CSAVR Letter to SSA on Cost Reimbursement October 03
COUNCIL OF STATE ADMINISTRATORS OF VOCATIONAL REHABILITATION
October 20, 2003
Jo Anne B. Barnhart, Commissioner
Social Security Administration
6401 Security Boulevard
Baltimore, MD 21235
Dear Commissioner Barnhart,
I am writing on behalf of the Council of State Administrators of Vocational Rehabilitation (CSAVR) to seek clarification regarding a number of SSA policy interpretations in connection with implementation of the Ticket to Work program created under the Ticket to Work and Work Incentives Improvement Act of 1999. In March 2003, CSAVR wrote to you asking for a written explanation of the reasoning and legal basis for SSA’s interpretation regarding two specific policies: 1) the presumption of beneficiary participation in the Ticket program when a ticket-eligible beneficiary signs a service plan with a State VR agency; and 2) the traditional cost reimbursement program no longer being available for beneficiaries who are ticket-eligible and who choose not to use their tickets when seeking assistance from the public VR program. The response we received was less than satisfactory. It merely restated SSA policies in these areas and failed to provide any legislative citations to back up SSA’s interpretations in these areas. CSAVR would like to have a better understanding of these interpretations that potentially negatively impact the public VR program and its ability to build its capacity to serve more individuals with disabilities, including beneficiaries with disabilities.
The issuance of the final Ticket regulations (20 CFR 411) and SSA Transmittal 17 created a great deal of confusion among State VR agencies regarding the effects of the implementation of the Ticket program on VR and the ability to access compensation under the traditional “cost reimbursement program” authorized in 42 USC 422(d) and 1382d(d)&(e). There was also confusion surrounding the ability of State VR agencies to seek cost reimbursement for beneficiaries who have received or are eligible to receive a ticket under the Ticket program. While the Ticket legislation expands VR’s options for seeking compensation from SSA for successfully employing beneficiaries with disabilities, the Ticket regulations and SSA Transmittal 17 (TM 17) both appear to limit VR’s options and ability to seek such compensation. The ticket regulations and TM 17 both say that payments cannot be made under both cost reimbursement and an EN payment system, with the exception of “pipeline” cases, i.e., cases for beneficiaries who already have signed Individualized Plans for Employment (IPEs) with State VR agencies when they became ticket-eligible or when they receive their tickets. (NOTE: Based on a comment made by SSA staff during the RSA-sponsored Ticket Training in Washington,
Commissioner Barnhart Page 2
October 20, 2003
DC, in August 2003, it appears the definition of a pipe line case may have changed, without further clarity since the RSA training for the second tier ticket states conducted in Seattle in May 2002.)
Under the Social Security Act, SSA reimburses State VR agencies for reasonable and necessary service costs incurred in assisting individuals with disabilities who receive Social Security disabilities benefits under the Supplemental Security Income (SSI) and/or the Social Security Disability Insurance (SSDI) programs to engage in employment with earnings equal to or above SSA’s standard for substantial gainful activities (SGA). This “cost reimbursement” system is afforded to, according to sections 222 and 1615 of The Social Security Act, “State agencies” that administer a State plan under section 101 of the Rehabilitation Act of 1973, as amended. This reference refers to the designated state unit (DSU) responsible for administering the State’ public VR program authorized under Title I of the Rehab Act.
SSA’s Operations Manuals, known as POMS, indicates that SSA changed its method for reimbursing State VR agencies back in 1981:
“The Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35), changed the methods by which funds are paid to State VR agencies for rehabilitation services. Effective October 1, 1981, SSA MUST (emphasis added) reimburse State VR agencies each time their services result in a title II or title XVI beneficiary/recipient performing substantial gainful activity (SGA) for a continuous period of 9 months and certain other reimbursement conditions are met. Reimbursement will be on a case-by-case basis.”
