[Federal Register Volume 66, Number 249 (Friday, December 28, 2001)]
[Rules and Regulations]
[Pages 67370-67442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31567]



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Part II





Social Security Administration





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20 CFR Part 411



The Ticket to Work and Self-Sufficiency Program; Final Rule



Request for Public Suggestions on Ways to Support Youth With Disability 
in Transition to Adulthood; Notice

  Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / 
Rules and Regulations  

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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 411

RIN 0960-AF11


The Ticket to Work and Self-Sufficiency Program

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: We are publishing final regulations implementing the Ticket to 
Work and Self-Sufficiency Program (Ticket to Work program) authorized 
by the Ticket to Work and Work Incentives Improvement Act of 1999. The 
Ticket to Work program provides beneficiaries with disabilities with 
expanded options for access to employment services, vocational 
rehabilitation services, or other support services. We will pay the 
providers of those services after the beneficiaries achieve certain 
levels of work.

DATES: These regulations are effective January 28, 2002.

FOR FURTHER INFORMATION CONTACT: Georgia E. Myers, Regulations Officer, 
Social Security Administration, 6401 Security Boulevard, Baltimore, MD 
21235, E-mail to [email protected], or telephone (410) 965-3632 or 
TTY (410) 966-5609 for information about these regulations. For 
information on eligibility or filing for benefits, call our national 
toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our 
Internet Web site, SSA Online, at www.ssa.gov.

SUPPLEMENTARY INFORMATION:

Background

    The National Organization on Disability/Harris Survey of 1998 found 
that only 29 percent of individuals with disabilities were working 
full- or part-time. From calendar year 1986 to calendar year 1999, the 
number of individuals receiving disability benefits rose 80 percent, 
with about half receiving Social Security disability benefits and half 
Supplemental Security Income (SSI) benefits. Among the factors 
contributing to this increase were outreach efforts of the Social 
Security Administration (SSA) and the aging of the work force. The 
Federal government spent $51.3 billion on Social Security disability 
benefits in calendar year 1999, and $22.9 billion on SSI. Many States 
use State funds to supplement the benefits of SSI beneficiaries.
    According to the U.S. General Accounting Office, less than one 
percent of Social Security disability and SSI beneficiaries leave the 
Social Security and SSI rolls each year as a result of paid employment. 
Of those who leave, about one-third return within three years. If just 
one-half of one percent of the current Social Security disability and 
SSI beneficiaries were to cease receiving benefits as a result of 
engaging in self-supporting employment, savings in cash benefits would 
total $3.5 billion over the work-life of those individuals.
    These final regulations are intended to expand the options 
available for Social Security disability beneficiaries and disabled or 
blind SSI beneficiaries to access vocational rehabilitation (VR) 
services, employment services, and other support services that are 
necessary for such beneficiaries to obtain, regain or maintain 
employment that reduces their dependency on cash benefits. We expect 
that the expansion of these options and the creation of new work 
incentives in the Ticket to Work and Work Incentives Improvement Act of 
1999 (Public Law 106-170) will remove some of the disincentives that 
many beneficiaries with disabilities face when they attempt to work or, 
if already working, continue working or increase their work effort. If 
more beneficiaries with disabilities engage in self-supporting 
employment, the net result will be a reduction in the Social Security 
and SSI disability rolls and savings to the Social Security Trust Fund 
and general revenues.

Ticket to Work and Work Incentives Improvement Act of 1999

    On December 17, 1999, the Ticket to Work and Work Incentives 
Improvement Act of 1999 (Public Law 106-170) became law.
    In section 2(b) of Public Law 106-170, the Congress states that 
this legislation has the following four basic purposes:

--To provide health care and employment preparation and placement 
services to individuals with disabilities that will enable those 
individuals to reduce their dependence on cash benefit programs.
--To encourage States to adopt the option of allowing individuals with 
disabilities to purchase Medicaid coverage that is necessary to enable 
such individuals to maintain employment.
--To provide individuals with disabilities the option of maintaining 
Medicare coverage while working.
--To establish a ``Ticket to Work and Self-Sufficiency Program'' that 
allows Social Security disability and disabled or blind SSI 
beneficiaries to seek the employment services, vocational 
rehabilitation services, and other support services needed to obtain, 
regain, or maintain employment and reduce their dependence on cash 
benefit programs.

    Section 101(a) of Public Law 106-170 amended Part A of title XI of 
the Social Security Act (the Act) by adding a new section 1148, The 
Ticket to Work and Self-Sufficiency Program (Ticket to Work program). 
The purpose of the Ticket to Work program is to expand the universe of 
service providers available to beneficiaries with disabilities who are 
seeking employment services, vocational rehabilitation services, and 
other support services to assist them in obtaining, regaining and 
maintaining self-supporting employment.
    The Social Security Administration is required to develop the 
regulations necessary to implement section 1148 of the Act, as well as 
certain other amendments to the Act made by Public Law 106-170, and to 
provide details regarding the Ticket to Work program. Section 101(e) of 
Public Law 106-170 requires the Commissioner of Social Security (the 
Commissioner) to prescribe such regulations as are necessary to 
implement the amendments made by section 101. We are prescribing these 
regulations to address a number of areas where specific policy 
decisions were left to the discretion of the Commissioner.
    Under the Ticket to Work program, the Commissioner may issue 
tickets to Social Security disability beneficiaries and disabled and 
blind SSI beneficiaries. Each beneficiary will have the option of using 
his or her ticket to obtain services from a provider known as an 
employment network (EN). The beneficiary will choose the EN, and the EN 
will provide employment services, vocational rehabilitation services, 
and other support services to assist the beneficiary in obtaining, 
regaining and maintaining self-supporting employment. ENs will also be 
able to choose whom they serve. Beneficiaries issued a ticket also will 
have the option of taking the ticket to their State vocational 
rehabilitation agency for services.
    The Commissioner's intent in publishing these final regulations for 
the Ticket to Work program is to allow service providers that have 
traditionally provided employment services, vocational rehabilitation 
services and other support services, as well as other types of 
entities, to qualify as ENs and serve beneficiaries with disabilities 
under the program. The expansion of options available to obtain these 
services will provide beneficiaries with real choices in getting the 
services they

[[Page 67371]]

need to obtain, regain, or maintain employment.

Public Education Forums and Conferences

    Immediately following passage of Public Law 106-170, we began 
working with the U.S. Departments of Health and Human Services, 
Education, and Labor, as well as the Presidential Task Force on the 
Employment of Adults with Disabilities, the President's Committee on 
Employment of People with Disabilities, and the National Council on 
Disability. These Federal partners joined together to plan and conduct 
a series of public education forums. The purpose of the forums was to 
increase the awareness of public disability programs and programs 
designed to help individuals with disabilities start or return to work 
among individuals with disabilities, their families and 
representatives, service providers, advocates and State agencies. The 
forums focused on Federal and State employment-related policies and 
programs for people with disabilities.
    Forums were held in eleven major cities across the country. Those 
cities were Baltimore, Maryland (December 12, 1999); Kansas City, 
Missouri (February 2, 2000); Durham, North Carolina (March 9, 2000); 
Phoenix, Arizona (March 30, 2000); New York, New York (April 6, 2000); 
Austin, Texas (May 17, 2000); Seattle, Washington (June 13, 2000); 
Worcester, Massachusetts (June 26, 2000); Chicago, Illinois (August 1, 
2000); Harrisburg, Pennsylvania (August 15, 2000); and Denver, Colorado 
(September 13-14, 2000).
    Representatives from many national and community-based 
organizations participated in these forums, including the SSI 
Coalition, Virginia Commonwealth University, Disability Rights 
Education and Defense Fund, the National Brain Injury Association, 
Consortium for Citizens with Disabilities, Robert Wood Johnson 
Foundation, National Council on Independent Living, Capstone Group, as 
well as State representatives from the Developmental Disabilities 
Councils, the State Independent Living Councils, and the Governors' 
Committees on Employment of People with Disabilities.
    The forums provided participants with both information and an 
opportunity for discussion. Topics included: SSA customer services and 
work incentives; State health care systems and models; and employment 
initiatives of the Departments of Education, Labor, and Health and 
Human Services.
    The forums were also used as an opportunity to share information 
about Public Law 106-170 and conduct exploratory discussions about 
policy issues relating to the implementation of the provisions in the 
legislation that were left to the Commissioner to interpret. New models 
where State and local systems are working together to serve their 
common customers with disabilities were highlighted.
    SSA representatives were also involved in meetings and conferences 
on the national, regional, State, and local levels. These included SSA-
sponsored forums in Chicago, San Francisco, Dallas, Denver, and 
Philadelphia conducted in January and February 2000, which focused on 
the Ticket to Work program. At these meetings and conferences, SSA 
representatives made presentations on Public Law 106-170, facilitating 
discussion and obtaining recommendations that were considered in 
developing the provisions of the Ticket to Work program that were 
addressed in our proposed rules.

SSA's Programs for Rehabilitation Services Prior to Implementation 
of the Ticket to Work Program

    In titles II and XVI of the Social Security Act, Congress provided 
that we promptly refer individuals applying for or determined eligible 
for Social Security disability benefits or SSI benefits based on 
disability or blindness to State vocational rehabilitation (VR) 
agencies for necessary rehabilitation services. Under the statute and 
by regulations, if a State VR agency does not serve a beneficiary whom 
we referred, we may use other public or private agencies, 
organizations, institutions or individuals to provide services. Under 
our regulations, these other providers of services are known as 
alternate participants. We are authorized under the Act to pay State VR 
agencies and alternate participants for the reasonable and necessary 
costs of services provided to Social Security disability beneficiaries 
and disabled and blind SSI beneficiaries under specific circumstances. 
The most frequent circumstance permitting payment under the Act is when 
the services provided result in the beneficiary performing substantial 
gainful activity (SGA) for a period of at least nine continuous months. 
These programs for referral and reimbursement for VR services are 
provided for in sections 222(a) and (d) and sections 1615(a), (d), and 
(e) of the Act.
    Section 101(b) of Public Law 106-170 makes a number of conforming 
amendments to the Act, which require amendments to existing regulations 
that implement these statutory provisions. As we gradually implement 
the Ticket to Work program in States selected by the Commissioner, the 
provisions of the Act for referring beneficiaries to State VR agencies 
will cease to be in effect in those States as provided in sections 
101(b), (c) and (d) of Public Law 106-170. Additionally, the use of 
alternate participants under the title II and title XVI vocational 
rehabilitation reimbursement programs will be phased out in the States 
as the Ticket to Work program is implemented, as authorized under 
section 101(d)(5) of Public Law 106-170.
    Section 101(b) of Public Law 106-170 also repealed sections 222(b) 
and 1615(c) of the Act, under which the Commissioner was authorized to 
impose sanctions (i.e. make deductions from Social Security disability 
benefits or suspend SSI benefits) with respect to any beneficiary who 
refused, without good cause, to accept rehabilitation services made 
available by a State VR agency or an alternate participant.
    The proposed rules to implement these statutory changes will be 
published in the Federal Register at a later date.
    Section 101(b) of Public Law 106-170 also amends sections 225(b) 
and 1631(a)(6) of the Act under which SSA is authorized to continue 
disability or blindness benefit payments to individuals who recover 
medically while participating in a program of vocational rehabilitation 
services approved by the Commissioner if the Commissioner determines 
that continuation in or completion of the program will increase the 
likelihood that the individual will be permanently removed from the 
disability or blindness benefit rolls. Section 101(b) of Public Law 
106-170 amends these sections of the Act by striking ``a program of 
vocational rehabilitation services'' and inserting ``a program 
consisting of the Ticket to Work and Self-Sufficiency Program under 
section 1148 or another program of vocational rehabilitation services, 
employment services, or other support services''. The proposed rules to 
implement this expanded definition will be published in the Federal 
Register at a later date.
    We will also publish at a later date in the Federal Register the 
rules for implementing section 112 of Public Law 106-170, Expedited 
Reinstatement of Disability Benefits.

General Goals of the Ticket to Work Program

    The Ticket to Work program will enhance the range of choices 
available

[[Page 67372]]

to Social Security disability and disabled and blind SSI beneficiaries 
when they are seeking employment services, VR services and other 
support services to obtain, regain or maintain self-supporting 
employment. The coordinated and interrelated public policy embodied in 
various provisions of Public Law 106-170 will remove several 
disincentives to employment faced by beneficiaries with disabilities. 
The Ticket to Work program will increase beneficiaries' access to 
public and private providers to obtain employment services, VR 
services, and other support services. As a result, the Ticket to Work 
program, together with other provisions of Public Law 106-170, should 
increase the number of beneficiaries who increase their work effort and 
leave the Social Security or SSI disability rolls due to income from 
employment.
    In addition to providing the increased opportunity for these 
beneficiaries to obtain services when they seek employment, Public Law 
106-170 may result in substantial savings for the Federal government 
and State governments. Not only should there be an increase in the 
number of beneficiaries leaving the Social Security and SSI disability 
rolls due to work or earnings, some individuals will secure work with 
employers who offer group health coverage, thereby reducing Medicaid 
and Medicare expenses. Earned income should also yield tax receipts 
while reducing expenses in Social Security disability and disabled and 
blind SSI benefits, food stamps, HUD housing rent subsidies, and 
certain veterans benefits. Improved employment rates of individuals 
with disabilities should increase the independence of such individuals 
and strengthen our communities and workforce.

Ticket to Work Program

    Section 1148 of the Act, which was added by section 101(a) of 
Public Law 106-170, directs the Commissioner of Social Security to 
establish a Ticket to Work and Self-Sufficiency Program. Section 
1148(b) of the Act authorizes the Commissioner to issue a ticket to 
disabled beneficiaries. Beneficiaries may choose among public or 
private service providers that have been approved by SSA to function as 
ENs under the program to obtain employment services, vocational 
rehabilitation services, or other support services to assist them in 
obtaining, regaining or maintaining employment that will reduce their 
dependence on cash benefits. Beneficiaries will also have the option of 
choosing to obtain services from their State VR agency. The overall 
purpose of the Ticket to Work program is to expand the universe of 
options available to beneficiaries with disabilities for obtaining such 
services.
    Section 101(d) of Public Law 106-170 requires the Commissioner to 
implement the Ticket to Work program in graduated phases at phase-in 
sites selected by the Commissioner. This is to permit a thorough 
evaluation of the program and ensure that the most effective methods 
are in place for full implementation of the program. This section also 
provides that the Ticket to Work program should be available in every 
State not later than 2004.
    SSA has decided that the Ticket to Work program will be implemented 
in the following manner:
    During Phase I of the Ticket to Work program, we will distribute 
tickets to eligible beneficiaries in the following States: Arizona, 
Colorado, Delaware, Florida, Illinois, Iowa, Massachusetts, New York, 
Oklahoma, Oregon, South Carolina, Vermont and Wisconsin. We intend to 
implement this phase upon the effective date of these regulations.
    During Phase II of the Ticket to Work program, we will distribute 
tickets to eligible beneficiaries in the following States: Alaska, 
Arkansas, Connecticut, Georgia, Indiana, Kansas, Kentucky, Louisiana, 
Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New 
Jersey, New Mexico, North Dakota, South Dakota, Tennessee, Virginia and 
in the District of Columbia. We intend to implement this phase in 
calendar year 2002.
    During Phase III of the Ticket to Work program, we will distribute 
tickets to eligible beneficiaries in the following States: Alabama, 
California, Hawaii, Idaho, Maine, Maryland, Minnesota, Nebraska, North 
Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Utah, Washington, 
West Virginia, Wyoming, as well as in American Samoa, Guam, the 
Northern Mariana Islands, Puerto Rico and the Virgin Islands. We intend 
to implement this phase in calendar year 2003.
    Section 1148(d)(1) of the Act authorizes the Commissioner to 
conduct a competitive bidding process and enter into an agreement with 
one or more organizations to serve as a Program Manager (PM) to assist 
SSA in administering the Ticket to Work program.
    The PM will recruit and recommend for selection by the Commissioner 
ENs for service under the program; monitor all ENs serving in the 
geographic areas covered under the PM's agreement to ensure that 
adequate choices of services are made available to beneficiaries; 
assure that payment by the Commissioner to ENs is warranted; facilitate 
access by beneficiaries to ENs; ensure the availability of adequate 
services; and ensure that sufficient ENs are available and that each 
beneficiary under the program has reasonable access to employment 
services, vocational rehabilitation services, and other support 
services.
    Section 1148(d)(4) of the Act directs the Commissioner to select 
and enter into agreements with service providers that are willing to 
function as ENs and assume responsibility for the coordination and 
delivery of employment services, vocational rehabilitation services, 
and other support services to beneficiaries with disabilities under the 
Ticket to Work program. A beneficiary with a ticket may assign his or 
her ticket to any provider that is serving as an EN under the Ticket to 
Work program and is willing to accept the assignment. Beneficiaries who 
are issued a ticket also will have the option of taking the ticket to 
their State VR agency for services.
    Section 101(e) of Public Law 106-170 requires the Commissioner to 
prescribe such regulations as are necessary to implement the amendments 
made by section 101 of this legislation. These final regulations 
address those areas which must be regulated in order to implement the 
Ticket to Work program. Additional regulations necessary for the 
ongoing implementation of the program will be published as proposed 
rules in the Federal Register at a later date. For example, proposed 
performance measures to be used in conducting periodic reviews as 
necessary to provide for effective quality assurance in the provision 
of services by ENs will need to be developed and published in the 
Federal Register for comment.

Notice of Proposed Rulemaking

    We published a Notice of Proposed Rulemaking (NPRM) in the Federal 
Register on December 28, 2000 (65 FR 82844) proposing rules to 
implement the Ticket to Work program. We provided the public 60 days to 
submit comments. The comment period closed February 26, 2001. We 
received comments from over 400 commenters. We discuss the comments we 
received on the NPRM and provide our responses to the comments later in 
this preamble under ``Public Comments on the Notice of Proposed 
Rulemaking.'' A summary of the public comments is available on the 
Internet at the SSA Office of Employment Support Programs' Work Site at 
http://www.ssa.gov/work.

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    As we explain below, in these final regulations, we are making a 
number of changes from the proposed rules in response to public 
comments. As suggested in a number of these comments, we are also 
making other changes in the interest of improved clarity, consistency, 
and improved organization.

Final Regulations

    We are adding a new part 411 to chapter III of title 20 of the Code 
of Federal Regulations to provide the regulations for the Ticket to 
Work program. The new part 411 is divided into the following subparts.

Subpart A--Introduction

    Subpart A of these regulations provides an introduction to the 
regulations in the new part 411. Section 411.100 provides an overview 
of the regulations in part 411. Section 411.105 describes the purpose 
of the Ticket to Work program. Section 411.110 explains that the Ticket 
to Work program will be implemented in graduated phases in sites around 
the country as required by section 101(d) of Public Law 106-170. 
Section 411.115 provides definitions of terms used in part 411. In the 
final rules, we have reorganized the definitions of terms in 
Sec. 411.115 to place the terms in alphabetical order. In final 
Sec. 411.115(m) (proposed Sec. 411.115(i)), we have clarified the 
definition of State vocational rehabilitation agency to indicate that 
in those States that have one agency that provides VR services to non-
blind individuals and another agency that provides services to blind 
individuals, the term ``state vocational rehabilitation agency'' or 
``state VR agency'' refers to either State agency. In addition, we have 
expanded Sec. 411.115 in the final rules to provide definitions of the 
terms ``employment network'' or ``EN,'' ``individual work plan'' or 
``IWP,'' ``individualized plan for employment'' or ``IPE,'' ``program 
manager'' or ``PM,'' and ``ticket.''

Subpart B--Tickets Under the Ticket to Work Program

    Subpart B of these regulations describes what a ticket is and 
explains who is eligible to receive a ticket.
    Section 411.120 explains that a ticket is a document that provides 
evidence of the Commissioner's agreement to pay an EN or State VR 
agency to which a beneficiary's ticket is assigned for providing 
services to the beneficiary under the Ticket to Work program if certain 
conditions are met. As required by section 101(e)(2)(B) of Public Law 
No. 106-170, we have added a complete description of the format and the 
wording of the ticket to this section.
    Section 411.125 states the following requirements, among others, 
for eligibility to receive a ticket: a title II beneficiary must be age 
18 to 64, and a title XVI beneficiary must be age 18 to 64 and be 
eligible for disability payments under the disability standard for 
adults; a beneficiary must be in current pay status for monthly cash 
benefits based on disability under title II of the Act or monthly 
Federal cash benefits based on disability or blindness under title XVI 
of the Act; and a beneficiary's case must either (1) have a permanent 
impairment or a nonpermanent impairment (i.e. an impairment for which 
medical improvement is possible but cannot be predicted), or (2) have 
an impairment that is expected to improve and have undergone at least 
one continuing disability review (CDR).
    In developing requirements for ticket eligibility under these 
regulations, we considered, but decided not to extend eligibility for a 
ticket to three additional groups of individuals.
    The first group consists of beneficiaries who have impairments that 
are expected to improve and for whom we have not yet conducted at least 
one continuing disability review. Because these beneficiaries have 
conditions that are expected to medically improve in a relatively short 
period of time, they could be expected to return to work without the 
need for services under the Ticket to Work program. Continuing 
disability reviews for this category of beneficiaries are scheduled for 
6-18 months after the initial disability determination. Under these 
rules, if we determine in the first continuing disability review that 
the beneficiary remains disabled, we would then issue a ticket, 
provided that the beneficiary met the other ticket eligibility 
criteria. This approach would ensure that beneficiaries whose 
conditions do not improve as anticipated have the opportunity to 
benefit from services under the Ticket to Work program within a 
relatively short period of time after the initial determination.
    The second group consists of individuals who have not attained age 
18. Beneficiaries in this group generally are in school, still pursuing 
completion of their formal elementary and secondary education. For this 
group, participation in an employment plan under the Ticket to Work 
program could interfere with their pursuit of an education, completion 
of which many believe should be the primary focus and goal for school-
age youth.
    The third group consists of those who received title XVI payments 
prior to attaining age 18 (i.e. under the disability standard for 
children) and have since attained age 18, but for whom we have not yet 
conducted a redetermination of their eligibility under the disability 
standard for adults. Because ongoing eligibility has not yet been 
determined for these beneficiaries, we believe that it is premature to 
issue a ticket to them immediately. Under the final rules, if we 
establish in the redetermination that a beneficiary in this group is 
eligible for disability payments under the disability standard for 
adults, we would then issue a ticket, provided that the beneficiary met 
the other ticket eligibility criteria.
    We plan to review periodically our policy regarding ticket 
eligibility, including whether it would be prudent to extend 
eligibility to the groups discussed above. In addition, we are 
interested in exploring various approaches to assist youth under age 18 
to transition to independence, further education, and careers in the 
workforce. Therefore, we are publishing a Notice elsewhere in today's 
Federal Register in which we are seeking suggestions from the public to 
assist us in designing for beneficiaries in the second and third groups 
an approach that could complement the Ticket to Work program.
    In response to public comments, in these final rules we have added 
Sec. 411.125(c) to explicitly state that individuals whose entitlement 
to title II benefits based on disability is reinstated under section 
223(i) of the Act, or whose eligibility for title XVI benefits based on 
disability or blindness is reinstated under section 1631(p) of the Act, 
will be eligible to receive another ticket in the first month he or she 
is entitled to reinstated benefits, as long as the beneficiary meets 
certain other requirements for eligibility for a ticket. Sections 
223(i) and 1631(p) of the Act were added by section 112 of Public Law 
106-170.
    Section 411.130 explains that SSA will distribute tickets in 
graduated phases.
    Section 411.135 explains that participation in the Ticket to Work 
program is voluntary. This section explains that if beneficiaries want 
to participate in the program, they may take their tickets to any 
entity serving under the program.
    Section 411.140 explains that a beneficiary may assign his or her 
ticket to any EN or State VR agency that is willing to provide 
services, and that the

[[Page 67374]]

beneficiary may discuss his or her rehabilitation and employment plans 
with as many entities as he or she wishes. This section explains that 
the beneficiary can obtain a list of the approved ENs in his or her 
area. This section also explains certain requirements that must be met 
in order for a beneficiary to assign a ticket. Section 411.140 provides 
that an individual will be eligible to assign a ticket to an EN or 
State VR agency only during a month in which the individual meets the 
requirements of Sec. 411.125(a)(1) and (a)(2). In general, this means 
the individual must be age 18-64 and must be either a title II 
disability beneficiary in current pay status who is not receiving 
benefit payments under 20 CFR 404.316(c), 404.337(c), 404.352(d) or 
404.1597a, or a title XVI disability beneficiary whose Federal SSI cash 
benefits are not suspended and who is not receiving disability or 
blindness benefit payments under 20 CFR 416.996 or 416.1338.
    Section 411.140 also provides that beneficiaries and ENs must agree 
to and sign an individual work plan (IWP) (or, in the case of a State 
VR agency, an individualized plan for employment (IPE)) before a ticket 
can be assigned. In response to public comments, in these final rules 
we are revising Sec. 411.140(a) to indicate that individuals may assign 
their ticket to a State VR agency if they are eligible to receive VR 
services according to 34 CFR 361.42. We are making a similar change to 
Sec. 411.150 regarding reassignment of a ticket to a State VR agency. 
Also in response to comments, we are revising Secs. 411.140 and 411.150 
to indicate that a representative of the State VR agency must agree to 
and sign the IPE. We also have modified Secs. 411.140 and 411.150 of 
the final rules to provide that in order for a ticket to be assigned or 
reassigned to a State VR agency, the beneficiary and a representative 
of the State VR agency must agree to and sign both an IPE and a form 
that provides the information described in Sec. 411.385(a)(1), (2) and 
(3) of these final regulations.
    We are also making changes to Sec. 411.140(d) and (e) and 
Sec. 411.150(b) and (c) in these final rules to clarify that a copy of 
the signed IWP developed by the beneficiary and the EN, or the 
completed and signed form required for assignment or reassignment of a 
ticket to a State VR agency under Sec. 411.385(a) and (b), must be 
submitted to and received by the PM in order for a ticket to be 
assigned or reassigned to the EN or State VR agency. If the IWP or 
required form has been submitted to and received by the PM, and if the 
other requirements for assignment or reassignment of a ticket are met, 
we will consider the ticket assigned or reassigned to the EN or State 
VR agency, effective as of the first day on which such other 
requirements are satisfied.
    Section 411.145 describes the conditions under which a beneficiary 
may take a ticket back after it has been assigned to an EN or State VR 
agency. It also describes other conditions under which a ticket that is 
assigned can be taken out of assignment. In response to public 
comments, we are revising Sec. 411.145(b) to state that a State VR 
agency may ask the PM to take a ticket out of assignment if the State 
VR agency stops providing services because the individual has been 
determined to be ineligible for VR services under 34 CFR 361.42, and to 
provide a cross-reference to the reassignment rules in Sec. 411.150.
    Section 411.150 explains the beneficiary's right to reassign a 
ticket, if the beneficiary chooses. In response to public comments, we 
have revised Sec. 411.150(b) to state that the beneficiary and a 
representative of the State VR agency must agree to and sign an 
Individualized Plan for Employment if the beneficiary wishes to 
reassign his or her ticket to a State VR agency. Also, as discussed 
above, we have modified this provision in the final rules to provide 
that in order for a ticket to be reassigned to a State VR agency, the 
beneficiary and a representative of the State VR agency must agree to 
and sign both an IPE and a form that provides the information described 
in Sec. 411.385(a)(1), (2) and (3). We also are modifying 
Sec. 411.150(b) to clarify that one of the conditions for reassigning a 
ticket is that the ticket must be unassigned. We explain that if the 
ticket currently is assigned to an EN or State VR agency, the 
beneficiary must first tell the PM in writing that he or she wants to 
take the ticket out of assignment as provided under Sec. 411.145. In 
addition, as written, proposed Sec. 411.150(b)(2) potentially could 
have prevented certain individuals who were working with ENs or State 
VR agencies from reassigning their ticket, thus unnecessarily limiting 
their ability to take full advantage of the provisions of the Ticket to 
Work program.
    Accordingly, we have modified the requirements in Sec. 411.150(b) 
to provide exceptions to the general rule that in order to reassign a 
ticket, an individual must be age 18-64 and either a title II 
disability beneficiary in current pay status or a title XVI disability 
beneficiary whose Federal SSI cash benefits are not suspended. Final 
Sec. 411.150(b)(3) provides that an individual does not have to satisfy 
these requirements if the individual and a representative of the new EN 
sign an IWP, or if the individual and a representative of the State VR 
agency sign both an IPE and the required form, within certain time 
periods. The time periods begin from the effective date on which the 
ticket was no longer assigned to the previous EN or State VR agency. 
The applicable time period depends on whether the individual's ticket 
is or is not in use under the rules in Sec. 411.170 et seq. For an 
individual whose ticket is not in use, the specified time period is 30 
days from the effective date the ticket no longer was assigned to the 
previous EN or State VR agency. For an individual whose ticket is in 
use, the specified time period is the three-month period that begins 
with the first month the ticket no longer was assigned to the previous 
EN or State VR agency. This three-month period is the extension period 
described in Sec. 411.220.
    The requirements that an individual be age 18-64 and be either a 
title II disability beneficiary in current pay status or a title XVI 
disability beneficiary whose Federal SSI cash benefits are not 
suspended are two of the basic requirements specified in 
Sec. 411.125(a)(1) and (2) which an individual must meet in order to be 
eligible to receive a ticket under that section. In these final rules, 
an individual must meet these same requirements in order to be eligible 
to reassign a ticket under Sec. 411.150, unless one of the conditions 
specified in Sec. 411.150(b)(3) is met.
    In addition, final Sec. 411.150(a) provides that an individual will 
not be eligible to reassign a ticket if he or she is receiving title II 
disability benefits under 20 CFR 404.316(c), 404.337(c), 404.352(d) or 
404.1597a, or is receiving title XVI disability or blindness benefit 
payments under 20 CFR 416.996 or 416.1338. This rule was reflected in 
proposed Sec. 411.150(b)(2). We are retaining this rule in final 
Sec. 411.150(a). This rule applies regardless of whether one of the 
conditions specified in Sec. 411.150(b)(3) is met.
    Other changes which we are making in final Sec. 411.150(b) and (c) 
are explained above in our discussion of the revisions to Sec. 411.140. 
Because of these changes, proposed Sec. 411.150(d) is deleted in these 
final rules.
    Section 411.155 explains when a beneficiary's ticket terminates and 
eligibility for participation in the Ticket to Work program ends. Once 
a ticket terminates, a beneficiary may not assign or reassign it to an 
EN or State VR agency. Under these regulations, a ticket will terminate 
when: (1) entitlement to Social Security disability benefits ends for 
reasons other than the individual's

[[Page 67375]]

work activity or earnings, or when eligibility for SSI benefits based 
on disability or blindness terminates for reasons other than the 
individual's work activity or earnings, whichever is later; (2) a 
Social Security disabled widow(er) beneficiary attains age 65; or (3) a 
disabled or blind SSI beneficiary reaches age 65 and may qualify for 
SSI benefits based on age.
    In order to provide clarity regarding all of the circumstances 
under which a ticket will terminate and an individual's eligibility for 
participation in the Ticket to Work program ends, we also are expanding 
Sec. 411.155 to add a description of the events that terminate the 
ticket after the beneficiary's entitlement to title II benefits based 
on disability or eligibility for title XVI benefits based on disability 
or blindness terminated because of work or earnings. After such 
termination of entitlement or eligibility (and, in the case of a 
concurrent title II/title XVI disability beneficiary, the termination 
of entitlement/eligibility under the other program), a ticket will 
terminate in any of the following months: (1) the month we make a final 
determination or decision that an individual is not entitled to have 
title II benefits based on disability reinstated under section 223(i) 
of the Act or not eligible to have title XVI benefits based on 
disability or blindness reinstated under section 1631(p) of the Act; 
(2) the month in which we make a final determination or decision that 
an individual is not entitled to title II benefits based on disability 
or eligible for title XVI benefits based on disability or blindness 
based on the filing of an application for benefits; (3) the month in 
which a beneficiary reaches retirement age (as defined in section 
216(l) of the Act); (4) the month in which the beneficiary dies; (5) 
the month in which a beneficiary becomes entitled to a title II benefit 
that is not based on disability or eligible for a title XVI benefit 
that is not based on disability or blindness; and (6) the month in 
which the beneficiary again becomes entitled to title II benefits based 
on disability, or eligible for title XVI benefits based on disability 
or blindness, based on filing a new application.
    In addition, consistent with the modification to Sec. 411.125, we 
are modifying Sec. 411.155 to indicate that when a beneficiary is 
eligible to receive another ticket as a result of benefit reinstatement 
under section 223(i) or 1631(p) of the Act, the ticket that the 
beneficiary received in connection with the previous period of 
entitlement or eligibility will terminate in the month the beneficiary 
is eligible for the new ticket.
    We have deleted reference to payment of 60 outcome payments to an 
EN that was described in proposed Sec. 411.155(d), since this event 
properly refers to the period of using a ticket (see Sec. 411.171(d) 
and (e)).

