 
                        general selection criteria (such as 
                        professional and governmental certification and 
                        educational credentials) and specific selection 
                        criteria (such as the extent of work experience 
                        by the provider with specific populations), 
                        which shall be set forth in regulations 
                        prescribed under this section.
                    ``(F) Referral lists and quality measures.--Each 
                network coordinator shall maintain procedures for 
                establishing lists of network providers eligible for 
                referrals under the Program and reimbursement for time 
                periods specified under the Program, subject to annual 
                performance reviews measured against established 
                quality measures applied to recipients of 
                rehabilitation services. Such measures shall include 
                return-to-work rates, job retention, timeliness, cost, 
                and other factors which shall be specified in 
                regulations prescribed under this section.
                    ``(G) Provision of services under individual 
                employment plans ensured.--Each network coordinator 
                shall take such measures as are necessary to ensure 
                that vocational rehabilitation services provided under 
                the Program by, or under agreements entered into with, 
                the network coordinator are provided under appropriate 
                individual employment plans meeting the requirements of 
                paragraph (4).
                    ``(H) Administration of milestone payment system.--
                Each regional administrator for a service region shall 
                take such measures as are necessary, in accordance with 
                regulations prescribed under this section, to ensure 
                that any compensation received, by network coordinators 
                or by other providers under agreements entered into 
                with network coordinators, for vocational 
                rehabilitation services provided under the Program in 
                the service region complies with the requirements of 
                the milestone payment system prescribed pursuant to 
                paragraph (6). Each network coordinator shall 
                administer the milestone payment system with respect to 
                vocational rehabilitation services provided by, or 
                under agreements with, such network coordinator, 
                including the authorization and verification of 
                payments to providers and securing restitution of 
                overpayments.
                    ``(I) Annual financial reporting.--In accordance 
                with regulations which shall be prescribed under this 
                section, each network coordinator for a service region 
                shall engage a certified public accountant, who shall 
                prepare such annual financial reports to the regional 
                administrator for such region as are necessary to 
                provide for the quality assurance required under 
                paragraph (3)(F).
                    ``(J) Periodic outcomes reporting.--Each network 
                coordinator for a service region shall prepare periodic 
                reports, on at least an annual basis, itemizing for the 
                covered period specific outcomes achieved with respect 
                to specific services provided by the network 
                coordinator. Such report shall conform to a national 
                model which shall be prescribed in regulations under 
                this section. In such report, outcomes shall be 
                measured at least in part on uniform customer 
                satisfaction surveys. Each network coordinator shall 
                provide a copy of the latest report issued by the 
                network coordinator pursuant to this subparagraph to 
                each beneficiary or applicant upon enrollment under the 
                Program for services to be received through such 
                network coordinator. Upon issuance of such report to 
                each beneficiary or applicant, a copy of such report 
                shall be maintained in the files of the network 
                coordinator pertaining to such beneficiary or 
                applicant. The regional administrator for each service 
                region shall ensure that copies of all such reports 
                issued under this subparagraph are made available to 
                the public under reasonable terms.
            ``(5) Individual employment plans.--
                    ``(A) In general.--In accordance with regulations 
                which shall be prescribed under this section, each 
                provider of vocational rehabilitation services under 
                the Program shall develop, jointly with each recipient 
                of such services, an employment plan meeting the 
requirements of this paragraph.
                    ``(B) Employment evaluation.--In devising the 
                employment plan, the provider shall undertake an 
                employment evaluation with respect to the recipient. 
                Each employment evaluation shall set forth in writing 
                with respect to the recipient at least the following:
                            ``(i) A review and assessment of--
                                    ``(I) the recipient's prior work 
                                history,
                                    ``(II) the recipient's educational 
                                background,
                                    ``(III) the recipient's mobility, 
                                cognitive, sensory, and mental 
                                abilities and limitations, and
                                    ``(IV) the recipient's interests 
                                and aptitudes.
                            ``(ii) An inventory of the services 
                        determined by the network coordinator as most 
                        efficacious in obtaining employment for the 
                        recipient or facilitating training for 
                        employment for the recipient, identifying--
                                    ``(I) those services which are to 
                                be provided by providers who are 
                                generalists with respect to all 
                                populations, and
                                    ``(II) those services which are to 
                                be provided by providers in areas of 
                                specialty, which may include 
                                specialties in mobility, cognitive, 
                                sensory, and mental impairment and 
                                other areas specified in regulations 
                                prescribed under this section.