The Ticket program opened up new options for all parties involved in assisting beneficiaries with disabilities to engage in employment and receive earnings that result in the discontinuation of cash benefits (SSI and SSDI). Beneficiaries have additional options in terms of places that they can seek services and assistance to enter or re-enter the workforce. Community Rehabilitation Programs (CRPs) and other service providers have, for the first time, the option of seeking compensation for SSA for providing services to beneficiaries who engage in employment that results in the discontinuation of SSA cash benefits. In addition, State VR agencies have a new option for seeking compensation from SSA for successfully serving beneficiaries who go to work and earn enough for the discontinuation of cash benefits. However, CSAVR maintains that TWWIIA did not amend the traditional cost reimbursement system authorized under sections 222 and 1615 of The Social Security Act and referenced in Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35).
Since individuals receiving SSI and/or SSDI benefits, who want to go to work, are presumptively eligible for VR services, VR is the only service provider that is singled out in TWWIIA for special treatment. VR is the only service provider that is automatically
Commissioner Barnhart Page 3
October 20, 2003
designated as an approved Employment Network (EN). Hence, while other, non-VR services providers must apply and be approved to function as an EN, VR must simply notify SSA of its interest in functioning as an EN and select an EN payment system to activate VR’s new option for compensation. TWWIIA creates a new Section 1148(c)(1), STATE PARTICIPATION, that states:
“Each State agency administering or supervising the administration of the State plan approved under title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.) may elect to participate in the Program as an employment network with respect to a disabled beneficiary. If the State agency does elect to participate in the Program, the State agency also shall elect to be paid under the outcome payment system or the outcome-milestone payment system in accordance with subsection (h)(1).”
This provision of law appears to give VR the choice of participating in the Ticket program and seeking compensation under one of the EN payment systems, or of not participating in the Ticket program and seeking compensation under the traditional cost reimbursement program. The regulations governing the Ticket program appear to change this “voluntary participation” into “mandatory participation,” requiring VR to participate in the Ticket program if it wishes to receive any type of payment from SSA, i.e., either under one of the EN payment systems or under traditional cost reimbursement. Subpart F, Section 411.350 of the governing regulations states:
“411.350 Must a State VR agency participate in the Ticket to Work program?
Yes. Each State agency administering or supervising the administration of the State plan approved under title I of the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), must participate in the Ticket to Work program if it wishes to receive payments from SSA for serving disabled beneficiaries who are issued a ticket.”
VR is the only service provider that has the additional option of being able to choose on a “case-by-case” basis whether to seek compensation for successfully serving a beneficiary with a ticket under the traditional “cost reimbursement” program or under one of the new EN payment systems created by the Ticket program. Title I, Subtitle A, Section 101(c)(1) of TWWIIA establishes a new Sec. 1148(c) of the Social Security Act and sets forth a special status for State VR agencies.
“With respect to disabled beneficiaries that the State agency does not elect to have participate in the Program, the State shall be paid for services provided to that beneficiary under the system of payment applicable under Sec. 222(d) and subsection (d) and (e) of Sec. 1615.”
Commissioner Barnhart Page 4
October 20, 2003
This provision clearly acknowledges that VR may serve beneficiaries outside the Ticket program and seek compensation under the traditional cost reimbursement system.
Further, the presumptive eligibility of recipients of SSI and SSDI established under Section 102(a)(3) of the Rehabilitation Act means VR is still expected to serve SSI and SSDI beneficiaries who want to go to work, even if those beneficiaries are not “ticket eligible” or do not want to assign their tickets to VR. However, Section 411.355(c) of the ticket regulations stipulates that VR may only seek compensation under the traditional cost reimbursement system when serving beneficiaries who are not “ticket eligible.”
“411.355 What payment options does a State VR agency have under the Ticket to Work program?
(c) The State VR agency may seek payment only under its elected EN payment system whenever it serves as an EN. When serving a beneficiary who was not issued a ticket, the State VR agency may seek payment only under the cost reimbursement payment system.”
In addition to concerns about SSA’s interpretation that the cost reimbursement program is subsumed under the Ticket program, CSAVR is also very concerned about Sec. 411.585 of the Ticket regulations that severely limits VR’s ability to seek cost reimbursement.
“411.585 Can a State VR agency and an EN both receive payment for serving the same beneficiary?
Yes. It is possible if the State VR agency serves the beneficiary as an EN. In this case, both the State VR agency serving as an EN and the other EN may be eligible for payment based on the same ticket (see Section 411.560).