Subpart C--Suspension of Continuing Disability Reviews for 
Beneficiaries Who Are Using a Ticket

    Under section 221(i) of the Act and under the authority granted by 
sections 1631 and 1633 of the Act, we conduct periodic reviews to 
ensure that beneficiaries continue to meet the definition of disability 
under sections 223(d) and 1614(a) of the Act. These reviews are called 
continuing disability reviews (CDRs). Public Law 106-170 amends the Act 
to add section 1148(i), which states that SSA may not initiate a CDR 
during any period in which a beneficiary is using a ticket. The statute 
states:
    ``During any period for which an individual is using, as defined by 
the Commissioner, a ticket to work and self-sufficiency issued under 
this section, the Commissioner (and any applicable State agency) may 
not initiate a continuing disability review or other review under 
section 221 of whether the individual is or is not under a disability 
or a review under title XVI similar to any such review under section 
221.''
    The definition of using a ticket is to be determined by the 
Commissioner of Social Security. Subpart C outlines our definition of 
using a ticket.
    In developing our definition of using a ticket, we considered two 
key factors. First, the intent of the Ticket to Work program is to 
allow beneficiaries with disabilities to seek the services they need to 
work and to reduce or eliminate dependence on Social Security 
disability and SSI benefits. However, anecdotal evidence suggests that 
some beneficiaries are afraid that working, or even receiving 
vocational rehabilitation services, may increase the likelihood that 
their benefits will be terminated by a CDR. Therefore, using a ticket 
should be defined in a way that minimizes this employment disincentive 
for beneficiaries participating in the Ticket to Work program. In order 
to maintain the integrity of the disability programs, it is also 
important that beneficiaries who have medically improved and who no 
longer meet the definition of disability under sections 223(d) and 
1614(a)(3) of the Act do not continue to receive disability benefits 
for an undue length of time.
    Our definition seeks to balance these concerns by ensuring that 
CDRs are suspended only during the period in which beneficiaries are 
making timely progress toward reducing or eliminating dependence on 
Social Security disability or SSI benefits, while at the same time 
recognizing that progress toward that goal may not always be rapid or 
continuous.
    Under our definition of using a ticket, a beneficiary will be 
considered to be using a ticket during the period in which he or she 
was making progress toward the goal of reducing or eliminating 
dependence on disability benefits within reasonable time frames. Under 
this approach, beneficiaries will be allowed a limited period to 
prepare for work. At the end of this period, they will need to show 
that they were progressing toward self-sufficiency by demonstrating 
increasing levels of employment.
    An important advantage of this definition of using a ticket is that 
it increases employment incentives by ``rewarding'' beneficiaries who 
work and progress toward self-sufficiency with continued suspension of 
CDRs. However, requiring beneficiaries to demonstrate increasing levels 
of employment within a defined time frame results in a fairly complex 
regulation. The complexity arises from our attempt to balance the 
concerns discussed above and, to the extent possible, to accommodate 
the diverse employment needs of a wide range of beneficiaries. While 
some level of complexity is unavoidable, we have attempted wherever 
possible to simplify the regulation and to make it straightforward to 
implement.
    Based on the comments that we received regarding the complexity and 
difficulty of this subpart, we are revising and reorganizing the 
content to increase clarity wherever possible.
    Sections 411.160 and 411.165 introduce this subpart. In response to 
a comment on proposed Sec. 411.160 noting a confusion in the use of the 
term ``continuing disability review'' for both medical and work 
reviews, we are clarifying the language in paragraph (b) to reference 
our rules on when we may conduct a CDR to determine whether an 
individual remains eligible for disability-based benefits. In response 
to recommendations that we clarify proposed Sec. 411.165 to explain 
when the period of using a ticket begins and ends, we are expanding 
Sec. 411.165 to include cross-references to Secs. 411.170 and 411.171.
    We are adding Sec. 411.166 in response to comments on our proposed 
rules regarding the use of new terms. This

[[Page 67376]]

section provides a glossary of the following terms: ``active 
participation in your employment plan,'' ``extension period,'' 
``inactive status,'' ``initial 24-month period,'' ``progress review,'' 
``timely progress guidelines,'' ``12-month progress review period,'' 
and ``using a ticket.''
    In our proposed rules, we used the terms ``work review'' or ``work 
review period'' when referring to the requirements for making timely 
progress toward self-supporting employment. In response to comments 
that these terms caused confusion with existing terms used to describe 
``work CDR,'' we are now referring to ``progress review'' or ``progress 
review period,'' which are included in the glossary of terms in 
Sec. 411.166.
    Sections 411.170 and 411.171 describe when the period of using a 
ticket begins and ends. The period of using a ticket begins when the 
ticket is first assigned to an EN or State VR agency. The primary 
purpose of the suspension of CDRs is to ensure that Ticket to Work 
program participants are not inhibited in their attempts to work or 
pursue an employment plan by the fear that such activities will 
increase the likelihood that their benefits will be terminated in a 
medical review. Prior to the assignment of the ticket, a beneficiary is 
not participating in these activities under the Ticket to Work program.
    We are revising Sec. 411.171 to clarify that the period of using a 
ticket ends with the earliest of the following (1) the occurrence of 
one of the events listed in Sec. 411.155, which describes the events 
that will result in termination of the ticket; (2) when the beneficiary 
is determined to be no longer making timely progress toward self-
supporting employment according to our guidelines (see Secs. 411.180 
through 411.200); (3) when the extension period expires if the 
beneficiary has not reassigned the ticket within the period; or (4) 
when we have made 60 outcome payments to an EN, including a State VR 
agency functioning as an EN, under subpart H. In instances where the 
beneficiary assigned a ticket to a State VR agency which selected the 
cost reimbursement payment system, the period of using a ticket also 
will end with the 60th month for which an outcome payment would have 
been made had the State VR agency chosen to function as an EN with 
respect to the beneficiary.
    Section 411.175 describes our rules when a beneficiary assigns a 
ticket after a CDR has begun. A beneficiary may assign the ticket and 
receive services under the Ticket to Work program. We will, however, 
complete the CDR.
    Sections 411.180, 411.185, 411.190 and 411.191 describe our 
guidelines for timely progress toward self-supporting employment.
    After assigning a ticket, beneficiaries will be allowed up to two 
years to prepare for employment. This two-year period is referred to in 
the final rules as the initial 24-month period. After two years, we 
will consider that beneficiaries are continuing to use a ticket, and 
are therefore eligible to receive the protection in Section 1148(i) of 
the Act regarding non-initiation of CDRs, if they work at progressively 
higher levels of employment. Such a progression would allow 
beneficiaries time to improve their employment capacities.
    We are reordering certain paragraphs in Sec. 411.180 to provide a 
more appropriate placement for the definitions of terms we use to 
describe the guidelines we use to determine if an individual is making 
timely progress toward self-supporting employment. We are also 
clarifying that, for purposes of counting the 24 months comprising the 
initial 24-month period, we will not count any month in which the 
ticket is not assigned or not in use.
    Under our timely progress guidelines, in the 24-month progress 
review conducted by the PM, beneficiaries must demonstrate that their 
employment plan has a goal of at least three months of work, as defined 
in Sec. 411.185, by the time of the first 12-month progress review. The 
PM also must find that beneficiaries can reasonably be expected to 
reach this goal. In response to public comments, we are revising 
Sec. 411.180(c)(1) to allow beneficiaries to use months worked during 
the initial 24-month period to meet these requirements of the 24-month 
progress review, as long as the work was at the level applicable to the 
work requirements for the first 12-month progress review period under 
Sec. 411.185. In the third year of participation in the Ticket to Work 
program (referred to in the final rules as the first 12-month progress 
review period), beneficiaries would be required to work at least three 
months at a specified level. In response to public comment, we are 
revising Sec. 411.180(c)(2) to allow beneficiaries to use months worked 
during the initial 24-month period to meet this requirement as well, as 
long as the work was at the required level as described in 
Sec. 411.185. We are revising Sec. 411.185(a)(1), (b)(1) and (c)(1) to 
reference the rules in Sec. 411.180(c)(1) and (c)(2) on when months of 
work performed during the initial 24-month period may be used to meet 
certain requirements of the 24-month progress review and the work 
requirements of the first 12-month progress review period.
    In the fourth year of participation in the program, beneficiaries 
will be required to work at least six months at the SGA level. In the 
fifth and succeeding years, in order to be considered to be using a 
ticket, they will be required to work at least six months in each year 
and have earnings in each such month that are sufficient to eliminate 
the payment of Social Security disability benefits and Federal SSI 
benefits.
    In developing these guidelines, we recognized that progress toward 
self-sufficiency is not always continuous, and some beneficiaries may 
not attain full self-sufficiency. Many beneficiaries have disabilities 
with cycles of relapse and remission. In addition, some beneficiaries 
may need to try more than one job before finding a situation that suits 
their abilities and needs. The requirement that beneficiaries need only 
work three months out of 12 in the third year and six months out of 12 
in succeeding years recognizes that some beneficiaries may not be able 
to work on a continuous basis.
    Section 411.185 provides levels of earnings that an individual must 
have in order to be considered to be using a ticket. It defines when an 
individual will be considered to be working for purposes of meeting the 
timely progress guidelines. Under this definition, the required 
earnings level will increase over time. In the third and fourth years 
of participation in the Ticket to Work program (i.e. the first and 
second 12-month progress review periods), both Social Security 
disability beneficiaries and concurrent Social Security and SSI 
beneficiaries will be required to work at the SGA level applicable to 
non-blind beneficiaries for the specified number of months. This means 
that the beneficiary must have monthly earnings from employment or 
self-employment, after any applicable deductions under 20 CFR 404.1572 
through 404.1576, that are more than the SGA threshold amount for non-
blind beneficiaries.
    The SGA threshold amount is set by regulation under 20 CFR 
404.1574(b)(2), and is currently $740 a month for non-blind 
beneficiaries. Social Security disability beneficiaries, including 
concurrent Social Security and SSI beneficiaries, who are in a trial 
work period or who are statutorily blind will be deemed to have met the 
requirement to work at the SGA level applicable to non-blind 
beneficiaries if their gross earnings from employment, before any 
exclusions, are more than the SGA threshold amount for non-blind

[[Page 67377]]

beneficiaries, or if their net earnings from self-employment, before 
any exclusions, are more than the SGA threshold amount for non-blind 
beneficiaries.
    Under the definition of work for purposes of the first and second 
12-month progress review periods, SSI disability and blindness 
beneficiaries will be considered to be working in a month in which the 
beneficiary has gross earnings from employment, before any exclusions, 
that are more than the SGA threshold amount for non-blind 
beneficiaries, or has net earnings from self-employment, before any 
exclusions, that are more than the SGA threshold amount for non-blind 
beneficiaries.
    Earnings at the levels established in Sec. 411.185 for the third 
and fourth years of participation in the program may not be sufficient 
to eliminate the payment of all disability benefits. The amount of 
earnings needed to eliminate the payment of disability benefits depends 
on a variety of factors, including whether the beneficiary receives 
Social Security or SSI benefits, or both, whether the beneficiary is 
blind, and whether the beneficiary has impairment-related work expenses 
or is eligible for other income exclusions. The earnings requirement 
for the third and fourth years are set at levels that allow 
beneficiaries time to work toward the higher levels of earnings that 
may be required to eliminate the payment of disability benefits for the 
required months in subsequent years of program participation.
    In the fifth and subsequent years of participation in the program, 
both Social Security and SSI beneficiaries will be required to work for 
at least six months with earnings in each such month that are 
sufficient to eliminate payment of Social Security disability and 
Federal SSI cash benefits in a month. The requirement that individuals 
using a ticket eventually attain this level of earnings is consistent 
with the payment structure of the Ticket to Work program, in which ENs 
receive outcome payments only when Federal disability benefit payments 
are eliminated. It also reflects that one of the purposes of the Ticket 
to Work program is to produce savings in benefit payments. Since the 
suspension of CDRs for individuals using a ticket means that it is 
possible that some beneficiaries who no longer meet the definition of 
disability will continue to be eligible for benefits, it is important 
that the suspension of CDRs not continue for an undue length of time 
without a significant reduction in benefit payments due to earnings.
    In Sec. 411.190, we discuss how it will be determined if a 
beneficiary is meeting the timely progress guidelines. To place the 
rules in a more logical order according to the sequence of events and 
actions they discuss, we are expanding Sec. 411.190 to incorporate the 
rules for placing a ticket in inactive status, as well as other rules 
relating to the initial 24-month period, that were previously set out 
in proposed Secs. 411.192 and 411.220. (In the final rules, 
Sec. 411.192 has been deleted, and proposed Sec. 411.225 has been 
redesignated Sec. 411.220.) During the initial 24-month period 
following assignment of a ticket, the PM will give beneficiaries the 
option of placing the ticket in inactive status if they are unable to 
participate in their employment plan for a significant period of time 
for any reason. Beneficiaries may decide to exercise this option 
because any months during which the ticket is in inactive status will 
not count toward the time limitations (i.e. the initial 24-month 
period) under the timely progress guidelines. The PM will explain, 
however, that since the ticket will not be in use during the period in 
which it is in inactive status, the beneficiary will be subject to a 
CDR, should one become due.
    A beneficiary will be subject to initiation of a CDR during any 
period for which the beneficiary's ticket is considered to be not in 
use. A ticket is considered to be not in use during any month during 
which the ticket is in inactive status as described in Sec. 411.190 or 
during which the ticket is unassigned following the close of the three-
month extension period described in Sec. 411.220. A ticket also is 
considered to be not in use after the period of using a ticket ends as 
described in Sec. 411.171.
    We are modifying the summary table in Sec. 411.191 to reflect the 
rule we are adding to Sec. 411.180(c)(2) which will allow beneficiaries 
to use months worked during the initial 24-month period to meet the 
work requirements of the first 12-month progress review if the work was 
at the requisite level. We also are making changes to the table in 
these final rules to clarify certain entries in the table, to reflect 
changes we are making to other sections of the final rules in subpart 
C, and to provide a more accurate description of the level of earnings 
required for SSI-only beneficiaries during the first and second 12-
month progress review periods.
    In Secs. 411.195, 411.200 and 411.205, we discuss how the PM will 
conduct periodic progress reviews to ensure that beneficiaries are 
meeting the timely progress guidelines. The first review will be a 24-
month progress review occurring at the end of the initial 24-month 
period. This will be followed by 12-month progress reviews. After 
successfully completing a progress review, the beneficiary will be 
considered to be meeting the timely progress guidelines until the next 
review is completed. If a beneficiary disagrees with the PM's decision 
in any review, the beneficiary will have the right to ask SSA to review 
the PM's decision. The Commissioner or the Commissioner's designee will 
review the decision. The criteria for the 24-month progress review and 
the 12-month progress reviews are designed to be as clear-cut as 
possible. This feature, combined with the PM's responsibility for 
conducting the reviews should allow for rapid processing of reviews and 
decrease the administrative burden on both the beneficiary and SSA.
    In response to public comments, we are adding a sentence to 
Sec. 411.195(a)(1) to indicate that the activities outlined in the 
employment plan during the initial 24-month period may include 
employment.
    In Sec. 411.210, we explain that a determination that a beneficiary 
is not making timely progress toward self-supporting employment will 
result in our finding that the beneficiary no longer is using a ticket. 
The beneficiary would be allowed to continue in the Ticket to Work 
program, and the beneficiary's EN or State VR agency would be eligible 
for any payments that became due. In response to public comments, we 
are modifying Sec. 411.210(a) to indicate that these payments would 
include not just outcome payments, but also milestone payments (or, for 
a State VR agency electing payment under the cost reimbursement payment 
system, payments under the cost reimbursement payment system) for which 
the ENs or State VR agencies are eligible. These beneficiaries, 
however, would once again be subject to CDRs.
    This section also provides that a beneficiary who fails to meet the 
timely progress guidelines will have the opportunity to be considered 
to be using a ticket later if the beneficiary actively participates in 
the employment plan or works for a specified number of months. The 
requirements which a beneficiary must meet in order to re-enter in-use 
status (including the number of months, type of participation, and 
earnings level required) vary depending on how far the beneficiary had 
progressed when he or she failed to meet the timely progress 
guidelines.
    We are providing this method of allowing a beneficiary to be 
considered

[[Page 67378]]

again to be using a ticket because, as previously stated, we recognize 
that due to the nature of disability, progress toward increased self-
sufficiency is not always direct. Beneficiaries may make unsuccessful 
attempts before reaching their employment goals, and these unsuccessful 
attempts should not deprive them of the supports that they need to make 
renewed efforts.
    In response to a public comment, we are adding a new 
Sec. 411.210(b)(1) to provide that a beneficiary who fails to meet the 
timely progress guidelines during the initial 24-month period may re-
enter in-use status by demonstrating three consecutive months of active 
participation in the employment plan. This new provision is more 
consistent with the requirements of active participation during this 
period under the timely progress guidelines under Sec. 411.190(a). In 
new Sec. 411.210(b)(1)(iii) we explain that for a beneficiary who is 
reinstated to in-use status after having failed to meet the timely 
progress guidelines during the initial 24-month period, the next review 
will be the 24-month progress review. We also have added a new 
Sec. 411.210(b)(2) to provide a separate provision on re-entering in-
use status for a beneficiary who failed to meet the timely progress 
guidelines in the 24-month progress review. In new 
Sec. 411.210(b)(2)(i), we explain that, consistent with the proposed 
rules, a beneficiary who fails to meet the timely progress guidelines 
in the 24-month progress review may re-enter in-use status by 
completing three months of work (as defined in Sec. 411.185(a)(1), 
(b)(1) or (c)(1)) within a rolling 12-month period. We have modified 
this provision (which was formerly a part of proposed 
Sec. 411.210(b)(1)) to provide that the beneficiary also must satisfy 
the test of Sec. 411.200(a)(2) regarding the anticipated level of the 
beneficiary's work during the ensuing 12-month progress review period 
that would begin if the beneficiary were reinstated to in-use status. 
We also clarify in new Sec. 411.210(b)(2)(i) and (iii) that the work 
requirements for this 12-month progress review period will be the work 
requirements that are applicable during the second 12-month progress 
review period.
    To accommodate new Sec. 411.210(b)(1) and (b)(2), we have 
renumbered the remaining numbered paragraphs that were included under 
proposed Sec. 411.210(b). In Sec. 411.210(b)(3), (b)(4) and (b)(5) of 
the final rules, we have added provisions to the rules on re-entering 
in-use status to provide that, in addition to completing the work 
requirements, the beneficiary also must satisfy the test of 
Sec. 411.200(a)(2) regarding the anticipated level of the beneficiary's 
work during the ensuing 12-month progress review period that would 
begin if the beneficiary were reinstated to in-use status. This change 
is consistent with the two-step process for the 12-month progress 
reviews under Sec. 411.200(a).
    For further clarification of the process of re-entering in-use 
status, we are adding Sec. 411.210(c), and revising Sec. 411.210(b), to 
describe the process for requesting reinstatement to in-use status, to 
explain that the PM will decide whether the beneficiary has satisfied 
the requirements for re-entering in-use status, and to provide that a 
beneficiary may ask us to review the PM's decision that the beneficiary 
has not satisfied the requirements for re-entering in-use status. These 
sections explain that a beneficiary must submit a written request to 
the PM asking that he or she be reinstated to in-use status. If the PM 
decides that the beneficiary has not satisfied the requirements for re-
entering in-use status, the beneficiary may request that we review the 
decision.
    Final Sec. 411.220 was Sec. 411.225 in the proposed rules. Final 
Sec. 411.220 explains that beneficiaries who are using a ticket are 
eligible for an extension period of up to three months to reassign a 
ticket that previously was assigned to an EN or State VR agency and no 
longer is assigned. We have revised this section to indicate that the 
ticket must be in use for the beneficiary to be eligible for the 
extension period. During this period, we will consider that the ticket 
still is in use, and the beneficiary will not be subject to CDRs. In 
response to public comments, we are modifying this section to show the 
beneficiary's moving to an area not served by the previous EN or State 
VR agency as a reason the ticket may no longer be assigned. We also 
have explained in Sec. 411.220(e) of the final rules that a beneficiary 
whose extension period began during the initial 24-month period will 
have a new initial 24-month period when the beneficiary reassigns a 
ticket during the extension period to an EN or State VR agency, other 
than the one to which the ticket previously was assigned.
    We are adding a new Sec. 411.225 to describe the circumstance of a 
beneficiary reassigning a ticket after the end of the extension period. 
This section concerns a situation that was not discussed in the 
proposed rules. This section explains that a beneficiary may reassign a 
ticket after the end of the extension period under the conditions 
described in Sec. 411.150. Section 411.225(c) explains that if the 
extension period began during the initial 24-month period, a 
beneficiary will have a new initial 24-month period when the 
beneficiary reassigns a ticket to an EN or State VR agency, other than 
the one to which the ticket previously was assigned. The reason for 
providing a new initial 24-month period at this time is because the 
beneficiary may have to reassign his or her ticket due to no fault of 
his or her own. For example, the EN may have gone out of business or be 
no longer approved to participate in the Ticket to Work program, or the 
beneficiary may have to relocate or may have a relapse in his or her 
medical condition. Section 411.225(d) explains that if the extension 
period began during any 12-month progress review period, the period 
comprising the remaining months in that review period will begin with 
the first month beginning after the day on which reassignment of the 
ticket is effective.

Subpart D--Use of One or More Program Managers To Assist in 
Administration of the Ticket To Work Program

    Section 1148(d)(1) of the Act requires the Commissioner to enter 
into an agreement with one or more organizations to serve as a PM to 
assist the Commissioner in administering the Ticket to Work program. 
Section 101(e)(2)(E) of Public Law 106-170 identified specific 
regulations that SSA must promulgate regarding the terms of the 
agreements to be entered into with a PM. Three items are specifically 
required:
    (1) the terms by which a PM would be precluded from direct 
participation in the delivery of services;
    (2) standards which must be met by quality assurance measures and 
methods of recruitment of ENs; and
    (3) the format under which dispute resolution will operate under 
section 1148(d)(7) of the Act.
    Among other things, section 1148(d)(7) requires the Commissioner to 
provide a mechanism for resolving disputes between PMs and ENs, and 
between PMs and providers of services.
    Subpart D of these regulations explains that SSA will contract with 
one or more organizations to serve as a PM and assist SSA in 
administering the Ticket to Work program.
    Section 411.230 explains that SSA will conduct a competitive 
bidding process to select one or more private organizations to perform 
the PM's functions.
    Section 411.235 describes the minimum qualifications required of a 
PM.

[[Page 67379]]

    Section 411.240 describes certain limitations that are placed on a 
PM regarding the direct provision of services under the Ticket to Work 
program.
    Section 411.245 identifies key responsibilities that a PM must 
assume to assist SSA in administering the program, including ensuring 
that information provided to beneficiaries is in alternate formats, 
meaning media appropriate to beneficiaries' impairments. We are 
revising paragraph (b)(2) of Sec. 411.245 to remove the word 
``medical'' from the term ``medical impairment'' used in defining 
``accessible format,'' as recommended by one commenter, because not all 
impairments are medical. We are also revising paragraph (c)(2) of 
Sec. 411.245, as recommended by a number of commenters, to make it 
clear that the PM will be responsible for making determinations 
regarding the allocation of outcome or milestone payments when the 
beneficiary has been served by more than one EN.
    Section 411.250 explains how SSA will evaluate a PM.

Subpart E--Employment Networks

    Section 1148(d)(4)(A) of the Act requires the Commissioner to 
select and enter into agreements with ENs to provide services under the 
Ticket to Work program. Section 1148(f)(1)(A) states that each EN 
serving under the Ticket to Work program shall consist of an agency or 
instrumentality of a State (or a political subdivision thereof) or a 
private entity that assumes responsibility for the coordination and 
delivery of services under the program to beneficiaries assigning 
tickets to it.
    These ENs are in addition to State agencies administering or 
supervising the administration of the State plan approved under title I 
of the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), 
known as State VR agencies, that will also be serving beneficiaries 
with disabilities under the Ticket to Work program. State VR agencies 
will have the option of serving beneficiaries with tickets either as an 
EN (that is, to be paid under one of the EN payment systems described 
in subpart H of these regulations) or under the existing cost 
reimbursement payment system authorized in sections 222(d) and 1615(d) 
of the Act. The Commissioner is also directed to enter into an 
agreement with any alternate participant operating under the authority 
of section 222(d)(2) of the Act in any State where the Ticket to Work 
program is being implemented if the alternate participant chooses to 
serve as an EN. An EN may consist of a one-stop delivery system 
established under subtitle B of title I of the Workforce Investment Act 
of 1998 (29 U.S.C. 2811 et seq.).
    Section 1148(f) of the Act requires that entities seeking to 
participate in the Ticket to Work program as ENs meet certain 
qualifications. The Commissioner has discretion in determining the 
qualifications that an entity must meet to be approved to serve as an 
EN. We are providing requirements for ENs that are not unduly 
burdensome and that are intended to permit both traditional as well as 
other types of entities to qualify. The Commissioner's intent is to 
ensure that non-traditional service providers are not prohibited from 
being approved as ENs, while still requiring evidence that all ENs meet 
certain minimum qualifications such as licensure, accreditation, 
academic qualifications, or experience. This inclusive approach is 
critically important to ensure that beneficiaries with disabilities 
have a real choice in services necessary to obtain, regain and maintain 
employment.
    Section 1148(f) of the Act also addresses requirements for ENs 
under the Ticket to Work program. It requires each EN to serve a 
prescribed service area and ensure that employment services, VR 
services, and other support services are provided under appropriate 
IWPs.
    Sections 411.300 and 411.305 of these regulations explain what an 
EN is and what entities are eligible to apply to serve as ENs.
    Section 411.310 explains how public or private entities will apply 
to us to be approved as ENs and how we will determine whether an entity 
qualifies to be an EN. We are changing the heading of Sec. 411.310 to 
make it clear that this section is not applicable to State VR agencies 
and that State VR agencies do not apply to be ENs.
    We are revising the first sentence of Sec. 411.310(a) to make it 
clear that a State VR agency does not have to respond to our request 
for proposals (RFP) to function as an EN.
    We are adding paragraph (c) to this section to Sec. 411.310 to 
provide a cross-reference to Sec. 411.360 on how a State VR agency 
begins to participate as an EN in the Ticket to Work program.
    Section 411.315 describes the minimum qualifications for an EN 
under the Ticket to Work program. In response to public comments, we 
are adding language to paragraph (a)(2) of Sec. 411.315 to provide 
examples of what we mean by programmatically accessible.
    We are revising section 411.315(b)(2) to make it clear that ENs are 
not required to provide medical or related health services or be 
licensed to provide such services, but that the EN should take 
reasonable steps to assure that if any medical and related health 
services are provided, such medical and health related services are 
provided under the formal supervision of persons licensed to prescribe 
or supervise the provision of these services.
    Section 411.315 provides that an EN must have applicable 
certificates, licenses, or other credentials if State law in the 
entity's State requires such documentation to provide VR services, 
employment services or other support services in the State.
    Section 411.320 describes the major responsibilities of an entity 
serving as an EN.
    Section 411.321 explains the conditions under which we will 
terminate an agreement with an EN for inadequate performance. We have 
clarified that we will terminate an agreement with an EN for non-
compliance in any of the three areas cited in this section.
    Section 411.325 lists the reporting requirements placed on an 
entity serving as an EN. We are adding a new paragraph (e) to require 
that ENs submit information to assist the PM conducting the reviews 
necessary to determine whether a beneficiary is making timely progress 
towards self-supporting employment. This requirement is necessary to 
obtain information for determining whether a beneficiary will continue 
to receive CDR protection. It will make the EN reporting requirement 
consistent with the reporting requirement of State VR agencies 
regarding timely progress reviews. As a result of adding a new 
paragraph (e), we are redesignating the proposed paragraphs (e) through 
(i) as paragraphs (f) through (j) in the final rules. We are deleting 
the requirement from paragraph (g) in the proposed rules (redesignated 
as paragraph (h) in the final rules) to submit a financial report that 
shows the percentage of the EN's budget that was spent on serving 
beneficiaries with tickets, including the amount spent on beneficiaries 
who return to work and those who do not return to work. We are making 
this change because of many public comments indicating that this would 
be a burdensome reporting requirement.
    Section 411.330 explains how we will evaluate an EN's performance.

[[Page 67380]]

Subpart F--State Vocational Rehabilitation Agencies' Participation

    Section 1148(c) of the Act addresses participation by State VR 
agencies in the Ticket to Work program. In general, this section gives 
each State VR agency the opportunity to determine, on a case-by-case 
basis, whether it will participate in the Ticket to Work program as an 
EN or under the cost reimbursement payment system authorized under 
sections 222(d) and 1615(d) of the Act (see 20 CFR Secs. 404.2101 et 
seq. and 416.2201 et seq.). The State VR agency must elect either the 
outcome payment system or the outcome-milestone payment system to be 
used when it functions as an EN when serving a beneficiary with a 
ticket. The Commissioner is directed to provide for periodic 
opportunities to exercise this election.
    Generally, under the Ticket to Work program, State VR agencies will 
continue to operate as they do today. For example, when a State VR 
agency functions as an EN, it will provide services in accordance with 
the requirements of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), and a 
client will complete an individualized plan for employment with the 
State VR agency. If a State VR agency has a dispute over a payment 
under the cost reimbursement payment system, the State VR agency will 
use the dispute resolution procedures already in place under 20 CFR 
404.2127 and 416.2227. The new functions and responsibilities for State 
VR agencies under the Ticket to Work program include checking with the 
PM if the State VR agency wants to see if a disabled beneficiary who is 
seeking services from the State VR agency has a ticket that is 
available for assignment or reassignment, submitting information to the 
PM required to assign or reassign a beneficiary's ticket to the State 
VR agency, routing EN payment dispute questions through the PM, 
submitting preliminary and post-employment data to the PM, and 
providing reports regarding the outcomes achieved by beneficiaries 
assigning tickets to the State VR agency in those cases where the State 
VR agency functioned as an EN.
    Subpart F of these regulations establishes that the cost 
reimbursement payment system is a payment option under the Ticket to 
Work program for State VR agencies, subject to certain limitations 
described in Sec. 411.585(a) and (b) of subpart H of these final rules.
    Section 411.350 explains that a State VR agency must participate in 
the Ticket to Work program if it wishes to receive payment from SSA for 
serving disabled beneficiaries who are issued a ticket. We have 
clarified this section by adding the words ``who are issued a ticket''.
    Section 411.355 describes the different payment options available 
to the State VR agencies. Section 411.355 explains that, subject to the 
limitations in Sec. 411.585 of subpart H, State VR agencies, on a case-
by-case basis, may participate in the Ticket to Work program either as 
an EN or under the cost reimbursement payment system. This section also 
explains that the State VR agency must use the EN payment system it 
elected when serving a beneficiary as an EN. We have modified the 
language and structure of this section for added clarity.
    Section 411.360 explains what a State VR agency must do to function 
as an EN under the Ticket to Work program with respect to a beneficiary 
and explains that a State VR agency may choose, on a case-by-case 
basis, to seek payment from SSA under the cost reimbursement payment 
system or its elected EN payment system. Paragraph (a) of Sec. 411.360 
describes the method SSA will use to communicate with State VR agencies 
about implementation of the Ticket to Work program in States. Paragraph 
(b) includes a reference to the limitations on payment in Sec. 411.585. 
We have made these changes to this section to add clarity.
    Section 411.365 describes how a State VR agency will select an EN 
payment system for use when functioning as an EN. In these final rules, 
we are modifying Sec. 411.365 to eliminate the requirement that the 
Governor or Governor's designated representative must sign the letter 
advising SSA of which EN payment system the State VR agency will use 
when it functions as an EN with respect to a beneficiary who has a 
ticket. We are revising this section to provide that the director of 
the State agency administering or supervising the administration of the 
State plan approved under title I of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 720 et seq.), or the director's designee must sign 
the letter advising SSA of the State VR agency's election of an EN 
payment system. We are making this change to the final rules to respond 
to comments that the director or his or her designee is in a better 
position to make the payment election decision.
    Section 411.370 explains that a State VR agency generally may 
choose to be paid under the cost reimbursement payment system when 
serving beneficiaries with tickets, subject to the limitation in 
Sec. 411.585(b) of subpart H of these final rules.
    Section 411.375 explains that State VR agencies must continue to 
provide services to beneficiaries with tickets under the requirements 
of the State plan approved under title I of the Rehabilitation Act of 
1973, as amended (29 U.S.C. 720 et seq.).
    Section 411.380 describes how a State VR agency can determine if a 
disabled beneficiary seeking services has been issued a ticket and, if 
so, the status of the ticket. We have made changes to this section in 
the final rules to provide a more accurate description of the 
information the State VR agency can obtain from the PM regarding a 
beneficiary's ticket status.
    Section 411.385 explains that once the State VR agency determines 
that a beneficiary is eligible for vocational rehabilitation services, 
the beneficiary and a representative of the State VR agency must agree 
to and sign an IPE. In these final rules, we are revising the 
provisions of Sec. 411.385(a) to conform to the changes we are making 
to Secs. 411.140 and 411.150 regarding the requirements that must be 
met in order for a beneficiary to assign or reassign a ticket. We 
explain that the parties must agree to and sign an IPE in order for the 
beneficiary to assign or reassign his or her ticket to the State VR 
agency. We explain that Secs. 411.140(d) and 411.150(a) and (b) 
describe the other requirements which must be met for a ticket to be 
assigned or reassigned, respectively. Final Sec. 411.385(a) explains 
that in order for a beneficiary's ticket to be assigned or reassigned 
to the State VR agency, the State VR agency must submit the information 
described in Sec. 411.385(a)(1)-(a)(3) to the PM. This information 
includes the method of payment which the State VR agency is selecting 
for a particular beneficiary.
    We are revising Sec. 411.385(b) to change the designation of the 
person in the State VR agency who is required to sign the completed 
form which the State VR agency must submit to the PM in order for a 
ticket to be assigned or reassigned to the State VR agency. We are 
revising this section to permit ``a representative of the State VR 
agency'' to sign the form as this provides greater flexibility to the 
State VR agency than our proposed requirement that the form be signed 
by ``the State VR agency representative working with the beneficiary.''
    Section 411.390 describes what a State VR agency should do when a 
beneficiary already receiving services under an approved IPE becomes 
eligible for a ticket that is available for assignment and decides to 
assign the ticket to the State VR agency. We are modifying this section 
in the final rules to provide a more accurate description

[[Page 67381]]

of the circumstances in which an individual who is already receiving 
services from the State VR agency under an IPE may become eligible for 
a ticket. We also are adding a provision to clarify that the State VR 
agency must submit the completed and signed form described in 
Sec. 411.385(a) and (b) to the PM in order for the beneficiary's ticket 
to be assigned to the State VR agency. In addition, we explain that 
Sec. 411.140(d) describes the other requirements which must be met in 
order for the beneficiary to assign a ticket.
    Section 411.395 explains that each State VR agency will be required 
to provide periodic reports to the PM on the specific outcomes achieved 
with respect to the services provided to beneficiaries under the Ticket 
to Work program in cases where the State VR agency functioned as an EN.
    Section 1148(c)(3) of the Act requires State VR agencies and ENs to 
enter into agreements regarding the conditions under which services 
will be provided when an EN that has been assigned the beneficiary's 
ticket refers the beneficiary to a State VR agency for services.
    Sections 411.400 and 411.405 explain that an EN may refer a 
beneficiary that it is serving under the Ticket to Work program to a 
State VR agency for services only if such an agreement is in place 
prior to the EN making the referral.
    Section 411.410 explains that these agreements should be broad-
based and apply to all beneficiaries who may be referred by an EN to a 
particular State VR agency. In the final rules, we are modifying 
Sec. 411.410 to indicate that the general guideline that the agreements 
should be broad-based and apply to all beneficiaries who may be 
referred by an EN to a State VR agency is not intended to preclude an 
EN and a State VR agency from entering into an individualized agreement 
to meet the needs of a single beneficiary if both the EN and State VR 
agency wish to do so.
    Section 411.415 explains that the PM will verify the establishment 
of such agreements based on the EN's submission of a copy of the 
agreement to the PM.
    Section 411.420 provides guidance and examples of what could be 
included in these agreements.
    Section 411.425 explains what a State VR agency should do if an EN 
attempts to refer a beneficiary being served under the Ticket to Work 
program to the State VR agency without having established such an 
agreement.
    Section 411.430 explains what the PM should do when notified that a 
referral has been attempted in the absence of an agreement.
    Section 411.435 establishes procedures for resolving disputes 
arising under these agreements between ENs and State VR agencies. We 
are revising this section by replacing the word ``should'' in 
Sec. 411.435(a) and (b) with ``must,'' to establish the regulatory 
policy as a requirement to be followed in the dispute resolution 
process.

Subpart G--Requirements for Individual Work Plans

    Section 1148(g) of the Act requires each EN to ensure that 
employment services, vocational rehabilitation services, and other 
support services provided under the Ticket to Work program are provided 
under IWPs. The minimum requirements for an IWP are spelled out in this 
section.
    Subpart G of these regulations establishes the requirements for the 
IWP that must be developed when an EN and a beneficiary with a ticket 
agree to work together under the Ticket to Work program. Beneficiaries 
who are clients of the State VR agencies will continue to use the IPE 
rather than an IWP.
    Section 411.450 explains what an IWP is. In response to comments on 
the proposed rule, we are revising this section to spell out 
``individual work plan'' for clarity, and to add the words ``(other 
than a State VR agency)'' to clarify that IWPs would not be a 
requirement for State VR agencies.
    Section 411.455 explains the purpose of the IWP and explains that 
the EN must develop and implement the plan in a manner that gives the 
beneficiary the opportunity to exercise informed choice in selecting an 
employment goal.
    Section 411.460 explains that the beneficiary and the EN share the 
responsibility for determining the content of the IWP.
    Section 411.465 describes the specific information that must be 
included in each IWP.
    Section 411.470 describes when an IWP becomes effective. In the 
final rules, we are revising Sec. 411.470 to conform to the changes we 
are making to Secs. 411.140 and 411.150 concerning the requirements 
which must be met in order for a beneficiary to assign or reassign his 
or her ticket. We are also revising Sec. 411.470(b) to make the 
effective date of an IWP consistent with the effective date of the 
assignment or reassignment of the beneficiary's ticket.

