[Federal Register Volume 62, Number 28 (Tuesday, February 11, 1997)]
[Rules and Regulations]
[Pages 6408-6432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3317]



[[Page 6407]]

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Part IV





Social Security Administration





_______________________________________________________________________



20 CFR Parts 404 and 416



Supplemental Security Income; Determining Disability for a Child Under 
Age 18; Interim Final Rules With Request for Comments

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / 
Rules and Regulations

[[Page 6408]]



SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

[Regulations Nos. 4 and 16]
RIN 0960-AE57


Supplemental Security Income; Determining Disability for a Child 
Under Age 18; Interim Final Rules With Request for Comments

AGENCY: Social Security Administration.

ACTION: Interim final rules with request for comments.

-----------------------------------------------------------------------

SUMMARY: These rules implement the childhood disability provisions of 
sections 211 and 212 of Public Law 104-193, the Personal Responsibility 
and Work Opportunity Reconciliation Act of 1996 that provide a new 
definition of disability for children (i.e., individuals under age 18), 
mandate changes to the evaluation process for children's disability 
claims and continuing disability reviews (CDRs), and require that 
disability redeterminations be performed for 18-year-olds eligible as 
children in the month before they attain age 18.

DATES: These rules are effective beginning April 14, 1997. To be sure 
that your comments are considered, we must receive them no later than 
April 14, 1997.

ADDRESSES: Comments should be submitted in writing to the Commissioner 
of Social Security, P.O. Box 1585, Baltimore, MD 21235; sent by telefax 
to (410) 966-2830; sent by E-mail to ``regulations@ssa.gov''; or 
delivered to the Division of Regulations and Rulings, Social Security 
Administration, 3-B-1 Operations Building, 6401 Security Boulevard, 
Baltimore, MD 21235, between 8:00 a.m. and 4:30 p.m. on regular 
business days. Comments may be inspected during these same hours by 
making arrangements with the contact person shown below.

FOR FURTHER INFORMATION CONTACT:
Daniel T. Bridgewater, Legal Assistant, Division of Regulations and 
Rulings, Social Security Administration, 6401 Security Boulevard, 
Baltimore, MD 21235, (410) 965-3298 for information about these rules. 
For information on eligibility or claiming benefits, call our national 
toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION: 

History

    Prior to the enactment of Public Law 104-193 on August 22, 1996, 
the Act defined childhood disability in relation to the definition of 
disability for adults. The definition of disability for adults in 
section 1614(a)(3) of the Act is an inability ``to engage in any 
substantial gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or which has lasted or can be expected to last for a continuous period 
of not less than twelve months.'' Prior to August 22, 1996, the 
definition of disability for children (i.e., individuals under the age 
of 18) was contained in a parenthetical statement at the end of section 
1614(a)(3)(A): A child was considered disabled for purposes of 
eligibility for SSI if he or she ``* * * suffer[ed] from any medically 
determinable physical or mental impairment of comparable severity'' to 
an impairment(s) that would make an adult disabled.
    Social Security Administration (SSA) regulations at 20 CFR 416.920 
set out a five-step sequential evaluation process for determining the 
disability of adults:
    1. Whether the adult is engaging in substantial gainful activity;
    2. Whether, in the absence of substantial gainful activity, the 
individual's medically determinable impairment or combination of 
impairments is ``severe;''
    3. Whether, if the impairment(s) is severe, it meets or medically 
equals the severity of a listing in the Listing of Impairments in 
appendix 1 of subpart P of 20 CFR part 404 (the Listing);
    4. Whether, if the impairment(s) is severe but does not meet or 
equal the severity of a listing, the individual retains the capacity to 
do his or her past relevant work, considering his or her residual 
functional capacity; and
    5. Whether, if past relevant work is precluded, the individual 
retains the capacity to do any other kind of work which exists in 
significant numbers in the national economy, considering the 
individual's residual functional capacity and the vocational factors of 
age, education and work experience.
    Until 1990, if a child was not engaging in substantial gainful 
activity and his or her impairment(s) met the statutory duration 
requirement, a child's claim for SSI benefits based on disability was 
decided based on whether or not the child's impairment(s) met or 
equaled the severity of a listing, as in the third step of the process 
for adults. We did not provide additional evaluation steps for children 
as we did for adults because it was inappropriate to apply the 
vocational rules we used for adults whose impairments do not meet or 
equal the severity of a listed impairment to childhood claims.

Sullivan v. Zebley

    On February 20, 1990, in the case of Sullivan v. Zebley, 493 U.S. 
521 (1990), the Supreme Court decided that the ``listings-only'' 
approach SSA had used to deny claims for SSI benefits based on 
childhood disability did not carry out the ``comparable severity'' 
standard in title XVI of the Act. This was because the listings did not 
provide for an assessment of a child's overall functional impairment. 
The Court held that, under the comparable severity standard, children 
claiming SSI benefits based on disability were entitled to an 
assessment as part of the disability determination process, comparable 
to adults who have impairments that do not meet or equal the severity 
of a listing and who receive such an individualized assessment. The 
Court found that, whereas adults who are not found to be disabled under 
the Listing still have the opportunity to show that they are disabled 
at the last step of the sequential evaluation process, no similar 
opportunity existed for children. The Court concluded that, although 
the vocational analysis we use in claims filed by adults is 
inapplicable to claims for SSI benefits based on disability filed by 
children, this does not mean that a functional analysis could not be 
applied to children's claims.
    The Court also addressed various aspects of the way in which we 
employed the Listing in evaluating childhood disability claims. The 
Court stated that the policies for establishing whether a child's 
impairment(s) was equivalent in severity to a listed impairment 
``exclude[d] claimants who have unlisted impairments or combinations of 
impairments that do not fulfill all the criteria for any one listed 
impairment.'' The Court was also concerned that all claimants be given 
an opportunity for an assessment of their functional limitations, 
including the effects of their symptoms, in establishing medical 
equivalence.

The Childhood Rules That Resulted From Zebley

    As a result of the Zebley decision, we revised the rules we used to 
evaluate childhood disability claims under SSI. The rules were first 
published in the Federal Register on February 11, 1991 (56 FR 5534) as 
a final rule with a request for comments. Following consideration of 
public comments, we published a final rule in the Federal Register on 
September 9, 1993 (58 FR 47532).
    In Sec. 416.924(a) of the prior rules, we defined the term 
``comparable severity'' in terms of the impact of an impairment

[[Page 6409]]

or a combination of impairments on a child's ability to function 
independently, appropriately, and effectively in an age-appropriate 
manner. The rules also provided that each child whose impairment(s) did 
not meet or medically or functionally equal the requirements for any 
listing would have an ``individualized functional assessment'' (IFA), 
an evaluation of the impact of the child's impairment(s) on his or her 
overall ability to function independently, appropriately, and 
effectively in an age-appropriate manner.
    In fact, the rules provided three steps at which we would consider 
a child's functioning. At each of these steps, we considered the impact 
of all of the child's medically determinable impairments on his or her 
functioning and considered all relevant evidence, including the effects 
of the individual's symptoms and the side effects of medication. We 
considered the nature of the impairment(s), the child's age, the 
child's ability to be tested given his or her age, the child's ability 
to perform age-appropriate daily activities, and other relevant 
factors.
    First, we added a ``severe impairment'' step for children to 
parallel step 2 of the adult sequential evaluation process. At this 
step, the threshold for further evaluation was whether a child had more 
than a slight abnormality or a combination of slight abnormalities that 
caused more than minimal limitation in a child's ability to function 
independently, appropriately, and effectively in an age-appropriate 
manner.
    Second, at step 3 of the sequential evaluation process, we expanded 
the rules for determining equivalence to the Listing. The new 
``functional equivalence'' rule was intended, among other things, to 
address the Supreme Court's concerns about our use of the Listing in 
childhood cases. Functional equivalence provided that, if a child's 
impairment(s) did not meet or medically equal the severity of any 
listed impairment, we would assess the child's functional limitations 
and compare those limitations with the disabling functional 
consequences of any listed impairment, without regard to whether the 
listed impairment chosen for comparison was medically ``related'' to 
the child's impairment(s); for example, functional equivalence permits 
comparison of the functional limitations caused by a physical 
impairment with the functional limitations establishing disability in 
the mental disorders listings.
    Last, for those children whose impairments were not of listing-
level severity, the rules resulting from the Zebley decision included 
an entirely new fourth step in the sequential evaluation process for 
children. At this step, we used the IFA to assess whether a child's 
severe impairment(s), while not of listing-level severity, was 
nonetheless of ``comparable severity'' to an impairment(s) that would 
disable an adult.
    The IFA addressed the functional impact of a child's impairment(s) 
in broad areas of functioning, which we called domains and behaviors, 
such as cognition, communication, and motor abilities. These domains 
and behaviors were intended to encompass and reflect all the things 
that a child may do at any particular age, and were, therefore, 
intended to include all of a child's functioning.
    If an IFA showed that a child's impairment(s) substantially reduced 
his or her ability to function independently, appropriately, and 
effectively in an age-appropriate manner, and the impairment(s) met the 
duration requirement, we found the impairment(s) to be of comparable 
severity to an impairment that would result in disability in an adult, 
and the child would, therefore, be considered disabled. If the 
impairment(s) did not substantially reduce the child's ability to 
function independently, appropriately, and effectively in an age-
appropriate manner, or if it did not meet the duration requirement, we 
found the child was not disabled. For most children, the rules provided 
examples of how ``marked'' and ``moderate'' limitations in the domains 
and behaviors would indicate whether there was a substantial reduction 
in functioning; for example, ``moderate'' limitations in three domains 
would generally, though not invariably, result in a finding of 
disability.

Summary of the Childhood Disability Provisions of Public Law 104-
193

    Public Law 104-193 provides a new statutory definition of 
disability for children claiming SSI benefits and directs us to make 
significant changes in the way we evaluate childhood disability claims. 
Under the new law, a child's impairment or combination of impairments 
must cause more serious impairment-related limitations than the old law 
and our prior regulations required.
    Section 211(a) of Public Law 104-193 amended section 1614(a)(3) of 
the Act to provide a definition of disability for children separate 
from that for adults. The ``comparable severity'' criterion in the Act 
was repealed and replaced with the following definition:

    (C)(i) An individual under the age of 18 shall be considered 
disabled for the purposes of this title if that individual has a 
medically determinable physical or mental impairment, which results 
in marked and severe functional limitations, and which can be 
expected to result in death or which has lasted or can be expected 
to last for a continuous period of not less than 12 months.
    (ii) Notwithstanding clause (i), no individual under the age of 
18 who engages in substantial gainful activity (determined in 
accordance with regulations prescribed pursuant to subparagraph (E)) 
may be considered to be disabled.

    The conference report that accompanied Public Law 104-193 further 
explained:

    The conferees intend that only needy children with severe 
disabilities be eligible for SSI, and the Listing of Impairments and 
other current disability determination regulations as modified by 
these provisions properly reflect the severity of disability 
contemplated by the new statutory definition. In those areas of the 
Listing that involve domains of functioning, the conferees expect no 
less than two marked limitations as the standard for qualification. 
The conferees are also aware that SSA uses the term ``severe'' to 
often mean ``other than minor'' in an initial screening procedure 
for disability determination and in other places. The conferees, 
however, use the term ``severe'' in its common sense meaning.

    H.R. Conf. Rep. No. 725, 104th Cong., 2d Sess. 328 (1996), 
reprinted in 1996 U.S. Code, Cong. and Ad. News 2649, 2716. The House 
report contains similar language. See H.R. Rep. No. 651, 104th Cong., 
2d Sess. 1385 (1996), reprinted in 1996 U.S. Code, Cong. and Ad. News 
2183, 2444.
    Further provisions concerning childhood disability adjudication are 
summarized below with references to the relevant sections of Public Law 
104-193.
     The Commissioner was directed to remove references to 
maladaptive behavior in the personal/behavioral domain from listings 
112.00C2 and 112.02B2c(2) of the childhood mental disorders listings 
(Section 211(b) (1)).
     The Commissioner was directed to discontinue the IFA for 
children in 20 CFR 416.924d and 416.924e (Section 211(b) (2)).
     Within 1 year after the date of enactment, we must 
redetermine the eligibility of individuals under the age of 18 who were 
eligible for SSI based on disability as of August 22, 1996, and whose 
eligibility may terminate by reason of the new law. The cases are to be 
redetermined using the eligibility criteria for new applicants. The 
medical improvement review standard in section 1614(a) (4) of the Act 
and 20 CFR 416.994a, used in CDRs, shall not apply

[[Page 6410]]

to these redeterminations (Section 211(d) (2)).
     The medical improvement review standard for determining 
continuing eligibility for children was revised to conform to the new 
definition of disability for children (Section 211(c)).
     Not less frequently than once every 3 years, we must 
conduct a CDR for any childhood disability recipient eligible by reason 
of an impairment(s) which is likely to improve. At the option of the 
Commissioner, we may also perform a CDR with respect to those 
individuals under age 18 whose impairments are unlikely to improve 
(Section 212(a)).
     We must redetermine the eligibility of individuals who 
were eligible for SSI based on disability in the month before the month 
in which they attained age 18 using the rules for determining initial 
eligibility for adults. We will do the redetermination during the 1-
year period beginning on the individual's 18th birthday. The medical 
improvement review standard used in CDRs does not apply to these 
redeterminations (Section 212(b)).
     We must conduct a CDR not later than 12 months after the 
birth of the child for any child whose low birth weight is a 
contributing factor material to our determination that the child was 
disabled (Section 212(c)).
     At the time of a CDR, a child's representative payee shall 
present evidence that the child is and has been receiving treatment to 
the extent considered medically necessary and available for the 
disabling impairment. If a payee refuses without good cause to provide 
such evidence, we may select another representative payee, or pay 
benefits directly to the child, if we determine that it is appropriate 
and in the best interests of the child (Section 212(a)).
    These rules implement all of the provisions of sections 211 and 212 
of Public Law 104-193, with the exception of section 211(d)(2). Because 
Public Law 104-193 repealed the ``comparable severity'' disability 
standard for children, and eliminated use of the IFA, step 4 of our 
prior sequential evaluation process (the comparable severity step) has 
been removed. To be found disabled under these rules, an individual 
under age 18 must have ``marked and severe functional limitations,'' 
which means that his or her impairment or combination of impairments 
must meet, or medically equal or functionally equal, the severity of a 
listed impairment.

Summary of Specific Revisions

    These interim final rules revise our prior rules for deciding 
initial eligibility and continuing eligibility for children claiming 
SSI benefits based on disability. They also provide rules for 
redetermining the eligibility of individuals who attain age 18 and who 
were eligible for SSI based on disability in the month before the month 
in which they attained age 18.
    The major changes to the rules are explained below. In addition, we 
have added, removed, and revised language throughout subpart I of 20 
CFR part 416 to remove references to the ``comparable severity'' 
standard and our prior regulatory definition of disability interpreting 
that standard. Since these are only conforming changes to comply with 
the new law, we have not summarized each of them in this summary.
    These rules do not address every aspect of the evaluation of 
disability of children and of individuals who have attained age 18. 
They implement primarily those changes required by Public Law 104-193. 
Therefore, they must be read in the context of all our other relevant 
rules for determining disability.

Appendix 1 to Subpart P of Part 404--Listings 112.00C and 112.02B2

    Public Law 104-193 mandates removal of references to ``maladaptive 
behaviors'' in listings 112.00C2 and 112.02B2c(2) in the childhood 
mental disorders section of the Listing of Impairments. Listing 112.00C 
explains the severity criteria we use to evaluate a mental impairment 
in most of our childhood mental disorder listings. These severity 
criteria are often referred to as the ``paragraph B'' criteria because 
they are found in paragraph B of most of the listings to which they 
apply. Listing 112.02B2c(2) was a particular paragraph B criterion for 
persistent, serious maladaptive behaviors in children aged 3 to 18. 
Pursuant to Public Law 104-193, we have removed all references to 
``maladaptive behaviors'' in listing 112.00C and deleted all of prior 
listing 112.02B2c(2); we have also redesignated the ``personal/
behavioral'' area as the area of ``personal function.'' For this 
reason, we also removed the reference to ``activities of daily living'' 
from former listing 112.02B2c(1), which we now designate as listing 
112.02B2c because it is the only paragraph remaining.
    The area of personal function now pertains only to self-care; that 
is, the ability to help oneself and to cooperate with others in taking 
care of personal needs, health, and safety (e.g., feeding, dressing, 
toileting, bathing, following medication regimes, and following safety 
precautions). Further, we have clarified the description of the social 
area of functioning to make it clearer that many impairment-related 
behavioral problems (including those previously considered in the prior 
personal/behavioral area) are likely to have their most significant 
effects on a child's social functioning.
    In addition, we revised the fourth area of function from 
``concentration, persistence, and pace'' to ``concentration, 
persistence, or pace.'' This is a technical correction to conform the 
language of this section to the rules in listings 112.00C3 and 
112.02B2d, which have always read ``deficiencies of concentration, 
persistence, or pace.'' We made a corresponding change in listing 
112.00C4, which also used the word ``and.'' We also made several 
clarifications in listing 112.00C2b. The changes are not substantive 
and are only intended to parallel the adult mental listing 12.00C2 with 
appropriate language for children.

Section 416.635  Responsibilities of a Representative Payee.

    We revised this section to provide that, in cases in which the 
beneficiary is an individual under age 18 (including cases in which the 
beneficiary is an individual whose low birth weight is a contributing 
factor material to our determination that the individual is disabled), 
the representative payee is responsible for ensuring that the 
beneficiary is and has been receiving treatment to the extent 
considered medically necessary and available for the condition that was 
the basis for providing benefits.