(a) If a State VR agency is paid by us under the cost reimbursement payment system with respect to a ticket, such payment precludes any subsequent payment by us based on the same ticket to an EN or to a State VR agency serving as an EN under either the outcome payment system or the outcome-milestone payment system.
(b)If an EN or a State VR agency serving a beneficiary as an EN is paid by us under one of the EN payment systems with respect to a ticket, such payment precludes subsequent payment to a State VR agency under the cost reimbursement payment system based on the same ticket.”
According to these regulatory interpretations regarding beneficiaries who are served by both VR and an EN, once a payment is made under either cost reimbursement or an EN payment system, no payment can be made under the other payment system. On the other hand, if VR is paid under an EN payment system, the regulations do allow for shared payments when both an EN and a State VR agency serve the same ticket-eligible beneficiary.
Commissioner Barnhart Page 5
October 20, 2003
These interpretations will, and have, put VR agencies and ENs in a position of “competing” to get the first payment. If an EN has chosen the milestone/outcome payment system, and the beneficiary works for one month with earnings above the SGA amount, the EN is eligible for the first milestone payment, thereby trumping VR from any payment under the cost reimbursement system, regardless of the amount VR has invested in that beneficiary. On the other hand, if an EN chooses the outcome payment system, and VR has served the same individual under the cost reimbursement system, VR can be reimbursed after 9 months of SGA, while the consumer would have to go completely off benefits for the EN to be paid under the outcome payment system. CSAVR questions why SSA chose to prohibit the sharing of payments across the two different types of payment systems, i.e., cost reimbursement and the EN payment systems.
This interpretation creates a significant disincentive for ENs to participate in the Ticket program. It also creates a situation where VR could loose a significant amount of program income that would be used to assist additional individuals with disabilities, including beneficiaries with disabilities, to engage in employment.
CSAVR questions this policy interpretation given the attention paid to VR’s access to compensation from SSA in the Ticket legislation. CSAVR believes Congressional intent was to increase VR’s access to compensation from SSA, not limit it. State VR agencies are facing increased pressure on both fiscal and human resources due to both internal and external changes and challenges.
· The demand for VR services has grown as more and more individuals with disabilities become empowered and encouraged to live more independently.
· Reforms in welfare have resulted in reductions in state welfare rolls, with more than 40 percent of the individuals left on the TANF rolls being individuals with disabilities or family members of individuals with disabilities.
· Increased access to assistive technology devices and services gives individuals with disabilities the tools they need to overcome functional limitations that create impediments to employment.
· As individuals with significant disabilities are moved into community settings as a result of the Supreme Court’s Olmstead Decision, many of these individuals will be interested in exploring vocational opportunities.
· Almost every state is in deficit funding, making it harder and harder for State VR agencies to secure the state match needed to draw down the State’s federal allotment. (Note: VR has a required match of 21.3% state to 78.7% federal.)
Commissioner Barnhart Page 6
October 20, 2003
· Some states are looking at creative ways to address their state deficits, e.g., significantly increasing the rate charged for indirect administrative costs when VR is located in a larger umbrella agency.
· Between 1993 and 2003, special education funding increased by 332 percent. During the same 10-year period, funding for the public VR program increase by only 36 percent. With such a significant increase in special education funding, more and more students with disabilities are seeking assistance from VR (both while in school and upon exit from school).
· The public VR program is severely under-funded to meet the mandates of the Rehabilitation Act and the external challenges facing the program. Under the current appropriation, VR can meet the needs of only a small percentage of the potentially eligible population, having the ability to serve only one in twenty of the potentially eligible population of individuals with disabilities.
The cumulative effect of these external forces and the insufficiency of VR’s funding have resulted in about 37 State VR agencies being forced to implement an Order of Selection (OOS). An OOS is a mandated system of service provision whereby those individuals with the most significant disabilities are prioritized for services before and sometimes to the exclusion of those eligible individuals with less significant disabilities.