                    ``(C) Requirements for individual employment 
                plans.--Each individual employment plan shall--
                            ``(i) take into account results obtained 
                        from the employment evaluation undertaken 
                        pursuant to subparagraph (B), identifying any 
                        particular strengths and abilities of the 
                        recipient,
                            ``(ii) set forth specific employment goals 
                        that relate to the availability of gainful 
                        activity within the economy of the service 
                        region or the economy of any alternative 
                        service region within which the recipient 
                        chooses to relocate,
                            ``(iii) outline specific steps and 
                        activities necessary to prepare for employment, 
                        obtain employment, retain employment, and 
                        pursue advancement after initial employment,
                            ``(iv) identify and promote career paths 
                        that will allow the recipient to maintain a 
                        level of compensation upon obtaining employment 
                        which equals or exceeds the greater of--
                                    ``(I) the minimum level of earnings 
                                which, under regulations of the 
                                Commissioner of Social Security, 
                                demonstrates an ability to engage in 
                                substantial gainful activity, or
                                    ``(II) the level of benefits 
                                received by the recipient while 
                                disabled as cash benefits under this 
                                title and title XVI and the cash value 
                                of items and services received under 
                                title XVIII or under State plans under 
                                title XIX,
                            ``(v) incorporate to the extent practicable 
                        existing resources and programs, including (but 
                        not limited to):
                                    ``(I) co-enrollment in vocational 
                                rehabilitation programs provided under 
                                State plans approved under title I of 
the Rehabilitation Act of 1973,
                                    ``(II) any unexhausted training 
                                resources available from the carrier 
                                through which the recipient's worker's 
                                compensation benefits are provided,
                                    ``(III) personal resources of the 
                                recipient,
                                    ``(IV) stipends, grants, and loans 
                                available from other Federal, State, or 
                                local governmental programs,
                                    ``(V) stipends, grants, or loans 
                                from, or partnership agreements with, 
                                organizations of network coordinators, 
                                and
                                    ``(VI) cooperative agreements with 
                                prospective employers providing for 
                                assistance with training and related 
                                costs, and
                            ``(vi) take effect upon approval by the 
                        recipient.
            ``(6) Milestone payment system.--
                    ``(A) In general.--Under regulations prescribed 
                under this section, the Program shall provide for a 
                milestone payment system, which shall consist of an 
                incremental fee structure governing providers of 
                vocational rehabilitation services under the Program 
                which meets the requirements of this paragraph. The 
                milestone payment system shall provide for capitation 
                of costs and fees in the case of each recipient of such 
                services under managed competition (thereby precluding 
                the use of any cost-reimbursement, cost-plus, or other 
                cost-based payment methodology).
                    ``(B) Milestones.--The milestone payment system 
                shall provide for milestones, with respect to all 
                recipients of vocational rehabilitation services from a 
                provider under the Program, which are directed toward 
                the goal of permanent employment and which shall serve 
                as the basis for graduated fee levels applicable with 
                respect to providers. Such milestones may include:
                            ``(i) completion of the employment plan 
                        developed with the recipient under paragraph 
                        (5);
                            ``(ii) initial employment of the recipient 
                        secured after enrollment under the Program; and
                            ``(iii) retention by the recipient of 
                        employment secured after enrollment under the 
                        Program for specified periods of time.
                    ``(C) Initial fixed fees and subsequent deferred 
                retention fees.--The milestone payment system shall 
                provide for--
                            ``(i) payment of a fixed fee to the network 
                        coordinator upon the attainment of each 
                        milestone by the recipient of vocational 
                        rehabilitation services, as consideration for 
                        the attainment by the recipient of such 
                        milestone, and
                            ``(ii) subsequent payment of deferred 
                        retention fees to the network coordinator for a 
                        recipient who ceases to be entitled to benefits 
                        under this title or ceases to be eligible for 
                        benefits under title XVI by reason of retention 
                        by the recipient of employment after enrollment 
                        under the Program.