Section 416.902  General Definitions and Terms for This Subpart

    We have added four new definitions. First, we explain that a 
disability redetermination (see Sec. 416.987) is a redetermination of 
eligibility based on disability using the rules for new applicants 
appropriate to the individual's age, except the rules pertaining to 
performance of substantial gainful activity. Second, we explain that 
the term impairment(s) means ``a medically determinable physical or 
mental impairment or a combination of medically determinable physical 
or mental impairments.''
    Third, we explain that the term marked and severe functional 
limitations, when used as a phrase, means the standard of disability in 
the Act for children claiming SSI benefits, and is a level of severity 
that meets or medically or functionally equals the requirements of a 
listing. We explain that the separate words Marked and severe are also 
terms used throughout

[[Page 6411]]

this subpart, but the meanings of these words in the phrase marked and 
severe functional limitations is not the same as their meanings when 
used separately. The meaning of the phrase marked and severe functional 
limitations derives directly from the legislative history of Public Law 
104-193, quoted in the ``Summary of the Childhood Disability Provisions 
of Public Law 104-193,'' above. Since the meanings of the separate 
terms marked and severe predate enactment of Public Law 104-193, they 
are touched on in this section to minimize any confusion from the new 
law's use of the same words, used in combination with a different 
meaning. Finally, we define Commissioner to mean the Commissioner of 
Social Security.

Section 416.906  Basic Definition of Disability for Children

    We have revised this section to replace the prior ``comparable 
severity'' standard with the new ``marked and severe functional 
limitations'' standard for childhood disability. We also added the 
statutory provision that an individual under age 18 who files a new 
claim and who is engaging in substantial gainful activity will not be 
considered disabled. For clarity, we added language specifying our 
longstanding policy that we consider the effects of combined 
impairments in assessing whether a child is disabled.

Section 416.911  Definition of Disabling Impairment

    Under the Act and our regulations, individuals who file new 
applications for benefits based on disability and who are engaging in 
substantial gainful activity are found not disabled. However, after a 
disabled individual is eligible for SSI, the Act and our regulations 
permit some individuals to try to work without losing eligibility. A 
recipient of SSI benefits who begins or returns to work despite a 
``disabling impairment'' may be found eligible for special SSI cash 
benefits and for special SSI eligibility status under Secs. 416.260 ff. 
of our regulations.
    Section 416.911 provides the definition of the term ``disabling 
impairment'' for such cases. We have redesignated all but the last 
sentence of prior Sec. 416.911, which was applicable only to adults, as 
paragraph (a)(1), and added a paragraph (b)(1) to define ``disabling 
impairment'' for children. Final paragraph (a)(2) takes account of the 
new rules in Sec. 416.987 for the disability redeterminations required 
by section 212(b) of Public Law 104-193. Consistent with this section 
of the new law, the rules explain that, for disability redetermination 
cases of individuals who are age 18, and who were eligible for SSI 
benefits based on a disability for the month before the month in which 
they attained age 18, a disabling impairment is one that meets the 
criteria for initial eligibility set forth in Secs. 416.920(c) through 
(f) for adults. This is because the new law specifies that these 
disability redeterminations shall apply the eligibility criteria for 
new applicants, and not the medical improvement review standard 
provisions of section 1614(a)(4) of the Act applicable to CDRs. 
However, step 1 of the sequential evaluation process for new claims 
(the substantial gainful activity step) will not apply. For individuals 
affected by this provision who have a disabling impairment, and who are 
working, we will apply the rules in Secs. 416.260 ff. We redesignated 
as paragraph (c) the last sentence of prior Sec. 416.911, which 
provides that earnings are not considered in deeming whether a 
recipient has a disabling impairment(s), because it applies to both 
adults and children.

Section 416.919n  Informing the Examining Physician or Psychologist of 
Examination Scheduling, Report Content, and Signature Requirements

    We have amended Sec. 416.919n(c)(6), which concerns the opinion of 
a consulting physician or psychologist about an individual's ability to 
function despite his or her impairment(s), to add a discussion specific 
to childhood cases to make it clear that the provision applies to both 
adults and children.

Section 416.924  How We Determine Disability for Children

    We have extensively revised this section, which provides the 
sequential evaluation process for childhood disability claims, to 
conform to the provisions of Public law 104-193.
    We have deleted former paragraphs (a) and (f). Prior paragraph (a) 
defined comparable severity and prior paragraph (f) discussed the IFA. 
We redesignated prior paragraphs (b) through (e) as (a) through (d), 
and revised them as explained below. We added a new paragraph (e) to 
explain what we will do when children become adults (i.e., they attain 
age 18) after they file their applications for SSI benefits based on 
disability but before we make a determination or decision. We 
redesignated prior paragraph (g) as paragraph (f), but it is otherwise 
unchanged. Also, we added a new paragraph (g).
    In final Sec. 416.924, the new sequential evaluation process for 
determining initial eligibility is:
    1. Whether the child is engaging in substantial gainful activity;
    2. If not, whether the child has a medically determinable 
impairment or combination of impairments that is severe; and
    3. If the child's impairment(s) is severe, whether it meets or 
medically equals the requirements of a listing, or whether the 
functional limitations caused by the impairment(s) are the same as the 
disabling functional limitations of any listing and, therefore, 
functionally equivalent to such listing.
    As in the prior sequential evaluation process, we will follow the 
steps in order. If a determination or decision can be made at a step, 
we will stop; if not, we will proceed to the next step.
    New Sec. 416.924(a), ``Steps in evaluating disability,'' retains 
basic guidance from prior Sec. 416.924(b) that is unaffected by the new 
law. It continues to provide that we will consider all relevant 
evidence in a child's case record, that we will consider all 
impairments for which we have evidence and their combined effects, and 
that we will evaluate any limitations in a child's functioning that 
result from a child's symptoms, including pain. We have removed the 
reference to the prior IFA step and made minor revisions to reflect the 
new statutory standard and the new sequence of evaluation. Because 
meeting or equaling the severity of a listing is now the last step of 
the sequence, we have emphasized the importance of the step by 
specifying that a child will be disabled if his or her impairment(s) 
meets, medically equals, or functionally equals the severity of any 
listing. We also changed references to the ``ability to function'' to 
``functioning'' in order to conform to the new statutory definition of 
disability, which is now expressed in terms of ``marked and severe 
functional limitations.''
    Final paragraphs (b) through (d) provide more detail on the 
sequential evaluation steps outlined in paragraph (a). Final paragraph 
(b), ``If you are working,'' is the same as prior paragraph (c). A 
child who files a new application, and who is engaging in substantial 
gainful activity, will be found not disabled as required by the 
statute. Final paragraph (c), ``You must have a severe impairment(s),'' 
is substantively the same as prior paragraph (d), but revised to 
reflect the new law. At step two of the sequential process, we will 
continue to evaluate whether a child has a ``severe'' impairment or 
combination of impairments. We now provide that if a child has a slight 
abnormality or a combination of slight abnormalities that

[[Page 6412]]

causes no more than minimal functional limitations, we will find that 
the child does not have a severe impairment and, therefore, is not 
disabled. The phrase ``minimal functional limitations'' replaces the 
phrase from our prior rules ``minimal limitation in your ability to 
function, independently, appropriately, and effectively in an age-
appropriate manner,'' which, as noted above, was derived from the prior 
statutory definition of disability.
    Final paragraph (d) ``Your impairment(s) must meet, medically 
equal, or functionally equal in severity a listed impairment in 
appendix 1,'' explains that an impairment(s) causes marked and severe 
functional limitations if it meets, medically equals or functionally 
equals the severity of a listed impairment. Thus, if a child's 
impairment(s) meets, medically equals, or functionally equals in 
severity a listing (and meets the duration requirement), we will find 
the child disabled. If a child's impairment(s) does not meet or 
medically equal or functionally equal in severity any listing, or does 
not meet the duration requirement, we will find the child not disabled. 
We have removed the language from prior paragraph (e) that said a 
child's claim would not be denied because his or her impairment(s) was 
not of listing-level severity.
    We added a new paragraph (e), ``If you attain age 18 after you file 
your disability application but before we make a determination or 
decision,'' to explain what we will do in such cases. We will use the 
rules for determining disability in adults when an individual whom we 
found disabled prior to attaining age 18 attains age 18. (We have 
always used the adult disability rules beginning at age 18 when we find 
that an individual was not disabled prior to attaining age 18 to see if 
the individual became disabled at a later date.) Therefore, final 
paragraph (e) explains that, for the period during which the individual 
is under age 18, we will use the disability rules in Sec. 416.924, but 
for the period starting with the day the individual attains age 18, we 
will use the disability rules for adults filing new claims in 
Sec. 416.920.
    Except for redesignating prior paragraph (g) as final paragraph 
(f), ``Basic considerations,'' has not been changed. We will continue 
to consider all relevant medical and nonmedical evidence in a child's 
case record.
    Finally, we have added a new paragraph (g) to explain that, when we 
make an initial or reconsidered determination whether you are disabled 
or when we make an initial determination about whether your disability 
continues under section 416.994a, we will complete a standard form, 
Form SSA-538, Childhood Disability Evaluation Form. The new form is 
designed to guide our adjudicators through the new sequential 
evaluation process and emphasizes the requirements for establishing 
functional equivalence. In new paragraph (g), we also explain that 
disability hearing officers, administrative law judges, and the 
administrative appeals judges on the Appeals Council (when the Appeals 
Council makes a decision) will not complete the form. This is because 
these adjudicators issue decisions with detailed rationales and 
findings that will already reflect the steps of the new sequential 
evaluation process.

Section 416.924a  Age as a Factor of Evaluation in Childhood Disability

    Most of the guidance in our prior rules on consideration of age in 
childhood disability cases has not been changed by Public Law 104-193. 
We have revised this section to conform to the ``marked and severe 
functional limitations'' disability standard. As under our prior rules, 
we will consider the child's age in determining whether he or she has a 
severe impairment(s). When evaluating whether the impairment(s) meets, 
medically equals, or functionally equals the severity of a listing, we 
will consider the child's age if the listing we consider uses age 
categories. We have deleted prior paragraphs (a)(4) and (b), which 
addressed issues related to the IFA.
    We redesignated prior paragraph (c), ``Correcting chronological age 
of premature infants,'' and prior paragraph (d), ``Age and the impact 
of severe impairments on younger children and older adolescents,'' as 
final paragraphs (b) and (c) and made changes to conform to the new 
definition of disability; we deleted prior paragraph (d)(4)(ii) because 
it was based on the prior ``comparable severity'' standard.

Section 416.924b  Functioning in Children

    This section discusses some of the terms we use to describe or 
evaluate functioning in children, including age-appropriate activities, 
developmental milestones, activities of daily living, and work-related 
activities. We retained the discussions of these terms with appropriate 
conforming changes. We also clarified the explanations of the last 
three terms, which were described in our prior rules as ``the most 
important indicators of functional limitations'' in, respectively, 
infants up to attainment of age 3, children aged 3 to attainment of age 
16, and older adolescents aged 16 to attainment of age 18. In the 
interim final rules, we describe these functions as being ``most 
important as indicators of functional limitations,'' because the 
emphasis should be on whatever age groups for which these indicators of 
functional limitations are most appropriate.
    Although we deleted prior paragraph (b)(5) because it described the 
domains and behaviors used in performing an IFA under our prior rules, 
consideration of functional limitations remains an integral part of the 
childhood disability evaluation process. For example, final 
Sec. 416.926a describes areas of functioning we will consider when we 
evaluate whether a child's impairment(s) is functionally equivalent in 
severity to a listing.

Section 416.924c  Other Factors We Will Consider

    As under our prior rules, when we evaluate whether a child's 
impairment(s) is disabling, we will consider all relevant factors, such 
as the effects of medications, the setting in which the child lives, 
the child's need for assistive devices, and the child's functioning in 
school. However, as throughout these interim final rules, we have 
revised this section to conform to the statutory ``marked and severe 
functional limitations'' standard.

Section 416.924d  Individualized Functional Assessment for Children

Section 416.924e  Guidelines for Determining Disability Using the 
Individualized Functional Assessment

    We deleted both of these sections as required by section 211(b)(2) 
of Public Law 104-193.

Section 416.925  Listing of Impairments in Appendix 1 of Subpart P of 
Part 404 of This Chapter

    We have revised paragraph (a) of this section, ``Purpose of the 
Listing of Impairments,'' to explain that, for children, the Listing of 
Impairments describes impairments that are considered severe enough to 
result in marked and severe functional limitations. We revised 
paragraph (b)(2), which explains the purpose of the childhood listings 
in part B of the Listing, to explain that the level of severity of the 
impairments listed in part B is intended to be the same as that 
expressed in the functional severity criteria of the childhood mental 
disorders listings (see 112.01 ff.). Therefore, in general, a child's 
impairment(s) is of ``listing-level severity'' if it results in marked 
limitations in two broad areas of functioning, or extreme limitations 
in

[[Page 6413]]

one such area. However, we also explain that when we decide whether a 
child's impairment(s) meets the requirements for any listed impairment, 
we will decide that the impairment is of ``listing-level severity'' 
even if it does not result in marked limitations in two broad areas of 
functioning, or extreme limitations in one such area, if the listing 
that we apply does not require such limitations to establish that an 
impairment(s) is disabling. We also explain that we define the terms 
``marked'' and ``extreme'' as they apply to children in Sec. 416.926a.

Section 416.926  Medical Equivalence for Adults and Children

    In these interim final rules, we moved the rules for deciding 
whether a child's impairment(s) is medically equivalent in severity to 
any listing into the same section as the rules for deciding medical 
equivalence of impairments in adults, reserving Sec. 416.926a for 
functional equivalence. To make this clear, we revised the heading of 
final Sec. 416.926 to reflect the inclusion of children. We also 
revised final paragraph (a), ``How medical equivalence is determined,'' 
by replacing the explanation of how we determine medical equivalence 
with provisions from prior Sec. 416.926a. We also incorporated and 
revised the last sentence of prior Sec. 416.926a(a), explaining that we 
consider all relevant evidence in the case record when we decide the 
issue of medical equivalence because it remains applicable to both 
adults and children.
    We decided to use the provisions of former Sec. 416.926a(b) to 
explain our rules for determining medical equivalence for both adults 
and children. This is not a substantive change, but a clearer statement 
of our longstanding policy on medical equivalence than was previously 
included in prior Sec. 416.926(a), as it was clarified for children in 
prior Sec. 416.926a(b). This merely allows us to address only once in 
our regulations the policy of medical equivalence, which is and always 
has been the same for adults and children. (Although some of the text 
of Sec. 416.929(a) will differ from the text of Sec. 404.1526(a), both 
sections, which are in chapter III of title 20 of the Code of Federal 
Regulations, will continue to provide the same substantive rules.)
    We have also added a new paragraph (d), ``Responsibility for 
determining medical equivalence,'' to address our longstanding policy 
of who is responsible for determining medical equivalence for adults 
and children.

Section 416.926a  Functional Equivalence for Children

    Although Public Law 104-193 discontinued the use of the IFA, the 
legislation nevertheless emphasized that we were still to continue 
evaluating the functioning of children in our disability assessments, 
as shown by the news statutory definition of disability, ``marked and 
severe functional limitations.''
    Moreover, in the legislative history, the conferees stated:

* * * Where appropriate, the conferees remind SSA of the importance 
of the use of functional equivalence disability determination 
procedures.

* * * [T]he conferees do not intend to suggest by this definition of 
childhood disability that every child need be especially evaluated 
for functional limitations, or that this definition creates a 
supposition for any such examination. * * * Nonetheless, the 
conferees do not intend to limit the use of functional information, 
if reflecting sufficient severity and is otherwise appropriate.

    H.R. Conf. Rep. No. 725, 104th Cong, 2d Sess. 328 (1996), reprinted 
in 1996 U.S. Code, Cong. and Ad. News 2649, 2716. The House Report also 
contained similar language about the importance of functional 
information. See H.R. Rep. No. 651, 104th Cong., 2d Sess. 1385-1386 
(1996), reprinted in 1996 U.S. Code, Cong. and Ad. News 2183, 2444-
2445.
    Thus, even though it eliminated the IFA, Congress directed us to 
continue to evaluate a child's functional limitations where 
appropriate, albeit using a higher level of severity than under the 
former IFA. Congress also explicitly endorsed our functional 
equivalence policy as a means for evaluating impairments that would not 
meet or medically equal any of our listings and without which some 
needy children with severe disabilities would not be eligible.
    Therefore, we are retaining our prior policies on determining 
functional equivalence. Because the changes made by Public Law 104-193 
make the functional equivalence provision that last point of 
adjudication in a child's claim and, therefore, critical to the outcome 
of many cases, we are also clarifying these rules.
    When we published the prior rules in the Federal Register on 
September 9, 1993, we chose not to adopt a number of public comments 
about our policy of ``functional equivalence.'' Some commenters on the 
1993 rules thought that, because the functional equivalence policy was 
unfamiliar, it was important that we provide as much detail as possible 
in the regulations so that all adjudicators would understand and apply 
the new rules in the same way. Several commenters also said that 
Sec. 416.926a should explain the ``thought processes'' an adjudicator 
could employ to make a finding of functional equivalence; otherwise, 
the policy of functional equivalence might be under-utilized. One 
suggestion was that we incorporate into the rules the more detailed 
instructions in our operating manuals and training guides. One 
commenter suggested that we provide separate headings for medical 
equivalence and functional equivalence to highlight their differences 
and the novelty of the functional equivalence policy.
    Although we did not adopt the comments in 1993, we have made 
changes in these rules that respond to some of the earlier concerns of 
1993 to reflect the increased importance of the functional equivalence 
policy under the new law.
    First, as noted in the explanation of Sec. 416.926, we have 
separated the discussion of medical equivalence for children from the 
discussion of functional equivalence for children. We have also 
incorporated some of the more detailed explanations from our operating 
manuals regarding the application of functional equivalence.
    Final paragraph (a), ``General,'' and final paragraph (b), ``How we 
determine functional equivalence,'' now include, in reorganized form, 
the rules for functional equivalence previously in Sec. 416.926a(a) and 
(b)(3). As already indicated, we moved prior (b)(1) and (b)(2), which 
explained medical equivalence, to Sec. 416.926. Because of the 
reorganization, we deleted the second sentence from prior paragraph 
(b)(3) (``If you have more than one impairment, we will consider the 
combined effects of all your impairments on your overall 
functioning.'') because it would have been redundant.
    In final paragraph (b), we also included some of the more detailed 
guidelines concerning functional equivalence that commenters on the 
1993 childhood disability rules requested that we include in the 
regulations, and that we believe are necessitated by the new definition 
of disability. This paragraph explains that there are several methods 
for determining functional equivalence, and that we may use any one of 
them to determine whether an impairment is functionally equivalent in 
severity to a listing. Subparagraphs then explain the various methods 
that we may employ to determine functional equivalence. We explain that 
there is no set order in which we must apply these methods and that, 
when we find that an