Subpart H--Employment Network Payment Systems

    Section 1148(h) of the Act provides that the Ticket to Work program 
shall provide for payment authorized by the Commissioner to ENs under 
either an outcome payment system or an outcome-milestone payment 
system. Each EN must elect which payment system it will use.
    The outcome payment system and the outcome-milestone payment system 
are defined in Sec. 411.500. This section also defines certain other 
terms we use in this subpart relating to the EN payment systems.
    The first term we define in Sec. 411.500 is the ``payment 
calculation base.'' This term relates to the amount we will pay an EN 
(including a State VR agency choosing to be paid as an EN) under either 
EN payment system. We will pay an EN for specific milestones or 
outcomes that a beneficiary who assigns the ticket to the EN achieves, 
not for the costs of specific services that the EN provides. We base 
milestone and outcome payments upon the prior calendar year's national 
average disability benefit payable under title II or title XVI, not 
upon the specific benefit payment payable to a beneficiary with a 
ticket. We call the national average benefit payment the payment 
calculation base. In Sec. 411.500(a)(1), we define the payment 
calculation base applicable in connection with a title II or concurrent 
title II/title XVI disability beneficiary. In Sec. 411.500(a)(2), we 
define the payment calculation base applicable in connection with a 
title XVI disability beneficiary, who is not concurrently a title II 
disability beneficiary.
    In Sec. 411.500(b), we define the term ``outcome payment period.'' 
Both EN payment systems provide for a payment to an EN for each month, 
during an individual's outcome payment period, for which Social 
Security disability benefits and Federal SSI cash benefits are not 
payable to the individual because of the performance of substantial 
gainful activity (SGA) or by reason of earnings from work activity. 
Each beneficiary who is issued a ticket has one outcome payment period 
in connection with that ticket. In Sec. 411.500(b), we explain that an 
individual's outcome payment period begins with the first month, ending 
after the date on which the ticket was first assigned, for which Social 
Security disability benefits and Federal SSI cash benefits are not 
payable to the individual due to SGA or earnings. We also explain that 
the outcome payment period ends with the 60th month, consecutive or 
otherwise, ending after such date, for which such benefits are not 
payable due to SGA or earnings.
    In these final rules, we are modifying the definition of the 
``outcome payment system'' in Sec. 411.500(c) to clarify that this 
payment system provides for a schedule of payments to an EN for each

[[Page 67382]]

month, during an individual's outcome payment period, for which Social 
Security disability benefits and Federal SSI cash benefits are not 
payable to the individual because of work or earnings. We are also 
expanding Sec. 411.500 in these final rules to include definitions of 
``outcome payment'' and ``outcome payment month.'' In final 
Sec. 411.500(d), we explain that ``outcome payment'' means a payment 
for an outcome payment month. In final Sec. 411.500(e), we explain that 
``outcome payment month'' means a month, during an individual's outcome 
payment period, for which Social Security disability benefits and 
Federal SSI cash benefits are not payable to the individual because of 
work or earnings. Final Sec. 411.500(e) also explains that the maximum 
number of outcome payment months for each ticket is 60. This provision 
appeared in Sec. 411.500(c) of the proposed rules. We are moving the 
provision to Sec. 411.500(e) of the final rules where we explain what 
we mean by an outcome payment month.
    Final Sec. 411.500(f), which we proposed as Sec. 411.500(d), 
provides a general description of the term ``outcome-milestone payment 
system.'' This payment system provides a schedule of payments to an EN 
that includes, in addition to payments during the outcome payment 
period, payment for completion by a beneficiary of up to four 
milestones directed toward the goal of permanent employment. In these 
final rules, we are increasing the number of milestones for which 
payment may be made under the outcome-milestone payment system from the 
two milestones we proposed in the NPRM to four milestones. This is one 
of four major changes we are making to the outcome-milestone payment 
system in response to public comments, all of which we discuss more 
fully below.
    In addition, in these final rules we are modifying final 
Sec. 411.500(f) to clarify that the milestones for which payment may be 
made must occur prior to the beginning of an individual's outcome 
payment period. We are also clarifying that the payments which may be 
made to an EN under the outcome-milestone payment system consist of 
milestone payments which may be made for any milestones occurring prior 
to the individual's outcome payment period, as well as any outcome 
payments which may be made for months during the individual's outcome 
payment period. We deleted the last sentence in proposed section 
411.500(d) that compared the total payments under the outcome-milestone 
payment system, because this is stated in section 411.525(a).
    Section 1148(c) of the Act permits each State VR agency to 
participate in the program as an EN with respect to a disabled 
beneficiary. When the State VR agency elects to participate in the 
Ticket to Work program as an EN with respect to a disabled beneficiary, 
we will pay the State VR agency in accordance with its elected EN 
payment system. If the State VR agency chooses not to participate as an 
EN with respect to a disabled beneficiary, we will pay the State VR 
agency for services provided to that beneficiary in accordance with the 
cost reimbursement payment system under sections 222(d) and 1615(d) and 
(e) of the Act. Our regulations concerning this cost reimbursement 
payment system are at 20 CFR 404.2101 through 404.2127 and 416.2201 
through 416.2227. Payments to State VR agencies under the Ticket to 
Work program are discussed in Secs. 411.510 and 411.585.
    Each provider will elect, in writing, the EN payment system which 
it will be paid under when it agrees to become an EN. Similarly, each 
State VR agency will notify us in writing regarding which EN payment 
system it will use when it chooses to function as an EN for a 
beneficiary with a ticket. We will periodically offer each EN 
(including each State VR agency) the opportunity to change its elected 
payment system. If the EN (or State VR agency) does change its elected 
payment system, the change will apply only to tickets assigned to the 
EN (or State VR agency) after SSA is notified about the change in the 
elected payment system. These provisions, including the frequency of 
opportunity for an EN to change its payment system, are discussed in 
Secs. 411.505 through 411.520.
    In the final rule, we are making a number of changes to 
Secs. 411.505 through 411.520. These changes correct grammatical errors 
and clarify our intentions, but do not change the intent of the 
proposed sections.
     In final Sec. 411.505 we are combining the first two 
sentences concerning an EN's choice of payment systems into one 
sentence.
     In final Sec. 411.510(b) we are placing a new 
parenthetical sentence between the two sentences we proposed. The first 
sentence of this paragraph explains that a State VR agency must 
communicate its decision to serve a beneficiary to the PM. The new 
second sentence provides a reference to that portion of the final rule 
where we discuss the PM and its role in the Ticket to Work program.
     In final Sec. 411.515(a) we are making some editorial 
changes to the second sentence and clarifying the third sentence to 
note what day in the month an EN's payment system election becomes 
effective. Also, we are adding a new sentence to the end of this 
paragraph which clarifies that a State VR agency may also change its 
elected EN payment system.
     In final Sec. 411.515(b) we are making some editorial 
changes and expanding the explanation of when the 12-month period for 
making a change in an EN payment system for any reason ends. We had 
proposed that the period would end with the 12th month following the 
month in which the EN first elects an EN payment system. The final rule 
adds an alternative month, the 12th month after the month we implement 
the Ticket to Work program in the State in which the EN (or State VR 
agency) operates, if it is later.
     In final Sec. 411.515(c) we are correcting grammatical 
errors and deleting the date in the last sentence because it is 
unnecessary. This sentence notes that we will offer ENs the opportunity 
to make a change in their elected payment systems at least every 18 
months.
     In final Sec. 411.520 we are correcting grammatical errors 
in the title and text and clarifying that the rule applies to State VR 
agencies as well as to ENs.
    Sections 411.525 through 411.565 provide our rules for computing 
payments to ENs under the two EN payment systems. They also describe 
what payments may be made and when, and discuss allocating payments to 
multiple ENs to whom the ticket was assigned at different times.
    Sections 1148(h)(2) and (h)(3) of the Act provide that the outcome 
payment system and the outcome-milestone payment system shall provide 
for a schedule of payments to an EN, in connection with a beneficiary 
who assigns a ticket to the EN, for each month, during the individual's 
outcome payment period, for which Social Security disability benefits 
and Federal SSI cash benefits based on disability or blindness are not 
payable to the individual because of work or earnings. There can be a 
maximum of 60 outcome payment months and, therefore, a maximum of 60 
monthly outcome payments. In Sec. 411.525(a), we explain that we will 
calculate payments for outcome payment months under both EN payment 
systems using the payment calculation base as defined in 
Sec. 411.500(a)(1) or (a)(2). We deleted the second sentence in 
proposed Sec. 411.525(a). The proposed sentence referred to the fact 
that the payment

[[Page 67383]]

calculation base we use to compute the value of payments for outcome 
months attained in one calendar year is based on the preceding calendar 
year's national average disability benefit payment information. This is 
simply a restatement of the definition of the payment calculation base 
that is found in the references cited in the first sentence of 
Sec. 411.525(a), which we did not change.
    Section 411.525(a)(1)(i) discusses payments under the outcome 
payment system, explaining that an EN is eligible for a monthly outcome 
payment for each month for which Social Security disability benefits 
and Federal SSI cash benefits are not payable to the individual because 
of work or earnings. This section also provides that monthly payments 
under the outcome payment system will be 40 percent of the payment 
calculation base. This percentage is the maximum the law allows at the 
beginning of the program. Under the outcome payment system, each 
monthly outcome payment is the same during a calendar year. At the end 
of each calendar year, we will refigure the payment calculation base 
for the next year. For clarity, we combined the last two sentences of 
proposed Sec. 411.525(a)(1)(i) and added a reference to Sec. 411.550. 
We also noted that we will round our computation of the outcome payment 
to the nearest whole dollar.
    Section 411.525(a)(1)(ii) provides criteria for determining whether 
a month occurring after the month in which a beneficiary's entitlement 
to Social Security disability benefits ends or eligibility for SSI 
benefits based on disability or blindness terminates due to work 
activity or earnings will be considered to be an outcome payment month. 
We are making two changes to the rules we proposed. First, in final 
Sec. 411.525(a)(1)(ii), we are substituting the word ``with'' for the 
word ``in'' to clarify that the months we are talking about are those 
after the month ``with'' which such entitlement ends or eligibility 
terminates. Second, in Sec. 411.525(a)(1)(ii)(A), we are clarifying 
that the level of earnings required must be more than the SGA threshold 
amount specified in 20 CFR 404.1574(b)(2) (or 20 CFR 404.1584(d) for 
individuals who are statutorily blind). We had proposed that earnings 
could be at or above the SGA dollar amount, but this is ambiguous in 
that earnings at the dollar amount specified in 20 CFR 404.1574(b)(2) 
and 404.1584(d) are not indicative of SGA, while earnings above the SGA 
threshold amounts in the referenced rules are. It was our intent in 
this section, as well as in proposed Sec. 411.535, to require that 
earnings exceed the monthly SGA threshold amount.
    As a result of these changes, final Sec. 411.525(a)(1)(ii) provides 
two criteria for us to use when determining whether we will consider 
any month after the month with which disability entitlement ends or 
eligibility terminates because of work or earnings to be an outcome 
payment month. First, the individual must have gross earnings from 
employment (or net earnings from self-employment) in that month that 
are more than the SGA threshold dollar amount in 20 CFR 404.1574(b)(2) 
(for an individual who is not statutorily blind) or in 20 CFR 
404.1584(d) (for an individual who is statutorily blind). Second, the 
individual cannot be entitled to any monthly benefits under title II or 
eligible for any benefits under title XVI for that month.
    Section 411.525(a)(2) explains what payments we can make to an EN 
under the outcome-milestone payment system. This system provides 
payments to an EN when the beneficiary achieves milestones directed 
toward the goal of permanent employment. Payments for the milestones 
achieved come before, and are in addition to, outcome payments made 
during the outcome payment period. For clarity, we inserted a new 
sentence after the first one we proposed. It notes that milestones must 
occur prior to the beginning of the beneficiary's outcome payment 
period and meet the requirements of Sec. 411.535. Also, consistent with 
changes we are making elsewhere in these final rules, we are amending 
the first sentence of Sec. 411.525(a)(2) to state that we may pay an EN 
for up to four milestones achieved by a beneficiary who assigned his or 
her ticket to the EN.
    Section 411.525(b) explains the provision in section 1148(h)(3)(C) 
of the Act concerning the limitation on total payments to an EN under 
the outcome-milestone payment system. The Act requires us to design the 
outcome-milestone payment system so that an EN's total payments with 
respect to each beneficiary is less than, on a net present value basis, 
the total amount the EN would receive if paid under the outcome payment 
system. In the second sentence of Sec. 411.525(b) we explain that an 
EN's total potential payments under the outcome-milestone payment 
system will be about 85 percent of the total that would be payable 
under the outcome payment system for the same beneficiary.
    Section 411.525(c) explains that we will pay an EN to whom a ticket 
has been assigned only for milestones or outcomes that are achieved 
prior to the month in which an individual's ticket terminates, as 
described in Sec. 411.155. We will not pay milestone or outcome 
payments based on an individual's work activity or earnings in or after 
the month a ticket terminates.
    Sections 411.530 through 411.545 provide our rules for computing 
payments to ENs under the outcome-milestone payment system. In response 
to the public comments, we are making four major changes to this EN 
payment system.
     First, we are adding two milestones. We describe them in 
Sec. 411.535.
     Second, we are doubling the total value of the potential 
milestone payments. We provide these payment amounts in Sec. 411.540.
     Third, we are spreading, over 60 months as opposed to 12, 
the outcome payment reductions made on account of milestone payments 
received. We discuss this reduction in Sec. 411.530.
     Fourth, we are substituting a flat outcome payment rate of 
34 percent for the graduated monthly outcome payments we proposed. We 
discuss how we calculate the payment amounts for outcome payment months 
under the outcome-milestone payment system in Sec. 411.545.
    Section 411.530 describes how we will reduce outcome payments under 
the outcome-milestone payment system when an EN receives milestone 
payments. In the NPRM, we proposed to reduce the first 12 outcome 
payments by the amount paid out as milestone payments. However, in 
response to public comments, we are extending the reduction period over 
the full 60 months of the outcome payment period. In addition, we are 
clarifying two points in final Sec. 411.530. First, we explain that an 
EN's outcome payments will be reduced due to the milestone payments 
received by that EN, not due to milestone payments paid to another EN. 
Second, we are broadening the language in the final rule by deleting 
the word ``already'' from the language we proposed. This change allows 
for adjustments should we make a retroactive payment for a milestone 
that a beneficiary achieved before the outcome payment period began.
    Section 411.535 provides the milestone requirements. We are making 
three changes to this section. First, we are clarifying that the 
milestones occur after the date on which the ticket was first assigned 
and the beneficiary starts to work. Just as the outcome payment period 
cannot begin until after the date the beneficiary first assigns a 
ticket, a beneficiary cannot begin to attain a milestone until after he 
or she first assigns the ticket. Second, as we explained in the changes 
we are making

[[Page 67384]]

to Sec. 411.525(a)(1)(ii)(A), we are clarifying that the level of a 
beneficiary's monthly earnings required for a milestone must be more 
than the SGA threshold amount. Third, we are including two additional 
milestones. The first milestone we are adding is met when a beneficiary 
works for one calendar month and has gross earnings from employment (or 
net earnings from self-employment) for that month that are more than 
the SGA threshold amount. The other milestone we are adding, which is 
the fourth milestone, is met when a beneficiary works for 12 calendar 
months within a 15-month period and has gross earnings from employment 
(or net earnings from self-employment) for each of the 12 months that 
are more than the SGA threshold amount. As a result of these additions, 
we are renumbering proposed milestones one and two as final milestones 
two and three. These milestones also require work at more than the SGA 
threshold amount for three and seven months, respectively, within a 12-
month period. Additionally, in Sec. 411.535 we are providing that any 
of the work months used to meet the first, second, or third milestone 
may be used to meet a subsequent milestone.
    Section 411.540 provides how we will calculate the payment for each 
milestone. In the proposed rules we provided for the payment of two 
milestones and based their calculation on a percentage of the payment 
calculation base that together represented approximately 10 percent of 
the total payments possible under the outcome-milestone payment system. 
In final Sec. 411.540 we are not changing our method of computing 
milestone payments or revising the payment percentages for the two 
milestones we proposed, but we are adding two more milestones and the 
net effect is a doubling of the total value of the milestone payments. 
The value of the first additional milestone payment is equal to 34 
percent of the payment calculation base, and the value of the other 
additional milestone payment is equal to 170 percent of the payment 
calculation base. The total value of the additional milestone payments 
is equal to approximately 10 percent of the potential payments possible 
under the outcome-milestone payment system. When combined with the 
total value of the milestone payments we originally proposed and which 
we are retaining in these final rules, the total value of the four 
potential milestone payments under the outcome-milestone payment system 
is equal to approximately 20 percent of the total possible payments 
available under the outcome-milestone payment system.
    We are also making four other changes to final Sec. 411.540. First, 
we are stating that after we multiply the applicable milestone 
percentage by the payment calculation base, we will round the resulting 
milestone payment computation to the nearest whole dollar. Second, we 
are adding two paragraphs that identify the attainment month for each 
of the two additional milestones. This month is important because we 
use the payment calculation base for the calendar year in which the 
attainment month occurs when computing the milestone payment. Third, we 
are redesignating proposed paragraphs (a) and (b) as paragraphs (b) and 
(c) and proposed paragraphs (c) and (d) as paragraphs (f) and (g). 
These paragraphs discuss the payment calculations and attainment months 
for the two milestones we proposed. Fourth, we are deleting the second 
sentence we proposed in paragraphs (a) and (b), now final paragraphs 
(b) and (c). The sentence referred to the two proposed milestone 
payments as being equal to two and four outcome payments, respectively. 
Technically, this is an incorrect statement because outcome payments 
under the outcome-milestone payment system will vary depending on how 
much has been paid in milestone payments.
    Section 411.545 states how, under the outcome-milestone payment 
system, we will calculate the amount of the outcome payment. We had 
proposed graduated monthly outcome payments. However, in response to 
public comments, we are substituting a flat outcome payment rate for 
the one we proposed. This rate is 34 percent of the payment calculation 
base for the calendar year in which the outcome payment month occurs, 
rounded to the nearest whole dollar, and then reduced, if necessary, as 
described in Sec. 411.530. This flat rate makes the total potential 
payments under the outcome-milestone payment system about 85 percent of 
the total potential payments that could be made under the outcome 
payment system. We did not change the rate differential between the two 
EN payment systems as many commenters suggested and explain our reasons 
for this in the responses to the public comments below.
    Section 411.550 provides the payment amounts for outcome payment 
months under the outcome payment system. An outcome payment under the 
outcome payment system is equal to 40 percent of the applicable payment 
calculation base. Consistent with clarifications we are making in 
Secs. 411.540 and 411.545, we are modifying Sec. 411.550 to state that 
we will round our computation of the outcome payment to the nearest 
whole dollar.
    Section 411.555 provides that an EN may generally keep the 
milestone and outcome payments it receives under its elected EN payment 
system, even if the beneficiary does not sustain work for all 60 
outcome payment months. The proposed rules for this section, by 
reference to Sec. 411.560, indicated that retroactive adjustments to 
payments already received by ENs may occur when we allocate a prior 
payment with another EN. In the final rules, we expand Sec. 411.555. We 
placed the general rule allowing ENs to keep the milestone and outcome 
payments for which they are eligible in paragraph (a) and added 
paragraphs (b) and (c). Paragraph (b) discusses the adjustments we may 
have to make should we determine that we paid an EN an incorrect 
amount. Paragraph (c) refers to the EN notification and dispute 
resolution process we have for overpayments and underpayments.
    Sections 411.560 and 411.565 explain that it is possible to pay 
more than one EN for the same milestone or outcome payment month. In 
this situation, the payment will be allocated among the ENs that 
qualify for payment. Section 1148(e)(3) of the Act provides that the PM 
will determine the allocation based on the services provided by each 
EN. It also is possible to pay more than one EN for different 
milestones or outcome payment months on the same ticket. When more than 
one EN is eligible for payment with respect to a ticket, we will pay 
each EN in accordance with its elected payment system at the time the 
ticket was assigned to each EN.
    In response to public comments, we are expanding the discussion in 
the last sentence of proposed Sec. 411.560 to clarify how the PM will 
make a payment allocation determination when more than one EN qualifies 
for a payment. The PM will base its determination on the contribution 
of services provided by each EN toward the achievement of the outcomes 
or milestones. Also, outcome and milestone payments will not be 
increased because the payments are shared between two ENs. In addition 
to these changes, we are correcting grammatical errors in the title of 
Sec. 411.565.
    Section 411.570 provides that the Act prohibits an EN from 
requesting or accepting compensation from a beneficiary for the EN's 
services.
    Section 411.575 describes how an EN will request payment for either 
a milestone payment or an outcome payment month. The EN will make a

[[Page 67385]]

written request to the PM for payment for each milestone. The request 
will be accompanied by evidence showing that the milestone was 
achieved. We do not have to stop a beneficiary's monthly cash payment 
in order to pay a milestone payment to an EN.
    For outcome payments under either EN payment system, an EN must 
also submit a written request for payment to the PM. Since outcome 
payments cannot be made unless the beneficiary has sufficient work or 
earnings to reduce the Federal cash benefits to zero, we are retaining 
the general requirement we proposed for an EN's payment request to be 
accompanied by evidence of the beneficiary's work or earnings. However, 
in response to public comments, we are making three changes to 
Sec. 411.575(b). First, we are providing an exception to the general 
requirement for evidence of a beneficiary's work or earnings in order 
to cover those situations in which the EN requesting the payment does 
not currently hold the ticket because it is unassigned or reassigned to 
another EN. Second, we are allowing the EN to submit its request for 
payment and evidence of work or earnings on a quarterly basis, rather 
than on a monthly or bimonthly basis as we proposed. Third, we are 
incorporating the rules we proposed in Secs. 411.575(b)(3) through (5) 
in Sec. 411.575(b)(3), and deleting Secs. 411.575(b)(3) through (5).
    In addition to these changes, we are making other clarifying 
changes to Sec. 411.575. We are adding three new paragraphs at 
Sec. 411.575(a)(1)(ii), (iii) and (iv) to discuss the requirements for 
an EN to receive a milestone payment. These requirements are: (1) The 
milestone must occur prior to the outcome payment period as defined in 
Sec. 411.500(b), (2) the provisions in Sec. 411.535 must be satisfied, 
and (3) the milestone cannot occur in or after the month in which the 
ticket terminates as defined in Sec. 411.155. We also are modifying the 
language in final Sec. 411.575(a)(1)(i), which was proposed as 
Sec. 411.575(a)(1). The revised language clarifies that we will pay an 
EN for milestones only if the EN's elected payment system in effect at 
the time the beneficiary assigned the ticket to the EN was the outcome-
milestone payment system. The wording we proposed had suggested that 
the payment system election and ticket assignment had to occur 
simultaneously and this was incorrect. Finally, we added paragraph 
(b)(1)(iii) to final Sec. 411.575 to clarify that in addition to the 
other requirements listed, we will pay an EN for an outcome payment 
month only if the ticket has not terminated for any of the reasons 
listed in Sec. 411.155.
    Section 411.580 explains that an EN must first have had the ticket 
assigned to it before it can be eligible to receive milestone or 
outcome payments.
    As a beneficiary is free to choose where to assign a ticket, the 
opening paragraph of Sec. 411.585 explains that a State VR agency and 
an EN can both be eligible for payment on a ticket if the State VR 
agency elects to be paid as an EN. Each entity can be paid as an EN 
under its respective EN payment system. If the State VR agency chooses 
to serve a beneficiary with a ticket and to be paid under the cost 
reimbursement payment system, then we will pay the State VR agency 
under the cost reimbursement payment system if it meets the criteria 
for reimbursement and if we have not first paid an EN under its elected 
payment system with respect to the same beneficiary and ticket. For 
each ticket, a payment either under the cost reimbursement payment 
system or under an elected EN payment system will exclude any payment 
under the other payment system. Absent this restriction, it would be 
possible to pay separately under both the cost reimbursement payment 
system and under the EN payment systems such amounts as, when combined, 
would exceed the statutory limitation of one or both of these payment 
systems for serving the same beneficiary under the same ticket.
    In response to a public comment, we are cross-referring 
Sec. 411.560 in the opening paragraph of Sec. 411.585. Section 411.560 
explains how the PM will make a determination of payment allocation 
should more than one entity qualify for payment as an EN.
    Section 411.587 is a new section that we are adding in response to 
a comment. It explains which provider we will pay if, with respect to 
the same ticket, we receive two requests for payment and one request is 
from a provider that elected an EN payment system and the other request 
is from a State VR agency that elected payment under the cost 
reimbursement payment system.
    Section 411.590 describes what an EN or State VR agency serving as 
an EN can do if either disagrees with our decision on a payment request 
it submits. This section also explains that an EN cannot appeal our 
determination about a beneficiary's right to benefits even when that 
determination affects the payment to an EN. In the final rules, we are 
broadening paragraph (d) of Sec. 411.590 to clarify that any 
determination we make about a beneficiary's right to disability cash 
benefits, not just a determination that a beneficiary appeals, could 
affect an EN's payment or result in an adjustment to payments already 
made to an EN. In addition, we made some editorial changes throughout 
this section.
    Section 411.595 identifies various methods we will use to monitor 
the EN payment systems for financial integrity. Section 411.597 states 
that we will periodically review the conditions affecting payment under 
the two EN payment systems to determine if these payment systems are 
providing adequate incentives and appropriate economies for ENs to 
assist beneficiaries to enter the workforce.

Subpart I--Ticket to Work Program Dispute Resolution

    Section 1148(d)(7) of the Act requires us to provide for a 
mechanism for resolving disputes between beneficiaries and ENs, between 
ENs and PMs, and between PMs and service providers. As part of this 
process, we are required to provide a party to a dispute a reasonable 
opportunity for a full and fair review of the matter in dispute. 
Finally, beneficiaries and State VR agencies may have disputes. The 
various dispute resolution mechanisms are discussed below.

PM and EN Disputes With SSA

    Since PMs and ENs, other than State VR agencies functioning as ENs, 
will operate under contracts with SSA, disputes between SSA and PMs and 
between SSA and ENs that are not State VR agencies will be subject to 
the dispute resolution procedures contained in the contracts with SSA.

Disputes between Beneficiaries and ENs That Are Not State VR 
Agencies

    There is a three-step process for resolving disputes between 
beneficiaries and ENs that are not State VR agencies. This three-step 
process will ensure that both beneficiaries and ENs have the 
opportunity to resolve disputes using informal means.
    As a first step in the dispute resolution process, each EN is 
required to have an internal grievance procedure whereby beneficiaries 
have the opportunity to work with representatives of the EN to try to 
resolve any disputes arising during the implementation or amending of 
an IWP. If the dispute is not resolved using the EN's internal 
grievance procedures, both the beneficiary and the EN will have the 
option of contacting the PM for assistance in resolving the dispute. 
Upon request, the PM will conduct a full review of the matter in 
dispute and

[[Page 67386]]

make a recommendation to the beneficiary and the EN as to how the 
dispute might be resolved (see Sec. 411.615). This second step is 
intended to provide the parties to the dispute the opportunity to 
present their case before an impartial third party, the PM. The third 
step involves bringing the dispute to SSA.
    Section 411.605 explains the responsibilities of an EN that is not 
a State VR agency regarding this dispute resolution process, including 
informing beneficiaries of the availability of assistance from the 
State Protection and Advocacy (P&A) system at every step in the dispute 
resolution process. Section 411.610 identifies specific points in the 
rehabilitation process when an EN that is not a State VR agency must 
inform beneficiaries about the procedures for resolving disputes.
    Section 411.615 describes how a disputed issue will be referred to 
the PM, including what information should be submitted. Section 411.620 
tells how long the PM has to provide a written recommendation on how to 
resolve the dispute. Section 411.625 explains that if the parties to 
the dispute do not agree with the PM's recommendation and the dispute 
continues to be unresolved, either the beneficiary or the EN that is 
not a State VR agency has the option of bringing the dispute to the 
attention of SSA for resolution.
    Section 411.625 also describes the information that must be 
submitted to SSA to facilitate our review of the dispute. Section 
411.630 explains that SSA's decision is final.
    Section 411.635 explains that a beneficiary has the right to be 
represented in the dispute resolution process under the Ticket to Work 
program and that the State P&A system is available to provide 
assistance and advocacy services to beneficiaries seeking or receiving 
services from ENs operating under the Ticket to Work program.

Disputes Between ENs and PMs

    Section 411.650 explains that a dispute between an EN that is not a 
State VR agency and the PM, that does not involve an EN's payment 
request, will be resolved using the procedures for resolving disputes 
developed by the PM. If the matter cannot be resolved using these 
procedures, it will be forwarded to SSA for resolution. Section 411.655 
explains how a PM will refer disputes to us. Section 411.660 explains 
that SSA's decision on a dispute between an EN that is not a State VR 
agency and a PM is final.
    A dispute over a payment request submitted by an EN, including a 
State VR agency serving as an EN, will be resolved using the dispute 
resolution procedures contained in Sec. 411.590.

Disputes Between Service Providers and PMs

    We are required to provide a mechanism for resolving disputes 
between service providers and PMs. Most service providers approved to 
serve beneficiaries under the Ticket to Work program will be serving as 
ENs. Disputes between ENs and PMs over payments are discussed in 
subpart H. Other disputes between ENs and PMs are discussed above, and 
in Secs. 411.650, 411.655, and 411.660. State VR agencies that choose 
not to serve beneficiaries with tickets as ENs will be the only other 
service providers having a relationship with a PM under the Ticket to 
Work program. Disputes between a State VR agency that is not 
functioning as an EN and a PM, that involve issues related to ticket 
assignment and do not involve a request for payment or other 
reimbursement issue, will be handled in accordance with the PM's 
dispute resolution procedures. A dispute over a payment request 
submitted by a State VR agency which is serving a beneficiary with a 
ticket under the vocational rehabilitation cost reimbursement system 
(see sections 222(d) and 1615(d) of the Social Security Act) will be 
resolved under existing regulations governing the resolution of 
disputes regarding a payment request (see 20 CFR Secs. 404.2127(a) and 
416.2227(a)).

Disputes Between Beneficiaries and State VR Agencies

    Section 411.640 explains that the dispute resolution procedures in 
the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), 
apply to any dispute arising between a disabled beneficiary and a State 
VR agency, regardless of whether the services are being provided under 
one of the EN payment systems or under the cost reimbursement payment 
system authorized under sections 222(d) and 1615(d) of the Social 
Security Act.
    In response to comments on the proposed rules, we are revising 
rules in subpart I (Secs. 411.600, 411.605, 411.610, 411.615, 411.625, 
411.630, 411.635, 411.640, and 411.650) to clarify whether they refer 
to ENs that are not State VR agencies, or those that are State VR 
agencies.

Subpart J--The Ticket to Work Program and Alternate Participants 
Under the Programs for Payments for Vocational Rehabilitation 
Services

    Section 101(d) of Public Law 106-170 provides for a graduated 
implementation of the Ticket to Work Program. By January 1, 2004, the 
program will be operating in all States and U.S. territories.
    Section 1148(d)(4)(B) of the Act requires the Commissioner, in any 
State where the Ticket to Work program is implemented, to enter into 
agreements with any alternate participant that is operating under the 
authority of section 222(d)(2) of the Act in the State as of the date 
of enactment of Public Law 106-170 if the alternate participant chooses 
to serve as an EN under the program.
    Subpart J of these regulations describes how implementation of the 
Ticket to Work program affects the current alternate participant 
payment programs under 20 CFR 404.2101 et seq. and 416.2201 et seq. 
Section 411.700 explains what an alternate participant is. Sections 
411.705 and 411.710 explain that an approved alternate participant has 
the option of becoming an EN when the Ticket to Work program is 
implemented in a State and tells an alternate participant what it must 
do to become an EN. Sections 411.715 through 411.730 describe how the 
transition process will occur for alternate participants who choose to 
become ENs. These sections explain how SSA will handle payments related 
to beneficiaries who were being served by alternate participants under 
existing employment plans prior to the Ticket to Work program being 
implemented in the State and the alternate participant becoming an EN. 
These sections also provide that SSA will not provide reimbursement for 
any services provided to a beneficiary under the alternate participant 
payment system after December 31, 2003.

Public Comments on the Notice of Proposed Rulemaking

    When we published the NPRM in the Federal Register on December 28, 
2000 (65 FR 82844), we provided interested parties 60 days to submit 
comments. We received comments from over 400 commenters, including 
national, State and community-based agencies and private organizations 
serving people with disabilities, beneficiaries, and other individuals. 
We considered carefully the comments we received on the proposed rules 
in publishing these final regulations. The comments we received and our 
responses to the comments are set forth below. Although

[[Page 67387]]

we condensed, summarized, or paraphrased the comments, we believe that 
we have expressed the views accurately and have responded to all of the 
relevant issues raised.

Comments and Responses

Subpart B--Tickets Under the Ticket to Work Program

    Comment: Several commenters indicated that we should delay the 
issuance of tickets until these final regulations were published.
    Response: After consideration of the public comments on our 
proposed rules as well as other views on the best time to begin the 
release of the tickets, we have decided to delay releasing tickets 
until after these final regulations are effective. These regulations 
are effective 30 days after the date of their publication in the 
Federal Register. We believe that this will allow for the development 
of an infrastructure of public and private sector employment networks 
to serve beneficiaries who receive a ticket. We also believe that it is 
critical to issue tickets as soon as possible after these regulations 
are effective.

Section 411.120  What Is a Ticket Under the Ticket to Work Program

    Comment: One commenter suggested that, in the interest of making 
these regulations user-friendly, we add a cross-reference from 
Sec. 411.120, regarding what is a ticket under the Ticket to Work 
Program, to Sec. 411.140, which describes when an individual can assign 
the ticket.
    Response: We are not adopting this comment. However, we agree that 
this section requires clarification to include a more complete 
description of the format and wording of the ticket, as provided by 
section 101(e)(2) of Public Law 106-170. Accordingly, we have expanded 
Sec. 411.120 in the final rules to include a fuller description of the 
format and wording of the ticket.

Section 411.125  Who is Eligible To Receive a Ticket Under the Ticket 
to Work Program?

    Comment: We received many comments in response to proposed 
Sec. 411.125(a)(1) which provided that an individual will be eligible 
to receive a ticket in a month in which he or she is age 18 or older 
and has not attained age 65. Some commenters agreed that it would not 
be appropriate to provide transitional youth with tickets, as it might 
interfere with their pursuit of an education. The majority of 
commenters, though, indicated that we should allow individuals under 
age 18 access to a Ticket, to try to ensure that they do not begin a 
life-long dependency on public benefits.
    Response: As we indicated in the Preamble to the proposed rules, as 
we gain experience with the Ticket to Work program, we plan, at a later 
time, to explore the possibility of expanding the age criteria for 
receiving a ticket to include those SSI beneficiaries age 16 and older 
who are eligible for disability benefit payments based on the childhood 
disability standard. While we are not adopting the recommendation to 
provide these individuals with tickets in these final rules, we are 
publishing a separate notice in this issue of the Federal Register to 
request public input for our consideration in developing possible 
approaches to serve the needs of transition-age youth with disabilities 
who are receiving payments under programs we administer under the Act.
    Comment: Proposed Sec. 411.125(a)(3)(i) and (ii) provide that an 
individual will only be eligible for a ticket in a month in which our 
records show that the individual's case has not been designated as a 
medical improvement expected (MIE) diary review case, or that we have 
conducted at least one continuing disability review (CDR) on such an 
individual and have made a final determination or decision that 
disability continues. Many commenters stated that we should provide 
tickets to beneficiaries regardless of whether they have been 
designated as a medical improvement expected diary review case. They 
stated that the MIE categorization is an administrative convenience to 
determine the frequency of CDRs, and is not a sufficiently precise tool 
to deny beneficiaries immediate access to a ticket. Others indicated 
that SSA should examine, on a disability-by-disability basis, which 
people whose cases have been designated as a MIE diary case are likely 
to remain on the rolls after initial CDR, and issue those people a 
ticket. Other commenters indicated that the majority of individuals 
designated as MIE remain on the rolls after the first CDR, and that we 
would, therefore, needlessly be delaying the opportunity to participate 
in the Ticket to Work program for these individuals.
    Response: We are not adopting this comment. As we indicated in the 
Preamble of the proposed rules, ``Because these beneficiaries have 
conditions that are expected to medically improve in a relatively short 
period of time, they could be expected to return to work without the 
need for services under the Ticket to Work program.'' Moreover, we do 
not believe, as some commenters stated, that the MIE classification is 
merely an ``administrative convenience'' and that it, therefore, has no 
relevance for determining who gets a ticket.
    We also believe that using a medical improvement diary system to 
help identify beneficiaries who should receive tickets is the most 
administratively feasible approach currently available to us. We 
believe that the approach outlined in the proposed rules, and provided 
in these final rules, strikes the proper balance between equitable 
treatment of disability beneficiaries and ensuring, to the extent 
possible, that the resources that will be available in the Ticket to 
Work program are distributed in the most effective and efficient 
manner.
    We believe that the use of the medical improvement diary system is 
the most practical and efficient means available to identify those 
beneficiaries with impairments that are expected to improve within a 
relatively short period of time so as to permit the individual to 
engage in SGA. However, we believe that it may be possible to find ways 
to improve that system for its use in connection with the Ticket to 
Work program. Therefore, we plan to conduct an evaluation of the 
methodology for the existing MIE category within the CDR classification 
system to assess possible ways to improve the system for use in 
identifying those beneficiaries for whom near-term medical improvement 
should preclude the immediate receipt of a Ticket.
    Comment: Many commenters indicated that there should not be a limit 
on the number of tickets a person can receive in a lifetime, as long as 
a person is not using more than one ticket at a time. Other commenters 
added that a person should be eligible for another ticket when the cash 
value of the first one has been exhausted. They cited potential 
inequities involving beneficiaries (1) Whose benefits are reinstated 
under the provisions of section 223(i) or 1631(p) of the Act (as added 
by section 112 of Public Law 106-170); (2) who retain eligibility under 
section 1619(b) of the Act; and (3) who receive services from the State 
VR agency that elects payment under the cost reimbursement payment 
system.
    Response: As in the proposed rules, Sec. 411.125(b) of the final 
rules does not limit the total number of tickets that an individual may 
be eligible to receive during his or her lifetime under the Ticket to 
Work program. Rather, consistent with section 1148 of the Act, the 
regulation limits the number of tickets an individual may receive 
during any period during which the individual is either a title II 
disability beneficiary

[[Page 67388]]

or a title XVI disability beneficiary and his or her title XVI 
eligibility has not terminated. If an individual's entitlement to title 
II benefits based on disability or eligibility for title XVI benefits 
based on disability or blindness terminates, and the individual again 
becomes entitled to or eligible for benefits, the individual may be 
eligible to receive a new ticket.
    Section 411.125(b) of the final regulations provides that an 
individual will not be eligible to receive more than one ticket during 
any period during which the individual is either: (1) Entitled to title 
II benefits based on disability; or (2) eligible for title XVI benefits 
based on disability or blindness and the eligibility has not 
terminated. This rule is based on section 1148 of the Act, which 
authorizes the Commissioner to issue ``a ticket'' to disabled 
beneficiaries for participation in the Ticket to Work program. The Act 
defines ``disabled beneficiary'' for purposes of this section to mean 
``a title II disability beneficiary or a title XVI disability 
beneficiary.'' Section 1148 of the Act also provides that an individual 
is a title II disability beneficiary for each month for which the 
individual is entitled to title II benefits based on disability as 
described in that section. This section also indicates that an 
individual is a title XVI disability beneficiary for each month for 
which the individual is eligible for a Federal cash benefit under 
section 1611 or 1619(a) of the Act based on disability or blindness.
    In addition, section 1148 of the Act indicates that an individual 
may be issued only one ticket while he or she is a disabled 
beneficiary. That section provides that the limitation on the total 
number of outcome payments that may be paid to an EN applies with 
respect to each beneficiary. Section 1148 also authorizes the 
Commissioner to pay an outcome payment to an EN, ``in connection with 
each individual who is a beneficiary, for each month, during the 
individual's outcome payment period, for which benefits . . . are not 
payable. * * *'' This section indicates that each individual who is a 
beneficiary has one outcome payment period, consisting of 60 months. 
Thus, under section 1148 of the Act, the Commissioner is authorized to 
pay a maximum of 60 outcome payments to an EN with respect to each 
individual who is a beneficiary. Accordingly, the final regulations 
provide that an individual may not receive more than one ticket during 
any period during which the individual is either a title II disability 
beneficiary or a title XVI disability beneficiary and his or her title 
XVI eligibility has not terminated.
    We are adding a provision to Sec. 411.125 in these final rules to 
clarify that individuals whose entitlement to title II benefits based 
on disability is reinstated under section 223(i) of the Act, or whose 
eligibility for title XVI benefits based on disability or blindness is 
reinstated under section 1631(p) of the Act, will be eligible to 
receive another ticket in the first month he or she is entitled to or 
is eligible for reinstated benefits, as long as the beneficiary meets 
certain other requirements for eligibility for a ticket.
    Comment: Many commenters stated that SSA must address issues 
specifically related to individuals who are entitled to child's 
insurance benefits as disabled adult children (DACs). They indicated 
that our title II program regulations should allow these beneficiaries 
to move on and off the title II program (in other words, to have their 
benefits reinstated) to the same extent that other beneficiaries with 
disabilities are allowed to do so. Otherwise, they argue, the purpose 
of the Ticket program will be thwarted.
    Response: Section 202(d)(1)(B) of the Act provides that an 
individual who is an adult child (18 years old or older) of an insured 
person who is entitled to old-age or disability benefits, or who has 
died, is eligible for benefits if the individual is unmarried and has a 
disability that began before the individual is 22 years old. Under the 
provisions of section 202(d)(6) of the Act, an individual whose 
entitlement to child's insurance benefits based on disability has 
terminated may again become entitled to such benefits if he or she has 
not married and he or she is under a disability which began before the 
end of the 84th month following the month in which his or her most 
recent entitlement to child's insurance benefits terminated because he 
or she ceased to be under a disability. Therefore, these individuals 
would be eligible to receive another ticket in the first month they 
again become entitled to benefits, as long as they meet all other 
requirements for eligibility for a ticket.
    Further, such individuals whose benefits are reinstated under 
section 223(i) of the Act also will be eligible to receive another 
ticket in the first month they are entitled to reinstated benefits, as 
long as they meet certain other requirements for eligibility for a 
ticket.
    Comment: Several commenters stated that we should eliminate the 
requirement in proposed Sec. 411.125(a)(2) that a beneficiary be in 
current pay status in order to be eligible to receive a ticket. They 
stated that this provision would disadvantage individuals who are in 
overpayment, extended period of eligibility or 1619(b) status.
    Response: The rule which provides that a disabled or blind title 
XVI beneficiary may be eligible to receive a ticket only in a month in 
which his or her Federal SSI cash benefits are not suspended is based 
on section 1148 of the Act. Under section 1148, the Commissioner is 
authorized to issue a ticket to a title XVI disability beneficiary for 
participation in the Ticket to Work program. This section also provides 
that an individual is a title XVI disability beneficiary for each month 
for which the individual is eligible for a Federal cash benefit under 
section 1611 or 1619(a) of the Act based on disability or blindness. If 
payment of an individual's monthly Federal SSI cash benefits is 
suspended under 20 CFR 416.1321-416.1330 due to ineligibility, such 
individual is not a title XVI disability beneficiary for that month for 
purposes of section 1148 of the Act since he or she is not eligible for 
Federal SSI cash benefits.
    We are providing a similar requirement regarding current pay status 
for title II disability beneficiaries to make the criteria for issuing 
a ticket the same for title II beneficiaries as for title XVI 
beneficiaries. This will provide consistent and equitable treatment of 
beneficiaries under the two programs with respect to the issuance of 
tickets. We also believe that limiting the issuance of tickets to title 
II disability beneficiaries who are receiving cash benefits is 
consistent with the purpose of the Ticket to Work program, which is to 
enable beneficiaries to seek the services they need to return to work 
and reduce their dependency on cash benefits. In addition, we believe 
that providing tickets only to title II disability beneficiaries who 
are receiving title II cash benefits is consistent with Congress' 
expectation regarding who would be eligible to participate in the 
Ticket to Work program. In its report on the legislation to establish 
the Ticket to Work program, the House of Representatives Committee on 
Ways and Means explained that the legislation would ``define `disabled 
beneficiary' for purposes of Program participation to include SSI 
disability benefits recipients and Social Security beneficiaries 
receiving disability insurance, disabled widow's, and childhood 
disability benefits.'' (H.R. Rep. No. 393, 106th Cong., 1st Sess. 41 
(1999).)