These and many other factors make VR’s access to SSA compensation critically important, whether that access is through traditional cost reimbursement or one of the EN payments systems. SSA compensation is classified as “program income” and VR must reinvest it in services to individuals whose disabilities create substantial impediments to employment. This is clearly demonstrated in VR’s increased efforts to obtain cost reimbursement from SSA. In 1983, VR agencies submitted only 3,626 claims. Of the 1,813 claims cleared, only 110 claims were allowed, amounting to a total of $216,000 nationwide. The average cost for an allowance was $1,964. For FY 2002, VR agencies submitted 11,786 claims. Claims were allowed on 10,521 of the 13,952 claims processed in FY 2002. The total reimbursement made in FY 2002 was $131,014,755.14, with the average cost allowance being $12,453. VR’s total reimbursement for FY 2002 was equal to approximately 5 percent of the FY 2002 federal appropriation for the program.
The importance of the cost reimbursement program to VR and to the people who receive assistance from VR motivated both the Rehabilitation Services Administration (RSA) and the CSAVR to seek assurances, very early in the legislative process, that the proposed Ticket program would not alter or supplant the traditional cost reimbursement program. Throughout the legislative process, representatives of the public VR program were assured that the proposed Ticket program would augment and in no way diminish the cost reimbursement program. While we understood that some reduction in reimbursement would likely result when some beneficiaries chose to seek assistance from ENs rather
Commissioner Barnhart Page 7
October 20, 2003
than VR, we were confident that VR would continue to be the service provider of choice for the vast majority of beneficiaries with significant disabilities hoping to engage in employment. This has proven to be true with the most recent numbers indicated that between 85 and 90 percent of the tickets that are in use have been assigned to State VR agencies.
The issuance of chapter 12 of the Vocational Rehabilitation Provider’s Handbook, which contains the now infamous TM 17 (issued August 30, 2002), created significant confusion over the delicate interplay between the legislative provisions in title I of the Rehabilitation Act, the regulations governing the public VR program, and the expectations of SSA with regard to VR’s participation in the Ticket to Work program. The policy interpretations in TM 17 (i.e., not in POMs, regulations, or the law) are problematic in two ways. First, it appears to remove VR’s option to assist a ticket-eligible beneficiary, and “not elect to have” the beneficiary participate in the Ticket program, and “be paid for services provided to that beneficiary under the system for payment applicable under Sec. 222(d) and subsection (d) and (e) of Sec. 1615.” TM 17 appears to be in direct conflict with Sec. 1148(c) of the Ticket legislation that provides the State VR agency the option of cost reimbursement payment at its discretion whether the beneficiary is or is not eligible to participate in the Ticket program.
The Ticket regulations are clear that the traditional cost reimbursement system is still in place when VR serves a beneficiary who is not ticket-eligible; however, the regulatory interpretation changes the nature of the cost reimbursement system when VR is serving beneficiaries who are ticket-eligible. CSAVR does not believe the statutory language was intended to limit the cost reimbursement system to only non-ticket eligible beneficiaries. Rather, it allows the State VR agency to choose on a case-by-case basis whether to serve a beneficiary outside the Ticket program and seek compensation through the traditional cost reimbursement program, or to serve a beneficiary under the Ticket program and seek compensation through the VR agency’s elected EN payment system. CSAVR would like SSA to provide the exact legislative citation(s) that gives SSA the authority to change the traditional cost reimbursement system for that segment of the beneficiary population that is ticket-eligible. SSA’s interpretation clearly conflicts with our understanding of the intent of Congress, the assurances of SSA and the language of the statute as it relates to the right of State VR agencies to continue to seek cost reimbursement under 42 USC 422(d) and 1382d(d)(e).
The second concern is with SSA’s interpretation regarding new VR cases and the “de-facto” assignment of ticket when a beneficiary seeks VR assistance after becoming ticket-eligible. TM 17, at 12.1B, presents a fundamental tenet of the Ticket program:
“A beneficiary’s participation in the Ticket to Work program is voluntary. The beneficiary is free to choose when and whether to use the ticket to obtain the assistance needed to return to work or go to work for the first time.”
Commissioner Barnhart Page 8
October 20, 2003
The definition of a new case in section 12.2(B) of TM 17 appears to contradict this voluntary participation.