[[Page 6414]]

impairment(s) is functionally equivalent to a listed impairment, we 
will use any method that is appropriate to, or best describes, a 
child's impairment(s) and functional limitations. However, we explain 
that will consider all of the methods before we decide that an 
impairment(s) is not functionally equivalent in severity to any listed 
impairment and refer to final Sec. 416.924(g), which explains how we 
will use the new Childhood Disability Evaluation Form, Form SSA-538, at 
the initial and reconsideration levels.
    In (b)(1), we explain the first method we may use. An impairment(s) 
may be functionally equivalent in severity to a listed impairment 
because of extreme limitations in one specific function, such as 
walking or talking, or based on a combination or more than one, but 
less medically severe, specific functional limitations, such as walking 
and talking. In (b)(2), we explain that an impairment(s) may be 
functionally equivalent to a listed impairment if it causes functional 
limitations in broad areas of development or functioning (e.g., in 
motor or social functioning) that are equivalent in severity to the 
disabling functional limitations in listing 112.12 or listing 112.02. 
(The areas of functioning in which an impairment(s) may be evaluate are 
discussed in paragraph (c), described below.) In (b)(3), we explain 
that an impairment(s) may be functionally equivalent to a listed 
impairment if it is chronic and characterized by frequent episodes of 
illness or attacks, or by exacerbations and remissions. In such cases, 
we may compare a child's functional limitations to those in any listing 
for a chronic impairment with similar episodic criteria. In (b)(4), we 
explain that an impairment(s) may be functionally equivalent to a 
listed impairment if it requires treatment over a long period of time 
(at least a year) and the treatment itself (e.g., multiple surgeries) 
causes marked and severe functional limitations, or if the combined 
effects of limitations caused by ongoing treatment and limitations 
caused by the impairment(s) result in marked and severe functional 
limitations.
    In final paragraph (c), ``Board areas of development or 
functioning,'' we explain that listing 112.12, for infants (especially 
infants who are too young to test) and listing 112.02 are the listings 
we will use for comparison when we use this method of functional 
equivalence. However, when we determine functional equivalence based on 
broad functional limitations, we will evaluate the functional effects 
of an impairment(s) in several areas of development or functioning 
specified in this paragraph of Sec. 416.926a instead of referring to 
the listings themselves. We also explain that we describe the areas of 
functioning in general terms in (c)(4) and in more detail for specific 
age groups in (c)(5). If we find ``marked limitations'' in two areas of 
development or functioning, or ``extreme limitations'' in one area, we 
will find that an impairment(s) is functionally equivalent to listing 
112.12 or listing 112.02. Even though the listings we use for reference 
are mental disorder listings, this evaluation may be done for a 
physical impairment(s) or for a combination of physical and mental 
impairments. We define the terms ``marked limitations'' and ``extreme 
limitations'' in (c)(3).
    In (c)(1), we explain how we use the areas of development or 
functioning: We consider the extent of functional limitations in the 
areas affected by an impairment(s) and how limitations in one area 
affect development or functioning in other areas. Thus, when a physical 
impairment(s) produces global limitations (i.e., limitations in the 
motor area and at least one other area), those limitations must be 
evaluated in all relevant areas. We also make reference to new areas of 
motor development and functioning we have added to ensure appropriate 
consideration of physical impairments.
    In (c)(2), ``Other considerations,'' we explain that we will 
consider all information in the case record that will help us determine 
the effect of an impairment(s) on a child's physical and mental 
functioning. We will consider the nature of the impairment(s), the 
child's age, the child's ability to be tested given his or her age, the 
child's need for help from others (and whether such need is age-
appropriate), and other relevant factors.
    In (c)(3), we define the terms ``marked'' and ``extreme'' 
limitations. The definitions are not new, but are based on longstanding 
policy in the regulations and interpretations we have used in our 
internal instructions and training. In (c)(4) and (c)(5), we describe 
the areas of development or functioning that may be addressed in a 
determination of functional equivalence, including the new areas of 
motor development and motor functioning and the revised ``personal'' 
area of functioning. The descriptions are based on our prior 
descriptions and changes mandated by Public Law 104-193, and contain 
several clarifications based on our experience evaluating functional 
equivalence in children since 1991.
    Final paragraph (d), ``Examples of impairments that are 
functionally equivalent in severity to a listed impairment,'' is 
substantively the same as prior paragraph (d), ``Examples of 
impairments of children that are functionally equivalent to the 
listings.'' We made minor editorial changes for clarity and, as 
throughout the rules, to conform the language to the changes in the 
law. We also updated examples (1) and (11) to remove examples of 
cardiovascular impairments that are now listed impairments and, 
therefore, no longer examples of equivalence. We changed example (4) to 
delete reference to a ``marked inability to stand and walk'' because 
the limitation described is actually ``extreme.'' We changed example 
(5) to show how the area of motor functioning may be used. We also 
clarified the primary purpose of example (10), which is primarily for 
children who are too young to test and for whom a diagnosis and other 
medical findings may be difficult to specify.

Section 416.927  Evaluating Medical Opinions About Your Impairment(s) 
or Disability

    We have added a description of the ``marked and severe functional 
limitations'' standard for children to paragraph (a), ``General,'' 
which already included a description of the disability standard for 
adults.

Section 416.929  How We Evaluate Symptoms, Including Pain

    Throughout this section, we have replaced references to a child's 
ability to ``function independently, appropriately, and effectively in 
an age-appropriate manner'' with references to the child's 
``functioning.'' The rules for evaluating a child's symptoms are 
otherwise unchanged by the new law.

Section 416.930  Need To Follow Prescribed Treatment

    This section explains that, in order to receive benefits, an 
individual must follow treatment prescribed by his or her physician if 
the treatment can restore his or her ability to work; i.e., if the 
treatment could end the individual's disability. We have added parallel 
language explaining that a child must follow prescribed treatment if 
the treatment can reduce his or her functional limitations so that they 
are no longer ``marked and severe.''

Section 416.987  Disability Redeterminations for Individuals Who Attain 
Age 18

    This section is new. It provides rules for disability 
redeterminations

[[Page 6415]]

mandated by section 212(b) of Public Law 104-193.
    In paragraphs (a)(1) and (a)(2), we explain that Public Law 104-193 
requires these redeterminations and that, when we do these disability 
redeterminations, we generally will use the rules for adults filing new 
claims, not the rules we use for CDRs.
    In paragraph (a)(3) we explain that we will notify individuals 
before we begin a disability redetermination. In paragraph (a)(4) we 
explain that we will notify the individual in writing of the results of 
the redetermination and explain the individual's rights in connection 
with our notice of disability redetermination.
    Paragraph (b) concerns a group of recipients who are subject to 
disability redeterminations under section 212(b) of the new law: 
individuals who became eligible by reason of disability prior to 
attaining age 18, and who were eligible for SSI benefits based on 
disability for the month before the month in which they attained age 
18. Paragraphs (b)(1) through (b)(7) of this section provide that, 
during the 1-year period beginning on the individual's eighteenth 
birthday, we will redetermine the eligibility of these individuals 
using the rules in Secs. 416.920 (c) through (f), and not the rules in 
Sec. 416.920(b) or Sec. 416.994; i.e., we will decide whether an 
individual is disabled using the rules for adults filing new claims, 
except the rule that says an individual engaging in substantial gainful 
activity will be found not disabled. If an individual age 18 or older 
has a ``disabling impairment'' as defined in Sec. 416.911 and is 
working, we will apply the rules for special SSI eligibility in 
Secs. 416.920ff. We also provide that eligibility will end if we find 
that the individual is not disabled and describe the month in which we 
may find an individual not disabled. Finally, we explain that, if we 
find an individual is not disabled, the last month for which benefits 
can be paid is the second month after the month in which the individual 
was determined not to be disabled.

Section 416.990  When and How Often We Will Conduct a Continuing 
Disability Review

    In paragraph (b), ``When we will conduct a continuing disability 
review,'' we have added a new paragraph (b)(11), mandated by Public Law 
104-193. The new paragraph provides that we will do a CDR by a child's 
first birthday if the child's low birth weight is a contributing factor 
material to the determination that the child is disabled; i.e., whether 
we would have found the child disabled if we had not considered the 
child's low birth weight.
    In paragraph (c), ``Definitions,'' we have revised the definition 
of a permanent impairment, medical improvement not expected, to explain 
that for a child, such an impairment is one that is unlikely to improve 
to the point that the child's functional limitations will no longer be 
marked and severe.

Section 416.994a  How We Will Determine Whether Your Disability 
Continues or Ends, and Whether You Are and Have Been Receiving 
Treatment That Is Medically Necessary and Available, Disabled Children

    We revised this section extensively to comport with provisions in 
Public Law 104-193 in two ways:
     To revise the medical improvement review standard (MIRS) 
used in conducting a CDR, and
     To add rules that, at the time of a CDR, a child's 
representative payee must show evidence that the child is and has been 
receiving treatment that is medically necessary and available for the 
condition that was the basis for providing SSI benefits.
    The new evaluation sequence for applying the medical improvement 
review standard in a CDR is:
    1. Has there been medical improvement in the impairment(s) on which 
eligibility was based? If there has been no medical improvement, we 
will find that the child is still disabled, unless certain exceptions 
apply.
    2. If there has been medical improvement, does the impairment(s) 
the child had at the time of our most recent favorable medical 
determination or decision still meet, medically equal, or functionally 
equal the severity of the listing that it met or equalled at the time 
of the prior determination or decision? If that impairment(s) still 
meets or equals the severity of that listed impairment as it was 
written at that time, we will find the child still disabled, unless 
certain exceptions apply.
    3. If that impairment(s) does not still meet or equal the severity 
of that listed impairment as it was written at that time, is the child 
now disabled, taking into consideration all current impairments.
    Because the childhood disability standard is no longer linked to 
the adult standard of inability to work, there is no longer a step to 
assess whether any medical improvement is ``related to the ability to 
work.''
    In paragraph (a)(1), we changed the outline of the sequential 
evaluation process for CDRs in childhood disability cases to reflect 
the new sequence of evaluation. The sequence outlined in paragraph 
(a)(1) and discussed in more detail in paragraphs (b)(1) through (b)(3) 
differs significantly from the sequence under our prior rules. In our 
prior rules, the first step of the CDR evaluation process for children 
required consideration of whether the child's impairment(s) met, or was 
equivalent in severity to, a listing. However, the new statutory 
definition of disability for children--``marked and severe functional 
limitations''--means a level of severity that meets or is medically or 
functionally equivalent in severity to the severity of a listing. Thus, 
if we were first to consider whether the child's impairment(s) is of 
listing-level severity, we would also be deciding whether that 
impairment(s) is disabling. In those instances in which the 
impairment(s) is found neither to meet nor to be equivalent in severity 
to any listing, we believe it would be difficult for an adjudicator to 
then fairly consider the issue of medical improvement, because the 
adjudicator would already have concluded that the child is not 
disabled. Section 1614(a)(4)(B) of the Act states that, with some 
exceptions, disability can be found to have ceased only if there is 
``substantial evidence which demonstrates that there has been medical 
improvement * * * and that [the] impairment or combination of 
impairments no longer results in marked and severe functional 
limitations.''
    Thus, to ensure proper consideration of the issue of medical 
improvement, we have placed that issue first in the sequence. If there 
has been no medical improvement, we will generally find that the child 
is still disabled. There are exceptions to this rule, set forth in 
final paragraphs (e) and (f) of this section and discussed below.
    Under our prior rules, pursuant to the MIRS provisions in the Act 
at that time, if there had been medical improvement, we considered 
whether the improvement was related to the ability to work (which we 
defined for childhood cases as meaning the medical improvement resulted 
in an increase in ability to function independently, appropriately, and 
effectively in an age-appropriate manner.) However, the MIRS as revised 
by Public Law 104-193 contains no provision for a ``related to the 
ability to work'' step for children and, thus, limits the application 
of this provision to individuals age 18 or over. Accordingly, we have 
deleted that step from our rules (paragraph (d) of our prior rules).
    If there has been medical improvement, the next step under these

[[Page 6416]]

rules (discussed in detail in paragraph (b)(2)) is to consider whether 
the impairment(s) that we considered at the time of our most recent 
favorable determination or decision still meets, or is still equivalent 
in severity to, the listing that it met or was equivalent in severity 
to at that time, as that listing then appeared, even if that listing 
has since been revised or removed from the Listing. If that 
impairment(s) would still meet or equal in severity that listing, we 
will find the child still disabled, subject to certain exceptions 
discussed in paragraphs (e) and (f) of this section and discussed 
below.
    If that impairment(s) would not now meet or equal in severity that 
listing, we will then consider whether the child is currently disabled, 
taking into account all current impairments, including any the child 
did not have or that we did not consider at the time of our most recent 
favorable determination or decision.
    At this step (discussed in detail in paragraph (b)(3)), we first 
consider whether the child has a severe impairment or combination of 
impairments considering all current impairments. If the child does not, 
we will find the child not disabled. If so, we then consider whether 
the child's current impairment(s) meets, or is medically equivalent or 
functionally equivalent in severity to, any listing in the Listing of 
Impairments. If so, the child continues to be disabled; if not, the 
child is not disabled.
    We will not always follow these steps in order. In final paragraph 
(b), we added language explaining that we may skip steps in the 
sequence if it is clear this would lead to a more prompt finding that 
disability continues. We will not skip any steps unless it is clear 
that a continuance will result. For example, we might not consider the 
issue of medical improvement if it is obvious on the face of the 
evidence that a current impairment meets the severity of a listed 
impairment.
    Final paragraph (c) discussed what we mean by ``medical 
improvement''; i.e., any decrease in the severity of the medical 
impairment(s) which was present at the time of our most recent 
favorable determination or decision. This paragraph is largely the same 
under our prior rules, but we have added language to make it clear that 
we will disregard minor changes in the individual's signs, symptoms, 
and laboratory findings that obviously do not represent medical 
improvement and could not result in a finding that the individual's 
disability has ended. This is a longstanding procedure we have used in 
cases in which there is technically medical improvement because there 
is some very slight improvement in a sign, symptom, or laboratory 
finding (e.g., a change in IQ from 61 to 62) but it is clear that the 
outcome will not change.
    Final paragraph (d), largely unchanged from prior paragraph (e), 
explains what we will do if we cannot find the prior file. First, we 
will determine whether the child is currently disabled. If not, we will 
decide whether to attempt reconstruction of those portions of the 
missing file that were relevant to our most recent favorable 
determination or decision, so as to allow a decision whether there has 
been medical improvement since that time. If we do not or cannot 
reconstruct the file, we will not find medical improvement.
    Paragraph (e) concerns ``the first group of exceptions to medical 
improvement.'' The law provides limited situations in which disability 
can be found to have ended even though medical improvement has not 
occurred, if the child's impairment(s) no longer results in marked and 
severe functional limitations. Two of the exceptions in our prior 
rules--the ``advances in medical or vocational therapy or technology'' 
exception and the ``vocational therapy'' exception--have been limited 
by Public Law 104-193 to individuals who have attained age 18. The 
third exception is still applicable: A child's disability may be found 
to have ceased if substantial evidence shows that, based on new or 
improved diagnostic techniques or evaluations, the child's 
impairment(s) is not as disabling as it was considered to be at the 
time of the most recent favorable determination or decision. We have 
revised this exception to conform to the new definition of disability 
for children.
    Final paragraph (f), largely unchanged from prior paragraph (g), 
concerns ``the second group of exceptions to medical improvement.'' 
These exceptions include such issues as fraud and failure to cooperate 
in obtaining evidence. If one of these exceptions applies, we may find 
that disability ceases without finding medical improvement or that the 
child is currently disabled. We have revised the language concerning 
these exceptions to conform to the new definition of disability for 
children.
    Final paragraph (g) (prior paragraph (h)) concerns the month we 
will find a child no longer disabled. We revised the language slightly 
to conform to the new definition of disability for children.
    Final paragraph (h) (prior paragraph, (i)) provides that, before we 
stop benefits, we will provide an opportunity for an appeal, and gives 
a reference to the rules on appeals; it is unchanged from our prior 
rules.
    Final paragraph (i) is new; it implements provisions in Public Law 
104-193 requiring that, if a child has a representative payee, that 
payee must present evidence at the time of a CDR showing that the child 
is and has been receiving treatment to the extent considered medically 
necessary and available for the condition(s) that was the basis for 
providing SSI benefits, unless we determine such evidence would be 
inappropriate or unnecessary, considering the nature of the child's 
impairment(s). If the payee refuses without good cause to provide 
evidence, and it is in the best interests of the child, we will 
determine if another payee should be selected or if the child should 
receive benefits directly.
    In paragraph (i)(1), we explain that ``medically necessary'' 
treatment means treatment that is expected to improve or restore the 
individual's functioning and that was prescribed by a ``treating 
source'' as defined in Sec. 416.902. If the child does not have a 
treating source, we will decide whether there is medically necessary 
treatment that could have been prescribed by a treating source. In 
paragraph (i)(2), we list some factors we will consider in evaluating 
whether medically necessary treatment is available; e.g., the location 
of institutions or facilities that could provide treatment, the 
availability and cost of transportation to such places, the 
availability of local community resources that would provide free 
treatment.
    In paragraph (i)(3), we explain that we will not require a payee to 
show proof of treatment if we decide that the disabling impairment(s) 
is not amenable to treatment. In paragraph (i)(4), we explain that if 
the representative payee refuses without good cause to provide evidence 
of treatment, we will, if it is in the child's best interests, remove 
the payee and determine if another payee should be selected or if the 
child should receive benefits directly. We further explain that when we 
consider whether a representative payee had good cause, we will 
consider factors such as the acceptable reasons for failure to follow 
prescribed treatment in Sec. 416.930(c) and other factors similar to 
those describing good cause for missing deadlines in Sec. 416.1411.
    Finally, in paragraph (i)(5) we explain that the requirements of 
paragraph (i) do not apply to a child who is receiving SSI payments 
directly. This is because the treatment provision in Public Law 104-193 
applies only to children who have representative payees. However, we 
have also included a reminder that the failure-to-follow-prescribed-
treatment rules in Sec. 416.930 continue to apply to

[[Page 6417]]

children who do not have representative payees.