[[Page 67389]]

Section 411.140  When Can I Assign My Ticket and How?

    Comment: One commenter indicated that we should revise proposed 
Sec. 411.140(b) to clarify that individuals may assign the ticket to a 
State VR agency if they are eligible to receive VR services according 
to 34 CFR 361.42. The commenter also indicated that we should revise 
Sec. 411.145(b) to clarify that a State VR agency does not have 
discretion on when it will or will not serve an individual. Rather, 
they indicated, Title I of the Rehabilitation Act provides that a VR 
agency must cease providing services to individuals who are no longer 
eligible for VR services. They further suggested that we revise both 
Sec. 411.140(c) and 411.150(b) to reflect that the VR counselor must 
agree to and sign an Individualized Plan for Employment.
    Response: We agree, and we have made the appropriate changes to 
Secs. 411.140, 411.145 and 411.150.

Section 411.150  Can I Reassign My Ticket to a Different EN or to the 
State VR Agency?

    Comment: Some commenters indicated that we should limit, in 
Sec. 411.150, the reasons a beneficiary can reassign a ticket. They 
also suggested that we impose limits as to how many times a beneficiary 
will be allowed to reassign a ticket.
    Response: Section 1148(e)(3) of the Act provides that the PM will 
ensure that beneficiaries are allowed changes in ENs without being 
deemed to have rejected services under the program. Therefore, we are 
not adopting this comment.
    Comment: We received a comment which we decided to group with the 
comments on this section because it most closely related to reassigning 
a ticket to a different EN or State VR agency. The commenter asked if, 
from a State VR agency's perspective, a legal guardian's decisions with 
regard to the Ticket to Work program would be controlling. For example, 
would we require a legal guardian's permission before the ticket could 
be taken back from one EN and reassigned to another?
    Response: We assume that the commenter is referring to a court-
appointed legal guardian of an individual who has been declared legally 
incompetent. In such a case, the legal guardian is responsible for 
making decisions on behalf of the individual and for exercising any 
rights of such individual. In the Ticket to Work program, the court-
appointed legal guardian of a beneficiary who is legally incompetent 
would be responsible for exercising the beneficiary's rights under the 
program, including deciding whether the beneficiary's ticket should be 
assigned or reassigned to an EN. In such circumstances, in order for 
the beneficiary's ticket to be assigned or reassigned, the IWP under 
which services are provided to the beneficiary by an EN must be agreed 
to and signed by the beneficiary's court-appointed legal guardian. 
According to the Rehabilitation Services Administration, the same would 
be true for approval of an IPE under which services are provided by a 
State VR agency. In the case of a beneficiary who is a legally 
competent adult, it is up to the beneficiary to decide whether to 
assign or reassign his or her ticket.

Section 411.155  When Does My Ticket Terminate?

    Comment: One commenter stated that we should revise Sec. 411.155 to 
indicate that we will pay a State VR agency after the month in which a 
ticket terminates if the VR agency has elected and is eligible to claim 
payment under the cost reimbursement payment system authorized under 
sections 222(d) and 1615(d) and (e) of the Social Security Act. This 
modification would clarify, according to the commenter, that if a state 
VR agency chooses current law reimbursement, which is possible on a 
case-by-case basis, the use of a ticket is not relevant, and the VR 
agency can be paid for services.
    Response: We do not agree with this recommendation to revise the 
final rules because it is unnecessary. The final rules provide that we 
will make payment to a State VR agency under the cost reimbursement 
payment system if all of the following conditions exist: (1) the 
beneficiary's ticket is assigned to the State VR agency under the rules 
in subpart F; (2) the cost reimbursement payment system is the State VR 
agency's payment system with respect to that beneficiary; (3) we have 
not made payment to an EN or a State VR agency functioning as an EN 
under one of the EN payment systems with respect to the ticket, as 
discussed in Sec. 411.585; and (4) the requirements of sections 222(d) 
and 1615(d) of the Act and applicable regulations relating to cost 
reimbursement are met.

Subpart C--Suspension of Continuing Disability Reviews for 
Beneficiaries Who Are Using a Ticket

Section 411.160  What Does This Subpart Do?

    Comment: One commenter noted that the Ticket to Work program 
exempts beneficiaries who are using a ticket from medical reviews, but 
not work reviews. The commenter indicated that the language in 
Sec. 411.160(b) would confuse beneficiaries and would not allay 
beneficiary fears about continuing disability reviews (CDRs) because 
SSA uses the term continuing disability reviews in the context of the 
disability programs when referring to the process of conducting both 
medical and work reviews. The commenter suggested that we establish a 
different process for work reviews.
    Response: We did not establish a different process for work reviews 
because programmatically they are a type of CDR. However, in response 
to this comment, we clarified the language in final Sec. 411.160(b). 
The revised language references our rules on when we may conduct a CDR 
(i.e. 20 CFR 404.1589, 416.989, and 416.989a) to determine whether an 
individual remains eligible for disability-based benefits. It then 
explains that, for purposes of subpart C, the term continuing 
disability review includes the medical reviews we conduct when 
determining if a beneficiary's medical condition has improved, as 
described in 20 CFR 404.1594 and 416.994, but does not include the CDRs 
we do under 20 CFR 404.1594(d)(5) to determine whether a title II 
beneficiary's work activity demonstrates the ability to engage in SGA. 
In light of this clarification, we removed the parenthetical reference 
to Secs. 404.1594 and 416.994 that we included in proposed 
Sec. 411.165.

Section 411.165  How Does Being in the Ticket to Work Program Affect My 
Continuing Disability Reviews?

    Comment: Two commenters recommended that we clarify proposed 
Sec. 411.165 by referencing the specific sections that explain when the 
period of using a ticket begins (Sec. 411.170) and ends (Sec. 411.171).
    Response: We concur with the recommendation and are adding these 
cross-references to final Sec. 411.165.
    Comment: Another commenter, referencing proposed Sec. 411.165, 
expressed concern that if a beneficiary places his or her ticket into 
inactive status (e.g. due to health reasons) we would be able to 
consider the activities he or she engaged in while actively 
participating in the Ticket to Work program when we conduct a 
subsequent medical CDR. The commenter said that our consideration of 
such activities would create a significant disincentive for 
beneficiaries to participate in the Ticket to Work program and 
recommended that we amend final Sec. 411.165 to assure beneficiaries 
that we

[[Page 67390]]

would not consider these activities when we conduct subsequent medical 
CDRs.
    Response: Section 1148 of the Act does not specifically address the 
factors we consider when we conduct medical CDRs and thus we are not 
amending Sec. 411.165 in the final rules in the manner suggested. 
However, we will address this issue when we implement section 111 of 
Public Law 106-170, Work Activity Standard as a Basis for Review of an 
Individual's Disabled Status, which becomes effective on January 1, 
2002. In general, this section amends section 221 of the Act to provide 
that, with regard to individuals who are entitled to title II benefits 
based on disability, and have received these benefits for at least 24 
months, we will not schedule a CDR solely as a result of work activity, 
and we will not use work activity engaged in by the individual as 
evidence that the individual is no longer disabled.
    Comment: A commenter asked what happens to those beneficiaries who 
are eligible to use a ticket, but are already working with a provider 
who is not an EN. The commenter notes that these beneficiaries, unlike 
those who are using a Ticket, have to undergo CDRs even though they may 
already be making progress towards fuller employment.
    Response: In order for CDRs to be suspended for an individual under 
section 1148(i) of the Act, the beneficiary must be using a ticket as 
defined by the Commissioner of Social Security. In the situation 
described by the commenter, the beneficiary may wish to encourage his 
or her current provider to become an EN.

Section 411.166  Glossary of Terms Used in This Subpart

    Comment: Several comments suggested that we define the terms we use 
in subpart C in a central location in order to assist with the clarity 
and flow of the subpart.
    Response: We agree and have added new Sec. 411.166 to provide a 
glossary of key terms which we use in Subpart C. In new Sec. 411.166 we 
explain the following eight terms:
     active participation in your employment plan
     extension period
     inactive status
     initial 24-month period
     progress review
     timely progress guidelines
     12-month progress review period,
     using a ticket
    In the proposed rules we called the ``12-month progress review 
period'' the ``12-month work review period'' and a ``progress review'' 
a ``work review.'' We renamed these concepts in these final rules to 
distinguish these progress reviews from the ``work reviews'' we conduct 
for title II beneficiaries, following the completion of their trial 
work periods, to determine whether their work and earnings demonstrate 
the ability to engage in SGA. When we do a work review under the title 
II disability program, we make a determination about whether an 
individual is no longer disabled because of work and earnings. When we 
do a progress review under the rules in subpart C, we are simply 
deciding whether a Ticket is ``in use'' so that we can determine 
whether an individual is exempt from periodic medical reviews.

Section 411.171  When Does the Period of Using a Ticket End?

    Comment: One commenter stated we should ensure that the events 
cited in proposed Sec. 411.171(b) and (c), that would signify that the 
period of using a ticket has ended, are not beyond the control of the 
individual. Proposed Sec. 411.171(b), which is redesignated in the 
final rules as Sec. 411.171(e), provides that, if a beneficiary has 
assigned a ticket to a State VR agency which selects the cost 
reimbursement payment system, the period of using a ticket will end 
with the 60th month for which an outcome payment would have been made 
had the State VR agency chosen to serve the beneficiary as an EN. 
Proposed Sec. 411.171(c), which is redesignated in the final rules as 
Sec. 411.171(b), provides that the period of using a ticket will end 
the day before the effective date of a decision under Sec. 411.192 
(which has been incorporated in final Sec. 411.190), Sec. 411.195, 
Sec. 411.200 or Sec. 411.205 that an individual no longer is making 
timely progress toward self-supporting employment.
    Response: Section 1148(h)(4)(B) of the Act provides that we will 
make up to 60 outcome payments to an EN based on a ticket. Final 
Sec. 411.171 (d) and (e), therefore, provide that the period of using a 
ticket will terminate at the same point, with reference to potential 
outcome payment months, regardless of whether a State VR agency elects 
to serve a beneficiary as an EN or elects to be paid under the cost 
reimbursement payment system. In order for the period of using a ticket 
to terminate in this situation, a beneficiary will have had to work 60 
months with monthly earnings sufficient to preclude the payment of 
Social Security disability benefits and Federal SSI cash benefits.
    The rules described in Secs. 411.190, 411.195, 411.200 and 411.205 
contemplate that the beneficiary will have the opportunity to 
participate in the decision-making process before the PM or SSA makes a 
decision that the beneficiary is no longer making timely progress 
toward self-supporting employment.
    Comment: One commenter recommended that we add a provision to the 
section of the rules regarding when the period of using a ticket ends 
to assure that the State VR agency will receive payment for services 
furnished to a beneficiary when a beneficiary applies and seeks 
services from the State VR agency after his or her period of using a 
ticket has ended.
    Response: The determination regarding ticket use affects whether a 
CDR may be initiated with respect to a beneficiary. The conduct of a 
CDR could affect payment to providers if the beneficiary's entitlement 
to or eligibility for benefits is determined to have ended for reasons 
other than work or earnings. The specific determination as to whether 
the period of using a ticket has ended for a particular beneficiary is 
not relevant to the determination of whether or not a State VR agency 
can be paid under either the cost reimbursement payment system or its 
elected EN payment option. Unless the restrictions on payment described 
in Sec. 411.585 apply, we will pay the State VR agency if all 
requirements for payment are met, even if the beneficiary's ticket is 
not in use.

Section 411.175  What if I Assign My Ticket After a Continuing 
Disability Review Has Begun?

    Comment: We received two comments suggesting that we add a 
statement to this section to indicate that, if a beneficiary chooses to 
have benefits continued pending an appeal of a medical cessation 
determination and does not prevail in the appeal, he or she may be 
required to repay the benefits received during this period.
    Response: While we understand the concern of the commenters, we did 
not adopt the recommendation to add this statement to Sec. 411.175 in 
these final regulations, since this section provides appropriate cross-
references to Secs. 404.1597a and 416.996, which provide this 
statement.
    Comment: Two commenters indicated that, since no other individuals 
have CDRs conducted while they are receiving services with a ticket, we 
should suspend CDRs when a beneficiary assigns the ticket after a CDR 
has begun. The commenters suggested that allowing the individual to 
continue to receive services and supports through an established EN 
should be consistent with the legislative intent to help ensure

[[Page 67391]]

access and entry into improved work opportunities. They concluded that 
SSA has more to gain in terms of positive outcomes by allowing 
suspension of such reviews and having the person continue with their 
individual work plan.
    Response: Section 1148(i) of the Act precludes the initiation of a 
CDR for a beneficiary who is using a ticket as defined by the 
Commissioner. Section 411.175 deals with the situation where a CDR is 
initiated before the beneficiary assigns and begins using the ticket. 
Mere receipt of a ticket does not preclude the conduct of a CDR. 
Further, Sec. 411.175 does not preclude the beneficiary from receiving 
services if he or she assigns a ticket after a CDR has begun.

Section 411.180  What Is Timely Progress Toward Self-Supporting 
Employment?

    General: By far, the overwhelming number of comments received 
relating to subpart C of the NPRM related to this section on timely 
progress toward self-supporting employment and other sections which 
specify the guidelines for timely progress. We have divided these 
comments into five topic areas. These topic areas are:
    (1) Allowing the individual and the EN or State VR agency to define 
what timely progress is in the IWP/IPE;
    (2) ``Banking'' of work performed in the initial 24-month period;
    (3) Allowing enough time in the time frames for the completion of 
college degrees and/or other post-secondary education;
    (4) Allowing for consideration of relapses, setbacks, and episodes 
of illness in setting time frames; and
    (5) Miscellaneous, such as the complexity of the timely progress 
guidelines and the contention that the timely progress guidelines are 
more lenient than the EN payment rules.
1. Allowing the Individual and the EN or State VR Agency To Define What 
Timely Progress Is in the IWP/IPE
    Comment: We received a large number of specific comments from 
various individuals and organizations recommending that we allow the 
individual and the EN or State VR agency to define what timely progress 
is in the beneficiary's IWP or IPE. In general, these commenters stated 
that people with disabilities have unique needs and, consequently, that 
the measurement of timely progress should be flexible and 
individualized.
    Response: There appears to have been some misunderstanding that 
beneficiaries must meet the timely progress guidelines in order to 
participate in the Ticket to Work program. Therefore, we believe that 
it is appropriate to restate here that the timely progress guidelines 
are only used to determine whether a beneficiary is using a ticket for 
purposes of protection against initiation of a CDR as provided under 
section 1148(i) of the Act. Beneficiaries who do not meet the timely 
progress guidelines may still participate in the Ticket to Work 
program, receive services and generate outcome and milestone payments 
to ENs. However, these beneficiaries may be subject to CDRs.
    With reference to the specific recommendation, we appreciate that 
individuals with disabilities have unique needs, and we believe that 
there is sufficient flexibility in our timely progress rules to 
accommodate these needs. Further, if we allowed the individual and the 
EN or State VR agency to define timely progress, it would not be 
possible to develop a consistent and standardized method to determine 
timely progress for program administration and integrity purposes. 
Absent these consistent standards, our ability to measure the 
effectiveness of the Ticket to Work program would be significantly 
hampered.
2. ``Banking'' of Work in the Initial 24-Month Period
    Comment: There were a large number of commenters who recommended 
improving the timely progress guidelines by providing for ``banking'' 
months of work completed in the initial 24-month period. These 
commenters noted that many beneficiaries have disabilities that are 
episodic and intermittent. While some people may not be able to work 
right away, others might be able to work sooner but may experience 
difficulties later. The commenters considered that it would be more 
equitable if we allowed those who can work earlier than the time frames 
described in the proposed rules to receive credit for their work 
effort.
    These commenters recommended that a beneficiary should be allowed 
to ``bank'' work months in the first two years of a beneficiary's 
participation in the program to count towards the work requirements in 
later years. They further recommended that, in year 5 and beyond, work 
in excess of the six-month requirement should count toward the next 
year's work requirements. Finally, these commenters recommended that 
increasing amounts of work or earnings, even if below SGA, should be 
evaluated as meeting the requirements for progress reviews.
    Response: As a result of these recommendations, we are modifying 
Sec. 411.180 and other appropriate sections to allow a beneficiary who 
has worked in months during the initial 24-month period to use those 
months of work to meet the work requirements of the first 12-month 
progress review period if the work was at the requisite level. However, 
we did not adopt the recommendations to allow for ``banking'' of work 
to satisfy the requirements of progress review periods beyond the first 
12-month progress review period, or to consider increasing amounts of 
work or earnings that are below the SGA level for non-blind 
beneficiaries as meeting the requirements for progress reviews. These 
recommendations would be inconsistent with the intent of the timely 
progress guidelines, which is to require that beneficiaries demonstrate 
an increasing ability to work at levels which will reduce their 
dependence on cash benefits.
3. Allowing Enough Time in the Time Frames for the Completion of 
College Degrees and/or Other Post-Secondary Education
    Comment: We received a large number of comments that indicated that 
the timely progress guidelines we proposed do not allow enough time for 
an individual to prepare for employment by pursuing a college degree 
and/or post-secondary education.
    Response: We understand the concerns of the commenters and agree 
that a college degree and/or post-secondary education may enhance 
employment outcomes for individuals with disabilities. We anticipate 
that the provision we are adding in response to recommendations to 
allow for ``banking'' months of work will provide many beneficiaries 
with additional time for the pursuit of college and/or post-secondary 
education, while suspending CDRs for them. Further, as we have stated, 
the timely progress guidelines are only intended to determine whether a 
beneficiary will be considered to be using a ticket for purposes of 
suspending initiation of CDRs. Therefore, a beneficiary pursuing post-
secondary education can continue to participate in the Ticket to Work 
program, receive services and remain in the education program. However, 
if the beneficiary does not meet the timely progress guidelines, he or 
she would be subject to CDRs.

[[Page 67392]]

4. Allowing for Consideration of Relapses, Setbacks and Episodes of 
Illness in Setting Time Frames
    Comment: We received a substantial number of comments stating that 
the proposed timely progress guidelines would not allow for relapses, 
setbacks and episodes of illness.
    Response: We have built into the timely progress guidelines several 
mechanisms that will allow for the episodic nature of many impairments. 
These mechanisms include the provision allowing a beneficiary to place 
a ticket in inactive status during the initial 24-month period; the 
progressive nature of the work requirements; the fact that we do not 
require that work activity has to be continuous to satisfy the timely 
progress guidelines, even in the fifth and subsequent years; and the 
modification that we are making in the final regulation to allow a 
beneficiary who has worked in months during the initial 24-month period 
to use those months to meet the requirements of the first 12-month 
progress review if the work was at the requisite level. Further, as we 
have stated, these guidelines are only used to determine whether a 
beneficiary will be considered to be using a ticket for purposes of 
suspension of initiation of CDRs, not to determine whether the 
beneficiary can participate in the Ticket to Work program.
5. Miscellaneous Comments
    Comment: We received several comments from Federal and State VR 
agencies indicating that the active participation requirement during 
the initial 24-month period should be eliminated because it is not 
consistent with principles set forth in title I of the Rehabilitation 
Act of 1973, as amended (29 U.S.C. 720 et seq.), which governs the 
Federal/State VR program. The commenters noted that, in contrast with 
our proposed requirements, the Rehabilitation Act does not set a time 
period for achieving an employment outcome as long as the terms of the 
IPE are being met.
    Response: The Ticket to Work program under section 1148 of the Act 
is not intended to mirror the Federal/State program for rehabilitation 
services under title I of the Rehabilitation Act. Rather, the purpose 
of the Ticket to Work Program is to provide Social Security or SSI 
beneficiaries who are disabled or blind the opportunity to choose from 
a variety of providers to obtain the services and supports that they 
need to become self-supporting. As we have stated, the timely progress 
guidelines are only used to determine whether a beneficiary will be 
considered to be using a ticket for purposes of suspending initiation 
of CDRs. They are not designed to measure overall success of the 
program or a beneficiary's ability to participate in the program. In 
this context, we must establish consistent standards that would apply 
to both beneficiaries receiving services from ENs and to beneficiaries 
receiving services from State VR agencies.
    Comment: One commenter remarked that the timely progress guidelines 
that we proposed in Sec. 411.180 and in succeeding sections were more 
generous than the payment requirements that we proposed in subpart H of 
these rules. The commenter noted that a beneficiary could keep the CDR 
protection afforded by the ticket by working for as little as nine 
months at the SGA level over a four-year period, while an EN working 
with such a beneficiary may receive only nine payments. The commenter 
said such a funding scheme was unrealistic for those providers who do 
not have additional funding sources.
    Response: The timely progress guidelines and the rules governing 
milestone and outcome payments are not designed for the same purpose. 
As we have stated, the timely progress guidelines only are used to 
determine whether a beneficiary will be considered to be using a ticket 
for purposes of the protection against initiation of a CDR as provided 
in section 1148(i) of the Act. The rules for determining if an EN or 
State VR agency will be eligible to receive a payment under the EN 
payment systems under the Ticket to Work program measure the ability of 
the service provider to assist beneficiaries in their efforts to become 
self-supporting. See subpart H for a further discussion of the EN 
payment systems.
    Comment: Several commenters remarked that there appears to be no 
incentive for either an EN or a State VR agency to maintain a case open 
in the initial 24-month period because the regulations do not provide 
any financial payment for providing services to an individual in this 
status. These commenters predicted that if we do not change our 
regulations that ENs and State VR agencies will not serve beneficiaries 
with significant disabilities or will be quick to terminate individuals 
who do not make progress towards achieving SGA.
    Response: The Ticket to Work program is an outcome-based program, 
and provides for milestone payments when a beneficiary starts to work, 
and/or outcome payments when Federal disability benefits are not 
payable to a beneficiary due to work or earnings. While there is no 
requirement that a beneficiary work during the initial 24-month period 
in order to be making timely progress, there is no penalty for or 
prohibition against work. In fact, we have modified the timely progress 
rules to specifically respond to comments that some beneficiaries can 
and do work early in their period of rehabilitation. In addition, 
enhancements to the outcome-milestone payment system described in 
subpart H of these rules make it possible for an EN to receive a 
milestone payment if a beneficiary works for only one month and has 
gross earnings from employment (or net earnings from self-employment) 
for that month that are more than the SGA threshold amount. Therefore, 
payment to ENs is possible during the initial 24-month period if they 
serve beneficiaries who work during this period.
    Comment: We received three related questions about proposed 
Secs. 411.185 and 411.190. They were: (a) What will happen to 
beneficiaries whose disabilities incapacitate them to the point that 
they remain on the disability benefit rolls after fully utilizing the 
ticket? (b) How much time does a consumer have to keep the ticket in 
inactive status? and (c) Will the beneficiary have a penalty?
    Response: We will make outcome payments to ENs to which 
beneficiaries have assigned a ticket only if monthly cash benefits are 
not payable because of the performance of SGA or by reason of earnings 
from work. Generally, by the time 60 outcome payment months have 
occurred, entitlement to title II benefits based on disability or 
eligibility for title XVI benefits based on disability or blindness 
will have terminated because of work or earnings for most 
beneficiaries. However, these beneficiaries may be entitled to have 
their benefits reinstated under section 223(i) or section 1631(p) of 
the Act. As we explain in Sec. 411.125 of the final rules, 
beneficiaries whose entitlement to or eligibility for benefits is 
reinstated under these sections of the Act would be eligible to receive 
another ticket if they meet certain other requirements for eligibility 
for a ticket.
    The option of placing a ticket in inactive status is available to 
beneficiaries only during the initial 24-month period following the 
assignment of the ticket. During this period there is no penalty or 
time limit for keeping the ticket in inactive status, per se. What 
happens is that the clock stops and the ensuing months during which the 
ticket is in inactive status do not count towards the initial 24-month 
period. However, the ticket is considered to be

[[Page 67393]]

not in use and the beneficiary is subject to continuing disability 
reviews during this time.

Section 411.185  How Much Do I Need To Earn To Be Considered To Be 
Working?

    Comment: One commenter questioned whether the earnings guidelines 
we proposed in Sec. 411.185(a)(1) and (b)(1) for meeting the timely 
progress requirements during the first and second 12-month work reviews 
would lessen the effect of existing work incentive provisions.
    Response: The earnings guidelines we proposed only deal with 
determining whether a beneficiary meets timely progress requirements 
for purposes of suspending medical CDRs. The guidelines do not affect 
any of the existing work incentive provisions.

Section 411.190  How is it Determined if I am Meeting the Timely 
Progress Guidelines?

    Comment: One commenter was concerned that proposed Sec. 411.190 may 
conflict with other Federal regulations governing a State VR agency's 
use and release of confidential information (see 34 CFR 361.38). This 
commenter suggested that we modify our final rule by adding a new 
paragraph that would require a State VR agency or an EN to satisfy all 
applicable Federal and State confidentiality requirements before 
sharing any personal information about the beneficiary with the PM.
    Response: We do not believe that such a modification is necessary. 
Nothing in this rule overrides Federal and State confidentiality rules. 
We provide in 20 CFR Part 401 a description of SSA's policies and 
procedures related to the Privacy Act of 1974, and section 1106 of the 
Social Security Act concerning disclosure of information about 
individuals. ENs, as SSA's contractors, are subject to these rules. 
Similarly, Sec. 411.375 states that State VR agencies are required to 
provide VR services under a plan approved under title I of the 
Rehabilitation Act of 1973, as amended, (29 U.S.C. 720 et seq.), even 
when functioning as an EN. This includes the confidentiality 
requirement that a State VR agency must follow.

Section 411.191  Table Summarizing the Guidelines for Timely Progress 
Toward Self-Supporting Employment

    Comment: One commenter, referencing the table in proposed 
Sec. 411.191, suggested that we have one SGA level for all 
beneficiaries and that it be the one that currently applies to those 
who are blind. The commenter said the higher level would support the 
Ticket program's goal of transitioning beneficiaries from benefits to 
self-sufficiency and would encourage more beneficiaries to participate 
in the Ticket to Work program.
    Response: We did not adopt this suggestion because the SGA level 
for individuals who are not blind is not the subject of these rules. 
The rules relating to the SGA levels for those who are not blind can be 
found in 20 CFR 404.1574 and 416.974, and the rules relating to the SGA 
levels for those who are blind can be found in 20 CFR 404.1584.

Section 411.192  What if My EN, the State VR Agency, or I Report That I 
Am Not Actively Participating in My Employment Plan?

    Comment: One commenter suggested that we add a third choice to the 
two we proposed in Sec. 411.192(a) (Sec. 411.190(a)(1) in the final 
regulations) for beneficiaries who are not actively participating in 
their employment plans during the initial 24-month period. It would 
allow them to reassign their tickets to a different EN.
    Response: We did not adopt this suggestion because we state in 
another section of these final rules that beneficiaries will have the 
right to reassign their tickets to other ENs or to a State VR agency 
(see Sec. 411.150(a)). Such reassignments can occur regardless of 
whether the beneficiaries are making timely progress toward self-
supporting employment.

Section 411.195  How Will the PM Conduct My 24-Month ProgressReview?

    Comment: One commenter stated that the timely progress reviews we 
proposed in Sec. 411.195 did not take into consideration the fact that 
beneficiaries may not be able to obtain or retain employment due to 
circumstances beyond their control. Reasons cited included a downward 
turn in the economy that increases competition for available jobs, an 
employment goal that requires more than two years to obtain, and a lack 
of transportation to look for jobs. This commenter indicated that it 
was unfair to subject beneficiaries to medical CDRs if they fail to 
obtain employment through no fault of their own.
    Response: The timely progress review to which this commenter 
referred is the 24-month progress review, which does not contain a 
specific requirement for work within the first 24 months after the 
beneficiary assigns a ticket. However, the 12-month progress reviews, 
which come after the 24-month progress review, contain a work 
requirement. We did not modify those requirements because we believe 
that they are sufficiently generous and flexible enough to accommodate 
individual needs. They do not require work in every month. They require 
work in three months for the first 12-month progress review period and 
in six months for subsequent 12-month progress review periods.
    We believe these rules are consistent with the intent of the Ticket 
to Work program, which is to allow beneficiaries to choose from a 
variety of providers to obtain the services and supports that they need 
to become self-supporting. While beneficiaries may be subject to a CDR 
if they do not successfully complete the 12-month progress reviews, the 
Ticket does not terminate and beneficiaries may later qualify for CDR 
protection.
    Comment: One commenter recommended rewording Sec. 411.195(a)(1) so 
that it does not sound like work is not an expectation within the 
initial 24-month period.
    Response: We agree with the comment and have reworded Sec. 411.195 
consistent with this recommendation.
    Comment: We received one comment about Sec. 411.195(a)(3). The 
commenter stated that the EN or State VR agencies, rather than the PM, 
should determine if the beneficiary can reasonably be expected to reach 
the goal of at least three months of work during the next 12-month work 
review period. The commenter continued that if we do not make this 
change, then this section should be deleted.
    Response: We have not adopted this comment. Under the law, we had 
to define what it means to be using a ticket for purposes of receiving 
protection against initiation of a CDR. We have chosen to use clear 
standards (active participation in the employment plan during the first 
24 months, then months of work activity at a certain level during 
succeeding 12-month periods). We believe it is better to have the PM, 
who is charged with helping us to administer the program, use the 
criteria we have established to help us determine whether a beneficiary 
will be considered to be using a ticket for purposes of CDR protection. 
We believe having a single entity perform these reviews will lead to 
more fair and efficient administration of the program.

Section 411.200  How Will the PM Conduct My Annual Work Review?

    Comment: We received six comments that questioned the ability of 
the PM to accurately anticipate and assess timely progress for 
individuals whose tickets are assigned to ENs or State VR agencies.

[[Page 67394]]

    Response: We believe that we have developed clear standards for 
determining whether a beneficiary is making timely progress toward 
self-supporting employment for purposes of being considered to be using 
a ticket. We further believe that it is better to have the PM, who is 
charged with helping us to administer the program, use these criteria 
to help us to determine whether a beneficiary is using a ticket for 
purposes of CDR protection. We believe that having a single entity 
perform these reviews, with significant input from ENs and State VR 
agencies, will lead to more fair and efficient administration of the 
program.

Section 411.210  What Happens if I Do Not Make Timely Progress Toward 
Self-Supporting Employment?

    Comment: Four commenters asked us to clarify the proposed rules in 
Sec. 411.210(a) to indicate whether a State VR agency would be able to 
receive payment under the cost-reimbursement payment system if a 
beneficiary, who is found to be no longer using a ticket for CDR 
protection purposes, continues to participate in the Ticket to Work 
program. Also, another commenter asked us whether a State VR agency or 
an EN would still be eligible for the payment option it selected should 
the beneficiary work but not meet the requirements for re-entering in-
use status.
    Response: In these final rules, we made changes to Sec. 411.210(a) 
to indicate that a State VR agency which selects the cost reimbursement 
payment system may be eligible for payment under that system even 
though the beneficiary is determined to be no longer using a ticket. We 
also made changes to indicate that an EN or State VR agency serving a 
beneficiary as an EN may receive milestone or outcome payments for 
which it is eligible even though the beneficiary is considered to be no 
longer using a ticket. The proposed rules had referred only to outcome 
payments. Under the final rules, beneficiaries who do not meet the 
timely progress guidelines may continue to receive services from their 
service providers.
    Comment: One commenter was concerned that an EN that first serves a 
beneficiary might not receive its appropriate share of any future EN 
payments if a beneficiary puts a ticket in inactive status or switches 
ENs when seeking to re-enter in-use status. This commenter recommended 
that we amend proposed Sec. 411.210(b)(1)(ii) to provide that when a 
beneficiary completes the required three months of work at the 
requisite level for reinstatement, he/she may re-enter in-use status, 
provided the ticket is reassigned to the previous EN or State VR 
agency.
    Response: We did not adopt this commenter's suggestion. We 
initially note that under the situation described in this section, the 
ticket does not have to be ``reassigned'' if it has never been taken 
out of assignment. This section merely provides that for a beneficiary 
to re-enter in-use status, his or her ticket must be assigned to an EN 
or State VR agency. We further believe that we do not have authority 
under section 1148 of the Act to restrict the beneficiary's choices 
regarding assigning a ticket in the manner suggested. With regard to 
this commenter's concerns about a former EN sharing in any future EN 
payments, our rules in Sec. 411.560 allow us to allocate a payment to 
more than one EN when the ENs request payment for the same milestone or 
outcome and the beneficiary has assigned the ticket to them at 
different times.
    Comment: A comment referenced Sec. 411.210 and suggested adding a 
new provision to the regulations to indicate that if SSA determined 
that individuals were not using a ticket, and, after a CDR, determined 
that they no longer were disabled, they still could continue to receive 
benefits if they meet the requirements in section 225(b) of the Social 
Security Act.
    Response: We are not adopting this recommendation to add a section 
to the Ticket to Work program regulations concerning the provisions for 
continuation of benefits. The rules for continuation of benefit 
payments to persons who recover medically while participating in a 
rehabilitation program are in 20 CFR 404.316(c), 404.337(c), 
404.352(d), and 416.1338. As previously stated, we plan to publish 
proposed rules to amend those sections of the regulations to take 
account of the amendments made by section 101(b) of Public Law 106-170 
to sections 225(b) and 1631(a)(6) of the Act.
    Comment: This commenter also indicated that Sec. 411.210(b)(1)(i) 
should be revised to make the requirement for re-entering in-use status 
during the initial 24-month period or in the 24-month progress review 
consistent with the actual requirements for this phase, in other words, 
actively participating in the activities outlined in the IWP/IPE, 
rather than completing three months of work at the prescribed level. 
The commenter indicated that this provision is not consistent with the 
purpose, as explained in the preamble and the proposed rules 
themselves, for the first 24-month period. The commenter further 
recommended that the requirements for reinstatement after subsequent 
work reviews also should be consistent with the requirements of that 
phase of timely progress.
    Response: We have revised the requirements for re-entering in-use 
status during the initial 24-month period in Sec. 411.210(b)(1). We 
have not changed the requirements for re-entering in-use status after 
failing to meet the timely progress guidelines in the 24-month progress 
review or in the 12-month progress reviews because these requirements 
are consistent with the requirements of the reviews.

Section 411.220  What if I Am Temporarily Unable To Participate in My 
Employment Plan?