                    ``(D) Backloaded payment structure.--Under 
                regulations prescribed under this section, the 
                milestone payment system shall provide for a schedule 
                of fee payments in connection with milestones attained 
                by a recipient prior to termination of entitlement to 
                benefits under this title or eligibility for benefits 
under title XVI. The fee schedule shall be designed so that the total 
amount of such fee payments do not exceed 33 percent of all fees 
payable under the Program with respect to such a recipient if the 
recipient were to attain all milestones and retain employment upon 
termination of such entitlement or eligibility for a substantially 
continuous period of not less than 5 years. Such fees shall be 
scheduled so as to ensure that profits attained by providers for 
providing vocational rehabilitation services under the Program are 
deferred generally until after retention by the recipient of employment 
for a significant period of time. At least 67 percent of all fees 
payable under the Program shall consist of deferred retention fees 
described in subparagraph (C)(ii).
                    ``(E) Periodic revisions.--Under regulations 
                prescribed under this section, any fee schedule 
                established under the milestone payment system shall be 
                revised on a periodic basis, based on information 
                provided to the Commissioner of Social Security by the 
                regional administrators under the Program and on 
                comparisons made by the Commissioner of the Program 
                with other similar programs established by the Federal 
                Government.''.
    (b) Conforming Amendments.--
            (1) Amendments to title ii.--
                    (A) Section 222 of such Act (42 U.S.C. 422) is 
                further amended--
                            (i) in subsection (a), by striking ``shall 
                        be promptly referred'' and all that follows 
                        through ``services,'' and inserting the 
                        following: ``shall be promptly referred to 
                        qualified providers of vocational 
                        rehabilitation services,'';
                            (ii) in subsection (b)(1)--
                                    (I) by striking ``for any month in 
                                which such individual, if'' and 
                                inserting ``for any month, if (A) such 
                                individual is'';
                                    (II) by striking ``refuses'' and 
                                inserting ``(B) participation by the 
                                individual in the Rehabilitation and 
                                Return-to-Work Program or a State plan 
                                approved under title I of the 
                                Rehabilitation Act of 1973 is mandatory 
                                under subsection (e)(2), and (C) the 
                                individual refuses in such month''; and
                                    (III) by striking ``a State plan 
                                approved under title I of the 
                                Rehabilitation Act of 1973'' each place 
                                it appears and inserting ``the Program 
                                or such a State plan'';
                            (iii) in subsection (d)(1)--
                                    (I) by inserting ``to operate, 
                                administer, and provide for payments 
                                under the Rehabilitation and Return-to-
                                Work Program and'' before ``to 
                                reimburse''; and
                                    (II) by inserting ``under such a 
                                State plan'' after ``under this 
                                paragraph'' in clause (ii);
                            (iv) by striking paragraph (2) of 
                        subsection (d) and redesignating paragraphs 
                        (3), (4), and (5) of subsection (d) as 
                        paragraph (2), (3), and (4), respectively;
                            (v) in paragraph (2) (as redesignated) of 
                        subsection (d), by inserting ``to States'' 
                        after ``Payments'';
                            (vi) in paragraph (3) (as redesignated) of 
                        subsection (d), by striking ``for the 
                        reimbursement of the costs of providing 
                        services to'' and inserting ``for the operation 
                        and administration of the Rehabilitation and 
                        Return-to-Work Program with respect to services 
                        provided to'', and by inserting ``and otherwise 
                        for the reimbursement of the costs of providing 
                        services to such individuals,'' after ``such 
                        individuals,'', and by striking ``to be 
                        reimbursed'' in subparagraph (A) and inserting 
                        ``to be paid for the operation and 
                        administration of the Rehabilitation and 
                        Return-to-Work Program and otherwise for 
                        reimbursement''; and
                            (vii) in paragraph (4) (as redesignated) of 
                        subsection (d), by striking ``subsection'' each 
                        place it appears and inserting ``section''.
                    (B) Section 225(b)(1) of such Act (42 U.S.C. 
                425(b)(1)) is amended by striking ``a program'' and 
                inserting ``a program consisting of the Rehabilitation 
                and Return-to-Work Program or another program''.
            (2) Amendments to title xvi.--Section 1615 of such Act (42 
        U.S.C. 1382d) is amended--
                    (A) in subsection (a), by inserting after 
                ``referral of such individual'' the following: ``(A) to 
                the Rehabilitation and Return-to-Work Program 
                established under section 222(e) or (B)''; and
                    (B) in subsection (b), by inserting ``under the 
                Rehabilitation and Return-to-Work Program or'' after 
                ``available to him''.