Other Changes

    Sections that have been changed only so that their language will 
conform to the new definition of disability for children, or to provide 
references to new or revised rules, include listings sections 103.00, 
104.00, 112.00, and 114.00, and Secs. 416.901, 416.912, 416.913, and 
416.919a.

Electronic Version

    The electronic file of this document is available on the Federal 
Bulletin Board (FBB) at 9:00 A.M. on the date of publication in the 
Federal Register. To download the file, modem dial (202) 512-1387. The 
FBB instructions will explain how to download the file and the fee. 
This file is in WordPerfect and will remain on the FBB during the 
comment period.

Regulatory Procedures

    Pursuant to section 702(a)(5) of the Act, 42 U.S.C. 902(a)(5), the 
Social Security Administration follows the Administrative Procedure Act 
(APA) rulemaking procedures specified in 5 U.S.C. 553 in the 
development of its regulations. The APA provides exceptions to its 
Notice of Proposed Rulemaking (NPRM) procedures when an agency finds 
that there is good cause for dispensing with such procedures on the 
basis that they are impracticable, unnecessary, or contrary to the 
public interest. In the case of these interim final rules, we have 
determined that under 5 U.S.C. 553(b)(B), good cause exists for waiving 
the NPRM procedures.
    Public Law 104-193 was signed into law on August 22, 1996. Sections 
211 and 212 of the law were effective upon enactment (or with respect 
to benefits for months beginning on or after enactment) without regard 
to whether regulations have been issued. In addition, section 215 
requires the Commissioner to issue regulations necessary to carry out 
the amendments made by sections 211 and 212, which are the subject of 
these interim final rules, within 3 months after the date of enactment. 
Accordingly, to issue these rules as an NPRM would have delayed 
issuance of final rules until well past 3 months after enactment.
    In light of the Congressional mandate that we issue regulations 
needed to carry out these statutory provisions as expeditiously as 
possible (see H.R. Rep. No. 651, 104th Cong., 2d Sess. 1392 (1996), 
reprinted in 1996 U.S. Code, Cong. and Ad. News 2183, 2451), we believe 
good cause exists for waiver of the NPRM procedures under the APA since 
issuance of proposed rules would be impracticable and contrary to 
Congressional intent. In light of the short statutory deadline in which 
to prescribe regulations under section 215 of Public Law 104-193, we 
find that use of the NPRM process is impracticable. Moreover, some of 
the changes in these rules are technical ones to conform our rules to 
the new definition of disability for children. The technical changes 
made by these rules are minor and do not represent discretionary 
policy. Accordingly, we find that prior notice and comment are 
unnecessary with respect to these rules. However, even though we are 
issuing these rules as interim final regulations, we are requesting 
public comments and will issue revised rules if necessary.

Executive Order 12866

    These interim final rules reflect and implement the disability 
provisions of sections 211 and 212 of Public law 104-193. This is a 
major rule as defined in section 251 of Public Law 104-121, 5 U.S.C. 
804. The Office of Management and Budget (OMB) has reviewed these 
interim final rules and determined that they meet the criteria for a 
significant regulatory action under Executive Order 12866. Therefore, 
we prepared and submitted to OMB, separately from these interim final 
rules, an assessment of the potential costs and benefits of this 
regulatory action. This assessment is available for review by members 
of the public.
    The potential costs and benefits for the policies reflected in 
these interim final rules follow:

Program Savings

    It is estimated that due to the legislation there would be reduced 
program outlays resulting in the following savings (in millions of 
dollars) to the SSI program (over $4.7 billion total in a 6-year 
period):

----------------------------------------------------------------------------------------------------------------
     FY1997           FY1998          FY1999          FY2000          FY2001          FY2002           Total    
----------------------------------------------------------------------------------------------------------------
-$120..........         -$715            -$945         -$1,075           -$905         -$1,010         -$4,775  
----------------------------------------------------------------------------------------------------------------

    This is the amount we expect to spend (in millions of dollars) on 
SSI childhood disability benefits:

----------------------------------------------------------------------------------------------------------------
     FY1997           FY1998          FY1999          FY2000          FY2001          FY2002           Total    
----------------------------------------------------------------------------------------------------------------
$5,425.........        $5,285           $5,475          $6,300          $5,715          $6,505         $34,705  
----------------------------------------------------------------------------------------------------------------
Note: Annual numbers may not add to total due to rounding.                                                      

    It is also estimated that there will be reduced Medicaid program 
outlays (Federal share) resulting in the following savings (in millions 
of dollars) over a 6-year period:

----------------------------------------------------------------------------------------------------------------
     FY1997           FY1998          FY1999          FY2000          FY2001          FY2002           Total    
----------------------------------------------------------------------------------------------------------------
-10............           -85             -110            -125            -125            -135            -590  
----------------------------------------------------------------------------------------------------------------

    There will also be reduced Medicaid program outlays for States.

Administrative Costs and Savings

    The administrative cost of conducting the medical redeterminations 
of the children who might be affected by the new childhood disability 
standards is expected to be $185 million in FY 1997 and $130 million in 
FY 1998. For this regulation, the administrative cost of redetermining 
disability in SSI childhood recipients is assumed to be same as the 
cost of a full medical CDR for these individuals, including the 
additional appellate costs.
    From FYs 1999-2002, the ongoing Federal workyear savings are from 
fewer recipients on the rolls, i.e., from those children currently 
receiving benefits who will be terminated and from those children who 
will be denied under the

[[Page 6418]]

stricter standards. There will be net savings of approximately $12 
million annually beginning with FY99. These savings will result from 
fewer income and resource redeterminations, representative payee 
actions, and maintenance of the rolls activities. The ongoing State 
workyear costs are for additional hearings, as well as medical reviews 
from additional reconsiderations, resulting from the stricter childhood 
disability standard.
    Estimated administrative costs ($ in millions, rounded to the 
nearest $5 million) and workyears (rounded to the nearest 50) are:

----------------------------------------------------------------------------------------------------------------
                                FY1997      FY1998      FY1999      FY2000      FY2001      FY2002       Total  
----------------------------------------------------------------------------------------------------------------
  ..........................        $185        $130        -$10        -$10        -$10        -$10        $265
                             -----------------------------------------------------------------------------------
                                                                                                                
(6) Workyears                                                                                                   
                             -----------------------------------------------------------------------------------
Federal.....................         900         650        -250        -250        -250        -250         550
State.......................       1,200       1,250         150         150         150         150       3,050
                             -----------------------------------------------------------------------------------
    Total...................       2,100       1,900        -100        -100        -100        -100       3,550
----------------------------------------------------------------------------------------------------------------
Note: Annual numbers may not add to total due to rounding.                                                      

Reductions in SSI Recipients (in thousands):

    We expect benefit eligibility for a total of 135,000 of those 
children receiving benefits at date of enactment will be terminated as 
a result of these changes in the law. The following figures show the 
estimated annual effect of the legislation on projected numbers of 
recipients of Federal SSI benefits:

----------------------------------------------------------------------------------------------------------------
                                                       FY1997    FY1998    FY1999    FY2000    FY2001    FY2002 
----------------------------------------------------------------------------------------------------------------
Current recipients..................................       -10       -95      -110       -95       -80       -70
New awards..........................................       -10       -35       -50       -70       -80       -90
                                                     -----------------------------------------------------------
    Total...........................................       -20      -130      -160      -165      -160      -160
----------------------------------------------------------------------------------------------------------------

    With the reductions in SSI recipients shown above, we estimate the 
average number of disabled children (in thousands) in payment status 
after implementation of these interim final rules will be:

----------------------------------------------------------------------------------------------------------------
      FY1997             FY1998             FY1999             FY2000             FY2001             FY2002     
----------------------------------------------------------------------------------------------------------------
1,010............             950                955                990              1,015              1,040   
----------------------------------------------------------------------------------------------------------------
Note: Annual numbers may not add to total due to rounding.                                                      

Regulatory Flexibility Act

    We certify that these interim final rules will not have a 
significant economic impact on a substantial number of small entities 
since this rule affects only individuals. Therefore, a regulatory 
flexibility analysis as provided in Public Law 96-354, the Regulatory 
Flexibility Act, as amended by Public Law 104-121 is not required.

Paperwork Reduction Act

    These interim final rules contain a new information collection 
requirement in Part 416, section 416.924(g). As required by 44 U.S.C. 
3507, as amended by section 2 of the Paperwork Reduction Act of 1995, 
we have requested under emergency procedures, and OMB has approved, 
under OMB #0960-0568, the information collection requirements contained 
in section 416.924(g).

(Catalog of Federal Domestic Assistance: Program Nos. 96.001 Social 
Security-Disability Insurance; 96.006 Supplemental Security Income.)

List of Subjects

20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors, and Disability Insurance, Reporting and 
recordkeeping requirements, Social Security.

20 CFR Part 416

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs, Reporting and recordkeeping 
requirements, Supplemental Security Income (SSI).

    Dated: February 5, 1997.
Shirley S. Chater,
Commissioner of Social Security.

    For the reasons set out in the preamble, 20 CFR chapter III is 
amended as follows:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950-  )

Subpart P--[Amended]

    1. The authority citation for subpart P of part 404 is revised to 
read as follows:

    Authority: Secs. 202, 205(a), (b), and (d)-(h), 216(i), 221(a) 
and (i), 222(c), 223, 225, and 702(a)(5) of the Social Security Act 
(42 U.S.C. 402, 405(a), (b), and (d)-(h), 416(i), 421(a) and (i), 
422(c), 423, 425, and 902(a)(5)); sec. 211(b), Pub. L. 104-193, 110 
Stat. 2105, 2189.

Appendix 1 to Subpart P--[Amended]

    2. Part B of Appendix 1 (Listing of Impairments) of subpart P to 
part 404 is amended by revising the third sentence of the second 
undesignated paragraph of 103.00A, the fourth undesignated paragraph of 
103.00A, the fourth sentence of the fifth undesignated paragraph of 
104.00A, the sixth undesignated paragraph of 104.00A, the last sentence 
of the last undesignated paragraph of 104.00C, the first three 
sentences of the eighth undesignated paragraph of 112.00A, the third 
sentence of the first paragraph of

[[Page 6419]]

112.00C, the first sentence of 112.00C2. introductory text 112.00C2.b., 
112.00C2.c., the heading of 112.00C2.d., 112.00C4 and the undesignated 
paragraph under it, and 112.02B2.c. introductory text to read as 
follows:

Appendix 1 to Subpart P--Listing of Impairments

* * * * *
Part B
* * * * *

103.00  Respiratory System

    A. * * *
* * * * *
    * * * Even if a child does not show that his or her impairment 
meets the criteria of these listings, the child may have an 
impairment(s) that is medically or functionally equivalent in severity 
to one of the listed impairments. * * *
* * * * *
    It must be remembered that these listings are only examples of 
common respiratory disorders that are severe enough to find a child 
disabled. When a child has a medically determinable impairment that is 
not listed, an impairment that does not meet the requirements of a 
listing, or a combination of impairments no one of which meets the 
requirements of a listing, we will make a determination whether the 
child's impairment(s) is medically or functionally equivalent in 
severity to the criteria of a listing. (See Secs. 404.1526, 416.926, 
and 416.926a.)
* * * * *

104.00  Cardiovascular System

    A. Introduction
* * * * *
    * * * Even though a child who does not receive treatment may not be 
able to show an impairment that meets the criteria of these listings, 
the child may have an impairment(s) that is medically or functionally 
equivalent in severity to one of the listed impairments.
    Indeed, it must be remembered that these listings are only examples 
of common cardiovascular disorders that are severe enough to find a 
child disabled. When a child has a medically determinable impairment 
that is not listed, an impairment that does not meet the requirements 
of a listing, or a combination of impairments no one of which meets the 
requirements of a listing, we will make a determination whether the 
child's impairment(s) is medically or functionally equivalent in 
severity to the criteria of a listing. (See Secs. 404.1526, 416.926, 
and 416.926a.)
* * * * *
    C. Treatment and Relationship Status
* * * * *
    * * * (See Sec. 404.1594 or Sec. 416.994a, as appropriate, for our 
rules on medical improvement and whether an individual is no longer 
disabled.)

112.00  Mental Disorders

    A. * * *
* * * * *
    It must be remembered that these listings are only examples of 
common mental disorders that are severe enough to find a child 
disabled. When a child has a medically determinable impairment that is 
not listed, an impairment that does not meet the requirements of a 
listing, or a combination of impairments no one of which meets the 
requirements of a listing, we will make a determination whether the 
child's impairment(s) is medically or functionally equivalent in 
severity to the criteria of a listing. (See Secs. 404.1526, 416.926, 
and 416.926a.) * * *
* * * * *
    C. * * * The functional areas that we consider are: Motor function; 
cognitive/communicative function; social function; personal function; 
and concentration, persistence, or pace. * * *
    1. * * *
    2. Preschool children (age 3 to attainment of age 6). For the age 
groups including preschool children through adolescence, the functional 
areas used to measure severity are: (a) Cognitive/communicative 
function, (b) social function, (c) personal function, and (d) 
deficiencies of concentration, persistence, or pace resulting in 
frequent failure to complete tasks in a timely manner. * * *
    a. * * *
    b. Social function. Social functioning refers to a child's capacity 
to form and maintain relationships with parents, other adults, and 
peers. Social functioning includes the ability to get along with others 
(e.g., family members, neighborhood friends, classmates, teachers). 
Impaired social functioning may be caused by inappropriate externalized 
actions (e.g., running away, physical aggression--but not self-
injurious actions, which are evaluated in the personal area of 
functioning), or inappropriate internalized actions (e.g., social 
isolation, avoidance of interpersonal activities, mutism). Its severity 
must be documented in terms of intensity, frequency, and duration, and 
shown to be beyond what might be reasonably expected for age. Strength 
in social functioning may be documented by such things as the child's 
ability to respond to and initiate social interaction with others, to 
sustain relationships, and to participate in group activities. 
Cooperative behaviors, consideration for others, awareness of others' 
feelings, and social maturity, appropriate to a child's age, also need 
to be considered. Social functioning in play and school may involve 
interactions with adults, including responding appropriately to persons 
in authority (e.g., teachers, coaches) or cooperative behaviors 
involving other children. Social functioning is observed not only at 
home but also in preschool programs.
    c. Personal function. Personal functioning in preschool children 
pertains to self-care; i.e., personal needs, health, and safety 
(feeding, dressing, toileting, bathing; maintaining personal hygiene, 
proper nutrition, sleep, health habits; adhering to medication or 
therapy regimens; following safety precautions). Development of self-
care skills is measured in terms of the child's increasing ability to 
help himself/herself and to cooperate with others in taking care of 
these needs. Impaired ability in this area is manifested by failure to 
develop such skills, failure to use them, or self-injurious actions. 
This function may be documented by a standardized test of adaptive 
behavior or by a careful description of the full range of self-care 
activities. These activities are often observed not only at home but 
also in preschool programs.
    d. Concentration, persistence, or pace. * * *
* * * * *
    4. Adolescents (age 12 to attainment of age 18). Functional 
criteria parallel to those for primary school children (cognitive/
communicative; social; personal; and concentration, persistence, or 
pace) are the measure of severity for this age group. Testing 
instruments appropriate to adolescents should be used where indicated. 
Comparable findings of disruption of social function must consider the 
capacity to form appropriate, stable, and lasting relationships. If 
information is available about cooperative working relationships in 
school or at part-time or full-time work, or about the ability to work 
as a member of a group, it should be considered when assessing the 
child's social functioning. Markedly impoverished social contact, 
isolation, withdrawal, and inappropriate or bizarre behavior under the 
stress of socializing with others also constitute comparable findings. 
(Note that self-injurious actions are evaluated in the personal area of 
functioning.)
    a. Personal functioning in adolescents pertains to self-care. It is 
measured in

[[Page 6420]]

the same terms as for younger children, the focus, however, being on 
the adolescent's ability to take care of his or her own personal needs, 
health, and safety without assistance. Impaired ability in this area is 
manifested by failure to take care of these needs or by self-injurious 
actions. This function may be documented by a standardized test of 
adaptive behavior or by careful descriptions of the full range of self-
care activities.
    b. In adolescents, the intent of the functional criterion described 
in paragraph B2d is the same as in primary school children, However, 
other evidence of this functional impairment may also be available, 
such as from evidence of the child's performance in wok or work-like 
settings.
* * * * *

112.01  Category of Impairments, Mental

112.02  Organic Mental Disorders:

* * * * *
    B. * * *
* * * * *
    2. * * *
    c. Marked impairment in age-appropriate personal functioning, 
documented by history and medical findings (including consideration of 
information from parents or other individuals who have knowledge of the 
child, when such information is needed and available) and including, if 
necessary, appropriate standardized tests; or
* * * * *
    3. Part B of Appendix 1 (Listing of Impairments) of subpart P to 
part 404 is amended by revising 114.00D6 and removing the last sentence 
of the second undesignated paragraph under 114.00D6.

114.00  Immune System

* * * * *
    D. * * *
    6. Evaluation of HIV infection in children. The criteria in 114.08 
do not describe the full spectrum of diseases or conditions manifested 
by children with HIV infection. As in any case, consideration must be 
given to whether a child's impairment(s) meets, medically equals, or 
functionally equals the severity of any other listing in appendix 1 of 
subpart P; e.g., a neoplastic disorder listed in 113.00ff. (See 
Secs. 404.1526, 416.926, and 416.926a.) Although 114.08 includes cross-
references to other listings for the more common manifestations of HIV 
infection, additional listings may also apply.
* * * * *

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND 
DISABLED

Subpart F--[Amended]

    4. The authority citation for subpart F of part 416 continues to 
read as follows:

    Authority: Secs. 702(a)(5), 1631(a)(2) and (d)(1) of the Social 
Security Act (42 U.S.C. 902(a)(5) and 1383(a)(2) and (d)(1)).