    Comment: We received five comments about proposed Sec. 411.220(a). 
All of these comments indicated that we should allow use of the 
``inactive status'' (as defined in proposed Secs. 411.192(b) and 
Sec. 411.220(a)) not only in the initial 24-month period, but 
throughout the life of the ticket as long as the ticket is in use.
    Response: To improve the organization of the rules in subpart C, 
the rules that were set out in proposed Secs. 411.192 and 411.220 have 
been incorporated in Sec. 411.190 in the final regulations. We did not 
adopt the suggestion to expand the scope of the rules to allow the 
placement of a ticket in inactive status after, as well as during, the 
initial 24-month period. While the placement of a ticket in inactive 
status is only permitted during the initial 24-month period in these 
final rules, the work requirements in subsequent progress review 
periods are designed to allow for intermittent employment (that is, 
three months of work out of 12, or six months of work out of 12) and to 
take into account relapses in health.
    Comment: We received a comment regarding proposed 
Sec. 411.220(b)(1) that indicated a belief that an individual would not 
be eligible to receive services from an EN or State VR agency if the 
individual chooses to place the ticket in inactive status. This 
commenter indicated that State VR agencies must continue to provide 
services to their clients under the terms of the IPE.
    Response: Section 411.190 of these regulations indicates that the 
option of placing a ticket in inactive status is designed to 
accommodate individuals who temporarily are unable to participate or 
are not actively participating in their employment plan. This presumes 
that these individuals will not be receiving services under an IPE 
during this period of inactivity.

[[Page 67395]]

    Comment: We received a comment suggesting that we modify proposed 
Sec. 411.220(d) to include reassignment of the ticket as one of the 
options that the PM will offer a beneficiary who is not actively 
participating in his or her employment plan. This option would be in 
addition to the options of resuming active participation or placing the 
ticket in inactive status.
    Response: We are not making this change because the rules in 
proposed Sec. 411.220(d), which have been moved to Sec. 411.190(a)(1) 
in the final regulations, concern the timely progress guidelines. In 
Secs. 411.145 and 411.150 of the final rules, we explain that a 
beneficiary has the option of taking a ticket out of assignment and 
then reassigning the ticket. We will ensure that beneficiaries are 
advised of their options regarding ticket reassignment by providing 
public information materials, notices, operating instructions and 
procedures to the PM.

Section 411.225  What if My Ticket Is No Longer Assigned to an EN or 
State VR Agency?

    Comment: We received two comments about this section (which is 
Sec. 411.220 in the final regulations) which allows the individual an 
extension period of up to three months, during which the individual 
will be considered to be using a ticket even though the ticket is no 
longer assigned, to give the individual time to find another EN willing 
and able to serve the individual. One commenter expressed support for 
the provision and did not recommend any changes. The other commenter 
suggested adding a numbered paragraph to Sec. 411.225(a) as follows: 
``You have relocated to an area not served by your previous EN or State 
VR agency.''
    Response: We agree with the suggested change to this section, with 
a modification. We are adding language to Sec. 411.220(a)(1) of the 
final rules (formerly proposed Sec. 411.225(a)(1)), instead of adding 
another numbered paragraph, to indicate that a beneficiary may have 
retrieved the ticket because the beneficiary relocated to an area not 
served by the beneficiary's previous EN or State VR agency.

Subpart D--Use of One or More Program Managers To Assist in 
Administration of the Ticket to Work Program

Section 411.230  What Is a PM?

    Comments: The comments on proposed Sec. 411.230 generally 
questioned the ability of a PM to administer a program as large and 
complex as the Ticket to Work program. One of the commenters expressed 
concern about the selection of a private organization as PM and 
recommended that the program be administered only by a designated State 
agency. The commenter indicated that there is a proven history of State 
administration of Federal programs to support their recommendation. 
Other issues included the PM's ability to provide sufficient access for 
beneficiaries with disabilities, to deal with the diversity issues of 
persons with disabilities, and to coordinate the program equitably 
nationwide.
    Response: Section 1148(d)(1) of Public Law 106-170 specifically 
provides that PM(s) can be either private or public sector 
organizations. Therefore, the selection of the PM cannot be restricted 
to only State agencies as recommended in the comments. All 
organizations, both public and private, must be considered under the 
competitive bidding process as stated in Sec. 411.230. The Commissioner 
may terminate a PM for inadequate performance. Public and private 
entities that serve as a PM for us will be held to the same level of 
accountability.
    While the regulation provides general information about the PM's 
administration of the Ticket to Work program, specific details 
regarding program administration are provided in the PM contract. The 
contract contains a comprehensive business plan, a listing of specific 
tasks required of the PM, and a delivery schedule for completion of the 
required tasks. We believe that the questions raised about access and 
diversity are sufficiently addressed in the contract. For example, the 
Business Plan in the contract requires the PM to operate a toll-free 
Text Telephone Communication Service and provide Spanish language 
services. Further, the Business Plan designates the hours of service to 
be provided across the country and requires that inquiries be monitored 
on a State-by-State basis to ensure that the program is successfully 
implemented nationwide.
    In September 2000, we contracted with MAXIMUS, Inc., to serve as 
the PM for the Ticket to Work program. Specific information about their 
duties and responsibilities as the PM can be obtained through their 
toll-free number at 1-866-968-7842, or TTY 1-866-833-2967.

Section 411.245  What Are the PM's Responsibilities Under the Ticket to 
Work Program?

    Comment: The majority of comments on proposed subpart D of the 
regulation addressed the provisions of Sec. 411.245. Several of the 
comments on proposed Sec. 411.245(a) questioned the PM's ability to 
recruit sufficient numbers of ENs. Specifically, the commenters 
expressed concern about whether enough ENs would be recruited in all 
States and all areas to provide beneficiaries with EN choices. To 
address this issue, one commenter recommended that a formal referral 
process be created for the beneficiaries to refer service providers to 
the PM as potential ENs. Another commenter wanted the evaluation of the 
PM as described in proposed Sec. 411.250 to specifically identify ``the 
recruitment of sufficient ENs'' as one of the assessment criteria.
    Another comment addressed the issue of beneficiary options from a 
different perspective. The commenter recommended that the PM provide 
each EN with a list of ticket holders in their area that had not yet 
assigned their ticket. Each EN could then contact the beneficiaries and 
discuss with them services the EN could offer. Through this process, 
beneficiaries would be provided a variety of options from which to 
choose when assigning their ticket.
    Response: As we indicated previously, the regulation provides 
general information regarding the responsibilities of the PM. The PM 
contract gives much greater detail about the PM's responsibilities, 
including the marketing activities that the PM will undertake.
    While the contract does not specifically identify a referral 
program for beneficiaries as part of their recruitment efforts, it does 
require the PM to use a variety of resources in their recruitment 
efforts. Since neither the regulation nor the PM contract precludes the 
beneficiary as a source for potential EN referrals, we do not believe a 
formal referral process specifically for beneficiaries is needed in 
order for the PM to use this source when appropriate. We do not believe 
that it is necessary to identify ``recruitment of sufficient ENs'' as a 
separate assessment criterion in the regulation. The regulation 
provides assessment criteria such as quality of services and customer 
satisfaction. We believe that these criteria can be used in determining 
whether or not the PM recruited sufficient ENs to provide beneficiaries 
with choices in the assignment of their tickets. In addition to the 
assessment criteria listed in the regulations, the PM's contract 
identifies the enrollment of sufficient ENs as a performance standard 
required under the Government Performance and Results Act.
    The process for the PM to provide ENs with information about 
beneficiaries eligible to receive tickets is

[[Page 67396]]

addressed in the Business Plan of the PM's contract. We will provide 
the PM with a list of all ticket-eligible beneficiaries by geographic 
area and disability impairment. The PM will provide, within the 
limitations of the Privacy Act, the ENs with information from this list 
for beneficiaries eligible to receive tickets in their area. The PM 
will encourage the ENs to use the lists to market their services with 
the beneficiaries.
    Comment: Several comments on proposed Sec. 411.245(b) addressed the 
issue of providing information in accessible formats. The language in 
the proposed regulation defined accessible format as ``media that is 
appropriate to a particular beneficiary's medical impairment(s)''. 
Other commenters were concerned that all information about the Ticket 
to Work program should be provided in an accessible format and that the 
beneficiary's preference should be taken into consideration. One 
commenter requested that ``medical'' be removed from the term ``medical 
impairment,'' in defining ``accessible format'' in paragraph (b)(2).
    Response: The Business Plan of the PM contract identifies certain 
requirements that address accessibility issues. The PM is required to 
operate a toll-free Text Telephone Communication Service for people 
with hearing and speech impairments+ to provide service through their 
toll-free telephone number. In addition, the website operated by the PM 
will be fully accessible to visitors with disabilities via software-
based assistive technologies such as screen readers, screen magnifiers, 
speech synthesizers, and voice input software that operate in 
conjunction with graphical desktop browsers. Informational materials 
will be made available to beneficiaries in Braille format upon request. 
We agree with the comment regarding the word ``medical,'' as not all 
impairments are ``medical'' in nature. We have changed the language in 
the final regulations to omit the word ``medical''.
    Comment: Comments on proposed Sec. 411.245(b) and (d) recommended 
adding time frames to the regulation. One was a fifteen-day time frame 
for the PM to respond to the beneficiaries about the reassignment of 
their tickets. The second was a ten-day time frame for the PM to 
respond to the EN about the assignment of a beneficiary's ticket. In 
both instances, the commenters were concerned about the delays that 
beneficiaries and ENs might experience if the PM did not respond 
timely.
    Response: In both of the situations addressed in the comments, 
there is an assumption that services to the beneficiary cannot begin 
until a formal notice is received from the PM about the assignment or 
reassignment of a Ticket. This is not the case. The Business Plan of 
the PM contract outlines the process the PM will use for assigning or 
reassigning a ticket. When a beneficiary brings the Ticket to an EN, 
the EN will verify that the beneficiary has a ticket eligible for 
assignment. If the beneficiary and EN agree to work together, they 
develop an individual work plan. At this time, the beneficiary and the 
EN may begin working together. Therefore, there is no delay in service 
as anticipated by the comments. When the PM receives the plan signed by 
both the beneficiary and EN, the PM will verify that the ticket is 
eligible for assignment, update the database to show the ticket has 
been assigned, and notify the appropriate parties.
    Comment: Comments on proposed Sec. 411.245(c)(2) and 
Sec. 411.245(d) requested that additional language be included to 
clarify the PM's involvement in certain dispute resolution situations. 
Commenters wanted both sections to identify the PM's responsibility to 
resolve payment disputes between two or more ENs when a ticket is re-
assigned and multiple ENs have provided services to the same 
beneficiary.
    Response: We agree and we are revising Sec. 411.245(c)(2) to 
clarify that the PM will be responsible for making determinations 
regarding the allocation of outcome or milestone payments when the 
beneficiary has been served by more than one EN. We believe that the 
changes to Sec. 411.245(c)(2) address the commenter's concerns and 
additional changes in Sec. 411.245(d) are not needed.
    Comment: We received several comments on proposed Sec. 411.245(d) 
from State VR agencies regarding the PM's review of individual work 
plans and individualized plans for employment. The commenters wanted 
the regulation to clarify that the PM could review only individual work 
plans and not individualized plans for employment. They stressed that 
the PM had no authority to review an individualized plan for employment 
submitted by a State VR agency serving as an EN. The comments cited 34 
CFR 361.45 and 361.46 as the only authority for the content and the 
development of individualized plans for employment.
    Response: Section 411.245(d) of the regulation does not require the 
PM to review individualized plans for employment or amendments to those 
plans. We have revised this section, as recommended, to state that the 
PM will not review individualized plans for employment developed by 
beneficiaries and State VR agencies. Section 411.385 of the regulation 
describes how an individualized plan for employment is used in the 
Ticket to Work program. Section 411.385 does not require these plans to 
be submitted to the PM in connection with the assignment of a ticket to 
a State VR agency, and we did not intend for the PM to review 
individualized plans for employment.
    Comment: Several comments on proposed Sec. 411.245(d) discussed the 
PM's oversight of referrals between the ENs and the State VR agencies. 
Commenters requested additional language that would clarify the PM's 
responsibility when an EN that chooses not to take a beneficiary's 
ticket makes a referral to a State VR agency. The commenters wanted the 
regulation to reflect the PM's lack of jurisdiction regarding such 
referrals.
    Response: While a referral to the State VR agency in this situation 
is possible, the referral would be outside the parameters of the Ticket 
to Work program and the PM's authority. So, we do not believe that we 
need to clarify the PM's lack of authority to oversee such referrals.

Section 411.250  How Will SSA Evaluate a PM?

    Comment: We received many comments about the evaluation process for 
the PM. The commenters wanted to ensure that evaluation included input 
from a variety of stakeholders. Several commenters recommended that we 
solicit input from ENs and beneficiaries as part of the evaluation 
process for the PM. In addition, one commenter urged that we submit the 
evaluation to the Ticket to Work and Work Incentives Advisory Panel for 
comment and recommendations.
    Response: The evaluation will gather input from parties served by 
the PM including beneficiaries and ENs. We agree that such input is a 
valuable resource. We also agree that it is appropriate for the Ticket 
to Work and Work Incentives Advisory Panel to receive and review a copy 
of the evaluation. However, we do not believe that these regulations 
need to address this issue as the evaluation process is outlined in 
detail in the PM's contract.
    Comment: Other comments on proposed Sec. 411.250 were directed at 
specific elements of the evaluation process. One commenter requested 
that the regulation specify that an evaluation would be performed at 
least annually. Another commenter wanted to know about the 
qualifications of the Project Officer and the Contracting Officer to 
review a contract for disability-related programs.

[[Page 67397]]

    Response: We believe that these elements of the evaluation process 
should not be addressed in this regulation as they are already 
described in other Federal regulations including the Federal 
Acquisition Regulations (FAR) at 48 CFR Chapter 1. The procedures 
regarding the review of the PM's performance are spelled out in the FAR 
at 48 CFR subpart 42.15. Qualifications for project officers and 
contracting officers are established in the FAR at 48 CFR 1.102-4 and 
1.602-1. In addition, the Project Officer is on staff at SSA's Office 
of Employment Support Program and is knowledgeable about programs 
serving persons with disabilities.

Subpart E--Employment Networks

Section 411.300  What is an EN?

    Comment: Some commenters suggested that the definition of an EN 
should be included in its entirety in the ``Definitions'' section of 
the final rule. They indicated this definition should include a 
complete list of the services that the ENs are responsible for 
providing or arranging and noted that we should include the scope of 
services that may be needed to enable an individual with a disability 
to prepare for work. Some other commenters indicated that ENs should be 
required to provide a minimum range of services and that we should 
specify what is meant by ``substantial expertise and experience'' as 
contained in section 1148(f)(1)(C) of the Act.
    Response: We have defined employment network, or EN, at 
Sec. 411.115(e). We are not providing a more complete listing of 
services because such a listing would not encompass all the services or 
other assistance a beneficiary might need. Instead we are specifying 
only employment services, vocational rehabilitation services or other 
support services to provide flexibility to ENs and thus not 
specifically include or exclude some services. Section 411.245(b)(3) 
contains examples of the services an EN may provide. The types of 
services an EN will provide in a specific case will be detailed in the 
work plan an EN will sign with a beneficiary. SSA does not want to 
limit or describe what specific services should be included in this 
plan. The phrase ``substantial expertise and experience'' is found in 
section 1148(f)(1)(C) of the Act, which states that no EN ``may serve 
under the Program unless it meets and maintains compliance with both 
general selection criteria (such as professional and educational 
qualifications, where applicable) and specific selection criteria (such 
as substantial expertise and experience in providing relevant 
employment services and supports).'' We have not further defined that 
phrase in the regulations. The general and specific selection criteria 
for ENs are contained in Sec. 411.315 of the final rules.

Section 411.305  Who Is Eligible To Be an EN?

    Comment: Many commenters recommended that family or friends who 
wish to serve an individual be considered eligible to be an EN. Some 
commenters also suggested that we permit a beneficiary to be his or her 
own EN.
    Response: The law provides that any entity willing to assume 
responsibility for the coordination and delivery of services under the 
Ticket to Work program may qualify as an EN. Our regulation states that 
any qualified entity willing to assume responsibility for the 
coordination and delivery of employment services, VR services, or other 
support services to beneficiaries who have assigned their tickets to an 
EN are eligible to be ENs. This does not rule out family or friends who 
meet the qualifications to be an EN and are willing to assume this 
responsibility. We therefore do not see any need to specifically cite 
family or friends. However, the statute does not allow a beneficiary to 
serve as his or her own EN. As Sec. 1148(b)(3) of the Social Security 
Act and Sec. 411.120 explain, a ticket under the Ticket to Work program 
is a document which provides evidence of the Commissioner's agreement 
to pay an EN or State VR agency for providing services to a 
beneficiary.
    Comment: Some commenters questioned why State VR and one-stop 
delivery systems should be automatic ENs. Another commenter requested 
inclusion of the Department of Veterans Affairs as an EN. Another 
commenter wanted to know whether an employer could become an EN.
    Response: Section 1148(f)(1) of the Act states that an EN may be an 
agency or instrumentality of a State (or political subdivision thereof) 
or a private entity. It does not allow Federal agencies to serve as 
ENs. Section 1148(c) of the Act allows each State VR agency to elect to 
participate in the Ticket to Work program as an EN with respect to a 
disabled individual. While the law specifically cites one-stop delivery 
systems as eligible to become ENs, it does not make them ENs 
automatically. Section 411.305(g) lists employers as eligible to be 
ENs.
    Comment: One commenter wanted to know whether American Indian 
Projects may become ENs and whether such projects can become ENs if 
their State has not been chosen as a site.
    Response: Section 411.305(e) lists organizations administering VR 
Services Projects for American Indians with Disabilities authorized 
under section 121 of part C of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 720 et seq.), as one of the entities eligible to be 
ENs. American Indian Projects under section 121 can apply to be ENs 
only within the States where the Ticket to Work program has been 
implemented, or if they are qualified to provide services within such a 
State.

Section 411.310  How Does an Entity Apply To Be an EN and Who Will 
Determine Whether an Entity Qualifies as an EN?

    Comment: Some commenters wanted to know how an entity applies to be 
an EN, who will determine whether an entity qualifies, and requested 
that our final rule reflect the differences in application between 
State VR agencies and other entities.
    Response: Section 411.310 explains that an entity applies to be an 
EN by responding to our Request for Proposal (RFP), that the PM will 
conduct a preliminary review of responses to the RFP, and that the 
Commissioner will decide which applicants will be approved to serve as 
ENs. Sections 411.360 and 411.365 explain that we will notify the State 
VR agency in writing about the payment systems available under the 
Ticket to Work program, and that the State agency must respond in 
writing. We have revised Sec. 411.310 to clarify that this section 
applies to entities other than State VR agencies which are applying to 
be ENs.
    Comment: One commenter suggested that since the PM is charged with 
the responsibility to ensure that there are a sufficient number of ENs 
nationally, the PM should be charged with the responsibility to 
evaluate the qualifications because they are more qualified. The 
commenter also stated that the PM, not the Commissioner, should decide 
which applicants to select as ENs.
    Response: The PM will play a strong role in evaluating applicants' 
qualifications and in recommending applicants for selection as ENs. SSA 
will consider the PM's evaluations and recommendations. However, since 
SSA will be entering into agreements with ENs, will be making payments 
to ENs, and ultimately will be responsible for the success of the 
Ticket to Work program, SSA must remain the final authority for 
evaluating EN

[[Page 67398]]

qualifications and determining which applicants will become ENs.
    Comment: Several commenters suggested that we change Sec. 411.310 
to indicate that it applies to entities other than State VR agencies 
and that State VR agencies must comply with Sec. 411.360 which 
discusses how a State VR agency becomes an EN.
    Response: We have modified Sec. 411.310 to indicate that it applies 
to entities other than State VR agencies and added a part (c) to 
explain that Sec. 411.360 describes how State VR agencies participate 
as ENs in the Ticket to Work program.

Section 411.315  What Are the Minimum Qualifications Necessary To Be an 
EN?

    Comment: One commenter suggested switching the order of some of the 
qualifications listed in Sec. 411.315(a) and deleting the example in 
Sec. 411.315 of using staff with a college degree in a related field.
    Response: The order of qualifications listed in Sec. 411.315(a) 
does not imply that the first one listed is of more importance than 
subsequent qualifications. Items (1) through (6) in this listing are of 
equal weight and there is no rationale for rearranging the listing. The 
use of staff with degrees in a related field as a qualification for ENs 
ensures that we do not unduly restrict qualified entities from becoming 
ENs and thus limit the options of our beneficiaries seeking services, 
because it provides another way for an entity to demonstrate that it 
meets one of the qualifications to serve as an EN.
    Comment: Several commenters believed that our requirements for ENs 
should require all ENs to be licensed, certified, accredited or 
registered to provide services or to be able to arrange for other 
qualified entities to provide these services. Other commenters felt 
that our requirements were too stringent and that we should delete 
entirely Sec. 411.315(c), which requires that potential ENs have 
applicable licenses, or certificates if required by State law.
    Response: We have tried to strike a balance between ensuring that 
ENs are qualified by licensing or certification, while also providing 
an opportunity for non-traditional providers to qualify as ENs by 
demonstrating that they have obtained education or experience in 
providing the relevant services. Section 1148(f) of the Act provides 
that ENs must meet general selection criteria such as professional and 
educational qualifications where applicable and specific selection 
criteria such as substantial expertise and experience in providing 
relevant employment services and supports. Section 1148(f) did not 
limit us to requiring that all ENs be licensed, certified, or 
accredited, or registered to provide services or to arrange for other 
qualified entities to provide these services. However, where State law 
requires such documentation, the requirements of State law will apply.
    Comment: Many commenters noted that the proposed rules appeared to 
require that ENs have relevant certification, accreditation, or 
license, even when the EN is not directly involved in the provision of 
services. They specifically expressed concern that we were requiring 
ENs to be qualified to provide medical and health-related services. 
Commenters suggested that our final rule clarify that an EN would not 
need certification, accreditation, or licensing unless it was directly 
providing the relevant services, but that the EN must be able to 
arrange for an entity with the applicable certification, accreditation, 
or license to provide the services.
    Response: Section 411.315 of the proposed rules did not require 
certification, licensing or registration per se. Section 411.315(b) of 
the rules requires ENs to have qualified staff. One way to meet this 
requirement is by using staff that are properly credentialed. Section 
411.315(c) of the rules requires ENs to comply with whatever State laws 
may apply to them; ENs are not relieved of their obligation to comply 
with State law simply by virtue of participating in the Ticket to Work 
program. Based on the comments, we revised Sec. 411.315(b)(2) to 
clarify that if any medical and related health services are provided, 
the EN should take reasonable steps to assure that such services are 
provided under the formal supervision of persons licensed to prescribe 
or supervise the provision of such services. We did not intend to give 
the impression in the proposed rules that all ENs must be licensed to 
provide medical services.
    Comment: A few commenters noted that required certificates and 
licenses would vary on a State-to-State basis and asked what measures 
would be taken to address the quality assurance of State requirements.
    Response: SSA has no authority or interest in determining the 
validity of State licensing requirements or to encroach on State laws 
regarding these requirements. Section 411.315(c) states that potential 
ENs must comply with other laws that they may be subject to in order to 
provide employment services, vocational rehabilitation services, and 
other support services. Their potential participation in the Ticket to 
Work program does not eliminate their duty to comply with other State 
laws that may govern their activities.
    Comment: One commenter suggested that our qualifications for ENs 
should include alternative demonstrations of competency and allow for 
special circumstances under which an individual can choose as their 
provider an entity with no demonstrated qualifications or experience 
subject to individual approval and periodic review of progress by the 
PM. Some commenters indicated that to meet the goal of expanding the 
universe of service providers, we should include those family members, 
friends, or other persons who have the greatest personal investment in 
the individual's self-sufficiency including formally established 
circles of support or incorporated trust/guardianship boards and to 
allow for our experience requirement to include experience in life 
planning and community support.
    Response: Section 1148(f)(1) of the Act requires that ENs meet and 
maintain compliance with both general selection criteria (such as 
professional and educational qualifications) and specific selection 
criteria (such as substantial expertise and experience in providing 
relevant employment services and supports). The Act thus requires some 
level of education, experience, or expertise in providing employment 
related services and does not permit us to use, as an EN, providers 
with no demonstrated qualifications or experience in providing or 
arranging for these types of services. Friends, family members, or 
other persons must meet these requirements to qualify as ENs.
    Comment: Several commenters questioned whether our requirement of 
applicable licenses, if such licenses are required by State law, would 
prevent entities specializing in certain impairments, such as deafness 
or blindness, from qualifying as ENs. Other commenters suggested our 
licensing requirement is too restrictive and will prevent organizations 
with national licenses or certifications from qualifying as ENs. Still 
other commenters indicated that Sec. 411.315(a)(3) should be modified 
to include nondiscrimination on the basis of disability as a 
requirement to be an EN.
    Response: We do not believe the requirement in Sec. 411.315(c) that 
ENs follow State law will prevent ENs from specializing in certain 
impairments. Section 411.315(c) merely provides that ENs must follow 
the State laws that are applicable to them. SSA has no authority to 
encroach on State laws in instances where licenses, certification,

[[Page 67399]]

or accreditation are required to provide specific services, including 
licenses to serve deaf or hard of hearing individuals. We do not 
believe the requirement in Sec. 411.315(c) will prevent organizations 
with national licenses or certificates from qualifying as ENs. 
Presumably, these organizations are already complying with State laws 
applicable to them. We are not adopting the comment to modify 
Sec. 411.315(a)(3) to require nondiscrimination on the basis of 
disability. The RFP for ENs requires applicants to indicate the 
impairment categories they serve and demonstrate that they have 
experience and expertise in serving people within those impairment 
categories. We envision that ENs will serve individuals in different 
impairment categories and have expertise and experience in serving 
specific groups.
    Comment: Some commenters believed the proposed rule placed a higher 
value on education than on experience. Other commenters questioned what 
constitutes ``substantial expertise and experience.''
    Response: The rules do not place a higher value on education than 
on experience. Our requirements to qualify as an EN are found at 
Sec. 411.315. They include general criteria such as systems 
requirements, being accessible, and having adequate resources to 
perform the required activities, among other items. They also include 
specific criteria. The phrase ``substantial expertise and experience'' 
is used in section 1148(f)(1)(C) of the Act as an example of what may 
be used as specific selection criteria to be an EN. With respect to the 
specific selection criteria we use in Sec. 411.315(b), we require ENs 
to have qualified staff. Potential ENs may show they have qualified 
staff by demonstrating that their staff are certified, licensed or meet 
certain standards. Potential ENs may also show they have qualified 
staff by demonstrating that their staff have education or experience to 
provide the services that the EN wants to provide to beneficiaries.
    Comment: One commenter suggested that we require all ENs to develop 
an expertise in small business development and self-employment 
assistance services. The commenter stated that access to competent and 
available self-employment and small business development services are 
critical to successful employment outcomes.
    Response: Expertise in small business development and self-
employment assistance could be a valuable tool for ENs in providing 
services to beneficiaries. However, we do not believe we should require 
all ENs to have this expertise. We intend these rules to encourage a 
variety of entities with different skills and expertise to become ENs, 
and do not want to limit a beneficiary's range of choices by requiring 
that all ENs possess a specific expertise.
    Comment: One commenter suggested that SSA implement a vigorous 
review process for any entity that wishes to become an EN to assure 
that each approved EN is adequately staffed by educated and certified 
professionals who are experienced in the areas of rehabilitation and 
disability. Other commenters indicated that we failed in the proposed 
rules to require specific qualifications for EN staff that would ensure 
a high level of knowledge in serving many disabilities.
    Response: The RFP for ENs requires that entities submit 
documentation of their qualifications to serve as ENs. SSA will not 
enter into agreements with entities that do not meet this requirement. 
Further, Sec. 411.315 provides criteria that an entity must meet to 
qualify as an EN. The staffing requirements outlined in this section 
should ensure that ENs have staff with a high level of knowledge to 
serve our beneficiaries. An EN is not required to serve all disability 
categories but can specialize. The RFP asks applicants to indicate the 
impairment categories they serve and demonstrate their qualifications 
to serve people within those impairment categories.
    Comment: Some commenters stated that we should specify the range of 
services ENs must provide.
    Response: We want to encourage as many qualified entities as 
possible to serve as ENs. We do not believe we should require all ENs 
to provide the same set of particular services, as beneficiaries may 
find a wide variety of services helpful in their return to work 
efforts. In addition, some ENs may not necessarily provide certain 
services, but only coordinate the delivery of services.
    Comment: One commenter requested we permit providers who qualified 
as alternate participants under our reimbursement program to be 
automatically eligible as ENs. The commenter also suggested that other 
entities which already contract with State VR agencies should readily 
qualify as ENs.
    Response: With respect to alternate participants, in any State 
where the Ticket to Work program is implemented, each alternate 
participant whose service area is in that State will be asked if it 
wants to participate in the program as an EN. See section 1148(d)(4)(B) 
of the Social Security Act and Sec. 411.705 of these final rules. With 
respect to entities that have contracts with State VR agencies, section 
1148(f)(1) of the Act requires that all entities must meet and maintain 
compliance with both general and specific selection criteria. Entities 
which have already contracted with State VR agencies are required to 
submit proposals in response to our RFP and indicate that they will 
comply with all requirements of the Ticket to Work program.
    Comment: One commenter recommended that we presumptively deem one-
stop delivery systems established under title I of the Workforce 
Investment Act of 1998 as meeting the qualifications to be an EN. 
Another commenter asked whether an independent living center might 
qualify as an EN. Another asked what policies would be put in place for 
people such as artists whose work does not fall into a category 
represented by an EN. This commenter expressed a concern that SSA did 
not see the arts as a valid career choice.
    Response: Section 1148(f) of the Act does not permit us to 
presumptively deem any entity as qualified as an EN, although State VR 
agencies and alternate participants are the only entities that do not 
have to follow the standard application process to become an EN. All 
other potential ENs must respond to the RFP for ENs and indicate that 
they understand and meet the requirements to serve as ENs. An 
independent living center may qualify as an EN if it meets the 
requirements spelled out in these regulations and in the RFP for ENs. 
Our regulation does not state what is appropriate work or prohibit 
potential ENs from specializing in certain career fieldsComment: 
Section 411.315(a)(2) of the proposed rules states that the general 
criteria for EN qualification include ``being accessible, both 
physically and programmatically, to beneficiaries seeking or receiving 
services.'' Some commenters suggested that we need to define 
``programmatic accessibility.''
    Response: We agree and have revised Sec. 411.315(a)(2) in the final 
rules to include some examples of what it means to be programmatically 
accessible.

Section 411.320  What Are an EN's Responsibilities as a Participant in 
the Ticket to Work Program?

    Comment: One commenter recommended that we establish clear 
standards for ENs to use in providing information to ticket holders 
regarding the services provided and expected outcomes.
    Response: ENs are required to provide information sufficient for 
beneficiaries to make an informed choice regarding

[[Page 67400]]

services and vocational goals and to then agree to and sign an IWP 
regarding these services and the vocational goal. Section 1148(f)(4) of 
the Act requires that ENs prepare periodic reports on at least an 
annual basis itemizing outcomes achieved with respect to services 
provided by the EN. Each EN must provide a copy of its latest report to 
each beneficiary that it agrees to work with under the Ticket to Work 
program. The PM is required to ensure that these reports are available 
to the public.
    Comment: One commenter indicated that this section should specify 
who prescribes an EN's service area.
    Response: When responding to the RFP for ENs, an applicant 
indicates the geographic area(s) in which it proposes to provide 
services to beneficiaries.
    Comment: Several commenters indicated that we should reflect the 
State VR agency's obligation to follow the law as outlined in the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.),
    Response: Section 411.375 in subpart F states that ``The State VR 
agency must continue to provide services under the requirements of the 
State plan approved under title I of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 720 et seq.), even when functioning as an EN.'' 
Section 411.385 indicates that the State VR agencies are required to 
follow the law as outlined in the Rehabilitation Act which requires the 
use of an individualized plan for employment (IPE).
    Comment: Several commenters stated that we should use the term 
``individualized plan for employment'' as well as IWP.
    Response: Sections 411.115(f), (i), and (j) explain that employment 
plan means an individual work plan under which an EN (other than a 
State VR agency) provides services to a disabled beneficiary under the 
Ticket to Work program or an individualized plan for employment under 
which a State VR agency provides services. We use IWP to identify the 
employment plan developed and implemented by an EN and beneficiary, and 
IPE to describe the employment plan agreed to and signed by a State VR 
agency and beneficiary.
    Comment: Several commenters stated that we should require ENs to 
serve any client living in the geographic area they indicate they 
serve. The commenters indicated that allowing ENs to choose would 
prevent those with the most severe disabilities from getting any 
services and ENs would take only the easiest clients.
    Response: The Ticket to Work program provides for a voluntary 
relationship between the beneficiary and the EN. While an EN may not 
discriminate in the provision of services based on a beneficiary's age, 
gender, race, color, creed, or national origin, an EN may select the 
beneficiaries to whom it will offer services based on factors such as 
its assessment of the needs of the beneficiary and of its ability to 
help the individual. Requiring the EN to serve all clients in their 
geographic area would eliminate the voluntary nature of this 
relationship and reduce the number of entities who would choose to 
serve beneficiaries as ENs.
    Whether there are under-served populations will be assessed as part 
of the ongoing evaluations of the Ticket to Work program. Section 
101(d)(4) of Public Law 106-170 requires the Commissioner of Social 
Security to provide for independent evaluations to assess the 
effectiveness of the Ticket to Work program, including evaluation of 
``the characteristics of individuals in possession of tickets under the 
Program who are not accepted for services and, to the extent reasonably 
determinable, the reasons for which such beneficiaries were not 
accepted for services.'' The Commissioner is required to provide 
periodic reports to the Congress on these evaluations, setting forth 
the Commissioner's evaluation ``of the extent to which the Program has 
been successful and the Commissioner's conclusions on whether or how 
the Program should be modified.'' Section 1148(h)(5)(C) of the Social 
Security Act also requires the Commissioner to report to Congress no 
later than 36 months after the date of the enactment of Public Law 106-
170 with recommendations for a method or methods to adjust EN payment 
rates that would ensure adequate incentives for the provision of 
services by ENs of:
     Individuals with a need for ongoing support and services;
     Individuals with a need for high-cost accommodations;
     Individuals who earn a subminimum wage; and
     Individuals who work and receive partial cash benefits.
    Based on these evaluations, the Commissioner may recommend 
modifications of the program to the Congress, or make other necessary 
changes within the Commissioner's authority under the Social Security 
Act.
    Comment: One commenter expressed concern about what would happen to 
a beneficiary who refused to work with an EN and faced the possibility 
of sanctions.
    Response: Section 101(b) of Public Law 106-170 repealed sections 
222(b) and 1615(c) of the Act, which provided for the sanctions for VR 
refusal.
    Comment: Some commenters stated that the requirements in the NPRM 
will restrict many private businesses from becoming ENs and do not 
offer any incentives to an employer to participate or even become an 
EN.
    Response: The requirements in the NPRM are intended to strike a 
balance between assuring the participation of qualified ENs including 
non-traditional providers while protecting beneficiaries by requiring a 
certain level of competence by the entities that will serve them. The 
incentives provided in section 1148 of the Act for the ENs are the 
milestone and outcome payments for achieving results. While no special 
incentives are provided in this legislation for employers, we are 
confident that employers are qualified to serve as ENs, and that they 
will be able to assist beneficiaries to obtain and maintain employment.

Section 411.321  Under What Conditions Will SSA Terminate an Agreement 
With an EN Due to Inadequate Performance?

    Comment: One commenter recommended that we delete the phrase 
``self-supporting employment and leaving the benefit rolls'' as the 
goals of our performance standards for ENs.
    Response: Enabling beneficiaries to achieve self-supporting 
employment and leave the benefit rolls is the goal of the Ticket to 
Work program. It is a critical performance standard for ENs and 
essential to our evaluation of ENs.
    Comment: One commenter expressed concern about the standards SSA 
will use to evaluate ENs and whether we will have different standards 
for rehabilitation agencies and for ENs.
    Response: We will develop appropriate standards to ensure the 
capability of ENs to provide the needed services and to achieve 
outcomes. For State VR agency performance, SSA will defer to the 
standards required by the Rehabilitation Act of 1973, as amended (29 
U.S.C. 720 et seq.). As indicated in section 411.375, the State VR 
agency must continue to provide services under the requirements of the 
State plan approved under title I of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 720 et seq.), even while functioning as an EN.

Section 411.325  What Reporting Requirements Are Placed on an EN as a 
Participant in the Ticket to Work Program?