    (c) Effective Date.--Subject to subsection (d)(2)(C), the 
amendments made by subsections (a) and (b) shall apply with respect to 
applications filed, and reviews of continuing disability commenced, 
after 6 months after the date of the enactment of this Act.
    (d) The Rehabilitation and Return-to-Work Commission.--
            (1) Establishment.--There is established in the Social 
        Security Administration a commission to be known as the 
        ``Rehabilitation and Return-to-Work Commission'' (in this 
        subsection referred to as the ``Commission'').
            (2) Duties of commission.--
                    (A) In general.--The Commission shall, jointly with 
                the Commissioner of Social Security, take such actions, 
                including issuance of appropriate regulations under the 
                amendments made by this section, as are necessary for 
                the full implementation of such amendments as soon as 
                practicable after the date of the enactment of this Act 
                but not later than 3 years after such date of 
                enactment.
                    (B) Specific program development 
                responsibilities.--As soon as practicable after the 
                date of the enactment of this Act, the Commission 
                shall, in direct consultation with Commissioner of 
                Social Security--
                            (i) formulate and develop for purposes of 
                        subparagraph (A) the procedures for assessing 
                        the capability of beneficiaries and applicants 
                        for vocational rehabilitation,
                            (ii) formulate and develop for purposes of 
                        subparagraph (A) the milestone payment system 
                        described in section 222(e)(5) of the Social 
                        Security Act (as amended by subsection (a)) and 
                        establish annual oversight procedures for such 
                        system,
                            (iii) formulate and develop for purposes of 
                        subparagraph (A) the referral services, quality 
                        assurance measures, and dispute resolution 
                        procedures referred to in subparagraphs (E), 
(F), and (G) (respectively) of section 222(e)(3) of such Act (as so 
amended),
                            (iv) establish, for the Rehabilitation and 
                        Return-to-Work Program upon its establishment 
                        and for programs undertaken in preparation for 
                        the establishment of the Program, procedures 
                        for effective oversight by the Commission and 
                        by the Commissioner of Social Security, 
                        including periodic reviews and reporting 
                        requirements, and
                            (v) establish the initial service regions 
                        for the Rehabilitation and Return-to-Work 
                        Program and carry out the provisions of 
                        subparagraph (C) in each such region.
                    (C) Graduated implementation of program.--
                            (i) In general.--Not later than 6 months 
                        after the date of the enactment of this Act, 
                        the Commission, in consultation with the 
                        Commissioner of Social Security, shall commence 
                        implementation of the amendments made by this 
                        Act in graduated phases at pilot sites selected 
                        by the Commission. Such pilot sites shall be 
                        selected so as to ensure, prior to full 
                        implementation of the Program, the development 
                        and refinement of referral processes, payment 
                        systems, computer linkages, management 
                        information systems, and administrative 
                        processes necessary to provide for full 
                        implementation of such amendments.
                            (ii) Requirements.--Implementation of the 
                        Program at each pilot site shall be carried out 
                        on a wide enough scale to permit a thorough 
                        evaluation of the alternative methods under 
                        consideration, so as to ensure that the most 
                        efficacious methods are determined and in place 
                        for full implementation of the Rehabilitation 
                        and Return-to-Work Program on a timely basis. 
                        In selecting pilot sites under this 
                        subparagraph, the Commission shall take full 
                        advantage of the results of experiments and 
                        demonstration projects conducted pursuant to 
                        section 505 of the Social Security Disability 
                        Amendments of 1980 selecting pilot sites which 
                        have participated in such demonstration 
                        projects (including ``Project Network''). The 
                        Commission shall also select sites which have 
                        participated in the ``Project with Industries'' 
                        programs established under title VI of the 
                        Rehabilitation Act of 1973.
                            (iii) Full implementation.--The Commission, 
                        in consultation with the Commissioner of Social 
                        Security, shall ensure that the Rehabilitation 
                        and Return-to-Work Program is fully implemented 
                        as soon as practicable after the date of the 
                        enactment of this Act but not later than 3 
                        years after such date of enactment.