    5. Section 416.635 is amended by revising paragraphs (c) and (d) 
and adding paragraph (e) to read as follows:


Sec. 416.635  Responsibilities of a representative payee.

* * * * *
    (c) Submit to us, upon our request, a written report accounting for 
the benefits received;
    (d) Notify us of any change in his or her circumstances that would 
affect performance of the payee responsibilities; and
    (e) In cases in which the beneficiary is an individual under age 18 
(including cases in which the beneficiary is an individual whose low 
birth weight is a contributing factor material to our determination 
that the individual is disabled), ensure that the beneficiary is and 
has been receiving treatment to the extent considered medically 
necessary and available for the condition that was the basis for 
providing benefits (See Sec. 416.994a(i).)

Subpart I--[Amended]

    6. The authority citation for subpart I of part 416 continues to 
read as follows:

    Authority: Secs. 702(a)(5), 1611, 1614, 1619, 1631(a), (c), and 
(d)(1), and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 
1382, 1382c, 1382h, 1383(a), (c), and (d)(1), and 1383b); secs. 4(c) 
and 5, 6(c)-(e), 14(a) and 15, Pub. L. 98-460, 98 Stat. 1794, 1801, 
1802, and 1808 (42 U.S.C. 421 note, 423 note, 1382h note).

    7. Section 416.901 is amended by revising paragraphs (e), (f)(2), 
and (f)(6) as follows:


Sec. 416.901  Scope of subpart.

* * * * *
    (e) Our general rules on evaluating disability for children filing 
new applications are stated in Sec. 416.924.
    (f) * * *
* * * * *
    (2) What we mean by the terms medical equivalence and functional 
equivalence and how we determine medical equivalence (and functional 
equivalence if you are a child);
* * * * *
    (6) The effect on your benefits if you fail to follow treatment 
that is expected to restore your ability to work or, if you are a 
child, to reduce your functional limitations to the point that they are 
no longer marked and severe, and how we apply the rule in Sec. 416.930.
* * * * *
    7. Section 416.902 is amended by adding four new definitions 
between the definitions for ``Child'' and ``Medical sources'' to read 
as follows:


Sec. 416.902  General definitions and terms for this subpart.

* * * * *
    Commissioner means the Commissioner of Social Security.
    Disability redetermination means a redetermination of your 
eligibility based on disability using the rules for new applicants 
appropriate to your age, except the rules pertaining to performance of 
substantial gainful activity. For individuals who are working and for 
whom a disability redetermination is required, we will apply the rules 
in Secs. 416.260 ff. In conducting a disability redetermination, we 
will not use the rules for determining whether disability continues set 
forth in Sec. 416.994 or Sec. 416.994a. (See Sec. 416.987.)
    Impairment(s) means a medically determinable physical or mental 
impairment or a combination of medically determinable physical or 
mental impairments.
    Marked and severe functional limitations, when used as a phrase, 
means the standard of disability in the Social Security Act for 
children claiming SSI benefits based on disability and is a level of 
severity that meets or medically or functionally equals the severity of 
a listing in the Listing of Impairments in appendix 1 of subpart P of 
part 404 (the Listing). See Secs. 416.906, 416.924, and 416.926a. The 
words ``marked'' and ``severe'' are also separate terms used throughout 
this subpart to describe measures of functional limitations; the term 
``marked'' is also used in the listings. See Secs. 416.924 and 
416.926a. The meaning of the words ``marked'' and ``severe'' when used 
as part of the term Marked and severe functional limitations is not the 
same as the meaning of the separate terms ``marked'' and ``severe'' 
used elsewhere in 20 CFR 404 and 416. (See Secs. 416.924(c) and 
416.926a(c).)
* * * * *
    8. Section 416.906 is revised to read as follows:

[[Page 6421]]

Sec. 416.906  Basic definition of disability for children.

    If you are under age 18, we will consider you disabled if you have 
a medically determinable physical or mental impairment or combination 
of impairments that causes marked and severe functional limitations, 
and that can be expected to cause death or that has lasted or can be 
expected to last for a continuous period of not less than 12 months. 
Notwithstanding the preceding sentence, if you file a new application 
for benefits and you are engaging in substantial gainful activity, we 
will not consider you disabled. We discuss our rules for determining 
disability in children who file new applications in Secs. 416.924 
through 416.924c and Secs. 416.925 through 416.926a.
    9. Section 416.911 is revised to read as follows:


Sec. 416.911  Definition of disabling impairment.

    (a) If you are an adult:
    (1) A disabling impairment is an impairment (or combination of 
impairments) which, of itself, is so severe that it meets or equals a 
set of criteria in the Listing of Impairments in appendix 1 of subpart 
P of part 404 of this chapter or which, when considered with your age, 
education and work experience, would result in a finding that you are 
disabled under Sec. 416.994, unless the disability redetermination 
rules in Sec. 416.987(b) apply to you.
    (2) If the disability redetermination rules in Sec. 416.987 apply 
to you, a disabling impairment is an impairment or combination of 
impairments that meets the requirements in Secs. 416.920(c) through 
(f).
    (b) If you are a child, a disabling impairment is an impairment (or 
combination of impairments) that causes marked and severe functional 
limitations. This means that the impairment or combination of 
impairments:
    (1) Must meet or medically or functionally equal the requirements 
of a listing in the Listing of Impairments in appendix 1 of subpart P 
of part 404 of this chapter, or
    (2) Would result in a finding that you are disabled under 
Sec. 416.994a.
    (c) In determining whether you have a disabling impairment, 
earnings are not considered.
    10. Section 416.912 is amended by revising paragraphs (a) and 
(c)(6) to read as follows:


Sec. 416.912  Evidence of your impairment.

    (a) General. In general, you have to prove to us that you are blind 
or disabled. This means that you must furnish medical and other 
evidence that we can use to reach conclusions about your medical 
impairment(s). If material to the determination whether you are blind 
or disabled, medical and other evidence must be furnished about the 
effects of your impairment(s) on your ability to work, or if you are a 
child, on your functioning, on a sustained basis. We will consider only 
impairment(s) you say you have or about which we receive evidence.
* * * * *
    (c) * * *
    (6) Any other factors showing how your impairment(s) affects your 
ability to work, or, if you are a child, your functioning. In 
Secs. 416.960 through 416.969, we discuss in more detail the evidence 
we need when we consider vocational factors.
* * * * *
    11. Section 416.913 is amended by revising paragraph (c)(3) to read 
as follows:


Sec. 416.913  Medical evidence of your impairment.

* * * * *
    (c) * * *
    (3) If you are a child, the medical source's opinion about your 
functional limitations in learning, motor functioning, performing self-
care activities, communicating, socializing, and completing tasks (and, 
if you are a newborn or young infant from birth to age 1, 
responsiveness to stimuli).
* * * * *
    12. Section 416.919a is amended by revising paragraph (b)(5) to 
read as follows:


Sec. 416.919a  When we will purchase a consultative examination and how 
we will use it.

* * * * *
    (b) * * *
    (5) There is an indication of a change in your condition that is 
likely to affect your ability to work, or, if you are a child, your 
functioning, but the current severity of your impairment is not 
established.
    13. Section 416.919n is amended by revising the fifth sentence of 
paragraph (b) and paragraph (c)(6) to read as follows:


Sec. 416.919n  Informing the examining physician or psychologist of 
examination scheduling, report content, and signature requirements.

* * * * *
    (b) * * * The medical report must be complete enough to help us 
determine the nature, severity, and duration of the impairment, and 
your residual functional capacity (if you are an adult) or your 
functioning (if you are a child). * * *
    (c) * * *
    (6) A statement about what you can still d0 despite your 
impairment(s), unless the claim is based on statutory blindness. If you 
are an adult, this statement should describe the opinion of the 
consultative physician or psychologist about your ability, despite your 
impairment(s), to do work-related activities such as sitting, standing, 
walking, lifting, carrying, handling objects, hearing, speaking, and 
traveling; and, in cases of mental impairment(s), the opinion of the 
consultative physician or psychologist about your ability to 
understand, to carry out and remember instructions, and to respond 
appropriately to supervision, coworkers and work pressures in a work 
setting. If you are a child, this statement should describe the opinion 
of the consultative physician or psychologist about your functional 
limitations in learning, motor functioning, performing self-care 
activities, communicating, socializing, and completing tasks (and, if 
you are a newborn or young infant from birth to age 1, responsiveness 
to stimuli); and
* * * * *
    14. Section 416.924 is amended by removing paragraphs (a) and (f), 
redesignating paragraphs (b) through (e) as (a) through (d), adding new 
paragraphs (e) and (g), redesignating prior paragraph (g) as paragraph 
(f), and by revising newly designated paragraphs (a), (c), and (d) to 
read as follows:


Sec. 416.924  How we determine disability for children.

    (a) Steps in evaluating disability. We consider all relevant 
evidence in your case record when we make a determination or decision 
whether you are disabled. If you allege more than one impairment, we 
will evaluate all the impairments for which we have evidence. Thus, we 
will consider the combined effects of all your impairments upon your 
overall health and functioning. We will also evaluate any limitations 
in your functioning that result from your symptoms, including pain (see 
Sec. 416.929). When you file a new application for benefits, we use the 
evaluation process set forth in (b) through (d) of this section. We 
follow a set order to determine whether you are disabled. If you are 
doing substantial gainful activity, we will determine that you are not 
disabled and not review your claim further. If you are not doing 
substantial gainful activity, we will consider your physical or mental 
impairment(s) first to see if you have an impairment or combination of

[[Page 6422]]

impairments that is severe. If your impairment(s) is not severe, we 
will determine that you are not disabled and not review your claim 
further. If your impairment(s) is severe, we will review your claim 
further to see if you have an impairment(s) that meets, medically 
equals, or functionally equals in severity any impairment that is 
listed in appendix 1 of subpart P of part 404 of this chapter. If you 
have such an impairment(s), and it meets the duration requirement, we 
will find that you are disabled. If you do not have such an 
impairment(s), or if it does not meet the duration requirement, we will 
find that you are not disabled.
* * * * *
    (c) You must have a severe impairment(s). If your impairment(s) is 
a slight abnormality or a combination of slight abnormalities that 
causes no more than minimal functional limitations, we will find that 
you do not have a severe impairment(s) and are, therefore, not 
disabled.
    (d) Your impairment(s) must meet, medically equal, or functionally 
equal in severity a listed impairment in appendix 1. An impairment(s) 
causes marked and severe functional limitations if it meets or 
medically equals in severity the set of criteria for an impairment 
listed in the Listing of Impairments in appendix 1 of subpart P of part 
404 of this chapter, or if it is functionally equal in severity to a 
listed impairment.
    (1) Therefore, if you have an impairment(s) that is listed in 
appendix 1, or is medically or functionally equal in severity to a 
listed impairment, and that meets the duration requirement, we will 
find you disabled.
    (2) If your impairment(s) does not meet the duration requirement, 
or does not meet, medically equal, or functionally equal in severity a 
listed impairment, we will find that you are not disabled.
    (3) We explain our rules for deciding whether an impairment(s) 
meets a listing in Sec. 416.925. Our rules for how we decide whether an 
impairment(s) medically equals a listing are set forth in Sec. 416.926. 
Our rules for deciding whether an impairment(s) functionally equals a 
listing are set forth in Sec. 416.926a.
    (e) If you attain age 18 after you file your disability application 
but before we make a determination or decision. For the period during 
which you are under age 18, we will evaluate whether you are disabled 
using the rules in this section. For the period starting with the day 
you attain age 18, we will evaluate whether you are disabled using the 
disability rules we use for adults filing new claims, in Sec. 416.920.
* * * * *
    (g) How we will explain our findings. When we make an initial or 
reconsidered determination whether you are disabled under this section 
or whether your disability continues under Sec. 416.994a (except when a 
disability hearing officer makes the reconsideration determination), we 
will complete a standard form, Form SSA-538, Childhood Disability 
Evaluation Form. The form outlines the steps of the sequential 
evaluation process for individuals who have not attained age 18. In 
these cases, the State agency medical or psychological consultant (see 
Sec. 416.1016) or other designee of the Commissioner has overall 
responsibility for the content of the form and must sign the form to 
attest that it is complete and that he or she is responsible for its 
content, including the findings of fact and any discussion of 
supporting evidence. Disability hearing officers, administrative law 
judges, and the administrative appeals judges on the Appeals Council 
(when the Appeals Council makes a decision) will not complete the form 
but will indicate their findings at each step of the sequential 
evaluation process in their determinations or decisions.
    15. Section 416.924a is amended by removing paragraph (a)(4), 
redesignating paragraph (a)(5) as paragraph (a)(4), removing paragraph 
(b), redesignating paragraphs (c) and (d) as paragraphs (b) and (c), 
revising the third sentence of paragraph (a) introductory text, 
revising paragraph (a)(2), revising the first sentence of paragraph 
(a)(3), revising the first sentence of redesignated paragraph (b) 
introductory text, and revising redesignated paragraphs (c)(1) and 
(c)(4) to read as follows:


Sec. 416.924a  Age as a factor of evaluation in childhood disability.

    (a) * * * However, your age is always an important factor when we 
decide whether your impairment(s) is severe (see Sec. 416.924(c)). * * 
*
    (2) The Listing of Impairments in appendix 1 of subpart P of part 
404 of this chapter contains examples of impairments that we consider 
of such significance that they cause marked and severe functional 
limitations. Therefore, we will usually decide whether your impairment 
meets a listing without giving special consideration to your age. 
However, several listings are divided into age categories. If the 
listing appropriate for evaluating your impairment includes such age 
categories, we will evaluate your impairment under the criteria for 
your age when we decide whether your impairment meets that listing.
    (3) When we compare an unlisted impairment with a listed impairment 
to determine whether you have an impairment(s) that medically or 
functionally equals the severity of a listing, the way in which we 
consider your age will depend on the listing we use for comparison. * * 
*
    (b) Correcting chronological age of premature infants. We generally 
use chronological age (that is, a child's age based on birth date) when 
we decide whether, or the extent to which, a physical or mental 
impairment or combination of impairments causes functional limitations. 
* * *
* * * * *
    (c) * * *
    (1) We recognize that how a particular child adapts to an 
impairment(s) depends on many factors (e.g., the nature and severity of 
the impairment(s), the child's temperament, the quality of adult 
intervention, and the child's age at onset of the impairment(s)). By 
adapting to an impairment, we mean the child's ability to learn those 
skills, habits, or behaviors that allow the child to compensate for the 
impairment(s) and, thus, to function as well as possible despite the 
impairment(s). Therefore, our disability determination will consider 
how you are adapting to your impairment(s) and the extent to which you 
are able to function as set forth in this section and Secs. 416.924 and 
416.924c.
 * * * * *
    (4) As children approach adulthood--that is, by about age 16--the 
functional abilities, skills, and behaviors that are appropriate for 
them are those that are also appropriate for adults. Older adolescents 
generally also share with the youngest adults the same abilities to 
adapt to work-related activities despite a severe impairment(s). By the 
age of adolescence, children have developed basic physical skills and 
behaviors, so that impairments occurring in adolescence may not have 
the cumulative interactive effects on functioning that impairments 
occurring in infancy and early childhood do. (However, as set forth in 
paragraph (c)(1) of this section, we also recognize that adolescents 
may experience a variety of impairments with different effects on their 
functioning. For instance, a child born with a degenerative disorder 
will experience a worsening of its effects as he or she grows older so 
that functioning may be more limited for the older child than it is for 
a younger child with the same illness or disorder.)

[[Page 6423]]

    16. Section 416.924b is amended by revising paragraph (a), the 
second sentences in paragraphs (b)(2) and (b)(3), and paragraph (b)(4), 
and by removing paragraph (b)(5) to read as follows:


Sec. 416.924b  Functioning in children.

    (a) General. When we evaluate whether your impairment(s) is severe 
and, if so, whether it causes marked and severe functional limitations, 
we will consider all of your mental and physical limitations that 
result from your impairment(s).
    (b) * * *
    (2) * * * Ordinarily, failures to achieve developmental milestones 
are most important as indicators of impaired functioning from birth 
until the attainment of age 3, although they may be used to evaluate 
older children, especially preschool children.
    (3) * * * Ordinarily, activities of daily living are most important 
as indicators of functional limitations in children aged 3 to 
attainment of age 16, although they may be used to evaluate children 
younger than age 3.
    (4) Work-related activities. The term work-related activities 
refers to those physical and mental activities that are associated 
with, or related to, activities in the workplace, as manifested in a 
person's activities in contexts such as school, work, vocational 
programs, and organized activities. Ordinarily, inability to perform 
work-related activities is most important as an indicator of functional 
limitations in adolescents aged 16 to attainment of age 18.
    17. Section 416.924c is revised to read:


Sec. 416.924c  Other factors we will consider.