    Comment: Several commenters objected to having to provide a 
financial report showing the percentage of the EN's budget that was 
spent on serving beneficiaries with tickets including the

[[Page 67401]]

amount of time that was spent on beneficiaries who return to work and 
those who do not return to work. They indicated that this percentage 
reporting would be an extensive process and would require reporting on 
time spent working with an individual for which they would not be 
compensated. Other commenters felt that the reporting of ticket 
acceptance and of the IWP is unnecessary and represents too much 
reporting on process as opposed to reporting on beneficiary outcomes. 
Another commenter asked for a definition of outcomes to be reported. 
One commenter suggested that we include a requirement that the State VR 
agency submit an IPE to the PM in Sec. 411.325(b) and (c).
    Response: We agree with the commenters that the reporting 
requirement regarding percentage of time working with beneficiaries 
would place an undue burden on ENs and are eliminating this specific 
requirement in our final rule. However, we are required to obtain 
information regarding ticket acceptance and the IWP to ensure that 
beneficiaries are using their tickets and thus are eligible for 
continuing disability review protection, and to determine EN 
eligibility for payments under the EN payment systems. We will develop 
a national report model, which will define outcomes. We will use the 
information we receive from EN reports to identify changes we must make 
to the Ticket to Work program in the future. We did not require, in 
Sec. 411.325 or elsewhere, the State VR agency to send a copy of the 
IPE to the PM, because of concerns expressed by the Rehabilitation 
Services Administration and other commenters about the privacy and 
confidentiality of client information required by the Rehabilitation 
Act of 1973, as amended (29 U.S.C. 720 et seq.).
    Comment: One commenter recommended that we add language to 
Sec. 411.325(h) indicating that the EN will collect and record such 
data as we shall require by written contractual agreement.
    Response: The requirement to collect and record such data as we 
shall require will be in our written agreements with ENs. There is no 
need to specify ``by contractual agreement'' in Sec. 411.325.

Section 411.330  How Will SSA Evaluate an EN's Performance?

    Comment: Some commenters requested information regarding the 
specific performance standards SSA will develop to evaluate ENs and 
from whom SSA will obtain input for such evaluations. Another commenter 
asked whether this evaluation should be the responsibility of the PM.
    Response: SSA will develop appropriate performance standards and 
will consider input from providers, beneficiaries, and other interested 
parties in developing these standards. The PM will assist SSA in 
evaluating EN performance. However, SSA is responsible for the final 
evaluation because SSA has entered into contractual agreements with ENs 
and bears the ultimate responsibility for EN performance and the Ticket 
to Work program's success.

Subpart F--State Vocational Rehabilitation Agencies' Participation

General Comments and Responses
    Comment: Several commenters stated that the State VR agency and the 
EN are the same entity in instances in which the VR agency participates 
as an EN. These commenters requested that, throughout the final 
regulations, whenever reference is made to an EN, such reference 
indicate that an EN includes a State VR agency functioning as an EN.
    Response: We did not adopt the commenters' recommendation. Some 
rules in these final regulations, such as most of the rules in subparts 
E and G, apply to entities, other than State VR agencies, which have 
entered into agreement with SSA (or wish to do so) to serve as ENs 
under the Ticket to Work program. Where necessary, various sections of 
the final rules include references to both an EN and a State VR agency 
to specify the scope of a particular rule or rules. For the rules in 
subpart H which describe the two EN payment systems, references to an 
EN generally are intended to encompass a State VR agency functioning as 
an EN, unless the context requires otherwise or there is a specific 
mention of the State VR agency.

Section 411.350  Must a State VR Agency Participate in the Ticket to 
Work Program?

    Comment: Several commenters requested that we modify Sec. 411.350, 
``Must a State VR agency participate in the Ticket to Work program?'' 
They indicated that as written this section indicates that a VR agency 
must participate as an EN in order to receive payment for services. 
They indicated that sections 222(d) and 1615(d) and (e) of the Social 
Security Act do not require VR agencies to become ENs.
    Response: Section 411.350 has been clarified as follows: ``Each 
State agency administering or supervising the administration of the 
State plan approved under title I of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 720 et seq.), must participate in the Ticket to Work 
program if it wishes to receive payments from SSA for serving disabled 
beneficiaries who are issued a ticket.'' Section 411.370, Does a State 
VR agency ever have to function as an EN?, states that: ``A State VR 
agency does not have to function as an EN when serving a beneficiary 
with a ticket if the ticket has not previously been assigned to an EN 
or State VR agency or if it has been previously assigned, we have not 
made payment under an EN payment system with respect to that ticket.'' 
(See 
Sec. 411.355(a).) Conversely, a State VR agency does have to function 
as an EN when it elects one of the EN payment systems for a 
beneficiary, on a case-by-case basis. (See Sec. 411.355(b).) However, 
as described in Sec. 411.585(b), a State VR agency is precluded from 
being paid under the cost reimbursement payment system if an EN or a 
State VR agency serving a beneficiary as an EN has been paid by SSA 
under one of the EN payment systems with respect to the same ticket. 
However, even if the State VR agency is not serving as an EN, it still 
must tell the PM whenever a beneficiary with a ticket is accepted for 
services.

Section 411.355  What Payment Options Does a State VR Agency Have Under 
the Ticket to Work Program?

    Comment: One commenter stated that it does not make sense to allow 
the State VR agencies to determine on a case-by-case basis how they 
will be paid for serving a beneficiary, because that could encourage VR 
agencies to seek out the easiest beneficiaries to serve and get them to 
employment. The commenter noted that this is the opposite of the State 
VR agencies' traditional mandate, which is to give priority to serving 
the most severely disabled.
    Response: We are not adopting this comment. The Ticket to Work 
program does not in any way affect the State VR agency's traditional 
mandate to serve the most severely disabled. It merely provides the 
State VR agency with an additional payment option in serving 
beneficiaries with disabilities who are issued a ticket and who seek 
services from the State VR agency rather than from an EN serving under 
the program.
    Comment: One commenter asked if there would be any changes to the 
present process for State VR agencies seeking cost reimbursement 
payments.
    Response: Under Sec. 411.585(a) of the final rule, if a State VR 
agency is paid by SSA under the cost reimbursement payment system with 
respect to a ticket,

[[Page 67402]]

such payment precludes any subsequent payment by SSA under one of the 
EN payment systems based on the same ticket. Under Sec. 411.585(b) of 
the final rules, if an EN or a State VR agency serving a beneficiary as 
an EN is paid by SSA under one of the EN payment systems with respect 
to a ticket, such payment precludes subsequent payment to a State VR 
agency under the cost reimbursement payment system based on the same 
ticket. Public Law 106-170 repealed sections 222(b) and 1615(c) of the 
Act, effective January 1, 2001. Therefore, sanctions for refusing VR 
services without good cause are eliminated. Because the sanctions are 
eliminated, cases in which such sanctions are imposed are eliminated 
and no longer one of the categories of cases for which State VR 
agencies can seek reimbursement. As noted in the preamble, SSA intends 
to publish proposed rules in the Federal Register at a later date to 
amend the affected regulations to reflect the change in the law.
    Comment: One commenter stated that these regulations should state 
that the VR reimbursement system continues to operate as a program 
available to all beneficiaries with disabilities who are eligible for 
VR services. In the commenter's view, as these regulations read now, 
reimbursement seems to apply only to ticket holders. State VR agencies 
have and will continue to serve many beneficiaries who will not receive 
tickets.
    Response: We are not adopting this comment. Section 411.355(c) 
states that: ``When serving a beneficiary who was not issued a ticket, 
the State VR agency may seek payment only under the cost reimbursement 
payment system.''

Section 411.365  How Does a State VR Agency Notify SSA About Its Choice 
of a Payment System for Use When Functioning as an EN?

    Comment: Several commenters stated that Sec. 411.365(a) should be 
revised to reflect that the State Agency must respond in writing only 
if it intends to function as an EN to make it clear that a State VR 
agency does not have to function as an EN.
    Response: We are not adopting this recommendation. Under 
Sec. 411.585(b) of the final rules, if an EN or a State VR agency 
serving a beneficiary as an EN is paid by us under one of the EN 
payment systems with respect to a ticket, such payment precludes 
subsequent payment to a State VR agency under the cost reimbursement 
payment system based on the same ticket. The only payment system 
available to a State VR agency under this rule would be the EN payment 
system elected in response to the letter identified in Sec. 411.365(a).
    Comment: Some commenters stated that Sec. 411.365(b) should be 
revised to allow for the appropriate administrative authority other 
than the Governor to sign the letter reflecting the State VR agency's 
preferred payment method when functioning as a EN.
    Response: We agree, and have revised Sec. 411.365(b) in the final 
rules to indicate that ``[t]he director of the State agency 
administering or supervising the administration of the State plan 
approved under title I of the Rehabilitation Act of 1973, as amended 
(29 U.S.C. 720, et seq.) or the director's designee must sign the State 
VR agency's letter.''

Section 411.370  Does a State VR Agency Ever Have To Function as an EN?

    Comment: Several commenters noted that proposed Sec. 411.370 
provides that ``even if the State VR agency is not serving as an EN, it 
still must tell the program manager whenever a beneficiary with a 
ticket is accepted for services to ensure that the beneficiary's ticket 
is assigned to that agency.'' The commenters stated that this provision 
would appear to indicate that all a VR agency needs to do to have a 
ticket assigned to it is to tell the PM that they are working with the 
individual. They noted that Sec. 411.370 seems to be contradicted by 
Sec. 411.385, which states that the State VR agencies must have 
beneficiaries sign a form when they wish to assign their Ticket to Work 
to a VR agency.
    Response: Proposed sections 411.370 and 411.385 are not in 
conflict. In the final rules, however, we have made changes to clarify 
Sec. 411.370. Section 411.370 explains that State VR agencies may 
choose on a case-by-case basis to function as an EN when serving a 
beneficiary with a ticket, or they may serve beneficiaries under the 
cost reimbursement system, subject to the limitations described in 
Sec. 411.585. In either situation, State VR agencies must tell the PM 
that a beneficiary has been accepted for services in order for the 
ticket to be assigned to that agency. If a beneficiary with a ticket 
decides to seek services from the State VR agency, then the beneficiary 
will in effect be using the ticket for those services, even if the 
State VR agency chooses to be reimbursed rather than being paid under 
one of the EN payment systems. The process that the State VR agency 
will use to inform the PM is provided in Sec. 411.385(a) and (b).

Section 411.385  What Does a State VR Agency Do if a Beneficiary Who Is 
Eligible for VR Services Has a Ticket That Is Available for Assignment?

    Comment: Several commenters noted that, under proposed 
Sec. 411.385, when a beneficiary signs an Individualized Plan for 
Employment (IPE) as defined under the Rehabilitation Act, the 
beneficiary automatically has assigned the ticket to the State VR 
agency, regardless of whether the VR agency elects to participate as an 
EN with respect to the beneficiary. These commenters believe that 
Sec. 411.385 negates beneficiary choice, which, as they state, is the 
hallmark of the Ticket to Work program. They noted that disability 
beneficiaries are presumptively eligible for State VR services without 
the ticket. They further indicated that if the State VR agency receives 
payment under the cost reimbursement payment system, Sec. 411.585 
provides that we cannot make payment to an EN. They argued that this 
would deny beneficiaries the use of their tickets at a later time.
    Response: The Ticket to Work program increases beneficiary choice 
by expanding the options available for disability beneficiaries to 
access employment services, vocational rehabilitation services, and 
other support services that are necessary for them to find and retain 
employment and reduce dependency on cash benefit programs. 
Beneficiaries can choose to receive services from either the State VR 
agency or other service providers approved to participate as ENs. 
Beneficiaries with a ticket that can be assigned who decide to work 
with an EN other than a State VR agency will agree to and sign an 
individual work plan. Similarly, beneficiaries with a ticket that can 
be assigned who decide to work with the State VR agency will agree to 
and sign an IPE required under the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 720 et seq.). In both circumstances, the 
beneficiaries have decided to participate in the Ticket to Work program 
by working with a provider to receive services necessary to help them 
go to work. Further, beneficiaries who are not satisfied with the 
services they receive from their chosen providers are able to reassign 
their ticket if they meet the requirements of Sec. 411.150. See the 
comment and response section of subpart H for a discussion of the 
conditions that must be met to allow a State VR agency and EN to both 
receive payment for serving a beneficiary based on the same ticket.
    Comment: Two commenters requested that Sec. 411.385(a) be rewritten 
to clarify

[[Page 67403]]

that the individual must be determined eligible prior to developing an 
IPE and that both the individual and the VR counselor must sign the 
IPE.
    Response: Section 411.385(a) has been revised to indicate that once 
the State VR agency determines that a beneficiary is eligible for VR 
services, the beneficiary and a representative of the State VR agency 
must agree to and sign the IPE, and that the requirements of 
Sec. 411.140(d) or Sec. 411.150(a) and (b) also must be met.
    Comment: Several commenters recommended that we delete the phrase 
``working with the beneficiary'' from Sec. 411.385(b) because it is 
overly specific and limits who can sign the information being provided 
to the PM by the State VR agency.
    Response: We agree and are revising Sec. 411.385(b) to delete 
``working with the beneficiary.''

Section 411.390  What Does a State VR Agency Do if a Beneficiary to 
Whom it Is Already Providing Services Has a Ticket That Is Available 
for Assignment?

    Comment: Several commenters identified a conflict between proposed 
Secs. 411.390 and 411.510(c) regarding a State VR agency's payment 
election options with respect to a beneficiary already receiving VR 
services under an IPE before the beneficiary receives a ticket and 
assigns it to the State VR agency.
    Response: We are revising Sec. 411.390 to remove the provision that 
conflicted with Sec. 411.510(c). Section 411.510(c) of the final rules 
provides that for each beneficiary who already is a client of the State 
VR agency prior to receiving a ticket, the State VR agency will notify 
the PM of its payment system election at the time the beneficiary 
decides to assign the ticket to it.
    Comment: Some commenters stated that proposed Sec. 411.390 should 
be revised to provide that the State VR agency should automatically be 
considered as the holder of the ticket for current clients unless and 
until the beneficiary opts to change providers.
    Response: We are not adopting this comment. Beneficiaries who are 
receiving services from the State VR agency under an existing IPE when 
they receive their ticket should have the opportunity to make an 
informed choice regarding their participation in the Ticket to Work 
program. Beneficiaries will be able to decide whether or not they wish 
to assign their ticket to the State VR agency. This includes 
beneficiaries who are determined eligible for a ticket upon 
implementation of the Ticket to Work program in a State and 
beneficiaries who are determined ineligible for a ticket when the 
Ticket to Work program is implemented in a State but later become 
eligible for a ticket.

Section 411.395  Is a State VR Agency Required To Provide Periodic 
Reports?

    Comments: One commenter stated that Sec. 411.395 should prescribe 
how periodic reports on outcomes should be transmitted, and that an 
electronic infrastructure should be in place and operational prior to 
implementation of the Ticket to Work program.
    Response: We are not adopting this recommendation to regulate the 
process for transmitting reports between a State VR agency and the PM. 
The PM will contact each State VR agency in States where the Ticket to 
Work program has been implemented to address the process for collecting 
information.
    Comment: Several commenters stated that SSA should accept reports 
submitted by State VR agencies to the Rehabilitation Services 
Administration rather than creating additional reporting requirements 
for these agencies. Their concern is that reporting will be excessive 
and may duplicate or conflict with existing requirements under the 
Rehabilitation Act of 1973, as amended and the Workforce Investment Act 
of 1998, as amended.
    Response: Reports that State VR agencies provide to the Department 
of Education's Rehabilitation Services Administration (RSA) may be used 
to meet the reporting requirements in section 411.395. However, at this 
time, we cannot say whether these existing reports will provide us with 
all of the information we need to fulfill our reporting requirements. 
The periodic outcomes reports discussed in section 411.395(a) are 
required by section 1148(f)(4) of the Social Security Act. They are a 
new reporting requirement for State VR agencies functioning as ENs. The 
reports discussed in section 411.395(b) are required so beneficiaries 
may take advantage of the new protection in section 1148(i) of the 
Social Security Act which prevents us from initiating a continuing 
disability review when the beneficiaries are using a ticket. We will 
work with RSA to share information whenever possible and avoid 
duplication of State VR agencies' existing reporting burden.
    Comment: One commenter indicated that Sec. 411.395 should be 
written to reflect confidentiality issues as outlined in the 
Rehabilitation Act of 1973, as amended.
    Response: We have not adopted this suggestion. The contract that 
the PM and ENs sign with SSA includes the requirement that access to 
confidential information must be restricted and that such information 
must be protected. Section 411.375 states that State VR agencies are 
required to provide VR services under a State plan approved under title 
I of the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et 
seq.), even when functioning as an EN. This includes the 
confidentiality requirement that a State VR agency must follow.
    Comment: One commenter noted that Sec. 411.395 involves the State 
VR agencies in conducting reviews necessary to ensure that the 
beneficiary is making timely progress towards self-supporting 
employment while the same is not true for ENs. The commenter questioned 
why the EN wouldn't be able to validate that beneficiaries are making 
timely progress.
    Response: Section 411.190 states that the PM will be using 
information provided by the EN or State VR agency in making the 
determination that a beneficiary is actively participating in his or 
her employment plan. Section 411.395(b) requires the State VR agency to 
submit this information. We are revising Sec. 411.325 to require the 
same information from an EN.
    Comment: This commenter also stated that the wording in 
Sec. 411.395(b) should be changed from: ``The State VR agency must also 
submit information to assist the PM conducting the reviews necessary to 
assess a beneficiary's timely progress towards self-supporting 
employment to determine if a beneficiary is using a ticket for purposes 
of suspending continuing disability reviews'' to: ``The State VR agency 
must also submit information to assist the PM conducting the reviews 
necessary to assess a beneficiary's timely progress towards self-
supporting employment to ensure a beneficiary is not using a ticket to 
avoid continuing disability reviews.''
    Response: We are not adopting this comment. The purpose of the PM's 
review is to determine whether a beneficiary's active participation 
qualifies for CDR suspension under section 1148(i) of the Act. As long 
as a beneficiary is meeting the guidelines for timely progress toward 
self-supporting employment, the CDR suspension applies.

Section 411.405  When Does an Agreement Between an EN and the State VR 
Agency Have To Be in Place?

    Comment: Commenters stated that Sec. 411.400 (Can an EN to which a 
beneficiary's ticket is assigned refer the beneficiary to a State VR 
agency for services?) and Sec. 411.405 should state that the agreements 
between ENs and

[[Page 67404]]

State VR agencies need to conform to the requirements of the 
Rehabilitation Act of 1973, as amended (29 U.S.C 720 et seq.)
    Response: We have not adopted this suggestion. Section 1148(c)(3) 
of the Act, Agreements between State Agencies and Employment Networks, 
does not require that the State VR agency and EN agreement must conform 
to the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.).
    Comment: Several commenters stated that there is no mention of ENs 
being able to enter into agreements with one-stop delivery systems 
established under the Workforce Investment Act of 1998.
    Response: Section 1148(c)(3) of the Act provides that State 
agencies and ENs shall enter into agreements regarding the conditions 
under which services will be provided when an individual is referred by 
an EN to a State agency for services. Section 411.320 regulates the 
responsibilities of an EN in the Ticket to Work program. Section 
411.320(c) provides that an EN may enter into agreements with other 
entities to provide employment services, vocational rehabilitation 
services, or other support services to a beneficiary.
    On a related point, section 1148(f)(1)(B) of the Act states that an 
EN serving under the Ticket to Work program may consist of a one-stop 
delivery system established under subtitle B of title I of the 
Workforce Investment Act of 1998, as amended. This provision is 
reflected in Sec. 411.305(c) of these final regulations. As indicated 
in Sec. 411.320(c), discussed above, a one-stop delivery system that is 
serving as an EN can enter into agreements as necessary to provide 
services to a beneficiary. As required of all non-State VR agency ENs, 
a one-stop delivery system that is an EN must have an agreement in 
place with a State VR agency before it can refer a beneficiary to the 
State VR agency for services.
    Comment: One commenter stated that the regulations or preamble 
should clarify that the regulations do not require a separate agreement 
and may be satisfied by a local Memorandum of Understanding (MOU) 
established under title I of the Workforce Investment Act of 1998, or a 
modification to such MOU that contains the specified information.
    Response: Section 1148(c)(3) of the Act does not specify the format 
of the agreements required between the State VR agencies and ENs. Any 
agreement must adhere to the requirements of Sec. 411.400, which 
specifies that the agreement must be in writing and signed by the State 
VR agency and the EN prior to the EN referring any beneficiary to the 
State VR agency for services. If a MOU satisfies these requirements, it 
would constitute a valid agreement.

Section 411.410  Does Each Referral From an EN to a State VR Agency 
Require Its Own Agreement?

    Comment: Another commenter noted that Sec. 411.410 indicates that 
agreements between ENs and State VR agencies should be broad-based and 
apply to all beneficiaries who may be referred to the State VR agency 
for services. The commenter stated that broad-based agreements ignore 
the uniqueness of each case and may prohibit an individual from 
receiving specialized services that are necessary in order to return to 
competitive employment. The commenter also noted that there is no 
mention of whether the agreement between the EN and State VR agency can 
be terminated. The commenter recommended that, in addition to broad-
based agreements, ENs and State VR agencies might also create distinct 
agreements based on the specific needs of the individual being served, 
and that both the EN and the State VR agencies should have the ability 
to terminate their agreement if the needs of the individual are not 
being served.
    Response: We agree with the commenter's first recommendation. We 
are adding language to Sec. 411.410 to indicate that the general 
guideline that the agreement should be broad-based and apply to all 
beneficiaries who may be referred by an EN to a State VR agency is not 
intended to preclude an EN and a State VR agency from entering into an 
individualized agreement to meet the needs of a single beneficiary if 
both the EN and the State VR agency wish to do so. What is agreed to in 
the agreement concerning the conditions for providing VR services to 
beneficiaries referred by an EN and the process for terminating the 
agreement must be negotiated between the State VR agency and the EN.

Section 411.420  What Information Should Be Included in an Agreement 
Between an EN and a State VR Agency?

    Comment: Several commenters stated that SSA should not be 
establishing the terms of the agreement between the State VR agency and 
the EN in the regulations. Other commenters indicated that we should 
modify Sec. 411.420 to provide minimum requirements for these 
agreements. One commenter stated that we should specify when the State 
VR agency will pay the ENs for services. Another commenter stated that 
the State VR agency would be in a position to negotiate terms of the 
agreement wholly favorable to its own interests. The commenter 
recommended that the rules should stipulate that each party to the 
agreement share reimbursement equitably, and that the rules to be 
applied by the PM in cases where disputes arise should be clearly 
defined prior to implementation.
    Response: We are not establishing the terms of any agreement 
entered into between a State VR agency and an EN. Section 1148(c)(3) of 
the Act states that: ``State agencies and employment networks shall 
enter into agreements regarding the conditions under which services 
will be provided when an individual is referred by an employment 
network to a State agency for services. The Commissioner shall 
establish by regulations the time frame within which such agreements 
must be entered into and the mechanisms for dispute resolution between 
State agencies and employment networks with respect to such 
agreements.'' The Act does not provide SSA with the authority to set 
minimum standards or to regulate payment or fee schedules for these 
agreements. The introductory text of Sec. 411.420 paraphrases the 
language in the Act regarding the basic nature of the agreements and 
paragraphs (a) through (d) of that section provide examples only of the 
types of information that could be included in any agreement. These 
regulations place no requirements on what should be included in an 
agreement.
    Comment: Several commenters stated that, regardless of whether 
there is an agreement in place when a beneficiary is referred to a 
State VR agency, recently published Department of Education 
regulations, 34 CFR part 361, require State VR agencies to process all 
applications for services. The commenters noted that the State VR 
agencies will not be expected to expend program funds on services that 
are comparable to the services the individual is already receiving from 
the EN to which the individual's ticket is assigned. The commenters 
noted that further clarification is needed concerning a State VR 
agency's responsibility to provide additional needed services without a 
signed agreement with the EN.
    Response: The Department of Education's, Rehabilitation Services 
Administration is the entity responsible for administering the State VR 
program. State VR agencies should contact the Rehabilitation Services 
Administration for guidance on expending State VR program funds on 
beneficiaries where no agreement exist with an EN.

[[Page 67405]]

    Comment: Several commenters stated that Secs. 411.405 to 411.430 do 
not address instances where individuals might have assigned their 
ticket to an EN, yet decide on their own to come to the State VR agency 
for additional services. In these instances, the EN is not making the 
referral, and an agreement may not be in place between the EN and the 
State VR agency. This may create a situation where a beneficiary is 
being served by both an EN and the State VR agency outside of the 
governance of an agreement. The commenters suggested expanding the 
rules in these sections to require that agreements will be in place 
between all ENs and State VR agencies, to ensure that all ticket 
holders are covered by an agreement.
    Response: We are not adopting the commenters' suggestion. Section 
1148(c)(3) of the Act requires agreements between State VR agencies and 
ENs regarding the conditions under which services will be provided when 
an individual is referred by an EN to a State VR agency for services. 
SSA does not have the authority to require an EN to enter into an 
agreement with a State VR agency unless the EN is going to make a 
referral of beneficiaries to a State VR agency for services.

Section 411.435  How Will Disputes Arising Under the Agreements Between 
ENs and State VR Agencies Be Resolved?

    Comment: One commenter recommended a change to Sec. 411.435(c)(2), 
to provide a time frame within which SSA must decide the matter in 
dispute between an EN and a State VR agency in a case where either 
party makes a timely request for SSA review following receipt of the 
PM's recommended resolution to the dispute. The commenter recommended 
adding a provision to provide that SSA will have 20 days to determine a 
resolution to the dispute.
    Response: We do not agree that these regulations should establish a 
time frame for us to resolve disputes. We agree that we must resolve 
disputes as quickly as possible. However, a rigid time frame would be 
inadvisable due to the potential complexity of disputes involved.
    Comment: One commenter noted that the rules do not mention the 
State VR agency's legal obligation to serve eligible individuals 
whether an agreement with an EN is in place. The commenter said it is 
essential that State VR agencies retain the ability to be paid under 
the cost reimbursement system.
    Response: Under the Ticket to Work program, we will pay a State VR 
agency for providing services to a beneficiary who is issued a ticket 
and assigns or reassigns the ticket to the State VR agency if certain 
conditions are met. Section 411.355(a) of the final regulation states 
that State VR agencies may choose to participate either as an EN or 
under the cost reimbursement payment system, subject to the limitations 
in Sec. 411.585. The section further states that the State VR agency 
makes this choice on a case-by-case basis. Section 411.370 states that 
a State VR agency generally is not restricted in making its choice of 
participating either as an EN or under the cost reimbursement payment 
system, with the exception of the rule under Sec. 411.585.
    Comment: One commenter questioned how a beneficiary who chooses an 
EN other than a State VR agency would access the State VR agency for 
assistance with assistive technology for employment purposes. The 
commenter observed that a person with a disability who needs assistive 
technology in order to work can request assistance from the State VR 
Agency. The commenter asks if this can be done under the Ticket to Work 
program without the beneficiary reassigning his or her ticket to the 
State VR Agency.
    Response: If the EN to whom the beneficiary has assigned his or her 
ticket has a signed agreement with the State VR agency, the EN could 
refer the beneficiary to the State VR agency to secure the services 
needed. If the beneficiary's EN has not entered into an agreement with 
the State VR agency, the beneficiary's EN would be required to enter 
into an agreement with the State VR agency before the EN could refer 
the beneficiary to the State VR agency for services.
    Comment: One commenter stated that the regulations suggest that 
there is only one State VR agency per State. The commenter noted that 
this is not true for all States. In some States, there is a separate 
blind services unit. The commenter asked whether two separate 
agreements have to be in place between the EN and the two VR entities 
in the State in such an instance.
    Response: The configuration of the State VR agencies within the 
State government's organizational structure would determine if an EN 
would need to enter into an agreement with one or two State VR agencies 
in a particular State. We are clarifying the definition of State 
vocational rehabilitation agency in final Sec. 411.115(m) to reflect 
that some States have more than one agency that provides VR services.

Subpart G--Requirements for Individual Work Plans

Section 411.450  What Is an IWP?

    Comment: One commenter was of the opinion that State VR agencies 
would have to complete an IWP and an IPE based on this regulation.
    Response: In accordance with 1148(c)(2) of the Act, the State VR 
agency will continue to provide services under the requirements of the 
State plan approved under title I of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 720 et seq.) when providing services as an EN. The 
State VR agencies continue to prepare an Individualized Plan for 
Employment (IPE) for all clients served. We are clarifying Sec. 411.450 
so that it does not give the impression that a State VR agency is 
required to complete an IWP. In the first sentence of Sec. 411.450 we 
added in parenthesis ``(other than a State VR agency)'' to clarify that 
State VR agencies are not required to complete an IWP.
    Comment: A few commenters suggested that we add the definition of 
IWP in its entirety in the definition section of the rules.
    Response: This suggestion was adopted. The IWP and many other new 
terms now are included in final Sec. 411.115.
    Comment: A few commenters wrote that whenever possible the 
regulations should encourage that the IWP and similar life/work 
planning instruments such as the IPE or individualized service delivery 
plan be used interchangeably.
    Response: Other employment plans that are developed based on 
specific guidelines and laws may not be used as a substitute for the 
IWP unless they satisfy the requirements of the IWP in Sec. 411.465.

Section 411.455  What Is the Purpose of an IWP?

    Comment: One commenter suggested alternate language to describe the 
purpose of an IWP. The commenter suggested that the wording be changed 
to read ``Both parties should develop and implement the IWP in 
partnership in a manner that gives the beneficiary the opportunity to 
exercise informed choice in selecting an employment goal.'' The 
commenter also suggested using the term ``define'' in place of the term 
``outline'' when naming services that will be provided under an IWP.
    Response: The wording that was used in describing the purpose of 
the IWP was taken from the law. Section 1148(g)(1)(B) of the Act 
requires that ``[e]ach employment network shall * * * develop and 
implement each

[[Page 67406]]

such individual work plan, in partnership with each beneficiary.'' The 
intent of the IWP is to outline, not define, the services that have 
been mutually agreed to by the EN and the beneficiary.

Section 411.460  Who Is Responsible for Determining What Information Is 
Contained in the IWP?

    Comment: One commenter stated that a beneficiary could not exercise 
informed choice if the EN was not required to provide the beneficiary 
with a comprehensive list of the services available to support and 
facilitate an IWP.
    Response: Section 1148(g)(1)(B) of the Act requires the IWP to be 
developed in partnership with the beneficiary and the EN. ENs will 
offer services themselves, or coordinate the delivery of services by 
others, or both. The services that any individual beneficiary may 
require will present different opportunities for an EN to meet. Given 
the varied nature of the beneficiaries that an EN may serve and the 
services that an EN may provide or coordinate, we do not believe that a 
requirement to provide a comprehensive list of such services would be 
meaningful.
    Comment: We received several comments noting that our proposed 
Sec. 411.465 stated that an EN may not request or receive compensation 
from the beneficiary for the services they provide, even though the 
Rehabilitation Act and other programs allow and sometimes require 
beneficiaries to financially participate in the cost of their plan.
    Response: Section 1148(b)(4) of the Act states that ``An employment 
network may not request or receive compensation for such services from 
the beneficiary.'' However, the Act does not prohibit an EN from 
requesting a beneficiary who has assigned his or her ticket to it to 
participate in the cost of achieving the employment outcomes agreed to 
in the IWP. Section 1148(c)(2) of the Act states that State VR agencies 
are to provide services under title I of the Rehabilitation Act of 
1973, as amended (29 U.S.C. 720 et seq.) when providing services as an 
EN. Therefore, section 1148 of the Act does not relieve a beneficiary 
from financially participating in the cost of an individualized plan 
for employment, if this is required by the Rehabilitation Act.
    Comment: We received one comment noting that our proposed 
Sec. 411.465 provided that an EN shall provide a statement of remedies 
available to the individual, including information about the 
availability of the advocacy services through the State P&A system. The 
commenter went on to discuss other regulations outside of the Ticket to 
Work program such as the Client Assistance Program (CAP) for resolving 
disputes. The commenter recommended that Sec. 411.465 be revised to 
reflect services available to individuals who use the public VR system, 
such as the CAP.
    Response: State VR agencies continue to provide services based on 
the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.). 
Therefore, the CAP would continue to be used by State VR agencies in 
resolving disputes between the State VR agency and the beneficiary. 
Section Sec. 411.465 covers a beneficiary who signs an IWP with an EN 
other than a State VR agency.
    Comment: One commenter suggested that the minimum requirements of 
the IWP specifically state that an EN use comparable benefits whenever 
available.
    Response: We are not adopting this comment. The definition of 
``comparable'' benefits is found in 34 CFR 361.53 and applies to State 
VR agencies. Section 1148 of the Act does not require ENs to determine 
whether comparable benefits are available when providing services to a 
beneficiary.
    Comment: One individual expressed concerns that a beneficiary who 
assigns his or her ticket would lose the ticket if the beneficiary did 
not do what the EN requested.
    Response: Participation in the Ticket to Work program is voluntary. 
An EN cannot take the beneficiary's ticket away for failure to comply 
with an EN's request. The beneficiary remains free to reassign his or 
her ticket to another EN.
    Comment: A commenter suggested that the minimum requirement for an 
IWP include a statement about the beneficiary's responsibility to not 
reassign his or her ticket without good cause.
    Response: We are not adopting this comment. Section 1148 of the Act 
does not require that the beneficiary have good cause for reassigning 
his or her ticket to another EN.
    Comment: Several commenters suggested that time frames be 
identified for providing specific services.
    Response: We are not adopting this comment. The IWP developed for 
an individual with a disability will vary based on the needs of the 
individual, their ability to progress based on the disability, and the 
employment goal that is established. Regulating time frames for 
providing services at such an early stage may be intimidating for some 
individuals or ENs. If the beneficiary and the EN feel comfortable with 
establishing time frames, they have the flexibility to do so under 
these regulations.
    Comment: One commenter stated that within the requirements of an 
IWP there is a provision that the individual has a right of privacy 
without any further definition or clarification of the term privacy. 
The commenter expressed concern that an individual's decision not to 
share relevant information with an EN could be critical to the success 
of the individual's rehabilitation. The commenter recommended that the 
term ``privacy'' be removed or adequately defined. Another commenter 
asked what the requirements were for an EN to obtain medical 
information for the IWP and what the requirements were before the EN 
could share that information.
    Response: Section 411.465(a)(8) requires that an IWP must include 
``A statement of the beneficiary's rights to privacy and 
confidentiality regarding personal information, including information 
about the beneficiary's disability.'' The EN's contract with SSA will 
include the requirement that the EN protect an individual's privacy and 
confidentiality. Personal and medical information must be obtained 
through the beneficiary. Once the information is obtained from the 
beneficiary, the EN's contract requires the EN to preserve the privacy 
and confidentiality of these records.

Section 411.470  When Does an IWP Become Effective?

    Comment: One commenter said that our description in the proposed 
rule of when an IWP becomes effective was unclear.
    Response: We have revised Sec. 411.470 to clarify when an IWP 
becomes effective.

Subpart H--Employment Network Payment Systems

General
    Comment: Many commenters recommended that we redesign the proposed 
outcome-milestone payment system so that it would be more supportive of 
small-to-mid-sized providers. They said that smaller providers, unlike 
State VR agencies and other large service providers, do not have the 
reserves to absorb the risk of providing services over an extended 
period of time or when they are expensive. The commenters said that, if 
the outcome-milestone payment system fails to provide enough up-front 
financial incentives and it takes a substantial amount of time before 
ENs can claim reimbursement, the Ticket to Work program would restrict 
the pool of

[[Page 67407]]

providers and undermine consumer choice. Some said that the proposed 
rules offered little improvement over the alternative participant 
program for payment for VR services that was intended to expand 
beneficiary access under the traditional VR cost reimbursement program. 
The commenters were concerned that the rules, as proposed, would not 
enhance beneficiary access to services and would not be flexible enough 
to help ENs serve the diverse needs of the disabled beneficiary 
population. Also, they predicted that the proposed payment system would 
encourage providers to ``cream'' the easier-to-serve clients, place 
many in ``any'' job, as opposed to developing the sort of career 
opportunities that are likely to result in permanent gains for both 
consumers and SSA, and that providers would not serve those with more 
severe disabilities.
    Response: In response to these comments, we made four changes to 
the outcome-milestone payment system we proposed. First, we added two 
milestones. Second, we doubled the total value of the potential 
milestone payments. Third, we spread, over 60 months as opposed to 12, 
the outcome payment reductions made on account of milestone payments 
received. Fourth, we substituted a flat outcome payment rate of 34 
percent for the graduated monthly outcome payments we proposed. We did 
not narrow the gap between the two payment systems, as recommended by 
many commenters.
    These changes are discussed further below, in response to specific 
comments.

Section 411.500  Definitions of Terms Used in This Subpart

    Comment: A few commenters said that the sample payment calculation 
bases we provided in the preamble to the proposed rule (65 FR 82853) 
seemed low. They suggested that, when we compute the actual payment 
calculation bases, we include only the average cash benefits of 
beneficiaries eligible for tickets. These commenters and another 
commenter also suggested that we consider increasing the payment 
calculation bases, and therefore the potential payments to ENs, by 
taking into account the additional program revenues (e.g., FICA taxes) 
and other savings (e.g., reduced Medicare/Medicaid costs resulting from 
employer-provided health insurance plans) that are generated by having 
a beneficiary go to work.
    Two other commenters said that using the average Federal payment 
amount for title XVI only beneficiaries as a payment calculation base 
was inflexible because it did not include State supplementation 
payments. The commenters said that the proposed calculations would not 
adequately compensate ENs that provide services in States where there 
are higher service costs or serve those who are the most disabled.
    Response: We did not and can not modify these final rules with 
regard to the calculation of the payment calculation bases as the 
commenters suggested because section 1148(h)(4) of the Act provides 
specific requirements on how to calculate them. When we calculate the 
payment calculation bases, the law does not allow us to exclude the 
average benefit payable to non-ticket holders or to account for any 
FICA taxes or other benefit savings. In addition, section 
1148(h)(4)(A)(ii) of the Act specifically directs us to exclude the 
State supplementation payment from the title XVI payment calculation 
base computation.
    Comment: One commenter suggested that we expand proposed 
Sec. 411.500(b) and (c) to explain that outcome payments can be 
affected by a beneficiary's impairment related work expenses (IRWEs) or 
the application of the provisions in section 1619(a) of the Act. 
Another commenter asked that we explain the effect of a beneficiary's 
trial work period (TWP) on the 60-month outcome payment period.
    Response: We did not expand the final rules as the commenters 
suggested. The effect that employment support provisions can have on 
the disability benefits of those who work can vary depending on the 
individual case facts. To the extent that employment support provisions 
allow a beneficiary to receive a Federal cash benefit, they will 
prohibit us from making outcome payments with respect to the 
beneficiary. For example, the trial work period allows beneficiaries 
who receive title II disability benefits to test their ability to work 
for at least nine months. During this period they can receive full 
benefits regardless of how high their earnings might be so long as they 
have a disabling impairment. As long as the beneficiaries are in their 
TWP and receiving Federal cash disability benefits, their ENs would not 
qualify for outcome payments. We have a publication, A Summary Guide to 
Employment Support Available to People with Disabilities under the 
Social Security Disability Insurance and Supplemental Security Income 
Programs, SSA Pub. No. 64-030, that provides a general description of 
the employment supports available to beneficiaries with disabilities. 
This publication is available on our website at http://www.ssa.gov/work/ResourcesToolkit/redbook_page.html.