                    (D) Oversight duties.--After full implementation of 
                the Rehabilitation and Return-to-Work Program pursuant 
                to subparagraph (C)(iii), until termination of the 
                Commission, the Commission shall oversee the operation 
                of the Rehabilitation and Return-to-Work Program and 
                include the results of its oversight of the Program in 
                its reports to the President and the Congress pursuant 
                to paragraph (6). The Commissioner of Social Security 
                shall cooperate with the Commission in carrying out its 
                duties under this subparagraph and, to the extent 
                permitted by law, provide to the Commission such 
                information and facilities as the Commission may 
                request in the performance of its duties under this 
                subparagraph.
            (3) Membership.--
                    (A) Number and appointment.--The Commission shall 
                be composed of 9 members appointed by the President as 
                follows:
                            (i) 3 members selected for appointment from 
                        among individuals recommended by the Speaker of 
                        the House of Representatives.
                            (ii) 3 members selected for appointment 
                        from among individuals recommended by the 
                        Majority Leader of the Senate.
                            (iii) 3 members selected for appointment 
                        from among such other individuals as the 
                        President may consider appropriate.
                    (B) Political affiliation.--Not more than 2 members 
                appointed under each of clauses (i), (ii), and (iii) of 
                subparagraph (A) may be of the same political party.
                    (C) Representation.--Of the members appointed under 
                each of clauses (i), (ii), and (iii) of subparagraph 
                (A)--
                            (i) one shall represent the interests of 
                        recipients of vocational rehabilitation 
                        services,
                            (ii) one shall represent the interests of 
                        providers of vocational rehabilitation 
                        services, and
                            (iii) one shall represent the interests of 
                        private employers.
                    (D) Terms.--
                            (i) In general.--Each member shall be 
                        appointed for a term of 4 years (or, if less, 
                        for the remaining life of the Commission), 
                        except as provided in clauses (ii) and (iii).
                            (ii) Terms of initial appointees.--As 
                        designated by the President at the time of 
                        appointment, of the members first appointed--
                                    (I) 4 shall be appointed for a term 
                                of 2 years, and
                                    (II) 5 shall be appointed for a 
                                term of 4 years.
                            (iii) Vacancies.--Any member appointed to 
                        fill a vacancy occurring before the expiration 
                        of the term for which the member's predecessor 
                        was appointed shall be appointed only for the 
                        remainder of that term. A member may serve 
                        after the expiration of that member's term 
                        until a successor has taken office. A vacancy 
                        in the Commission shall be filled in the manner 
                        in which the original appointment was made.
                    (E) Basic Pay.--Members shall each be paid at a 
                rate equal to the daily equivalent of the rate of basic 
                pay for level 4 of the Senior Executive Service, as in 
                effect from time to time under section 5382 of title 5, 
                United States Code, for each day (including travel 
                time) during which they are engaged in the actual 
                performance of duties vested in the Commission.
                    (F) Travel Expenses.--Each member shall receive 
                travel expenses, including per diem in lieu of 
                subsistence, in accordance with sections 5702 and 5703 
                of title 5, United States Code.
                    (G) Quorum.--5 members of the Commission shall 
                constitute a quorum but a lesser number may hold 
                hearings.
                    (H) Chairperson.--The Chairperson of the Commission 
                shall be designated by the President. The term of 
                office of the Chairperson shall be 4 years.
                    (I) Meetings.--The Commission shall meet at least 
                quarterly and at other times at the call of the 
                Chairperson or a majority of its members.
            (4) Director and staff of commission; experts and 
        consultants.--
                    (A) Director.--The Commission shall have a Director 
                who shall be appointed by the Commission. The Director 
                shall be paid at a rate not to exceed the maximum rate 
                of pay payable for GS-15 of the General Schedule.
                    (B) Staff.--Subject to rules prescribed by the 
                Commission, the Director may appoint and fix the pay of 
                additional personnel as the Director considers 
                appropriate.
                    (C) Experts and Consultants.--Subject to rules 
                prescribed by the Commission, the Director may procure 
                temporary and intermittent services under section 
                3109(b) of title 5, United States Code.
                    (D) Staff of federal agencies.--Upon request of the 
                Commission, the head of any Federal department or 
                agency may detail, on a reimbursable basis, any of the 
                personnel of that department or agency to the 
                Commission to assist it in carrying out its duties 
                under this Act.
            (5) Powers of commission.--
                    (A) Hearings and sessions.--The Commission may, for 
                the purpose of carrying out this its duties under this 
                subsection, hold such hearings, sit and act at such 
                times and places, and take such testimony and evidence 
                as the Commission considers appropriate.