    (a) General. When we evaluate whether your impairment(s) is severe, 
and if so, whether it causes marked and severe functional limitations, 
we will consider all factors that are relevant to the evaluation of the 
effects of your impairment(s) on your functioning, such as the effects 
of your medications, the setting in which you live, your need for 
assistive devices, and your functioning in school. Therefore, when we 
assess your functional limitations, we will consider all evidence from 
medical and nonmedical sources--such as your parents, teachers, and 
other people who know you--that can help us to understand how your 
impairment(s) affects your functioning. Some of the factors we will 
consider include, but are not limited to, the factors in paragraphs (b) 
through (g) of this section.
    (b) Chronic illness. If you have a chronic impairment(s) that is 
characterized by episodes of exacerbation (worsening) or remission 
(improvement), we will consider the frequency and severity of your 
episodes of exacerbation and your periods of remission as factors in 
our determination whether you have a severe impairment(s) and, if so, 
whether it meets or medically or functionally equals in severity any 
listing, and is therefore disabling. For instance, if you require 
repeated hospitalizations, or frequent outpatient care with supportive 
therapy for a chronic impairment(s), we will consider this need for 
treatment in our determination. When we determine whether you are 
disabled, we will consider how the level of treatment you need for your 
chronic illness affects your functioning. We will consider whether the 
length and frequency of your hospitalizations or episodes of 
exacerbation significantly interfere with your functioning on a 
longitudinal basis, or whether the frequency of your outpatient care 
affects your functioning.
    (c) Effects of medication. We will consider the effects of 
medication on your symptoms, signs, and laboratory findings, including 
your functioning. Although medications may control the most obvious 
manifestations of your condition(s), they may or may not affect the 
functional limitations imposed by your impairment(s). If your symptoms 
or signs are reduced by medications, we will consider whether any 
functional limitations which may nevertheless persist are marked and 
severe, even if there is apparent improvement from the medications. We 
will also consider whether your medications create any side effects 
which cause or contribute to your functional limitations.
    (d) Effects of structured or highly supportive settings. Children 
with serious impairments may spend much of their time in structured or 
highly supportive settings. A structured or highly supportive setting 
may be your own home, in which family members make extraordinary 
adjustments to accommodate your impairment(s); or your classroom at 
school, whether a regular class in which you are accommodated or a 
special classroom; or a residential facility or school where you live 
for a period of time. Children with chronic impairments also commonly 
have their lives structured in such a way as to minimize stress and 
reduce their symptoms or signs of impairment; others may continue to 
have persistent pain, fatigue, decreased energy, or other symptoms or 
signs, though at a lesser level of severity. Such children may be more 
impaired in their overall functioning than their symptoms and signs 
would indicate. Therefore, if your symptoms or signs are controlled or 
reduced by the environment in which you live, we will consider your 
functioning outside of this highly structured setting.
    (e) Adaptations. We will consider the nature and extent of any 
other adaptations that are made for you in order to enable you to 
function. Such adaptations may include assistive devices, appliances, 
or technology. Some adaptations may enable you to function normally, or 
almost normally (e.g., eyeglasses, hearing aids). Others may increase 
your functioning, even though you may still have functional limitations 
(e.g., ankle-foot orthoses, hand or foot splints, and specially adapted 
or custom-made tools, utensils, or devices for self-care activities 
such as bathing, feeding, toileting, and dressing). When we evaluate 
your overall functioning with an adaptation, we will consider the 
degree to which the adaptation enables you to function and any 
functional limitations that nevertheless persist.
    (f) Time spent in therapy. You may need frequent and ongoing 
therapy from one or more kinds of health care professionals in order to 
maintain or improve your functional status. Therapy may include 
occupational, physical, or speech and language therapy, special nursing 
services, psychotherapy, or psychosocial counseling. Frequent therapy, 
although intended to improve your functioning in some ways, may also 
interfere with your functioning in other ways. If you receive frequent 
therapy at school during a normal school day, it may or may not 
interfere significantly with your functioning. If you must frequently 
interrupt your activities at school or at home for therapy, these 
interruptions may interfere with your functioning. We will consider the 
frequency of any therapy that you must have, how long you have needed 
the therapy or will need the therapy, and whether it interferes with 
your functioning.
    (g) School attendance. (1) School records and information from 
people at school who know you or who have examined you, such as 
teachers and school psychologists, psychiatrists, or therapists, may be 
important sources of information about your impairment(s) and its 
effect on your functioning. If you attend school, we will consider this 
evidence when it is relevant and available to us.
    (2) The fact that you are able to attend school will not, in 
itself, be an indication that you are not disabled. We will consider 
the circumstances of your school attendance, such as your functioning 
in a regular classroom

[[Page 6424]]

setting. Likewise, the fact that you are in a special education 
classroom setting, or that you are not in such a setting, will not in 
itself establish your actual limitations or abilities. We will consider 
the fact of such placement or lack of placement in the context of the 
remainder of the evidence in your case record.
    (3) However, if you are unable to attend school on a regular basis 
because of your impairment(s), we will consider this when we determine 
whether you are disabled.
    (h) Treatment and intervention, in general. With adequate treatment 
or intervention, some children not only have their symptoms and signs 
reduced, but also maintain, return to or achieve a level of functioning 
that is not disabling. Treatment or intervention may prevent, 
eliminate, or reduce functional limitations; if such limitations were 
disabling in the absence of treatment or intervention, treatment or 
intervention may eliminate them or reduce them so that they are not 
disabling. We will, therefore, evaluate the effects of your treatment 
or intervention to determine the actual outcome of the treatment or 
intervention in your particular case.
    18. Section 416.924d is removed.
    19. Section 416.924e is removed.
    20. Section 416.925 is amended by revising paragraph (a) and adding 
five sentences to the end of paragraph (b)(2) to read as follows:


Sec. 416.925  Listing of Impairments in appendix 1 of subpart P of part 
404 of this chapter.

    (a) Purpose of the Listing of Impairments. The Listing of 
Impairments describes, for each of the major body systems, impairments 
that are considered severe enough to prevent an adult from doing any 
gainful activity or, for a child, that causes marked and severe 
functional limitations. Most of the listed impairments are permanent or 
expected to result in death, or a specific statement of duration is 
made. For all others, the evidence must show that the impairment has 
lasted or is expected to last for a continuous period of at least 12 
months.
    (b) * * *
    (2) * * * Although the severity criteria in Part B of the Listing 
of Impairments are expressed in different ways for different 
impairments, the level of severity for impairments listed in part B is 
intended to be the same as that expressed in the functional severity 
criteria of the childhood mental disorders listings. (See listings 
112.01 ff. of appendix 1 of subpart P of part 404 of this chapter.) 
Therefore, in general, a child's impairment(s) is of ``listing-level 
severity'' if it causes marked limitations in two broad areas of 
functioning or extreme limitations in one such area. (See Sec. 416.926a 
for definition of the terms marked and extreme as they apply to 
children.) However, when we decide whether your impairment(s) meets the 
requirements for any listed impairment, we will decide that your 
impairment is of ``listing-level severity'' even if it does not result 
in marked limitations in two broad areas of functioning, or extreme 
limitations in one such area, if the listing that we apply does not 
require such limitations to establish that an impairment(s) is 
disabling.
* * * * *
    21. Section 416.926 is amended by revising the section heading, 
paragraph (a), the last sentence of paragraph (b), and the first 
sentence of paragraph (c), and by adding paragraph (d) to read as 
follows:


Sec. 416.926  Medical equivalence for adults and children.

    (a) How medical equivalence is determined. We will decide that your 
impairment(s) is medically equivalent to a listed impairment in 
appendix 1 of subpart P of part 404 of this chapter if the medical 
findings are at least equal in severity and duration to the listed 
findings. We will compare the symptoms, signs, and laboratory findings 
about your impairment(s), as shown in the medical evidence we have 
about your claim, with the corresponding medical criteria shown for any 
listed impairment. When we make a finding regarding medical 
equivalence, we will consider all relevant evidence in your case 
record. Medical equivalence can be found in two ways:
    (1) If you have an impairment that is described in the Listing of 
Impairments in appendix 1 of subpart P of part 404 of this chapter, 
but:
    (i) You do not exhibit one or more of the medical findings 
specified in the particular listing, or
    (ii) You exhibit all of the medical findings, but one or more of 
the findings is not as severe as specified in the listing, we will 
nevertheless find that your impairment is medically equivalent to that 
listing if you have other medical findings related to your impairment 
that are at least of equal medical significance.
    (2) If you have an impairment that is not described in the Listing 
of Impairments in appendix 1, or you have a combination of impairments, 
no one of which meets or is medically equivalent to a listing, we will 
compare your medical findings with those for closely analogous listed 
impairments. If the medical findings related to your impairment(s) are 
at least of equal medical significance to those of a listed impairment, 
we will find that your impairment(s) is medically equivalent to the 
analogous listing.
    (b) * * * We will also consider the medical opinion given by one or 
more medical or psychological consultants designated by the 
Commissioner in deciding medical equivalence. (See Sec. 416.1016.)
    (c) Who is a designated medical or psychological consultant. A 
medical or psychological consultant designated by the Commissioner 
includes any medical or psychological consultant employed or engaged to 
make medical judgments by the Social Security Administration, the 
Railroad Retirement Board, or a State agency authorized to make 
disability determinations. * * *
    (d) Responsibility for determining medical equivalence. In cases 
where the State agency or other designee of the Commissioner makes the 
initial or reconsideration disability determination, a State agency 
medical or psychological consultant or other designee of the 
Commissioner (see Sec. 416.1016) has the overall responsibility for 
determining medical equivalence. For cases in the disability hearing 
process or otherwise decided by a disability hearing officer, the 
responsibility for determining medical equivalence rests with either 
the disability hearing officer or, if the disability hearing officer's 
reconsideration determination is changed under Sec. 416.1418, with the 
Associate Commissioner for Disability or his or her delegate. For cases 
at the Administrative Law Judge or Appeals Council level, the 
responsibility for deciding medical equivalence rests with the 
Administrative Law Judge or Appeals Council.
    22. Section 416.926a is revised to read as follows:


Sec. 416.926a  Functional equivalence for children

    (a) General. If your impairment or combination of impairments does 
not meet, or is not medically equivalent in severity to, any listed 
impairment in appendix 1 of subpart P of part 404 of this chapter, we 
will assess all functional limitations caused by your impairment(s), 
i.e., what you cannot do because of your impairment(s), to determine if 
your impairment(s) is functionally equivalent in severity to any listed 
impairment. While all possible impairments are not addressed within the 
Listing of Impairments, within the listed impairments are all the

[[Page 6425]]

physical and mental functional limitations, i.e., what a child cannot 
do as a result of an impairment, that produce marked and severe 
functional limitations. If the functional limitation(s) caused by your 
impairment(s) is the same as the disabling functional limitation(s) 
caused by a listed impairment, we will find that your impairment(s) is 
equivalent in severity to that listed impairment, even if your 
impairment(s) is not medically related to the listed impairment. When 
we make a determination or decision using this rule, the primary focus 
will be on whether your functional limitations are disabling, as long 
as there is a direct, medically determinable cause for these 
limitations. As with any disabling impairment, the duration requirement 
must also be met (see Secs. 416.909 and 416.924(a)).
    (b) How we determine functional equivalence. We will compare any 
functional limitations resulting from your impairment(s) with the 
disabling functional limitations of any listed impairment in part A or 
part B of the Listing that includes the same functional limitations. 
The listing we use for comparison need not be medically related to your 
impairment(s). In paragraphs (b)(1) through (b)(4) of this section we 
explain the methods we may use to decide that your impairment(s) is 
functionally equivalent in severity to a listing. There is no set order 
in which we must consider these methods and we may not consider them 
all if we find that your impairment(s) is functionally equivalent in 
severity to a listed impairment. We will use any method that is 
appropriate to, or best describes, your impairment(s) and functional 
limitations. However, we will consider all of the methods before we 
determine that your impairment(s) is not functionally equivalent in 
severity to any listed impairment. At the initial and reconsideration 
levels (except when a disability hearing officer makes the 
reconsideration determination), we will also complete a standard form, 
Form SSA-538, Childhood Disability Evaluation Form, to show how we 
determined whether your impairment(s) is functionally equivalent in 
severity to a listed impairment. (See Sec. 416.924(g).)
    (1) Limitation of specific functions. We may find that your 
impairment(s) is functionally equivalent in severity to a listed 
impairment because of extreme limitation of one specific function, such 
as walking or talking. (See paragraph (c) of this section for an 
explanation of the term ``extreme.'') Some listings also include 
criteria requiring limitation of more than one specific function, such 
as limitations in walking and talking; each limitation in itself is not 
enough to show disability, but the combination of limitations 
establishes marked and severe functional limitations. If you have a 
limitation of a combination of specific functions that are the same as 
those in such a listed impairment, we will find that your impairment(s) 
is functionally equivalent in severity to that listing.
    (2) Broad areas of development or functioning. Instead of looking 
at limitation of specific functions, we may evaluate the effects of 
your impairment(s) in broad areas of development or functioning, such 
as social functioning, motor functioning, or personal functioning 
(i.e., self-care) and determine if your functional limitations are 
equivalent in severity to the disabling functional limitations in 
listing 112.12 or listing 112.02. If you have extreme limitations in 
one area of functioning or marked limitation in two areas of 
functioning, we will find that your impairment(s) is functionally 
equivalent in severity to a listed impairment. We explain the broad 
areas of development or functioning we consider and what the terms 
``extreme'' and ``marked'' mean in paragraph (c) of this section.
    (3) Episodic impairments. If you have a chronic impairment(s) that 
is characterized by frequent illnesses or attacks, or be exacerbations 
and remissions, we may evaluate your functional limitations using the 
methods in paragraphs (b)(1) and (b)(2) of this section. However, your 
functional limitations may vary and we may not be able to use the 
methods in paragraphs (b)(1) and (b)(2) of this section. Instead, we 
may compare your functional limitation(s) to those in any listing for a 
chronic impairment with similar episodic criteria to determine if your 
impairment(s) has such a serious impact on your functioning over time 
that it is functionally equivalent in severity to one of those 
listings. Limitations that are characteristic of episodic impairments 
are not necessarily related to a single, specific function. Episodes of 
disabling functional limitations may occur with specified frequency 
despite treatment. If your episodic impairment(s) produces disabling 
functional limitations that are the same as the disabling functional 
limitations of a listed impairment with similar episodic criteria, we 
will find that you are disabled even though you may be able to function 
adequately between episodes.
    (4) Limitations related to treatment or medication effects. Some 
impairments require treatment over a long period of time (i.e., at 
least a year) and the treatment itself (e.g., multiple surgeries) 
causes marked and severe functional limitations. Marked and severe 
functional limitations may also result from the combined effects of 
limitations caused by ongoing treatment and limitations caused by an 
impairment(s). In many cases, we will be able to evaluate such 
limitations using the methods for evaluating specific functions or 
broad areas of development or functioning in paragraphs (b)(1) and 
(b)(2) of this section. But we may also compare your functional 
limitations(s) to criteria in listings based on treatment (including 
side effects of medication) that is itself disabling or that 
contributes to functional limitations. If treatment of your 
impairment(s) produces functional limitations that are the same as the 
disabling functional limitations of a listed impairment, we will find 
that your impairment(s) is functionally equivalent in severity to that 
listing.
    (c) Broad areas of development or functioning. When we determine 
functional equivalence based on broad areas of development or 
functioning, we will evaluate the functional effects of your 
impairment(s) in several areas of development or functioning to 
determine if your functional limitations are equivalent in severity to 
the disabling functional limitations of listing 112.12 or listing 
112.02. However, instead of referring to the areas of development or 
functioning in those listings, we will refer to the areas of 
development or functioning described in paragraphs (c)(4) and (c)(5) of 
this section. (We describe the areas in general terms in paragraph 
(c)(4) and then in detail as they apply to specific age groups in 
paragraph (c)(5).) If you have marked limitations in two areas of 
development or functioning, or extreme limitation in one area, we will 
find that your impairment(s) is functionally equivalent in severity to 
listing 112.12 or listing 112.02, even if your impairment(s) is a 
physical impairment(s) or a combination of physical and mental 
impairments. We explain the meaning of the terms ``marked limitation'' 
and ``extreme limitation'' in paragraph (c)(3) of this section.
    (1) How we use the areas of development or functioning. (i) When we 
make a finding about functional equivalence, we will consider the 
extent of your functional limitations in the areas affected by your 
impairment(s). We will also consider how your limitation(s) in one area 
affects your development or functioning in other areas.
    (ii) In some children, some physical impairments will be evaluated 
most