Section 411.515  Can the EN Change Its Elected Payment System?

    Comment: Two commenters expressed concern that the 18-month time 
frame in proposed Sec. 411.515(c) for offering ENs the opportunity to 
change their elected payment system was too long. According to one 
commenter, this long a period would hinder recruitment of potential ENs 
because providers will be looking for flexibility to help ease their 
apprehension over the risks associated with their participation. The 
other commenter suggested that we allow ENs to change their elections 
at least quarterly.
    Response: We did not adopt these comments because we believe that 
the language in final Sec. 411.515(b) and (c) is flexible enough to 
address these commenters concerns. Section 411.515(b) offers ENs the 
opportunity to change their elected payment system at any time during 
the 12 months following the later of the month they first elect an EN 
payment system or the month we implement the Ticket to Work program in 
their State. In addition, Sec. 411.515(c) states that we will offer an 
open election period to ENs ``at least every 18 months.'' This language 
allows us to offer an open election period more frequently, if we 
believe it is warranted.

Section 411.525  How Are the EN Payments Calculated Under Each of the 
Two EN Payment Systems?

    Comment: A few commenters urged us to relate the EN payment systems 
more to the cost of services, especially for those with more extensive 
service needs. Along these lines, one commenter suggested that we 
consider making the VR cost reimbursement payment system available to 
ENs. This commenter also suggested that we make payments whenever ENs 
establish that they provided significant efforts and services to assist 
beneficiaries because this commenter believes that improving the 
vocational skills of beneficiaries will ultimately lead to the 
reduction or elimination of benefits. We also received a recommendation 
for paying a stipend to vocational trainers and beneficiaries in lieu 
of 60 months of outcome payments.
    Response: We did not adopt these suggestions because the Ticket to 
Work program is an outcome-based program and the law does not provide 
authority for the types of payments identified by the commenters. We 
therefore cannot design a payment system around the cost of services, 
even for those with

[[Page 67408]]

more extensive service needs, or to make stipend payments in lieu of 
outcome payments. We do not have the authority to extend the VR cost 
reimbursement program to ENs that are not State VR agencies.
    Comment: One commenter believed that the outcome payments we 
proposed were too low. Based on experiences in welfare reform, this 
commenter did not believe that the proposed payment system would 
attract a wide variety of service providers. The commenter expressed 
the belief that the Ticket to Work program would be viewed as risky for 
providers because they lack the experiential data with which to 
estimate beneficiary work efforts. The commenter also believed that the 
proposed payment system would not attract smaller service providers 
because of the cash-flow concerns that such providers would have. 
Agreeing that an outcome based payment system was fiscally responsible, 
this commenter suggested we ``front-load'' the outcome payments in the 
first year, paying as much as 100% of the saved benefits. Then, in 
subsequent years, we could reduce payments some, but leave enough to 
encourage the ENs to provide for follow-up support services.
    Response: We did not adopt this comment. Section 1148(h)(2)(C) of 
the Act limits payments under the outcome payment system to 40 percent 
of the payment calculation base.
    Comment: We received several comments about the two substantial 
gainful activity (SGA) dollar thresholds in proposed 
Secs. 411.525(a)(1)(ii)(A) and 411.535(a). The commenters were 
concerned that ENs might be discouraged from serving beneficiaries who 
are statutorily blind because the SGA threshold amount for them 
(currently $1,240) is higher than it is for those who are not 
statutorily blind (currently $740). Thus, the commenters recommended 
that we use the lower SGA threshold amount when we determine whether to 
pay an EN, regardless of the beneficiary's disability.
    Response: We did not adopt this suggestion because we do not 
believe it appropriate to have a threshold amount for outcome or 
milestone purposes for beneficiaries who are blind that is not equal to 
the blind SGA threshold amount for benefit determination purposes. 
Individuals who are blind have several protections, including a higher 
earnings threshold. Thus, we believe that payments due an EN should 
reflect this higher limit.
    Comment: Many commenters had two concerns about the proposed 
differences in the payments for title II and title XVI beneficiaries. 
The first is that the proposed payment levels for title XVI only 
beneficiaries would be substantially lower than for title II (including 
concurrent) beneficiaries. The second is that since section 1619(a) of 
the Act allows for a gradual reduction of title XVI benefits, it may 
take longer for title XVI recipients to achieve outcome payments than 
it would for title II beneficiaries. For example, a title XVI recipient 
who receives the maximum SSI benefit would need to earn $1,145 in order 
to reduce benefits to zero and generate an outcome payment, while a 
title II beneficiary who is not blind would need to earn just over $740 
in a month to reduce benefits to zero and generate an outcome payment. 
The commenters contended that SSI recipients are likely to have more 
severe disabilities, less education and work history, and require more 
intensive and extensive supports. The commenters said that the lack of 
a uniform income level to trigger outcome payments made the Ticket to 
Work program confusing. They predicted that the differences will 
discourage ENs from serving title XVI recipients. Also, they said that 
our proposed formula overlooked the additional cost savings from 
reduced reliance on title XVI benefits and increased employment taxes 
paid by working beneficiaries. The commenters recommended that we 
increase the payment levels to ENs for serving title XVI only 
beneficiaries, with some suggesting we pay ENs the same amount 
regardless of whether they serve a title XVI only or a title II 
beneficiary. The commenters also recommended that we establish a 
uniform income level as a trigger for outcome payments and allow for 
outcome payments based on a partial reduction of title XVI Federal cash 
benefits.
    Response: We cannot adopt the commenters' recommendations to make 
outcome payments for title XVI only beneficiaries richer or to let an 
alternative event, such as the partial reduction in benefits, trigger 
outcome payments. The law is very specific about how we are to 
calculate payment levels and what events trigger outcome payments. 
However, the law also provides for us to study and report to Congress 
on the extent to which the Ticket to Work program has been successful 
and what further modifications should be made. Specifically, section 
1148(h)(5)(C) of the Act requires us to evaluate and report on the 
adequacy of the incentives for ENs to serve four specific groups of 
individuals. They are individuals with a need for ongoing support and 
services, individuals with a need for high-cost accommodations, 
individuals who earn a sub-minimum wage and individuals who work and 
receive partial cash benefits. Also, section 101(d)(4) of Public Law 
106-170 requires a broader evaluation and report on the success of the 
Ticket to Work program. Therefore, we will be studying how effective 
the program is in serving title XVI beneficiaries.
    We based our proposal for the payment levels on section 
1148(h)(2)(C) and 1148(h)(4)(A) of the Act. Under section 1148(h)(2)(C) 
of the Act, we have to base outcome payments on a fixed percentage of 
the payment calculation base for the calendar year in which the month 
occurs. With respect to the payment calculation base, section 
1148(h)(4)(A) of the Act provides for two payment calculation bases. 
The first is based on the average monthly title II disability insurance 
benefit payable for months during the preceding calendar year. We must 
use it in connection with a title II beneficiary. The second payment 
calculation base is based on the average monthly payment of title XVI 
benefits based on disability (excluding State supplementation) payable 
for months during the preceding calendar year to beneficiaries aged 18 
through 64. We must use this second payment calculation base in 
connection with a title XVI beneficiary who is not concurrently a title 
II beneficiary.
    We based our proposal to limit outcome payments to situations in 
which monthly Federal SSI cash benefits to a title XVI disability 
beneficiary stop due to work or earnings on sections 1148(h)(2)(B), 
(k)(4), and (k)(5) of the Act. Under section 1148(h)(2)(B) of the Act, 
an outcome payment month is a month, during an individual's outcome 
payment period, ``for which benefits (described in paragraphs (3) and 
(4) of subsection (k)) are not payable to such individual because of 
work or earnings.'' With respect to a title XVI disability beneficiary, 
the benefits described in section 1148(k)(4) of the Act are 
``supplemental security income benefits under title XVI'' based on 
blindness or disability. The term ``supplemental security income 
benefit under title XVI'' is defined in section 1148(k)(5) of the Act 
to mean ``a cash benefit under section 1611 or 1619(a),'' excluding any 
State supplementary payment. Thus, in formulating the proposed rules on 
outcome payments for a title XVI beneficiary, we considered an outcome 
payment month to be one ``for which [a cash benefit under section 1611 
and a cash benefit under section 1619(a)]

[[Page 67409]]

* * * are not payable to the individual because of work or earnings.''
    Comment: Many commenters were concerned that proposed 
Sec. 411.525(b) set the payment rate for the outcome-milestone payment 
system at about 85 percent of what would be payable under the outcome 
payment system for the same beneficiary. They said that this difference 
was too great to attract small or specialized providers that do not 
have the financial resources to pay for all of the up-front cost of 
services. The commenters predicted that the difference would discourage 
the use of the outcome-milestone payment system, impede the delivery of 
services to those with more severe disabilities, and undermine the 
Ticket to Work program's goal of increasing consumer choice.
    The commenters recommended that we close the gap between the two 
payment systems to create an incentive for as many providers as 
possible to participate in the Ticket to Work program. Many suggested 
that we narrow the gap to the bare minimum possible under the law; with 
two commenters saying that a one dollar difference would meet the 
letter of the law. Others suggested specific rate differentials ranging 
from 95 to 99 percent.
    Response: We did not adopt these commenters' suggestions to close 
the gap between the two payment systems. We believe that if we close 
the gap too much, there would be no incentive for ENs to choose the 
outcome payment system and, by default, we would have one rather than 
two EN payment systems, and that one system would be the outcome-
milestone payment system. Under the law, we are to offer providers two 
EN payment systems and we are to make the outcome-milestone payment 
system the less financially rewarding of the two. In return for the 
opportunity to receive up-front milestone payments, providers choosing 
the outcome-milestone payment system receive a smaller total potential 
payment amount than under the outcome payment system. If there is not a 
meaningful difference to the total payments available under the two 
systems, all providers would choose the outcome-milestone payment 
system because it offers payments earlier. Such a result could 
jeopardize the success of the program as a whole because the outcome-
milestone payment system, by offering payments to providers before SSA 
has achieved any program savings, increases the risk that government 
outlays in the form of milestone payments will not be subsequently 
offset with savings from the nonpayment of benefits. As we begin to 
implement the Ticket to Work program, we will collect data and use it 
to determine if we should continue to apply the same rate differential 
between the two systems.
    Comment: One commenter asked if an EN would be entitled to the 
remainder of the 60 months of outcome payments if an individual dies or 
turns age 65 first.
    Response: No. In final Secs. 411.155(a) and 411.525(c) we state 
that we will not pay an EN for milestone or outcomes achieved in or 
after the month in which a beneficiary's ticket terminates. The events 
that cause a ticket to terminate are listed in Sec. 411.155.
    In all cases, death is an event that would cause a ticket to 
terminate. It is a terminating event for benefit entitlement/
eligibility purposes, and thus is covered by the provisions in 
Sec. 411.155(a)(1). Also, we refer to death in Sec. 411.155(c)(4) of 
the final rules as a ticket-terminating event for those whose 
entitlement/eligibility to disability benefits have ended/terminated 
because of work or earnings.
    In most cases, a beneficiary's ticket will also terminate when the 
individual attains age 65 or, where appropriate, full retirement age. 
Attaining full retirement age is a terminating event for workers who 
are entitled to Social Security disability benefits, and thus is 
covered by the provisions in Sec. 411.155(a)(1). We also refer to full 
retirement age, or to age 65, in Sec. 411.155(a)(2), (a)(3), and (c)(3) 
of the final rules as a ticket-terminating event.
    The only instance in which attainment of age 65 or retirement age, 
would not cause disability benefits, and hence the ticket, to terminate 
is if the individual is still entitled to childhood disability 
benefits. However, we will not pay an EN for any of the remainder of 
the 60 months of the outcome payment period in such a case unless the 
rules in Sec. 411.525(a)(1)(i) are met. They provide that an EN may 
receive a monthly outcome payment only for months in which no benefits 
are payable because of work or earnings.

Section 411.530  How Will the Outcome Payments Be Reduced When Paid 
Under the Outcome-Milestone Payment System?

    Comment: Many commenters were critical of our proposal in 
Sec. 411.530 to reduce the first 12 outcome payments under the outcome-
milestone payment system by the total amount that we had already paid 
for milestone payments. They said that such a short reduction period 
would discourage smaller, less well-capitalized ENs from participating 
in the Ticket to Work program. Referring to this proposal as ``back 
loading,'' they noted that it would mean that the fifth year of monthly 
outcome payments would be three times higher than the payments in the 
first year. They were concerned that an EN might lose the bulk of the 
payments available should a beneficiary leave them shortly after 
beginning to work. The commenters recommended that we reduce all 60 
outcome payments equally, rather than just the first 12 outcome 
payments, to account for milestone payments already made.
    Response: We agree with these comments and revised Sec. 411.530. In 
the outcome-milestone payment system, we will reduce each outcome 
payment that an EN receives by an amount equal to \1/60\th of the 
milestone payments already made to that EN based on a ticket.
    With regard to the commenters' concerns about the loss of payments 
when a beneficiary leaves an EN shortly after beginning to work, an EN 
may make a claim for payment for any future milestones or outcomes the 
beneficiary achieves. Final Sec. 411.560 provides that payments can be 
split among ENs which have had a beneficiary's ticket assigned to them.
    Comment: Many commenters said that having milestones based on the 
SGA threshold amount was an inappropriate standard for title II 
beneficiaries who previously used up most or all of their trial work 
period before getting their tickets. Their concern was that ENs might 
not receive milestone payments if the beneficiaries reached the outcome 
payment period before achieving any milestones.
    Response: In response to this comment we are modifying final 
Sec. 411.530 to make clear that under the outcome-milestone payment 
system we will reduce only outcome payments based on the amount of 
milestone payments an EN receives. If we do not make milestone payments 
to an EN with respect to a particular ticket, we will not reduce the 
EN's outcome payments.
    This had been our intent when we proposed this rule, but we were 
not clear on two points. First, we did not identify whose outcome 
payments we would reduce when more than one EN receives outcome 
payments based on the same ticket and one receives milestone payments 
and the other does not. Our intent is to reduce the outcome payments of 
the EN that actually receives the milestone payments. Second, the 
proposed rules indicated that we would reduce outcome payments by 
milestone payments already made. In the final rules we deleted the word 
``already'' because

[[Page 67410]]

there may be situations in which we make a retroactive payment for a 
milestone that a beneficiary achieved before the outcome payment period 
began. In such a case, we will have to make an adjustment for any 
outcome reductions we did not take before we made the retroactive 
milestone payment, and we will reduce any future outcome payments by an 
amount equal to \1/60\th of all milestone payments we made to that EN.

Section 411.535  What Are the Milestones for Which an EN Can Be Paid?

    Comment: Many commenters suggested that we add one or more pre-
employment milestones to the outcome-milestone payment system we 
proposed to ensure that ENs can provide adequate pre-employment 
services to disability beneficiaries. Some suggested milestones at 
specific times, for example, when ENs make vocational assessments, when 
beneficiaries and ENs sign IWPs, when ENs purchase assistive devices 
for beneficiaries, or when ENs place beneficiaries in jobs. Others 
suggested that we make the milestones more flexible, for example, tie 
them to a measurable goal in the IWP, such as the completion of an 
educational goal or the acquisition of specified job skills.
    These commenters were concerned about the two milestones we 
proposed, the first of which would not occur until after beneficiaries 
work for at least three months at the SGA threshold amount. They 
believed these milestones would not occur early enough in the service 
period and would not allow payment for the substantial early costs 
incurred in providing individuals with significant disabilities the 
necessary services that are directly related to achieving the goal of 
permanent employment. While the commenters acknowledged that paying for 
an employment outcome is a worthy goal, they said that we should have 
balanced that goal against the ability to recruit and retain ENs. Most 
small-to-mid sized ENs, they explained, simply do not have the capital 
to wait, potentially, six months to a year or more to receive their 
first payments from SSA, especially when one considers the staff time 
and cost of pre-employment services required to serve individuals with 
significant disabilities. They believe that the lack of a more flexible 
and front-loaded outcome-milestone payment system may discourage 
providers from participating and thereby significantly limit 
beneficiary choice.
    The commenters also said that the milestones were supposed to be a 
method of risk sharing between SSA and providers, but that the two we 
proposed would delay and otherwise limit cash flow and force ENs to 
assume all of the risk. One community-based agency said it was unfair 
of SSA to ask currently under-funded, community-based organizations to 
accept yet another burden of providing services without compensation. 
In a similar vein, a State agency expressed concern that since their 
State funds many programs involving providers that could become ENs, 
the milestones, as proposed, would have the effect of shifting up-front 
funding costs to the State, unless and until the providers receive 
Federal payments.
    Response: We did not adopt any of the commenters' suggestions for 
establishing pre-employment milestones. Our major concern with offering 
them is that of projected costs. The events associated with pre-
employment milestones occur so early in the process of moving a 
beneficiary to independence that we project a significant number of 
beneficiaries who would achieve them would not eventually leave the 
disability rolls because of work or earnings. Accordingly, there would 
not be sufficient savings from the eventual nonpayment of benefits to 
offset the initial cost outlays associated with having pre-employment 
milestones. For this reason, we tied the milestones in these final 
rules to beneficiary work activity, when there is an increased 
likelihood of permanent employment and of achieving outcomes.
    Comment: Many commenters urged us to add to and modify the post-
employment milestones we proposed. Among the suggestions we received 
were those to link the milestones to length of job retention only 
(e.g., three, six, and nine months), without regard to the amount 
earned. Also, there were suggestions to have a milestone system that 
steps up to the SGA threshold amount for the final payment because many 
beneficiaries ease into their work and gradually increase their 
earnings. Others suggested that we substitute the recently raised trial 
work period amount (i.e. $530) for the higher SGA threshold amount 
(i.e. $740 for those who are not statutorily blind and $1,240 for those 
who are statutorily blind). In addition, we received suggestions to 
have specific title XVI milestones based on a percentage of reduction 
in cash benefits and to add a milestone for 12 months of employment at 
the SGA dollar amount.
    Response: In response to these comments we amended final 
Sec. 411.535 to add two milestones to the two that we originally 
proposed. The first additional milestone is met when the beneficiary 
works for one calendar month and has gross earnings from employment (or 
net earnings from self-employment) for that month that are more than 
the SGA threshold amount. The other additional milestone, which is 
actually the fourth milestone, is met when the beneficiary works for 12 
calendar months within a 15-month period and has gross earnings from 
employment (or net earnings from self-employment) for each of the 12 
months that are more than the SGA threshold amount. In making these 
changes, we renumbered the two milestones we originally proposed as the 
second and third milestones. Also, we provide that any of the work 
months used to meet the first, second, or third milestones may be used 
to meet a subsequent milestone.
    We do not anticipate that the changes we are making to the 
milestones in these final rules will be the only ones that we will 
make. Section 1148(h)(5)(B) of the Act directs us to periodically 
review the number and amount of the milestone payments, and authorizes 
us to make alterations, if necessary, to ensure that they allow for 
adequate incentives for ENs to serve beneficiaries with disabilities. 
Thus, as we begin to implement the Ticket to Work program in the 13 
initial States, we will continue to consider the various suggestions 
that we received with regard to milestone payments.
    At this time, however, we do not support the recommendations for a 
milestone system based solely on length of job retention or on lower 
levels of earnings so that beneficiaries can ease into their work. 
While length of job retention can be an important factor in determining 
whether benefits continue, so is the level of earnings, and we believe 
that that level ought to at least exceed the SGA threshold amount. This 
amount is a gross dollar amount, not the net earnings that remain after 
we deduct the various employment supports an individual may receive. 
Also, we do not favor the recommendations to structure SSI milestones 
on a percentage of reduction in cash benefits. Many factors (e.g., 
unearned income and impairment-related work expenses, to name a few) go 
into making SSI payment decisions. Thus, it would be difficult to know 
whether a given percentage reduction in cash benefits is due to work or 
to other factors, such as unearned income, without carefully examining 
each SSI payment calculation.
    Comment: A few commenters urged us to build incentives into the EN 
payment systems to reward ENs for each additional client they move into 
the workforce and for each client they help

[[Page 67411]]

to get better jobs, i.e. jobs that include benefits and provide a 
livable wage. Along these lines, many commenters urged us to adopt 
milestones provisions that would encourage ENs to serve those who need 
more costly or more extensive services to become work ready. Some 
suggested that we have individualized milestone criteria for those who 
need ongoing support services or high-cost accommodations when working, 
earn subminimum wages, or work but still receive partial cash benefits 
(e.g., section 1619(a) recipients). Other commenters suggested that we 
adopt a two-tiered milestone system like the ones used by some States 
that administer supported employment programs. Under such a system 
those in the second tier would get customized milestones when, due to 
the nature of their disabilities, the pre-defined milestones in tier 
one are unworkable. In addition, many suggested that we consult with 
providers who have experience in milestone payment systems and redesign 
our system.
    Response: We did not adopt these recommendations because it is 
impracticable for us to implement them at this time, given the size of 
the ticket population and its diversity. Like these commenters, we want 
the design of our EN payment systems to increase the number of ENs 
serving our beneficiaries. However, we have a responsibility to see 
that our expenditures under the program do not exceed program savings. 
As we gather experiential data, we will carefully look at who is being 
served and what design changes we can propose to broaden the number of 
beneficiaries being served and increase the number of those finding 
employment that will firmly establish their self-sufficiency. We will 
consult with experts in the field, as needed, and consider the effects 
of these suggestions in terms of beneficiary needs, program operations, 
and costs. Further, section 1148(h)(5)(C) of the Act requires us to 
submit a report to Congress on the adequacy of the incentives in the 
Ticket to Work program for four groups of individuals. They are those 
with a need for ongoing support and services, those with a need for 
high-cost accommodations, those who earn a subminimum wage, and those 
who work and receive partial cash benefits.

Section 411.540  What Are the Payment Amounts for Each of the 
Milestones?

    Comment: Many commenters told us that the payments we proposed to 
offer as milestones (i.e. approximately 10 percent of potential 
payments under the outcome-milestone payment system) are inadequate and 
urged us to increase the amounts so as to encourage more small-to-mid-
sized providers to participate in the Ticket to Work program. Some of 
these commenters suggested that we use a graduated fee system and pay 
based on the level of earnings a beneficiary receives. Others suggested 
that we base the milestone payments on a percentage of the true cost of 
services an EN provides. Still others suggested that we allow the PM to 
negotiate a fixed fee with each EN. We also received many 
recommendations for specific fees as well as many recommendations for a 
total package of milestone payments that ranged from $3,500 to $7,500.
    Response: We agree with the commenters that some increase in the 
total milestone package would help to encourage more providers to serve 
as ENs. Therefore, in these final rules, we doubled the total value of 
the milestones that ENs may receive to approximately 20 percent of the 
potential payments possible under the outcome-milestone payment system. 
In terms of the 2001 payment amounts this equates to milestone payments 
totaling $3,096 for title II (including concurrent) beneficiaries and 
$1,874 for title XVI only beneficiaries.
    To accomplish this increase in the milestone payments, we modified 
final Sec. 411.540. We provided that the two milestones we added--the 
first and fourth milestones--would equal 34 percent and 170 percent of 
the payment calculation base for the calendar year in which each 
occurs. This represents approximately 10 percent of the potential 
payments possible under the outcome-milestone payment system. In 
addition, in final paragraphs (e) and (h) we explain the term ``month 
of attainment'' for the new milestones.
    We do not believe that it is administratively practicable to adopt 
a graduated fee system, to set individual fees, or to have the PM 
negotiate fees with each EN. Also, we believe a $7,500 milestone 
package is excessive when there is no guarantee that individuals who 
achieve milestones will also achieve outcomes that result in program 
savings.

Section 411.545  What Are the Payment Amounts for Outcome Payment 
Months Under the Outcome-Milestone Payment System?

    Comment: Several commenters suggested that we offer a flat payment 
rate for outcome months under the outcome-milestone payment system. 
They found the graduated monthly outcome payments we proposed in 
Sec. 411.545 to be unnecessarily complex and predicted they would be 
more difficult to manage.
    Response: We have adopted this suggested change and have modified 
the rules. Final Sec. 411.545 provides that the payment for an outcome 
payment month under the outcome-milestone payment system is equal to 34 
percent of the payment calculation base for the calendar year in which 
the month occurs, rounded to the nearest whole dollar, and reduced for 
milestone payments made, as required by the rules in Sec. 411.530.

Section 411.555  Can the EN Keep the Milestone and Outcome Payments 
Even if the Beneficiary Does Not Achieve All 60 Outcome Months?

    Comment: One commenter asked whether an EN would be responsible for 
paying back any payments it receives if a beneficiary stops working and 
goes back on the benefit rolls.
    Response: An EN may keep each milestone or outcome payment for 
which the EN is eligible, even if the beneficiary subsequently stops 
working and returns to the benefit rolls. In some instances, however, 
we may find it necessary to adjust a milestone or outcome payment that 
the EN receives.
    In proposed Sec. 411.555, by reference to proposed Sec. 411.560, we 
provided for such adjustment when another EN, to which the beneficiary 
assigned the ticket, requests payment for the same milestone or 
outcome. As we drafted these final rules, we realized that there may be 
other instances in which an adjustment may be necessary, and thus we 
expanded final Sec. 411.555, to explain these other instances.
    Paragraph (a) of final Sec. 411.555 provides a general statement 
that ENs may keep those milestone and outcome payments for which they 
are eligible. Paragraph (b) of final Sec. 411.555 discusses the EN 
payment adjustments we may make if we determine that we paid more or 
less than the correct amount due. This paragraph also provides two 
examples of situations requiring such an adjustment. One example refers 
to the aforementioned adjustments for payment allocations required by 
Sec. 411.560. The other is an example of an adjustment described in 
Sec. 411.590(d) that results from a corresponding determination or 
decision that we make about a beneficiary's right to benefits. Finally, 
paragraph (c) of final Sec. 411.555 explains that we will notify ENs of 
any revised payment decisions. It also references our payment dispute 
rules in Sec. 411.590(a) and (b).

[[Page 67412]]

Section 411.560  Is It Possible To Pay a Milestone or Outcome Payment 
to More Than One EN?

    Comment: We received two comments about the consequences of a 
beneficiary reassigning the ticket to another EN. One commenter said 
that the proposed rules were not clear with regard to whether we would 
pay the first EN. The other commenter was concerned with the 
repercussions of expecting ENs to absorb the cost of the resources 
expended on those who reassign their tickets. This commenter predicted 
that concern over beneficiaries reassigning a ticket would cause some 
providers to decline to participate in the Ticket to Work program, and 
others who decide to be ENs would serve only those beneficiaries with 
the greatest potential for success in the timeliest fashion.
    Response: We can pay an EN after a beneficiary reassigns the ticket 
to another EN. Final Sec. 411.560 states we can pay more than one EN 
and the PM will determine how much to allocate to each EN based upon 
the services provided. Additionally, final Sec. 411.565 provides that 
if two or more ENs qualify for payment on the same ticket, we will pay 
each according to its elected EN payment system.
    If we receive a claim from one EN that we determine is payable, we 
will make a reasonable attempt to notify any other EN that has held the 
beneficiary's ticket and still has an agreement with us to serve under 
the program of its opportunity to claim a share of the payment. 
Similarly, if we receive a claim from the beneficiary's current EN that 
we determine is payable, we also will make a reasonable attempt to 
notify any State VR agency that previously held the beneficiary's 
ticket and had chosen to be paid as an EN based on that ticket, of the 
opportunity to claim a share of the payment.
    Comment: A few commenters suggested that we provide additional 
rules to further define the provisions of proposed Sec. 411.560 
regarding how the PM will determine payment allocation to more than one 
EN. These commenters were concerned that the Ticket to Work program is 
intended to pay ENs based on employment outcomes and the last sentence 
in this proposed section said that the PM would make payment 
allocations based ``upon the services provided by each EN.''
    Response: We agree that the proposed wording was unclear. The 
fourth sentence of final Sec. 411.560 now says that the PM will base 
the payment allocation determination upon the contribution of the 
services provided by each EN toward the achievement of the outcomes or 
milestones. In addition, we added a fifth sentence to the final rules 
to clarify that outcome and milestone payments will not be increased 
because the payments are shared between two or more ENs.

Section 411.570  Can an EN Request Payment From the Beneficiary Who 
Assigned a Ticket to the EN?

    Comment: One commenter questioned the use of the term 
``compensation'' in proposed Sec. 411.570. This section prohibits an EN 
from requesting or receiving compensation from the beneficiary for the 
services it provides. The commenter hoped that this section would not 
prevent a beneficiary from purchasing items at any retail establishment 
the EN may operate just because the EN holds the beneficiary's ticket.
    Response: We believe that in the context of these regulations it is 
clear that the EN may not charge a beneficiary for the employment, 
vocational rehabilitation, or support services it provides. This 
regulation does not prohibit a beneficiary from purchasing items 
unrelated to the services the EN is providing to the beneficiary in any 
retail establishment the EN may have.
    Comment: One commenter asked whether an EN could receive funding 
from another agency, other than a State VR agency, while serving a 
beneficiary with a ticket.
    Response: ENs may receive funding elsewhere. Other than payments we 
will make to ENs, the Ticket to Work program does not address how ENs 
are funded.

Section 411.575  How Does the EN Request Payment for Milestones or 
Outcome Payment Months Achieved by a Beneficiary Who Assigned a Ticket 
to the EN?

    Comment: Many commenters objected to the rules in proposed 
Sec. 411.575(b)(2) that would require ENs to submit evidence of 
beneficiary earnings when they request outcome payments because the 
commenters believe that the task of tracking such earnings is the 
Social Security Administration's responsibility. Some commenters simply 
recommended that we not involve ENs in the process. Others recommended 
that we partner with the Internal Revenue Service (IRS) to develop a 
reliable means of receiving earnings information. Still others 
recommended that we assign the PM the responsibility of acquiring and 
validating earnings documentation from IRS or another source. There 
were also suggestions to use the earnings data posted to our own 
earnings records and the earnings information which working 
beneficiaries are required to report to us.
    Response: We did not adopt these suggestions. Our goal in proposing 
that ENs submit evidence of monthly beneficiary earnings in order to 
receive outcome payments was to facilitate the EN payment process. 
Under the Ticket to Work program, we cannot make outcome payments for 
any month for which a beneficiary receives a Federal cash disability 
payment from us. Accurately and expeditiously tracking earnings and 
adjusting monthly benefits is a difficult task. Beneficiaries are 
responsible for telling us when work occurs. For various reasons, this 
does not always happen, or does not happen on a timely basis. We 
currently use earnings reports that we receive from the IRS and other 
sources to alert us to unreported earnings situations. However, the 
reports we get can be a year old, are in annual or quarterly formats, 
and are not always primary sources of earnings. As a result, we must 
undertake extensive development to verify monthly earnings and 
employment supports before adjusting benefits. Thus, we continue to 
believe that ENs, which will be working with and helping beneficiaries 
get and retain employment, will be able to supply documentation of 
earnings and this will speed up the benefit adjustment, and hence, the 
EN payment process.
    Comment: Some commenters suggested that rather than requiring ENs 
to submit evidence of earnings, we develop a system or mechanism to 
notify ENs when a beneficiary's disability benefits stop. Then, ENs 
will know when to file requests for outcome payments.
    Response: We did not adopt this suggestion. We do not presently 
have the systems interface capability to automatically notify ENs when 
a beneficiary's benefits stop on account of work or earnings. Further, 
based on the rules in Secs. 411.525(a)(1)(ii)(A) and 
411.575(b)(1)(i)(B), once an individual's entitlement to Social 
Security disability benefits ends or eligibility for SSI benefits based 
on disability or blindness terminates because of work or earnings, we 
still need evidence that the individual had gross earnings in a month 
that are more than the SGA threshold amount in order to make an outcome 
payment.
    Comment: Many commenters, representing both large and small service 
providers, objected to the provisions in proposed Sec. 411.575(b)(2), 
(b)(4), and (b)(5) that would require ENs to submit evidence of 
beneficiary earnings on a monthly or bimonthly basis. They said that 
the proposed rules

[[Page 67413]]

were complex, expensive, and excessively burdensome on both ENs and 
employers. Also, many predicted that the rules would deter providers 
from participating in the Ticket to Work program.
    The commenters expressed concern with the costs and feasibility of 
establishing a tracking system that could monitor the monthly earnings 
of multiple beneficiaries over an extended period of time, especially 
when beneficiaries switch employers, are not continuously employed, or 
move to areas the EN does not serve. Some commenters also said that ENs 
would not be able to obtain monthly earnings information on an ongoing 
basis from those who assign their tickets to other ENs, achieve 
independent employment, or leave the disability rolls and no longer 
have an incentive to cooperate with their EN. Even commenters who said 
that they presently have access to State records of employment wages 
pointed out that such records would not be a good source of evidence 
under our proposed rules. That is because these are quarterly, not 
monthly, wage reports, and they can be over a year old. Another 
commenter said that the proposed requirement to report earnings at 
least every two months would be difficult for State VR agencies, 
especially once they close a beneficiary's case.
    Many commenters suggested that we allow ENs to submit evidence of 
quarterly, rather than monthly, earnings and to do so on a quarterly or 
semi-annual basis, as opposed to a monthly or bimonthly basis. There 
were also suggestions to pay ENs in the event that ticket holders do 
not provide the needed earnings information and to assist ENs in 
documenting earnings when beneficiaries reassign their tickets to other 
ENs.
    Response: In response to these comments, we consolidated the 
earnings documentation requirements for outcome payments into one 
paragraph and made two changes. First, final Sec. 411.575(b)(2) now 
requires ENs to submit their payment requests, along with evidence of 
beneficiary work or earnings, on at least a quarterly basis. Second, 
this paragraph includes an exception to this general rule to provide 
for those situations in which the ticket is no longer assigned to the 
EN that files the request for payment. In such cases, the EN is not 
required to submit evidence of beneficiary work or earnings, although 
of course any evidence submitted in these cases will help to expedite 
our processing of the payment request.
    Comment: One commenter said that we should not place a mandatory 
earnings-reporting requirement on ENs. Instead, this commenter 
suggested that we require ENs to request a time-limited release for 
earnings information from each beneficiary. Then, if the beneficiary 
signs the release, we should require the EN to report earnings 
information to us, to the extent that the beneficiary continues to 
cooperate with the EN.
    Response: We did not adopt this suggestion. We believe that the 
method ENs use to collect earnings information from beneficiaries does 
not need to be regulated by us. Rather, it is something that both 
parties should discuss and reach an agreement on before the ticket is 
assigned. For example, they may decide to reference the agreed-to 
collection method in the IWP.
    Comment: Commenters were concerned that the second sentence of 
proposed Sec. 411.575(b)(2) was burdensome. It would require ENs to 
submit ``sufficient'' proof of work or earnings for us to determine 
whether we can stop the beneficiary's monthly Federal cash benefits due 
to work or earnings. One of these commenters pointed out that this 
sentence was inconsistent with how we actually evaluate a beneficiary's 
work or earnings because there was no mention of our work incentive 
provisions. For example, payroll records may show ``sufficient'' 
earnings to stop benefits, but we may decide to continue benefits 
because a beneficiary is in a trial work period, has an impairment 
related work expense or a plan for achieving self-support, or receives 
a subsidy.
    Response: We agree with the commenters and removed this sentence 
from final Sec. 411.575(b)(2).
    Comment: Many commenters were concerned with the last sentence in 
proposed Sec. 411.575(b)(2). It stated that wage evidence for employees 
is ``best obtained from the employer or the employer's designated 
payroll preparer.'' Some commenters said that this sentence poses 
significant confidentiality issues, especially for beneficiaries who 
have not disclosed their disability to their employers. Two commenters 
noted that an EN could just as easily obtain this same information from 
the beneficiary's pay stubs and one of these commenters suggested that 
we permit ENs to submit photocopied, as opposed to original, pay stubs. 
Another commenter said the information could be retrieved from State 
wage records, and one commenter suggested we allow for the use of 
Unemployment Insurance wage records. In addition to these comments, 
many said that having ENs collect earnings information from any source 
might violate the right of beneficiaries to keep such information 
confidential and private from ENs, if they so choose.
    Some of these commenters recommended that we specify what other 
types of earnings documentation we would consider acceptable and 
indicate where ENs could obtain them. One commenter suggested that we 
allow for the use of payroll records retrieved from State taxation 
departments.
    Response: In response to these comments, we included two additional 
examples of the types of evidence that ENs may submit with their 
payment requests in the second sentence of final Sec. 411.575(b)(2). 
They are an unaltered copy of the beneficiary's pay stub and an 
unaltered copy of the beneficiary's estimated tax return if self-
employed. These are not the only sources of evidence we will accept, 
and the PM, in its EN training material, will discuss what other types 
of evidence that ENs may submit.
    We retained the example of a statement from the employer or the 
employer's designated payroll preparer because we consider this 
evidence to be of high probative value. However, we would not expect an 
EN to request this information or, for that matter, an employer to 
provide it without a beneficiary's signed consent.
    Comment: With respect to proposed Sec. 411.575, one commenter asked 
how an EN's ability to collect payments would be affected by a delay in 
our stopping disability benefits to a working beneficiary.
    Response: In most situations, an EN's eligibility for a payment 
will depend on SSA's determination about a beneficiary's right to 
payment. Briefly, there are three different payment scenarios, two of 
which are related to outcome payments, and the other concerns milestone 
payments.
     The first scenario relates to when we are asked to make an 
outcome payment under either the outcome payment system or the outcome-
milestone payment system while the beneficiary is still entitled under 
title II or eligible under title XVI. (It is possible for a beneficiary 
to be entitled or eligible, but to not receive cash benefits.) Before 
we can make an outcome payment to the EN, we must determine whether the 
payment of Social Security disability benefits and Federal SSI cash 
benefits to an otherwise entitled or eligible beneficiary is precluded 
because of work or earnings.
     The second payment scenario relates to when we are asked 
to make