“Definition of a New Case: A new case is a case in which the beneficiary first becomes eligible for a ticket before the beneficiary and a representative of the VR agency sign an IPE. In such a case the signatures on the IPE indicate that:
· the beneficiary has decided to use the ticket to obtain services from the State VR agency, if the ticket is assignable; and
· the State VR agency has found the beneficiary eligible for VR services.”
Likewise, in the explanatory notes accompanying the final Ticket regulations, 20 CFR 411, SSA presumes beneficiary participation without any affirmative demonstration of intent to participate.
“If a beneficiary with a ticket decides to seek services from the State VR agency, then the beneficiary will in effect be using the ticket for services, even if the State VR agency chooses to be reimbursed rather than being paid under one of the EN payment systems.”
CSAVR maintains that these policy interpretations in TM 17 are in direct conflict with parts of the Ticket regulations. Page 67374 of the Supplementary Information states “in order for a ticket to be assigned or reassigned to a State VR agency, the beneficiary and a representatives of the State VR agency MUST (emphasis added) agree to and sign both an IPE and a form that provides the information described in Section 411.385(a)(1), (2) and (3).” The next paragraph goes on to say “…or the completed and signed form required for assignment or reassignment of a ticket to a State VR agency under Section 411.385(a) and (b), MUST (emphasis added) be submitted to and received by the PM in order for a ticket to be assigned or reassigned to the EN or State VR agency. At another point on page 67374, it states: “in order for a ticket to be reassigned to a State VR agency, the beneficiary and a representative of the State VR agency MUST (emphasis added) agree to and sign both an IPE and a form that provides the information described in Section 411.385(a)(1), (2) and (3). Additional references to the submission of this completed and signed form can be found on pages 67380 and 67381 of the Supplemental Information. In addition, the signing of this form is specifically referred to in Section 411.140(d)(1) and (3) of the governing regulations.
SSA’s presumption of beneficiary participation in the Ticket program when a ticket-eligible beneficiary signs an IPE with a State VR agency has many advocacy groups and service providers (including State VR agencies) up in arms because they believe this interpretation violates consumer choice and the voluntary nature of the Ticket program. In addition, many service providers believe this interpretation limits the choices that beneficiaries have available to them. Unfortunately, many are blaming VR for this problem. As a result, about half the State VR agencies are opting not to implement this
Commissioner Barnhart Page 9
October 20, 2003
“de-facto” assignment of tickets and, as a result, will see a significant reduction in their SSA reimbursements during the upcoming years. The end result will be a reduction in the resources available to State VR agencies to assist individuals with disabilities, including beneficiaries, to engage in employment and achieve self-sufficiency.
To lay the groundwork to resolve these issues, the CSAVR is requesting, at your earliest convenience, a written explanation of the reasoning and legal basis for the policy interpretation regarding the presumption of beneficiary participation and regarding the traditional cost reimbursement program no longer being available for beneficiaries who are ticket-eligible and who choose not to use their tickets when seeking assistance from the public VR program.
It is our understanding that SSA is revisiting some of the regulations governing the Ticket to Work program. As these regulations and related policy interpretations are reviewed, CSAVR believes it is critically important that SSA consult with representatives of the public VR program and other interested parties (e.g., ENs and advocates) to find a way to resolve these issues to the benefit of all involved.
While the issues we have identified are significant, they do not constitute an insurmountable barrier to our continued close cooperation as implementation of the Ticket to Work program continues. Please be assured that CSAVR and State VR agencies nationwide remain committed to assuring the success of the Ticket program.
Sincerely,
Carl Suter, Executive Director
CSAVR
CC: Martin H. Gerry, Deputy Commissioner
Disability and Income Security Programs, Social Security Administration
Sarah Wiggins Mitchell, Chair, TWWIA Panel
Kim Hildred, Staff Director
House Subcommittee on Social Security
Connie Garner, Disability and Special Needs Population Policy Advisory
Senate Health, Education, Labor and Pensions Committee
Robert Pasternack, Assistance Secretary
Office of Special Education and Rehabilitative Services
Joanne Wilson, Commissioner, Rehabilitation Services Administration