[[Page 6426]]

appropriately only in the areas of motor development or motor 
functioning. In others, the effects will be more global. If you have a 
physical impairment(s) that causes a functional limitation(s) not 
addressed solely in the area of motor development or motor functioning, 
we will consider the effects of your impairment in all relevant areas 
in which you have limitations from the impairment(s). A physical 
impairment(s) may cause limitations in any or all of the areas of 
development or functioning.
    (2) Other considerations. When we assess your functioning, we will 
consider all information in your case record that can help us determine 
the effect of your impairment(s) on your physical and mental 
functioning. We will consider the nature of your impairment(s), your 
age, your ability to be tested given your age, and other relevant 
factors (see Secs. 416.924a through 416.924c). We will consider whether 
any help that you need from others to enable you to do any particular 
activity (e.g., dressing) is appropriate to your age.
    (3) Definitions of ``marked'' and ``extreme'' limitations--(i) 
Marked limitation means--(A) When standardized tests are used as the 
measure of functional abilities, a valid score that is two standard 
deviations or more below the norm for the test (but less than three 
standard deviations); or
    (B) For children from birth to attainment of age 3, functioning at 
more than one-half but not more than two-thirds of chronological age; 
or
    (C) For children from age 3 to attainment of age 18, ``more than 
moderate'' and ``less than extreme.'' Marked limitation may arise when 
several activities or functions are limited or even when only one is 
limited as long as the degree of limitation is such as to interfere 
seriously with the child's functioning.
    (ii) Extreme limitation means-- (A) When standardized tests are 
used as the measure of functional abilities, a valid score that is 
three standard deviations or more below the norm for the test; or
    (B) For children from birth to attainment of age 3, functioning at 
one-half chronological age or less; or
    (C) For children from birth to attainment of age 18, no meaningful 
functioning in a given area. There may be extreme limitation when 
several activities or functions are limited or even when only one is 
limited.
    (4) Areas of development or functioning. The following are the 
areas of development or functioning that may be addressed in a finding 
of functional equivalence.
    (i) Cognition/communication: The ability or inability to learn, 
understand, and solve problems through intuition, perception, verbal 
and nonverbal reasoning, and the application of acquired knowledge; the 
ability to retain and recall information, images, events, and 
procedures during the process of thinking. The ability or inability to 
comprehend and produce language (e.g., vocabulary and grammar) in order 
to communicate (e.g., to respond, as in answering questions, following 
directions, acknowledging the comments of others; to request, as in 
demanding action, meeting needs, seeking information, requesting 
clarification, initiating interaction; to comment, as in sharing 
information, expressing feelings, and ideas, providing explanations, 
describing events, maintaining interaction, using hearing that is 
adequate for conversation, and using speech (articulation, voice, and 
fluency) that is intelligible.
    (ii) Motor: The ability or inability to use gross and fine motor 
skills to relate to the physical environment and serve one's physical 
purposes. It involves general mobility, balance, and the ability to 
perform age-appropriate physical activities involved in play, physical 
education, sports, and physically related daily activities other than 
self-care (see Personal area).
    (iii) Social: The ability or inability to form and maintain 
relationships with other individuals and with groups; e.g., parents, 
siblings, neighborhood children, classmates, teachers. Ability is 
manifested in responding to and initiating social interaction with 
others, sustaining relationships, and participating in group 
activities. It involves cooperative behaviors, consideration for 
others, awareness of others' feelings, and social maturity appropriate 
to a child's age. Ability is also manifested in the absence of 
inappropriate externalized actions (e.g., running away, physical 
aggression--but not self-injurious actions, which are evaluated in the 
personal area of functioning), and the absence of inappropriate 
internalized actions (e.g., social isolation, avoidance of 
interpersonal activities, mutism). Social functioning in play, school, 
and work situations may involve interactions with adults, including 
responding appropriately to persons in authority (e.g., teachers, 
coaches, employers) or cooperative behaviors involving other children.
    (iv) Responsiveness to stimuli (birth to age 1 only): The ability 
or inability to respond appropriately to stimulation (visual, auditory, 
tactile, vestibular, proprioceptive).
    (v) Personal (age 3 to age 18 only): The ability or inability to 
help yourself and to cooperate with others in taking care of your 
personal needs, health, and safety (e.g., feeding, dressing, toileting, 
bathing; maintaining personal hygiene, proper nutrition, sleep, health 
habits; adhering to medication or therapy regimens; following safety 
precautions).
    (vi) Concentration, persistence, or pace (age 3 to age 18 only): 
The ability or inability to attend to, and sustain concentration on, an 
activity or task, such as playing, reading, or practicing a sport, and 
the ability to perform the activity or complete the task at a 
reasonable pace.
    (5) Descriptions for specific age groups--(i) Newborns and young 
infants (birth to attainment of age 1) Children in this age group are 
evaluated in terms of four areas of development. The following are 
general descriptions of development typical of this age group.
    (A) Cognitive/communicative development (birth to attainment of age 
1): Your ability or inability to show interest in, and actively seek 
interaction with, your environment, first randomly, then through trial-
and-error, and finally with deliberate and purposeful intent. Your 
ability or inability to first recognize, and then attach meaning to, 
routine situations and events and gradually to everyday sounds and 
eventually to familiar words. Your ability or inability to vocalize, 
both imitatively and spontaneously, using vowels and later consonants, 
first in isolation, and then in increasingly longer babbling strings.
    (B) Motor development (birth to attainment of age 1): Your ability 
or inability to explore and manipulate your environment by moving your 
body and by using your hands; e.g., by increasingly controlling 
position and movement of head, sitting with support, creeping or 
crawling, pulling to standing position, walking with hand held, 
standing alone briefly, waving small rattle, reaching for or grasping 
objects, transferring toys, picking up small objects, attempting to 
scribble.
    (C) Social development (birth to attainment of age 1): Your ability 
or inability to form and maintain intimate relationships, and to 
respond to, and eventually initiate reciprocal interactions with, your 
primary caregivers (e.g., through games such as pat-a-cake, peek-a-boo, 
so big). Your ability or inability to begin to regulate the behavior of 
others through intentional behavior (e.g., gestures, vocalizations). 
Your ability or inability to recognize and produce a variety of

[[Page 6427]]

emotional cues (e.g., facial expressions, vocal tone changes).
    (D) Responsiveness to stimuli (birth to attainment of age 1): Your 
ability or inability to form patterns of self-regulation, i.e., to 
recognize internal cues (e.g., hunger, pain), and to organize external 
experiences (e.g., light, sound, temperature, movement), and to 
regulate your reactions to them (e.g., brightening in response to 
sights and sounds, enjoying being touched or stroked or held, enjoying 
gentle movement in space (``rock-a-bye-baby'')).
    (ii) Older infants and toddlers (age 1 to attainment of age 3): 
Children in this age group are evaluated in terms of three areas of 
development. The following are general descriptions of development 
typical of this age group.
    (A) Cognitive/communicative development (age 1 to attainment of age 
3): Your ability or inability to understand by responding to 
increasingly complex requests, instructions, and questions; to refer to 
yourself and things around you by pointing and eventually by naming; to 
form concepts and to solve simple problems through purposeful 
experimentation (e.g., disassembling toys), imitation (immediate and 
delayed), and constructive play (e.g., putting things in and out of 
containers, building with blocks, exploring spaces); to demonstrate 
your knowledge of objects, actions, and situations you have encountered 
through pretend play activities; to spontaneously communicate your 
wishes or needs by using gestures, an increasing number of intelligible 
words, and eventually grammatically correct simple sentences and 
questions with increasingly rich and broad vocabulary.
    (B) Motor development (age 1 to attainment of age 3): Your ability 
or inability to move in your environment using your body with steadily 
increasing dexterity and independence from support by others, and your 
increasing ability to manipulate small objects and to use your hands to 
do, or to get, something that you want or need.
    (C) Social development (age 1 to attainment of age 3): Your ability 
or inability to exhibit normal dependence upon, and intimacy with, your 
primary caregivers, as well as increasing independence from them; to 
initiate and respond to a variety of emotional cues; to regulate and 
organize emotions and behaviors. Your ability or inability to be 
interested in initiating and maintaining interactions with others, 
first during brief, yet frequent encounters, and gradually increasing 
to longer, sustained ones. Your ability or inability to show interest 
in, initially watch, then play alongside, and eventually interact with 
similarly aged peers.
    (iii) Preschool children (age 3 to attainment of age 6). Children 
in this age group are evaluated in terms of five areas of development. 
The following are general descriptions of development typical of this 
age group.
    (A) Cognitive/communicative development (age 3 to attainment of age 
6): Your ability or inability to learn, understand, and solve problems 
through intuition, perception, verbal and nonverbal reasoning, and the 
application of acquired knowledge; your ability or inability to retain 
and recall information, images, events, and procedures during the 
process of thinking (as in the development of readiness skills for 
formal learning (e.g., learning letters, shapes, colors) and skills for 
daily living (e.g., putting toys in proper places)). Your ability or 
inability to communicate by expressing your needs, feelings, and 
preferences; by telling, requesting, predicting, and relating 
information; by describing actions and functions; by providing 
explanations; by following and giving directions; and by engaging in 
conversation in a spontaneous, interactive, and increasingly 
intelligible manner, using increasingly complex vocabulary and grammar.
    (B) Motor development (age 3 to attainment of age 6): Your ability 
or inability to move and use your arms and legs in increasingly more 
intricate and coordinated activity, and your ability or inability to 
use your hands with increasing coordination to manipulate small objects 
during play (e.g., drawing, using building blocks, constructing 
puzzles) and physically related daily activities other than self-care 
(see Personal area).
    (C) Social development (age 3 to attainment of age 6): Your ability 
or inability to initiate social exchanges, to organize and regulate 
your emotions and behaviors, and to respond to your social environment 
through appropriate and increasingly complex interactions, such as 
showing affection, sharing, and helping; your ability to relate to 
caregivers with increasing independence, to choose your own friends, 
and to play cooperatively with other children, one-at-a-time or in a 
group.
    (D) Personal development (age 3 to attainment of age 6): Your 
ability or inability to help yourself and to cooperate with others in 
taking care of your personal needs, health, and safety (e.g., bathing, 
dressing, maintaining sleep habits, crossing the street with an adult).
    (E) Concentration, persistence, or pace (age 3 to attainment of age 
6): Your ability or inability to engage in an activity, and to sustain 
the activity for a period of time at a reasonable pace (e.g., playing a 
simple board game).
    (iv) School-age children (age 6 to attainment of age 12). Children 
in this age group are evaluated in terms of five areas of functioning. 
The following are general descriptions of functioning typical of this 
age group.
    (A) Cognitive/communicative functioning (age 6 to attainment of age 
12): Your ability or inability to learn, understand, and solve problems 
through intuition, perception, verbal and nonverbal reasoning, and the 
application of acquired knowledge; the ability to retain and recall 
information, images, events, and procedures during the process of 
thinking, as in formal learning situations (e.g., reading, class 
discussions) and in daily living (e.g., telling time, making change). 
Your ability or inability to comprehend and produce language (e.g., 
vocabulary, grammar) in order to communicate in social conversation 
(e.g., to express feelings, meet needs, seek information, describe 
events, share stories), and in learning situations (e.g., to exchange 
information and ideas with peers and family or with groups such as your 
school classes) in a spontaneous, interactive, sustained, and 
intelligible manner, using increasingly complex vocabulary and grammar.
    (B) Motor functioning (age 6 to attainment of age 12): Your ability 
or inability to use fine and gross motor skills in order to engage in 
the physical activities involved in normal mobility, school work, play, 
physical education, sports, and other physically related daily 
activities other than self-care (see Personal area).
    (C) Social functioning (age 6 to attainment of age 12): Your 
ability or inability to play alone, with another child, and in a group; 
to initiate and develop friendships; to respond to your social 
environments through appropriate and increasingly complex interpersonal 
behaviors, such as empathizing with others and tolerating differences; 
and to relate appropriately to individuals and in group situations 
(e.g., siblings, parents or caregivers, peers, teachers, school 
classes, neighborhood groups).
    (D) Personal functioning (age 6 to attainment of age 12): Your 
ability or inability to help yourself and to cooperate with others in 
taking care of your personal needs, health, and safety (e.g., eating, 
dressing, maintaining personal hygiene, following safety precautions).

[[Page 6428]]

    (E) Concentration, persistence, or pace (age 6 to attainment of age 
12): Your ability or inability to engage in an activity, and to sustain 
the activity for a period of time and at a reasonable pace.
    (v) Adolescents (age 12 to attainment of age 18): Children in this 
age group are evaluated in terms of five areas of functioning. The 
following are general descriptions of functioning typical of this age 
group.
    (A) Cognitive/communicative functioning (age 12 to attainment of 
age 18): Your ability or inability to learn, understand, and solve 
problems through intuition, perception, verbal and nonverbal reasoning, 
and the application of acquired knowledge; the ability or inability to 
retain and recall information, images, events, and procedures during 
the process of thinking, as in formal learning situations (e.g., 
composition, classroom discussion) and in daily living (e.g., using the 
post office, using public transportation). Your ability or inability to 
comprehend and produce language (e.g., vocabulary, grammar) in order to 
communicate in conversation (e.g., to express feelings, meet needs, 
seek information, describe events, tell stories), and in learning 
situations (e.g., to obtain and convey information and ideas) both 
spontaneously and interactively, in all communication environments 
(e.g., home, classroom, game fields, extra-curricular activities, job), 
and with all communication partners (e.g., parents, siblings, peers, 
school classes, teachers, employers).
    (B) Motor functioning (age 12 to attainment of age 18): Your 
ability or inability to use fine and gross motor skills in order to 
engage in the physical activities involved in normal mobility, school 
work, play, physical education, sports, and other physically related 
daily activities other than self-care (see Personal area).
    (C) Social functioning (age 12 to attainment of age 18): Your 
ability or inability to initiate and develop friendships, to relate 
appropriately to individual peers and adults and to peer and adult 
groups, and to reconcile conflicts between yourself and peers or family 
members or other adults outside your family.
    (D) Personal functioning (age 12 to attainment of age 18): Your 
ability or inability to help yourself in taking care of your personal 
needs, health, and safety (e.g., dressing, bathing, doing laundry, 
adhering to medication or therapy regiments).
    (E) Concentration, persistence, or pace (age 12 to attainment of 
age 18): Your ability or inability to engage in an activity, and to 
sustain the activity for a period of time and at a reasonable pace.
    (d) Examples of impairments that are functionally equivalent in 
severity to a listed impairment. The following are some examples of 
impairment and limitations that are functionally equivalent to 
listings. Findings of equivalence based on the disabling functional 
limits of a child's impairment(s) are not limited to the examples in 
this paragraph (d), because these examples do not describe all possible 
effects of impairments that might be found to be functionally 
equivalent in severity to a listed impairment. As with any disabling 
impairment, the duration requirement must also be met (see 
Secs. 416.909 and 416.924(a)).
    (1) Documented need for major organ transplant (e.g., liver).
    (2) Any condition that is disabling at the time of onset, requiring 
a series of staged surgical procedures within 12 months after onset as 
a life-saving measure or for salvage or restoration of function, and 
such major function is not restored or is not expected to be restored 
within 12 months after onset of the condition.
    (3) Frequent need for a life-sustaining device (e.g., central 
venous alimentatin catheter), at home or elsewhere.
    (4) Ambulation possible only with obligatory bilateral upper limb 
assistance.
    (5) Any physical impairment(s) or combination of physical and 
mental impairments causing marked restriction of age-appropriate 
personal functioning and marked restriction in motor functioning.
    (6) Any physical impairment(s) or combination of physical and 
mental impairments causing complete inability to function independently 
outside the area of one's home within age-appropriate norms.
    (7) Requirement for 24-hour-a-day supervision for medical 
(including psychological) reasons.
    (8) Infants weighing less than 1200 grams at birth, until 
attainment of 1 year of age.
    (9) Infants weighing at least 1200 but less than 2000 grams at 
birth, and who are small for gestational age, until attainment of 1 
year of age. (Small for gestational age means a birth weight that is at 
or more than 2 standard deviations below the mean or that is below the 
3rd growth percentile for the gestational age of the infant.)
    (10) In an infant who has not attained age 1 year, and who may be 
too young to test, any limitations caused by a physical impairment(s) 
or a combination of physical and mental impairments that causes the 
same functional limitations in listing 112.12.
    (11) Major congenital organ dysfunction which could be expected to 
result in death within the first year of life without surgical 
correction, and the impairment is expected to be disabling (because of 
residual impairment following surgery, or the recovery time required, 
or both) until attainment of 1 year of age.
    (12) Gastrostomy in a child who has not attained age 3.
    (e) Responsibility for determining functional equivalence. In cases 
where the State agency or other designee of the Commissioner makes the 
initial or reconsideration disability determination, a State agency 
medical or psychological consultant or other designee of the 
Commissioner (see Sec. 416.1016) has the overall responsibility for 
determining functional equivalence. For cases in the disability hearing 
process or otherwise decided by a disability hearing officer, the 
responsibility for determining functional equivalence rests with either 
the disability hearing officer or, if the disability hearing officer's 
reconsideration determination is changed under Sec. 416.1418, with the 
Associate Commissioner for Disability or his or her delegate. For cases 
at the Administrative Law Judge or Appeals Council level, the 
responsibility for deciding functional equivalence rests with the 
Administrative Law Judge or Appeals Council.
    23. Section 416.927 is amended by revising paragraph (a)(1) to read 
as follows:


Sec. 416.927  Evaluating medical opinions about your impairment(s) or 
disability.

    (a) General. (1) If you are an adult, you can only be found 
disabled if you are unable to do any substantial gainful activity by 
reason of any medically determinable physical or mental impairment 
which can be expected to result in death or which has lasted or can be 
expected to last for a continuous period of not less than 12 months. 
(See Sec. 416.905.) If you are a child, you can be found disabled only 
if you have a medically determinable physical or mental impairment(s) 
that causes marked and severe functional limitations and that can be 
expected to result in death or that has lasted or can be expected to 
last for a continuous period of not less than 12 months. (See 
Sec. 416.906.)
* * * * *
    24. Section 416.929 is amended by revising the fourth, fifth, and 
last sentences of paragraph (a), the heading

[[Page 6429]]

of paragraph (c), the first and last sentences of paragraph (c)(1), the 
second sentence of paragraph (c)(2), the heading and the first and last 
sentences of paragraph (c)(4), the reference at the end of paragraph 
(d)(1), the sixth and ninth sentences of paragraph (d)(3), and 
paragraph (d)(4) to read as follows:


Sec. 416.929  How we evaluate symptoms, including pain.

    (a) * * * These include statements or reports from you, your 
treating or examining physician or psychologist, and others about your 
medical history, diagnosis, prescribed treatment, daily activities, 
efforts to work, and any other evidence showing how your impairment(s) 
and any related symptoms affect your ability to work (or if you are a 
child, your functioning). We will consider all of your statements about 
your symptoms, such as pain, and any description you, your physician, 
your psychologist, or other persons may provide about how the symptoms 
affect your activities of daily living and your ability to work (or if 
you are a child, your functioning). * * * We will then determine the 
extent to which your alleged functional limitations and restrictions 
due to pain or other symptoms can reasonably be accepted as consistent 
with the medical signs and laboratory findings and other evidence to 
decide how your symptoms affect your ability to work (or if you are a 
child, your functioning).
* * * * *
    (c) * * * (1) General. When the medical signs or laboratory 
findings show that you have a medically determinable impairment(s) that 
could reasonably be expected to produce your symptoms, such as pain, we 
must then evaluate the intensity and persistence of your symptoms so 
that we can determine how your symptoms limit your capacity for work 
or, if you are a child, your functioning. * * * Paragraphs (c)(2) 
through (c)(4) of this section explain further how we evaluate the 
intensity and persistence of your symptoms and how we determine the 
extent to which your symptoms limit your capacity for work (or, if you 
are a child, your functioning) when the medical signs or laboratory 
findings show that you have a medically determinable impairment(s) that 
could reasonably be expected to produce your symptoms, such as pain.
    (2) * * * Objective medical evidence of this type is a useful 
indicator to assist us in making reasonable conclusions about the 
intensity and persistence of your symptoms and the effect those 
symptoms, such as pain, may have on your ability to work or, if you are 
a child, your functioning. * * *
* * * * *
    (4) How we determine the extent to which symptoms, such as pain, 
affect your capacity to perform basic work activities, or, if you are a 
child, your functioning). In determining the extent to which your 
symptoms, such as pain, affect your capacity to perform basic work 
activities (or if you are a child, your functioning), we consider all 
of the available evidence described in paragraphs (c)(1) through (c)(3) 
of this section. * * * Your symptoms, including pain, will be 
determined to diminish your capacity for basic work activities (or, if 
you are a child, your functioning) to the extent that your alleged 
functional limitations and restrictions due to symptoms, such as pain, 
can reasonably be accepted as consistent with the objective medical 
evidence and other evidence.
    (d) * * *
    (1) * * * (See Sec. 416.920(c) for adults and Sec. 416.924(c) for 
children.)
* * * * *
    (3) * * * (If you are a child and we cannot find equivalence based 
on medical evidence only, we will consider pain and other symptoms 
under Sec. 416.926(a)(b)(3) in determining whether you have an 
impairment(s) that causes overall functional limitations that are the 
same as the disabling limitations of a listed impairment.) * * * If 
they are not, we will consider the impact of your symptoms on your 
residual functional capacity if you are an adult.* * *
    (4) Impact of symptoms (including pain) on residual functional 
capacity or, if you are a child, on your functioning. If you have a 
medically determinable severe physical or mental impairment(s), but 
your impairment(s) does not meet or equal an impairment listed in 
appendix 1 of subpart P of part 404 of this chapter, we will consider 
the impact of your impairment(s) and any related symptoms, including 
pain, or your residual functional capacity, if you are an adult, or, on 
your functioning if you are a child. (See Secs. 416.945 and 416.924a 
through 416.924e.)
    25. Section 416.930 is amended by revising paragraph (a) to read as 
follows:


Sec. 416.930  Need to follow prescribed treatment.