                    (B) Powers of members and agents.--Any member or 
                agent of the Commission may, if authorized by the 
                Commission, take any action which the Commission is 
                authorized to take by this section.
                    (C) Mails.--The Commission may use the United 
                States mails in the same manner and under the same 
                conditions as other departments and agencies of the 
                United States.
                    (D) Administrative support services.--Upon the 
                request of the Commission, the Administrator of General 
                Services shall provide to the Commission, on a 
                reimbursable basis, the administrative support services 
                necessary for the Commission to carry out its duties 
                under this subsection.
            (6) Reports.--
                    (A) Interim reports.--The Commission shall submit 
                to the President and the Congress interim reports at 
                least annually.
                    (B) Final report.--The Commission shall transmit a 
                final report to the President and the Congress not 
                later than 5 years after the date of the enactment of 
                this Act. The final report shall contain a detailed 
                statement of the findings and conclusions of the 
                Commission, together with its recommendations for 
                legislation and administrative actions which the 
                Commission considers appropriate.
            (7) Termination.--The Commission shall terminate 
        immediately upon submission of its final report under paragraph 
        (6)(B).
            (8) Authorization of appropriations.--There are authorized 
        to be appropriated from the Federal Old-Age and Survivors 
        Insurance Trust Fund and the Federal Disability Insurance Trust 
        Fund, as appropriate, such sums as are necessary to carry out 
        this subsection.

SEC. 3. MEDICARE COVERAGE FOR OASDI DISABILITY BENEFIT RECIPIENTS WHO 
              RETURN TO WORK.

    (a) Providing for 5-Year Period of Continuation Coverage for Those 
Returning to Work.--Section 226 of the Social Security Act (42 U.S.C. 
426) is amended--
            (1) in the first sentence of subsection (b), by inserting 
        ``(subject to subsection (h))'' after ``and ending'';
            (2) by redesignating subsection (h) as subsection (i); and
            (3) by inserting after subsection (g) the following new 
        subsection:
    ``(h)(1) If an individual, in each month during a 3-consecutive-
month period (covered under paragraph (2))--
            ``(A)(i) is entitled to benefits described in subsection 
        (b)(2)(A), (ii) is a disabled qualified railroad retirement 
        beneficiary (within the meaning of section 7(d) of the Railroad 
        Retirement Act of 1974), or (iii) is described in subsection 
        (b)(2)(C)(i) and would be entitled to benefits described in 
        subsection (b)(2)(A) if subclauses (I) and (II) of subsection 
(b)(2)(C)(ii)(II) were applicable, and
            ``(B) has earnings from employment of at least 160 times 
        the minimum hourly wage rate in effect under section 6(a)(1) of 
        the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) for 
        the month,
then the entitlement to benefits pursuant to subsection (b) shall not 
end before the earlier of (i) the end of the 5-year period beginning 
with the month immediately following such 3-consecutive-month period, 
or (ii) the month before the month in which the individual attains age 
65.
    ``(2) Paragraph (1) shall apply only to a 3-consecutive-month 
period that--
            ``(A) begins on or after the 4th month that begins after 
        the date of the enactment of the Disability Benefits Reform Act 
        of 1996, and
            ``(B) does not begin (with respect to an individual) during 
        a 5-year coverage period previously provided under such 
        paragraph with respect to the individual.
    ``(3) Nothing in this subsection shall be construed as affecting 
the month in which an entitlement under subsection (b) begins with 
respect to an individual.''.
    (b) Making Permanent Medicare Secondary Payer Rules Relating to 
Disability.--Section 1862(b)(1)(A) of such Act (42 U.S.C. 
1395y(b)(1)(A)) is amended by striking clause (iii).
    (c) Elimination of Current Continuation Coverage Rules.--
            (1) In general.--Section 226(b) of such Act (42 U.S.C. 
        426(b)) is amended--
                    (A) by striking ``(subject to the next to last 
                sentence of this subsection)'' in the first sentence, 
                and
                    (B) by striking the third and fourth sentences.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply beginning with the 8th month that begins after the 
        date of the enactment of this Act, except that such amendments 
        shall not apply to individuals who are entitled to benefits 
        under section 226(b) of the Social Security Act pursuant to the 
        third sentence of such section for the 7th month that begins 
        after such date of enactment.