    (a) What treatment you must follow. In order to get benefits, you 
must follow treatment prescribed by your physician if this treatment 
can restore your ability to work, or, if you are a child, if the 
treatment can reduce your functional limitations so that they are no 
longer marked and severe.
* * * * *
    26. Section 416.987 and an undesignated center heading are added to 
20 CFR part 416, subpart I to read as follows:

Disability Redeterminations for Individuals Who Attain Age 18


Sec. 416.987  Disability redeterminations for individuals who attain 
age 18.

    (a)(1) Public Law 104-193, The Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996, requires that the individuals 
described in paragraph (b) of this section must have their eligibility 
redetermined.
    (2) For these individuals, subject to the provisions of paragraphs 
(b)(2) and (b)(3) of this section, we will use the rules for new 
applicants; we will not use the rules for determining whether 
disability continues set out in Sec. 416.994. If you are an individual 
affected by the provisions of this section, we may find that you are 
not now disabled even though we previously found that you were 
disabled.
    (3) Before we begin your disability redetermination, we will notify 
you that we are redetermining your eligibility for payments, why we are 
redetermining your eligibility, which disability rules we will apply, 
that our review could result in a finding that your SSI payments based 
on disability could be terminated, that you have the right to submit 
medical and other evidence for our consideration during the 
redetermination, and that when we make our determination, we will 
notify you of our determination, your right to appeal the 
determination, and your right to request continuation of benefits 
during appeal.
    (4) We will notify you in writing of the results of the disability 
redetermination. The notice will tell you what our determination is, 
the reasons for our determination and your right to request 
reconsideration of the determination. If our determination shows that 
we should stop your SSI payments based on disability, the notice will 
also tell you of your right to request that your benefits continue 
during any appeal. The results of an initial disability redetermination 
are binding unless you request a reconsideration within the stated time 
period, or we revise the initial determination.
    (b)(1) We will redetermine the eligibility of individuals
    (i) Who became eligible for SSI benefits by reason of disability 
prior to attaining age 18, and

[[Page 6430]]

    (ii) Who also were eligible for such benefits for the month before 
the month in which they attained age 18.
    (2) When we make this determination, we will apply the rules in 
Secs. 416.920(c)-(f); we will not apply the rules in Sec. 416.920(b) or 
Sec. 416.994.
    (3) If you are an individual affected by the provisions of this 
section, and you are disabled under Sec. 416.920 (d) or (f), and you 
are working, we will apply the rules in Secs. 416.260 ff.
    (4) We will initiate this disability redetermination during the 1-
year period beginning on your 18th birthday.
    (5) If we find that you are not disabled under the rules in 
Sec. 416.920 (except Sec. 416.920(b)), your eligibility will end. The 
month in which we will find you not disabled is explained in paragraph 
(b)(6) of this section; the month your benefits will stop is explained 
in paragraph (b)(7) of this section.
    (6) If the evidence shows that you are not disabled, we will find 
that your disability ended in the earliest of:
    (i) The month the evidence shows that you are not disabled under 
the rules set out in this section, but not earlier than the month in 
which we mail you a notice saying that you are not disabled.
    (ii) The first month in which you failed without good cause to 
follow prescribed treatment under the rules in Sec. 416.930.
    (iii) The first month in which you failed without good cause to do 
what we asked. Section 416.1411 explains the factors we will consider 
and how we will determine generally whether you have good cause for 
failure to cooperate. In addition, Sec. 416.918 discusses how we 
determine whether you have good cause for failing to attend a 
consultative examination.
    27. Section 416.990 is amended by revising paragraphs (b)(9) and 
(b)(10), adding paragraph (b)(11), and revising the first and second 
sentences of the definition of Permanent impairment in paragraph (c) to 
read as follows:


Sec. 416.990  When and how often we will conduct a continuing 
disability review.

* * * * *
    (b) * * *
    (9) Evidence we receive raises a question whether your disability 
or blindness continues;
    (10) You have been scheduled for a vocational reexamination diary 
review; or
    (11) By your first birthday, if you are a child whose low birth 
weight was a contributing factor material to our determination that you 
were disabled; i.e., whether we would have found you disabled if we had 
not considered your low birth weight.
    (c) * * *
    Permanent impairment--medical improvement not expected--refers to a 
case in which any medical improvement in a person's impairment(s) is 
not expected. This means an extremely severe condition determined on 
the basis of our experience in administering the disability programs to 
be at least static, but more likely to be progressively disabling 
either by itself or by reason of impairment complications, and unlikely 
to improve so as to permit the individual to engage in substantial 
gainful activity or, if you are a child, unlikely to improve to the 
point that you will no longer have marked and severe functional 
limitations. * * *
* * * * *
    28. Section 416.994a is amended by removing paragraphs (b)(4), 
(b)(5), (c)(4), (d) (f)(1), and (f)(2), redesignating paragraphs (e) 
through (i) as paragraphs (d) through (h), redesignating paragraphs 
(f)(3) and (f)(4) as paragraphs (e)(1) and (e)(2), adding paragraph 
(i), revising the section heading and paragraphs (a)(1), revising the 
first sentence of the introductory text to paragraph (b), adding two 
sentences between the first and second sentences of the introductory 
text to paragraph (b), revising paragraphs (b)(1) through (b)(3), 
adding one sentence between the first and second sentences of the 
introductory text to paragraph (c), revising the third and fourth 
sentences of redesignated paragraph (d), revising the introductory text 
to redesignated paragraph (e), revising paragraph (e)(1), revising the 
second sentence of the introductory text to redesignated paragraph (f), 
and revising paragraphs (f)(4) and (g)(5) to read as follows:


Sec. 416.994a  How we will determine whether your disability continues 
or ends, and whether you are and have been receiving treatment that is 
medically necessary and available, disabled children.

    (a) * * *
    (1) We will first consider whether there has been medical 
improvement in your impairment(s). We define ``medical improvement'' in 
paragraph (c) of this section. If there has been no medical 
improvement, we will find you are still disabled unless one of the 
exceptions in paragraphs (e) or (f) of this section applies. If there 
has been medical improvement, we will consider whether the 
impairments(s) you had at the time of our most recent favorable 
determination or decision now meets or medically or functionally equals 
the severity of the listing it met or equalled at that time. If so, we 
will find you are still disabled, unless one of the exceptions in 
paragraphs (e) or (f) of this section applies. If not, we will consider 
whether your current impairment(s) are disabling under the rules in 
Sec. 416.924. These steps are described in more detail in paragraph (b) 
of this section. Even where medical improvement or an exception 
applies, in most cases, we will find that your disability has ended 
only if we also find that you are not currently disabled.
* * * * *
    (b) Sequence of evaluation. To ensure that disability reviews are 
carried out in a uniform manner, that decisions of continuing 
disability can be made in the most expeditious and administratively 
efficient way, and that any decisions to stop disability benefits are 
made objectively, neutrally, and are fully documented, we follow 
specific steps in determining whether your disability continues. 
However, we may skip steps in the sequence if it is clear this would 
lead to a more prompt finding that your disability continues. For 
example, we might not consider the issue of medical improvement if it 
is obvious on the face of the evidence that a current impairment meets 
the severity of a listed impairment. * * *
    (1) Has there been medical improvement in your condition(s)? We 
will determine whether there has been medical improvement in the 
impairment(s) you had at the time of our most recent favorable 
determination or decision. (The term medical improvement is defined in 
paragraph (c) of this section.) If there has been no medical 
improvement, we will find that your disability continues, unless one of 
the exceptions to medical improvement described in paragraph (e) or (f) 
of this section applies.
    (i) If one of the first group of exceptions to medical improvement 
applies, we will proceed to step 3.
    (ii) If one of the second group of exceptions to medical 
improvement applies, we may find that your disability has ended.
    (2) Does your impairment(s) still meet or equal the severity of the 
listed impairment that it met or equaled before? If there has been 
medical improvement, we will consider whether the impairment(s) that we 
considered at the time of our most recent favorable determination or 
decision still meets or equals the severity of the listed impairment it 
met or equalled at that time. In making this decision, we will consider 
the current severity of the impairment(s) present and documented at the 
time of our most recent favorable determination or decision, and the 
same listing section used to make that

[[Page 6431]]

determination or decision as it was written at that time, even if it 
has since been revised or removed from the Listing of Impairments. If 
that impairment(s) does not still meet or equal the severity of that 
listed impairment, we will proceed to the next step. If that 
impairment(s) still meets or equals the severity of that listed 
impairment as it was written at that time, we will find that you are 
still disabled, unless one of the exceptions to medical improvement 
described in paragraphs (e) or (f) of this section applies.
    (i) If one of the first group of exceptions to medical improvement 
applies, we will proceed to step 3.
    (ii) If one of the second group of exceptions to medical 
improvement applies, we may find that your disability has ended.
    (3) Are you currently disabled? If there has been medical 
improvement in the impairment(s) that we considered at the time of our 
most recent favorable determination or decision, and if that 
impairment(s) no longer meets or equals the severity of the listed 
impairment that it met or equaled at that time, we will consider 
whether you are disabled under the rules in Secs. 416.924(c) and (d). 
In determining whether you are currently disabled, we will consider all 
impairments you now have, including you did not have at the time of our 
most recent favorable determination or decision, or that we did not 
consider at that time. The steps in determining current disability are 
summarized as follows:
    (i) Do you have a severe impairment or combination of impairment? 
If there has been medical improvement in your impairment(s), or if one 
of the first group of exceptions applies, we will determine whether 
your current impairment(s) is severe, as defined in Sec. 416.924(c). If 
your impairment(s) is not severe, we will find that your disability has 
ended. If your impairment(s) is severe, we will then consider whether 
it meets or medically equals the severity of a listed impairment.
    (ii) Does your impairment(s) meet or medically equal the severity 
of any impairment listed in appendix 1 of subpart P of part 404 of this 
chapter? If your current impairment(s) meets or medically equals the 
severity of any listed impairment, as described in Secs. 416.925 and 
416.926, we will find that your disability continues. If not, we will 
consider whether it functionally equals the severity of a listed 
impairment.
    (iii) Does your impairment(s) functionally equal the severity of 
any listed impairment? If your current impairment(s) functionally 
equals the severity of any listed impairment, as described in 
Sec. 416.926a, we will find that your disability continues. If not, we 
will find that your disability has ended.
    (c) * * * Although the decrease in severity may be of any quantity 
or degree, we will disregard minor changes in your signs, symptoms, and 
laboratory findings that obviously do not represent medical improvement 
and could not result in a finding that your disability has ended.
* * * * *
    (d) * * * If so, your benefits will continue unless one of the 
second group of exceptions applies (see paragraph (f) of this section). 
If not, we will determine whether an attempt should be made to 
reconstruct those portions of the missing file that were relevant to 
our most recent favorable determination or decision (e.g., school 
records, medical evidence from treating sources, and the results of 
consultative examination). * * *
    (e) First group of exceptions to medical improvement. The law 
provides certain limited situations when your disability can be found 
to have ended even though medical improvement has not occurred, if your 
impairment(s) no longer results in marked and severe functional 
limitations. These exceptions to medical improvement are intended to 
provide a way of finding that a person is no longer disabled in those 
situations where, even though there has been no decrease in severity of 
the impairment(s), evidence shows that the person should no longer be 
considered disabled or never should have been considered disabled. If 
one of these exceptions applies, we must also show that your 
impairment(s) does not now result in marked and severe functional 
limitations, before we can find you are no longer disabled, taking all 
your current impairments into account, not just those that existed at 
the time of our most recent favorable determination or decision. The 
evidence we gather will serve as the basis for the finding that an 
exception applies.
    (1) Substantial evidence shows that, based on new or improved 
diagnostic techniques or evaluations, your impairment(s) is not as 
disabling as it was considered to be at the time of the most recent 
favorable decision. Changing methodologies and advances in medical and 
other diagnostic techniques or evaluations have given rise to, and will 
continue to give rise to, improved methods for determining the causes 
of (i.e., diagnosing) and measuring and documenting the effects of 
various impairment on children and their functioning. Where, by such 
new or improved methods, substantial evidence shows that your 
impairment(s) is not as severe as was determined at the time of our 
most recent favorable decision, such evidence may serve as a basis for 
a finding that you are no longer disabled, provided that you do not 
currently have an impairment(s) that meets or equals the severity of 
any listed impairment, and therefore results in marked and severe 
functional limitations.
* * * * *
    (f) * * * In these situations, the determination or decision will 
be made without a finding that you have demonstrated medical 
improvement or that you are currently not disabled under the rules in 
Sec. 416.924. * * * 
    (4) You fail to follow prescribed treatment which would be expected 
to improve your impairment(s) so that it no longer results in marked 
and severe functional limitations. If treatment has been prescribed for 
you which would be expected to improve your impairment(s) so that it no 
longer results in marked and severe functional limitations, you must 
follow that treatment in order to be paid benefits.
    (g) * * * 
    (5) The first month in which you were told by your physician that 
you could return to normal activities, provided there is no substantial 
conflict between your physician's and your statements regarding your 
awareness of your capacity, and the earlier date is supported by 
substantial evidence; or
* * * * *
    (i) Requirement for treatment that is medically necessary and 
available. If you have a representative payee, the representative payee 
must, at the time of the continuing disability review, present evidence 
demonstrating that you are and have been receiving treatment, to the 
extent considered medically necessary and available, for the 
condition(s) that was the basis for providing you with SSI benefits, 
unless we determine that requiring your representative payee to provide 
such evidence would be inappropriate or unnecessary considering the 
nature of your impairment(s). If your representative payee refuses 
without good cause to comply with this requirement, and if we decide 
that it is in your best interests, we may pay your benefits to another 
representative payee or to you directly.
    (1) What we mean by treatment that is medically necessary. 
Treatment that is medically necessary means treatment that is expected 
to improve or restore

[[Page 6432]]

your functioning and that was prescribed by a treating source, as 
defined in Sec. 416.902. If you do not have a treating source, we will 
decide whether there is treatment that is medically necessary that 
could have been prescribed by a treating source. The treatment may 
include (but is not limited to)--
    (i) Medical management;
    (ii) Psychiatric, psychological, or psychosocial counseling;
    (iii) Physical therapy; and
    (iv) Home therapy, such as administering oxygen or giving 
injections.
    (2) How we will consider whether medically necessary treatment is 
available. When we decide whether medically necessary treatment is 
available, we will consider such things as (but not limited)--
    (i) The location of an institution or facility or place where 
treatment, services, or resources could be provided to you in 
relationship to where you reside;
    (ii) The availability and cost of transportation for you and your 
payee to the place of treatment;
    (iii) Your general health, including your ability to travel for the 
treatment;
    (iv) The capacity of an institution or facility to accept you for 
appropriate treatment;
    (v) The cost of any necessary medications or treatments that are 
not paid for by Medicaid or another insurer or source; and
    (vi) The availability of local community resources (e.g., clinics, 
charitable organizations, public assistance agencies) that would 
provide free treatment or funds to cover treatment.
    (3) When we will not require evidence of treatment that is 
medically necessary and available. We will not require your 
representative payee to present evidence that you are and have been 
receiving treatment if we find that the condition(s) that was the basis 
for providing you benefits is not amenable to treatment.
    (4) Removal of a payee who does not provide evidence that a child 
is and has been receiving treatment that is medically necessary and 
available. If your representative payee refuses without good cause to 
provide evidence that you are and have been receiving treatment that is 
medically necessary and available, we may, if it is in your best 
interests, suspend payment of benefits to the representative payee, and 
pay benefits to another payee or to you. When we decide whether your 
representative payee had good cause, we will consider factors such as 
the acceptable reasons for failure to follow prescribed treatment in 
Sec. 416.930(c) and other factors similar to those describing good 
cause for missing deadlines in Sec. 416.1411.
    (5) If you do not have a representative payee. If you do not have a 
representative payee and we make your payments directly to you, the 
provisions of this paragraph do not apply to you. However, we may still 
decide that you are failing to follow prescribed treatment under the 
provisions of Sec. 416.930, if the requirements of that section are 
met.
    29. Section 416.998 is revised to read as follows:


Sec. 416.998  If you become disabled by another impairment(s).

    If a new severe impairment(s) begins in or before the month in 
which your last impairment(s) ends, we will find that your disability 
is continuing. The new impairment(s) need not be expected to last 12 
months or to result in death, but it must be severe enough to keep you 
from doing substantial gainful activity, or severe enough so that you 
are still disabled under Sec. 416.994, or, if you are a child, to 
result in marked and severe functional limitations.

[FR Doc. 97-3317 Filed 2-10-97; 8:45 am]
BILLING CODE 4190-29-M