SEC. 4. TAX CREDIT FOR EMPLOYERS WHO HIRE CERTAIN DISABLED INDIVIDUALS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following new section:

``SEC. 45D. CREDIT FOR EMPLOYERS WHO HIRE CERTAIN DISABLED INDIVIDUALS.

    ``(a) In General.--For purposes of section 38, the disabled 
employee hiring credit determined under this section for the taxable 
year is an amount equal to the tax paid or incurred by the taxpayer 
under section 3111 during such taxable year with respect to wages paid 
for services performed by a qualified disabled individual during an 
eligible month of employment.
    ``(b) Qualified Disabled Individual.--For purposes of this section, 
the term `qualified disabled individual' means any individual who is 
disabled within the meaning of section 223 of the Social Security Act 
or blind or disabled within the meaning of paragraph (2) or (3), 
respectively, of section 1614(a) of such Act.
    ``(c) Eligible Month of Employment.--For purposes of this section:
            ``(1) In general.--The term `eligible month of employment' 
        means--
                    ``(A) the first month in which the individual is 
                employed on a substantially full-time basis by the 
                employer at a monthly rate of pay equal to at least 160 
                times the minimum hourly wage rate in effect under 
                section 6(a)(1) of the Fair Labor Standards Act of 1938 
                (29 U.S.C. 206(a)(1)) for the month, and
                    ``(B) subject to paragraph (2), each succeeding 
                month in which the individual is so employed.
            ``(2) Limitation on number of eligible months.--
                    ``(A) In general.--The number of eligible months 
                which are taken into account under this section with 
                respect to the employment of an individual (whether or 
                not with the same employer) during any period of 
                disability shall not exceed 12.
                    ``(B) Months of eligibility to be certified.--An 
                employer may treat a month as one of the 12 months 
                referred to in subparagraph (A) only if the employer 
                receives a certificate to that effect from--
                            ``(i) a provider of rehabilitation services 
                        providing such services to the employed 
                        individual under section 222 or 1615 of the 
                        Social Security Act, or
                            ``(ii) in the case of an individual who 
                        does not receive services from a provider of 
                        rehabilitation services under section 222 or 
                        1615, the Commissioner.
                    ``(C) Period of disability.--For purposes of 
                subparagraph (A), the term `period of disability' means 
                the period of eligibility specified in the disability 
                determination under section 221(i) of the Social 
                Security Act.
    ``(d) Denial of Credit for Employment of Relatives.--No credit 
shall be determined under this section with respect to the employment 
of any individual described in a subparagraph of section 51(i)(1).
    ``(e) Denial of Double Benefit.--No deduction shall be allowed 
under this chapter for any amount taken into account in determining the 
credit under this section.
    ``(f) Election Not To Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.''
    (b) Credit To Be Part of General Business Credit.--
            (1) Subsection (b) of section 38 of such Code (relating to 
        general business credits) is amended by striking ``plus'' at 
        the end of paragraph (11), by striking the period at the end of 
        paragraph (12) and inserting ``, plus'', and by adding after 
        paragraph (12) the following new paragraph:
            ``(13) the disabled employee hiring credit determined under 
        section 45D(a).''
            (2) Subsection (d) of section 39 of such Code is amended by 
        adding at the end thereof the following new paragraph:
            ``(8) No carryback of section 45D credit before 
        enactment.--No portion of the unused business credit for any 
        taxable year which is attributable to the disabled employee 
        hiring credit determined under section 45D may be carried to a 
        taxable year ending before the date of the enactment of the 
        Rehabilitation and Return to Work Opportunity Act of 1996.''
    (c) Conforming Amendments.--
            (1) Subsection (c) of section 196 of such Code (relating to 
        deduction for certain unused business credits) is amended by 
        striking ``and'' at the end of paragraph (6), by striking the 
        period at the end of paragraph (7) and inserting ``, and'', and 
        by adding at the end the following new paragraph:
            ``(8) the disabled employee hiring credit determined under 
        section 45D(a).''
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 45D. Credit for employers who hire 
                                        certain disabled individuals.''
    (d) Effective Date.--The amendments made by this section shall 
apply to months beginning after the date of the enactment of this Act 
in taxable years ending after such date.
                                 <all>
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