[[Page 67414]]

payment to an EN in connection with an individual whose entitlement or 
eligibility for disability benefits has terminated due to work or 
earnings. In such a situation, payment to an EN will depend on whether 
the individual has earnings for a month that meet the earnings 
requirements in Sec. 411.525(a)(1)(ii)(A), and whether the requirement 
in Sec. 411.525(a)(1)(ii)(B) is satisfied.
     The third payment scenario involves an EN's request for a 
milestone payment. Our determination regarding a milestone payment will 
depend on whether the requirements concerning duration of work and 
level of earnings for attainment of a particular milestone are met and 
whether attainment of the milestone occurs before the start of the 
individual's outcome payment period. As noted in Sec. 411.500(b), the 
outcome payment period begins with the first month, ending after the 
date on which the ticket was first assigned, for which Social Security 
disability benefits and Federal SSI cash benefits are not payable to 
the individual due to work or earnings. If the start of the outcome 
payment period is an issue with regard to a request for a milestone 
payment, then we may have to make a determination about a beneficiary's 
right to payment.
    Comment: We received suggestions not to recover any overpayments to 
ENs or beneficiaries that result from the earnings reporting system we 
use and a suggestion to provide for a specific payment time frame to 
ensure ENs of prompt payment following the submission of accurately 
documented payment claims. Along similar lines, many commenters 
suggested that SSA institute a 90-day payment processing rule. Under 
such a rule, the PM would have 30 days to submit EN reported earnings 
to us and then SSA would have 60 days to stop or adjust a beneficiary's 
check. Should we fail to stop or adjust benefits within this time 
frame, these commenters recommended that we pay the EN's claim 
immediately, as though benefits had stopped, and not hold the 
beneficiary liable for any overpayment.
    Response: We did not adopt the suggestions to not recover or not 
hold beneficiaries liable for overpayments because, except in the case 
of milestone payments, the statute does not allow us to pay an EN and 
the beneficiary for the same month. Therefore, in order for us to pay 
one party, we must recover any overpayments we may have made to the 
other party.
    Also, we did not incorporate any payment time frames into these 
final rules. The earnings documentation that ENs submit will help us to 
make more timely decisions. However, we must still develop all relevant 
issues and adhere to strict due process guidelines before we adjust or 
stop a beneficiary's benefits. Additionally, in SSI cases, we must 
offer to continue benefits should a beneficiary appeal our 
determination to stop benefits.
    Comment: Two commenters discussed the outcome payment system and 
how a beneficiary's use of work incentive provisions such as plan for 
achieving self-support (PASS) and impairment-related work expenses 
(IRWE) could prevent some ENs from getting paid. Their concern was that 
those beneficiaries with more intensive service needs would not be 
served. One of these commenters said that ENs might not fully disclose 
or explain to beneficiaries that beneficiaries have these other work 
incentives available, and that ENs may rush beneficiaries to benefit 
suspension, in order to generate outcome payments for the EN.
    Response: We hope that all beneficiaries who want to work will 
receive services, and that, when they begin to work, they will avail 
themselves fully of all of the various work incentive provisions of the 
Act. We will monitor any complaints about ENs discouraging 
beneficiaries from using the work incentive provisions. In addition, to 
eliminate any possibility of a conflict of interest, in these final 
rules we deleted the provision in proposed Sec. 411.575(b)(3) that 
encouraged ENs to submit beneficiary-completed Work Activity Reports 
(Form SSA-821s) with their requests for outcome payments. Usually, 
Social Security field personnel request beneficiaries to complete and 
return this form when work activity is reported and assist 
beneficiaries when needed. We originally thought it would speed our 
determinations about work or earnings if ENs obtained this form and 
submitted it to us with their payment requests. However, the form 
contains questions about special working conditions and payments and 
impairment-related work expenses. In light of these comments, we 
believe the beneficiaries should obtain the form from Social Security 
field personnel, and should complete it with their assistance, not the 
EN's.
    Beneficiaries have many sources of information about our other work 
incentives such as PASS and IRWE. Section 1149 of the Act, as added by 
section 121 of Public Law 106-170, requires that SSA establish a corps 
of work incentives specialists within SSA who will specialize in 
disability work incentives and who will disseminate accurate 
information on work incentives to disability beneficiaries and to 
benefit applicants. We have created a new position called the 
employment support representative to fulfill this requirement to create 
a corps of work incentives specialists. These specialists will also 
assist organizations awarded funds by SSA to provide information about 
work incentives.
    Section 1149 of the Act requires us to establish a program of 
grants, cooperative agreements, or contracts for State or private 
agencies or organizations to provide benefits planning and assistance 
to beneficiaries with disabilities. Under this program, we have awarded 
funds to organizations in every State and U.S. territory in order to 
disseminate accurate information about the various work incentives 
provisions available to title II and title XVI disability 
beneficiaries. The organizations receiving funds from SSA will provide 
information, guidance, and planning to beneficiaries with disabilities 
on the availability and interrelation of Federal and State work 
incentives programs, on health coverage, and on the availability of 
protection and advocacy services and how to access such services.
    Under a program authorized by section 1150 of the Act, we are 
awarding grants to State protection and advocacy systems in every 
State, in the District of Columbia, in five U.S. territories, and to 
the protection and advocacy system for Native Americans. These grants 
will allow the protection and advocacy systems to assist beneficiaries 
with disabilities in obtaining information and advice about receiving 
vocational rehabilitation and employment services, as well as advocacy 
and other services that a disabled beneficiary may need to secure or 
regain gainful employment.
    We believe that these programs and our efforts will ensure that 
disability beneficiaries are more fully informed about all of the work 
incentives provisions available to them.
    Comment: One commenter asked about the consequences for an EN if we 
deny an EN's claim for payment due to inaccurate wage information or 
other reasons.
    Response: Generally, the only consequence is that the claim will be 
denied and the EN will not receive payment. However, if we believe that 
the issue of inaccurate wage reporting involves the possibility of 
fraud, we will investigate the issue fully and take appropriate action.
    Of course, if an EN disagrees with our decision on a payment 
request, we will follow the rules in Sec. 411.590(a) to resolve the 
dispute. Similarly, if a State VR agency, serving a beneficiary as an 
EN, disagrees with our decision on a

[[Page 67415]]

payment request under an EN payment system, we will follow the rules in 
Sec. 411.590(b) to resolve the dispute.

 Section 411.585  Can a State VR Agency and an EN Both Receive Payment 
for Serving the Same Beneficiary?

    Comment: One commenter, referring to the introductory text of 
proposed Sec. 411.585, suggested that the final rules provide guidance 
on how a shared payment to an EN and a State VR agency that decides to 
serve a beneficiary as an EN would be calculated.
    Response: We amended the introductory text of final Sec. 411.585 to 
provide a cross-reference to final Sec. 411.560, which explains how a 
PM will make a shared payment EN determination.
    Comment: We received a number of comments, from both inside and 
outside of the State VR system, about the proposal in Sec. 411.585 (a) 
and (b) to preclude payment under one of the EN payment systems if a 
State VR agency first receives payment under the cost reimbursement 
payment system, and vice-versa. Several of these commenters questioned 
the legal basis for this provision. They said that they found nothing 
in the legislative history or statute that would prohibit payments 
under both systems. Further, they argued that our proposal would negate 
beneficiary choice and ultimately harm those with significant 
disabilities who could benefit from services under both the VR cost 
reimbursement and EN payment systems.
    Some of the commenters also said that our proposal seems to assume 
that the EN payment systems and the cost reimbursement payment system 
pay for identical services. Their interpretation of the EN payment 
systems is that they provide for long-term supports that help 
beneficiaries maintain productive employment over 60 months. These 
commenters view the cost reimbursement payment system as one that 
allows State VR agencies to close cases after 90 days of employment and 
collect payment when beneficiaries achieve a continuous 9-month period 
of SGA.
    Those who commented on Sec. 411.585 recommended that we revise it. 
They believe that the Ticket to Work program should accommodate both 
the EN and the cost reimbursement payments systems for serving the same 
beneficiary.
    Response: We did not revise final Sec. 411.585 to allow for payment 
with respect to a ticket under both the traditional cost reimbursement 
system and an EN payment system because we believe to do so would be 
contrary to how we believe Congress intended for the two programs to 
operate together, and to do so could undermine the Ticket to Work 
program's goal of realizing program savings while moving beneficiaries 
to independence. The first two sentences of section 1148(c)(1) of the 
Act provide State VR agencies with the option of electing to 
participate in the Ticket to Work program as an EN with respect to a 
beneficiary. The third sentence of section 1148(c)(1) of the Act allows 
State VR agencies the additional option of choosing, on a case-by-case 
basis, to be paid under the cost reimbursement payment system when 
serving a beneficiary with a ticket. Had Congress intended to allow for 
payments under both the cost reimbursement payment system and the EN 
payment systems with respect to the same individual with a ticket, 
there would have been no need for the third sentence of 1148(c)(1). The 
authority to reimburse State VR agencies under the cost reimbursement 
payment system already existed under sections 222(d) and 1615(d) and 
(e) of the Act. We believe that Congress included the third sentence in 
section 1148(c)(1) of the Act to make the securing of services by a 
beneficiary with a ticket from a State VR agency electing cost 
reimbursement a mutually exclusive alternative to a beneficiary's 
obtaining services from an EN. This view of section 1148(c)(1) of the 
Act is shared by the Congressional Budget Office (CBO) in the cost 
estimates it submitted to the Senate Committee on Finance (Senate 
Report No. 106-37, March 26, 1999, page 41) and the House Committee on 
Commerce (House Report No. 106-220, July 1, 1999, page 19). In their 
reports the CBO stated that the Ticket to Work program would 
``partially displace the current'' cost reimbursement program.
    Another provision of the enabling legislation that supports our 
regulatory limitation on payments in Sec. 411.585 is section 1148(e)(3) 
of the Act. It provides that a beneficiary may change ENs without being 
deemed to have rejected services under the Ticket to Work program; 
that, when such a change occurs, the PM shall reassign the ticket based 
on the choice of the beneficiary; and that, ``[u]pon the request of the 
employment network, the program manager shall make a determination of 
the allocation of the outcome or milestone-outcome payments based on 
the services provided by each employment network.'' These provisions do 
not contemplate a beneficiary switching providers or having SSA or the 
PM allocate payments among providers in a case where one of the 
providers is a State VR agency that has chosen to be paid under the 
cost reimbursement payment system.
    Section 1148(h) of the Act also supports the regulatory limitation 
on payments in Sec. 411.585. This section limits the total number of 
outcome payments that we can make on a ticket under either EN payment 
system to 60 payments. Once this limit is reached, the ticket ceases to 
have any further value for purposes of making payments under either EN 
payment system. Since the third sentence of section 1148(c)(1) of the 
Act gives State VR agencies the option of being paid under the cost 
reimbursement payment system instead of being paid under one of the EN 
payment systems (not in addition to being paid under the EN payment 
systems), we believe that once we pay a State VR agency under this 
system for having served a beneficiary, the ticket ceases to have value 
for purposes of making payments thereafter under either EN payment 
system.
    Comment: One commenter expressed concern that the rules in 
Sec. 411.585 did not address how State VR agencies would be paid for 
the cost of the services they provide to beneficiaries whose tickets 
are held by an EN. On one hand the State VR agencies cannot limit the 
services they provide to eligible individuals. On the other hand, an EN 
that holds the ticket of a beneficiary who requires expensive 
technological services to work could not be expected to reimburse a 
State VR agency for the cost of such services from the monies the EN 
would receive under the Ticket to Work program.
    Response: The authorizing legislation of the Ticket to Work program 
does not give us the authority to decide how or whether State VR 
agencies will be reimbursed by ENs for the services they provide to 
beneficiaries whose tickets are held by ENs. Section 1148(c)(3) of the 
Act provides that State VR agencies shall enter into agreements 
regarding the conditions under which services will be provided when an 
individual is referred by an EN to a State VR agency for services. Our 
rules in Sec. 411.400 through 411.435 address the agreements between 
State VR agencies and EN and how disputes will be resolved.
    Comment: Some commenters expressed concern that the provisions in 
Sec. 411.585 could lead to abuses should ENs actively recruit 
beneficiaries who are near the end of their employment plans after 
State VR agencies have put substantial resources into serving them.
    Response: We understand these concerns, however, we believe that 
State

[[Page 67416]]

VR agencies and ENs will use the provisions in the Ticket to Work 
program to work together to serve our beneficiaries in ways that give 
the beneficiaries expanded access to employment, vocational 
rehabilitation, and support services. We will make every effort to 
ensure that beneficiaries can make informed choices about the providers 
available to them, the nature of the services they offer, and how a 
provider's payment system election may affect the beneficiary's future 
use of the ticket.
    Comment: One commenter suggested that we make provision for State 
VR agencies to share their cost reimbursement payments with ENs, with 
the PM resolving any disputes.
    Response: We do not have the statutory authority to adopt this 
suggestion. Section 1148(e)(3) of the Act provides for the PM to make 
determinations about allocating outcome and milestone payments. 
However, there is no similar provision for allocating cost 
reimbursement payments between a State VR agency and an EN that serve 
the same beneficiary.

Section 411.587  Which Provider Will SSA Pay if, With Respect to the 
Same Ticket, SSA Receives a Request for Payment From an EN or a State 
VR Agency That Elected Payment Under an EN Payment System and a Request 
for Payment From a State VR Agency That Elected Payment Under the Cost 
Reimbursement Payment System?

    Comment: One commenter suggested that, if we did not revise 
Sec. 411.585 to allow for payment under both the cost reimbursement and 
the EN payment systems with respect to the same ticket, we specify the 
criteria we would use when deciding which provider to pay.
    Response: In response to this comment, we added Sec. 411.587 to 
these final rules. This section clarifies which provider we will pay 
if, with respect to the same ticket, we receive a request for payment 
from a provider that elected an EN payment system and one from a State 
VR agency that elected the cost reimbursement payment system. Paragraph 
(a) of Sec. 411.587 explains that we will pay the claim of the provider 
that first meets the requirements for payment under its elected payment 
system applicable to the beneficiary who assigned the ticket. Paragraph 
(b) of this section explains which provider we will pay should both 
meet the payment requirements in the same month. In such a case, we 
will pay the claim of the provider to which the beneficiary's ticket is 
currently assigned. If the ticket is not currently assigned to either 
provider, we will pay the claim of the provider to which the ticket was 
most recently assigned.

Section 411.590  What Can an EN Do if the EN Disagrees With Our 
Decision on a Payment Request?

    Comment: Many commenters found two issues troubling in proposed 
Sec. 411.590(d) concerning what an EN can do if it disagrees with a 
revised determination which we make about a beneficiary's right to 
benefits following a beneficiary's appeal of a determination which is 
unfavorable to the beneficiary and which affects the beneficiary's 
entitlement, eligibility, or right to a benefit payment. First, 
commenters believed that the proposed section highlights the 
possibility of an EN having to return payments following a 
beneficiary's successful appeal, which the commenters said would act as 
a disincentive for providers to serve as ENs. Second, they disliked the 
provision which permits an EN to furnish any evidence it has which may 
be relevant to the beneficiary's appeal. The commenters said this rule 
would create an adversarial situation and harm the relationship between 
beneficiaries and ENs.
    Response: We understand the concerns that these commenters have 
about the disability determination and payment process and resulting 
effect it can have on the EN payment process. That is why we decided to 
refer to this process, which we call the administrative review process, 
in proposed Sec. 411.590(d). Also, we do not want the process to create 
an adversarial relationship between beneficiaries and ENs. That is why 
we clearly state in Sec. 411.590(c) and (d) that an EN cannot appeal a 
determination we make about a beneficiary's right to benefits, but they 
may furnish evidence in support of their claims for payment.
    Sections 404.900 et seq. and 416.1400 et seq. explain the 
administrative review process we have under title II and title XVI of 
the Act. Determinations we make about a beneficiary's right to 
disability cash benefits are administrative actions that are subject to 
review. Generally, if beneficiaries are dissatisfied with a 
determination we make, they have a 60-day period in which to request 
further administrative review, and ultimately court review. 
Additionally, if they do not request a review within these time frames, 
they may request that we reopen and revise a determination we 
previously made about a beneficiary's right to cash benefits, or we may 
decide to this on our own initiative. Since the EN payment systems are 
inherently linked to the determinations we make about a beneficiary's 
right to cash benefits, there will be situations in which we make, 
amend, or otherwise revise a determination relating to a beneficiary's 
right to cash benefits, and that determination will result in an EN 
having to return a payment we previously made to them. However, we are 
hopeful that our efforts to educate beneficiaries and ENs about the 
various employment support provisions in the Act and to remind them of 
their reporting responsibilities will increase understanding of how 
work may affect a beneficiary's right to cash benefits, which in turn 
will help us to minimize the number of instances in which we must 
revise EN payment decisions.
    As we reviewed the provisions we proposed to respond to these 
comments, we realized that the rules we proposed in Sec. 411.590(d) did 
not cover all of the possible administrative actions that we might make 
about a beneficiary's right to disability cash benefits. Therefore, we 
reorganized and broadened the language in the final rules so that they 
refer to all determinations we may make about a beneficiary's right to 
benefits, not just those determinations that a beneficiary may appeal. 
In addition, we referenced our rules in Sec. 411.555 concerning the 
adjustment of EN payments when we determine we paid more or less than 
the correct amount.

Section 411.597  Will SSA Periodically Review the Outcome Payment 
System and the Outcome-Milestone Payment System for Possible 
Modifications?

    Comment: Many commenters suggested that we initiate, as soon as 
possible, the research needed for the Report on the Adequacy of the 
Incentives provided in the Ticket to Work program, as required by 
section 1148(h)(5)(C) of the Act. They said that they had identified 
the report as a key initiative to assure that those with severe 
disabilities are able to participate fully in the Ticket to Work 
program. Thus, they urged us to begin collecting the information as 
soon as possible and suggested that we collect data on matters such as 
the reasons ENs decline to offer services to one or more groups of the 
four groups specifically identified in the law.
    Response: We agree with the commenters that the information 
gathered for this report will play a key role in the development of 
future policies and proposals for possible legislative changes to 
assist beneficiaries participate more fully in the Ticket to Work 
program. As soon as the Ticket to Work program is operational, we will 
begin collecting data on all four groups mentioned in the statute, 
including data

[[Page 67417]]

on the reasons ENs may decline to serve them.
    Comment: Many commenters suggested that we use our demonstration 
authority to test various payment options and funding schemes in the 
initial rollout States. Some recommended that we test three or four 
varying milestone and payment amounts to determine which would best 
attract appropriate ENs for hard to serve populations. One specific 
recommendation was that we test offering outcome payments for reduced 
cash benefits when, due to the nature of a beneficiary's condition, the 
beneficiary can achieve only lower levels of employment. Another 
recommendation was that we test making outcome and milestone payments 
richer for cases involving SSI beneficiaries and encourage States to 
contribute a portion of the saved SSI State supplementation payment. In 
addition, there was a suggestion to test up-front capitalization 
funding via matching Federal and State dollars.
    Response: We will consider all of these interesting demonstration 
ideas as we continue to explore the best ways to serve beneficiaries 
with disabilities and reduce their barriers to work and self-
sufficiency.

Subpart I--Ticket to Work Program Dispute Resolution

    Public comments on subpart I of the proposed rules raised a number 
of issues relating to the dispute resolution processes. An overall 
theme in the comments was that review and appeal mechanisms should be 
more elaborate than required by the legislation. The Rehabilitation Act 
of 1973, as amended (29 U.S.C. 720 et seq.), provides a process for 
resolution of disputes between beneficiaries and ENs that are State VR 
agencies. The Commissioner has developed a different 3-step process for 
resolving disputes between beneficiaries and ENs that are not State VR 
agencies.
    The rules for this 3-step dispute resolution process provide common 
sense guidelines that give both parties to the dispute several 
opportunities to be heard. The rules permit disputants to resolve 
quickly, easily, and fairly issues that arise between them. The 3-step 
dispute resolution process for resolving disputes between beneficiaries 
and ENs that are not State VR agencies affords a full and fair review 
of issues in dispute. A discussion of specific issues raised in the 
public comments and our responses follow.
    Comment: Some commenters stated that we should provide 
beneficiaries and ENs that are not State VR agencies an opportunity for 
a face-to-face hearing. Several recommended that the administrative and 
judicial review process for appeal of initial determinations 
(Secs. 404.900 through 404.999 and 416.1400 through 416.1499) be used 
for the dispute resolution process. One commenter suggested that 
beneficiaries should be entitled to the rights customary to evidentiary 
hearings, including the right to be provided notice, the right to 
request discovery, the right to present evidence, the right to defend 
oneself, the right to cross-examine witnesses, the right to a written 
decision, and the opportunity to appeal. Another commenter stated that 
the time frame for appeal of a decision should be 60 days to be 
consistent with time frames in our administrative review process.
    Response: Section 1148(d)(7) of the Act requires, among other 
things, that the Commissioner provide a mechanism for resolving 
disputes between beneficiaries and ENs. The Commissioner is required to 
afford a party to such a dispute a reasonable opportunity for a full 
and fair review of the matter in dispute. The Rehabilitation Act of 
1973, as amended (29 U.S.C. 720 et seq.), provides a process for 
resolution of disputes between beneficiaries and ENs that are State VR 
agencies. The Commissioner has developed a different process for 
resolving disputes between beneficiaries and ENs that are not State VR 
agencies.
    We believe that the dispute resolution process we have created 
provides the parties with a reasonable opportunity to have a full and 
fair review of the matter in dispute. Section 1148(d)(7) does not 
require the Commissioner to afford a face-to-face hearing. The 
legislation did not allocate funding to support this type of process. 
Disputes between beneficiaries and ENs relate to aspects of the 
rehabilitation process, such as proposed changes in the vocational goal 
and the Individual Work Plan, the nature and duration of education and 
training, and the type and availability of equipment provided. Multiple 
disputes may arise between a beneficiary and the EN at different points 
in the rehabilitation process, and each dispute will require quick 
resolution to maintain ongoing rehabilitation efforts. Submission of 
these types of disputes to the administrative and judicial review 
process reserved for critical payment issues would impose unacceptable 
administrative and financial burdens on the Agency. This would also 
disrupt the rehabilitation process while relatively minor issues could 
remain unresolved during a lengthy appeal process.
    We are retaining the 3-step process set forth in the proposed 
rules, because this process meets the statutory mandate for a full and 
fair review of disputes between beneficiaries and ENs that are not 
State VR agencies. It provides the parties several opportunities to be 
heard, allows both parties to the dispute to present their case before 
an impartial third party, the PM, and expedites dispute resolution.
    Comment: Many commenters questioned whether the 3-step process for 
resolving disputes between beneficiaries and ENs that are not State VR 
agencies provides a full and fair review. Several commenters proposed 
that we establish a single, standard grievance model at step one for 
use by all ENs that are not State VR agencies. Other commenters said 
that we should provide beneficiaries clear information about the 
dispute resolution process, including defined ``next steps,'' impose 
reasonable time frames, and inform disputants of the right to be 
represented and the right to provide evidence at each step of the 
dispute resolution process. In addition, one commenter said that the PM 
should be required to provide all the evidence, not just relevant 
evidence, when a dispute is referred to us at step 3.
    Response: The 3-step process in subpart I provides for expedient 
resolution of disputes between beneficiaries and ENs, and a full and 
fair review of the disputed issues. Requiring ENs that are not State VR 
agencies to implement a standard grievance model of our design at the 
first step of the 3-step dispute resolution process would impose unfair 
burdens on them. ENs are voluntary participants in the Ticket to Work 
program, and some ENs might choose to withdraw from this program if 
required to implement a new process distinct from internal grievance 
procedures already in place.
    In subpart I, we require that:
    At step one, the EN that is not a State VR agency is required: to 
have grievance procedures that a beneficiary can use to seek a 
resolution to a dispute under the Ticket to Work program; to give each 
beneficiary seeking services a copy of its internal grievance 
procedures; to inform each beneficiary seeking services of the right of 
either party to refer a dispute first to the PM for a review, and then 
to us for a final decision; and to inform each beneficiary of the 
availability of assistance from the State P&A system.
    At step two, if the beneficiary or the EN that is not a State VR 
agency asks the PM to review a disputed issue, the PM is to contact the 
EN to submit all relevant information and evidence

[[Page 67418]]

within 10 days, including a description of the disputed issue, a 
summary of the beneficiary's and the EN's positions related to each 
disputed issue, and a description of any solutions proposed by the EN, 
including the reasons the beneficiary rejected each proposed solution. 
The PM has 20 days to provide a written recommendation resolving the 
dispute, and explaining the reasoning for the proposed resolution.
    At step three, if the beneficiary or the EN requests SSA to review 
the PM's recommended resolution of the dispute, this request must be 
made within 15 working days of the receipt of the PM's recommendation. 
The PM has 10 working days to refer the request to us for a review, 
including with the request a copy of the beneficiary's IWP, information 
and evidence related to the disputed issues, and the PM's conclusions 
and recommendations. Our decision on the resolution of the dispute will 
be final.
    Comment: Some commenters suggested that the process for resolving 
disputes between beneficiaries and ENs that are not State VR agencies 
should provide for optional mediation or an external appeals process to 
ensure the beneficiary an unbiased resolution of the dispute. Several 
commenters said that the Dispute Resolution Board mentioned in the 
preamble to the proposed rules for this process should have non-SSA 
employees. Another commenter stated that the third step should be 
eliminated and the final decision delegated to the PM at step two.
    Response: In developing these rules, we considered making outside 
mediation part of the dispute resolution process, but we rejected this 
option, in part, because we believe using an outside mediator would not 
achieve expedient dispute resolution. We also believe that it is not 
necessary to establish any external appeals process for dispute 
resolution, because we believe the three-step process provides for a 
full and fair review. We have deleted any reference to a dispute 
resolution board, as the proposed rules did not provide for it, but it 
was only mentioned in the preamble to the proposed rules. At step 
three, disputes will be referred to SSA rather than to a formal board. 
We do not agree that step three should be eliminated from the dispute 
resolution process and that the PM should make the final dispute 
decision. An appeal to SSA affords the beneficiary an additional 
opportunity to be heard and to receive the Commissioner's opinion on 
the issue.
    Comment: Some commenters stated that the dispute resolution process 
for disputes between beneficiaries and ENs that are not State VR 
agencies should be the same as the process that is used for those 
disputes between beneficiaries and ENs that are State VR agencies.
    Response: State VR agencies that are serving as ENs have dispute 
resolution procedures in place already. The dispute resolution process 
used by State VR agencies provides an opportunity for beneficiaries and 
State agencies to resolve disputes by formal mediation, an impartial 
hearing, or civil action. The dispute resolution process that the State 
VR agencies are required to follow fulfills and exceeds the requirement 
of section 1148(d)(7) of the Social Security Act for a full and fair 
review of the matter in dispute.
    We recognize that beneficiaries who choose to work with State VR 
agencies will have a different dispute resolution process than those 
who choose to work with non-State agency ENs. However, the 3-step 
process described in the regulations provides these beneficiaries with 
a full and fair review, in an expeditious and cost-efficient manner.
    Comment: Several commenters pointed out that our proposed rules 
were not clear with respect to whether they addressed both ENs that are 
not State VR agencies and those that are. Several others stated that 
the regulations should indicate when the provisions of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), 
relating to opportunities for mediation, an impartial hearing, and 
court action apply.
    Response: We are revising the rules in subpart I to clarify whether 
they referred to ENs that are not State VR agencies, or those that are 
State VR agencies.
    Comment: One commenter stated that services and supports provided 
to a beneficiary should not be suspended or reduced while the 
beneficiary is involved in the dispute resolution process. Another 
asked if the timely progress guidelines would be suspended immediately 
when a dispute is not solved.
    Response: Participation of ENs in the Ticket to Work program is 
voluntary. We believe that requiring ENs to continue providing supports 
or services until disputes are resolved would not be consistent with 
these aspects of the program. The timely progress guidelines will not 
be suspended when a dispute remains unsolved.
    Comment: Several commenters stated that we should provide 
beneficiaries the names and addresses of P&A services and 
representatives. One commenter suggested we should notify P&A services 
of all disputes and the names of disputants, unless the beneficiaries 
specifically objected. Another commenter stated that we should ensure 
all representatives are expert in all aspects of benefits. And, several 
commenters suggested that legal services for beneficiaries involved in 
disputes be paid for.
    Response: Section 411.605(d) requires ENs that are not State VR 
agencies to inform beneficiaries of the availability of P&A services to 
assist them in the dispute resolution process. We will not release any 
information to a P&A service about the beneficiary unless we are 
authorized to do so, in accord with our regulations governing 
disclosure of official records and information (20 CFR 401.100 ff.). We 
will require ENs to inform beneficiaries of the right to be represented 
at each step of the dispute resolution process. We do not have the 
authority to pay such representatives. We are not establishing 
standards of expertise for representatives, because this would impair 
the beneficiary's ability to choose non-attorneys to help them with 
their disputes (e.g., family members, clergy, members of the 
rehabilitation community). The ability to use non-attorneys to 
represent beneficiaries in minor disputes is especially important 
because many beneficiaries may not be able to pay for representation.
    Comment: Several commenters suggest we require disputants to adhere 
to our final recommendations for resolving issues between them.
    Response: Because the Ticket to Work program is voluntary in 
nature, the good will and commitment of both parties to the 
rehabilitation effort is critical to its successful outcome. The three-
step dispute resolution process should promote positive and productive 
communication between these parties. We do not believe that mandating 
participants to adhere to our recommendations for dispute resolution 
would further the rehabilitation partnership.

Youth in Transition to Adulthood

    Section 411.125 of these final regulations states that an 
individual will be eligible to receive a ticket in a month in which he 
or she is age 18 or older and has not attained age 65, provided the 
individual has qualified for title II benefits based on disability or 
qualified for title XVI benefits based on disability under the adult 
standard or based on blindness.
    When we published the proposed rules on December 28, 2000, we 
included the following: ``As we gain experience with the Ticket to Work 
program, we plan, at a later time, to explore the possibility of 
expanding the

[[Page 67419]]

age criteria for receiving a ticket to include those SSI beneficiaries 
age 16 and older who are eligible for disability benefit payments based 
on the childhood disability standard.''
    In these final rules, we have decided not to issue a ticket to 
those recipients under age 18 and those who have attained age 18, but 
for whom we have not yet conducted a redetermination of their 
eligibility under the disability standard for adults. However, we are 
interested in exploring various approaches to assist youth 
beneficiaries to transition to independence, further education, and 
careers in the workforce. Therefore, we are publishing a Notice 
elsewhere in today's Federal Register in which we are seeking 
suggestions from the public to assist us in designing for these 
beneficiaries an approach that could complement the Ticket to Work 
program.

Electronic Version

    The electronic version of this document is available on the 
Internet at http://www.access.gpo.gov/su_docs/aces/aces140.html. It is 
also available on the Internet site for SSA at http://www.ssa.gov.

Regulatory Procedures

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these final rules meet the criteria for a 
significant regulatory activity under Executive Order (E.O.) 12866. 
Thus, OMB has reviewed these final rules. For the five-year period from 
fiscal year 2002 through 2006, the effects on the Old Age, Survivors 
and Disability Insurance benefit payments range from minimal in fiscal 
year 2002 to costs of $27 million in fiscal year 2006. For the same 
period, the effects on Federal Supplemental Security Income payments 
range from savings of $1 million in fiscal year 2002 to savings of $6 
million in fiscal year 2006. We expect that the effects on expenditures 
of the Medicare and Medicaid programs during that time period would be 
negligible. As the costs and savings from fiscal year 2002 through 2006 
are not expected to exceed $100 million in any one year, these final 
rules are neither economically significant under E.O. 12866, nor 
``major'' under the provisions of 5 U.S.C. 801 et seq.
    However, we believe there may be additional ``benefits'' to society 
that will result from these rules. While these benefits are difficult 
to quantify, we can present some general elements of these benefits.
    We believe the Ticket to Work program offers potential benefits to 
society on several levels. For example, the Ticket to Work program may 
increase opportunities for individuals who receive disability benefits 
to access training, employment and placement services, including 
opportunities to create their own businesses and widen their exposure 
to the employment market. The program may provide new funding streams 
for existing providers of vocational services and give them access to 
new clients, as well as allow them to forge relationships with 
employers interested in job placement of these clients. It may also 
encourage the establishment of new providers of vocational services. 
For employers, the program may provide access to a new base of 
potential employees as individuals who receive disability benefits 
attempt to enter the employment market under the terms of the Ticket to 
Work program.
    As required by the Ticket to Work and Work Incentives Improvement 
Act of 1999, we must evaluate the Ticket to Work program after it is 
implemented. As part of that evaluation, we plan to use various 
qualitative measures to determine the effects on society.

Regulatory Flexibility Act

    We certify that these final rules will not have a significant 
economic impact on a substantial number of small entities because they 
would primarily affect only individuals, and those entities that 
voluntarily enter into a contractual agreement with us. Therefore, a 
regulatory flexibility analysis as provided in the Regulatory 
Flexibility Act, as amended, is not required.
    Although a regulatory flexibility analysis is not required, we have 
made every effort to consider the effects these rules might have on 
small entities that might choose to participate in the Ticket to Work 
program. As we mentioned earlier in this preamble, we sponsored and 
participated in many public forums, presentations, and discussions 
leading up to the development of these final rules. At these forums, we 
discussed with service providers their concerns about participating in 
the Ticket to Work program. These final rules reflect our efforts to 
make these rules as inclusive as possible; that is, to allow for the 
participation in the program of many different types of vocational 
service providers, including small entities, that can provide a wide 
range of services. For example, we increased the number and total 
amount of milestone payments, from what we had earlier proposed, to 
help smaller or lesser-capitalized entities to participate in the 
program. We also considered the effects on small entities in 
determining the level of credentials a service provider must have to 
participate in the program. At the same time, we must also consider our 
stewardship responsibilities in protecting the public funds and in 
assuring that individuals receiving disability benefits who choose to 
participate in the Ticket to Work program also receive quality services 
from the providers to whom they assign their tickets. We believe these 
final rules reflect our efforts to achieve a balance between providing 
opportunities for small entities, and protecting public funds and 
assuring that individuals receiving disability benefits receive quality 
services.

Federalism

    We have reviewed these final rules under the threshold criteria of 
E.O. 13132, ``Federalism,'' and determined that they do not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or the distribution of power 
and responsibilities among the various levels of government. The Ticket 
to Work and Work Incentives Improvement Act of 1999 established the 
Ticket to Work program that will complement the existing State 
vocational rehabilitation program.
    Although we have determined that these final rules do not trigger 
the requirements of E.O. 13132, we have consulted with State vocational 
rehabilitation agencies and their national organization throughout our 
development of these rules. As mentioned earlier in the preamble to 
these rules, we sponsored and participated in numerous educational 
forums throughout the country in order to stimulate discussion about 
the Ticket to Work program. We employed our long-standing relationship 
with the State vocational rehabilitation agencies through a variety of 
meetings, forums and other conversations to gain insight as to how to 
develop these rules. Furthermore, we have consulted on a regular basis 
with those States selected for the first round of the Ticket to Work 
rollout, and the Department of Education's Rehabilitation Services 
Administration in preparing these rules. These final rules reflect, to 
the extent practicable, our efforts to respond to the issues raised by 
the States during these consultations.
    In addition, we note that the Old-Age, Survivors and Disability 
Insurance program is exempt from the Unfunded Mandates Reform Act of 
1995.

[[Page 67420]]

Paperwork Reduction Act

    This final rule contains new reporting (Rpt), recordkeeping (Rec) 
and disclosure (Dis) requirements in the sections listed below. These 
burden requirements have been cleared under OMB Number 0960-0644. The 
clearance expires on December 31, 2004.

                   Ticket to Work and Self-Sufficiency Program Annual Burden Calculation Chart
----------------------------------------------------------------------------------------------------------------
                                                                                  Average burden     Estimated
     Section No. and requirements         Number of      Frequency of response     per response    annual burden
                                         respondents                               (in minutes)        hrs.
----------------------------------------------------------------------------------------------------------------
411.140(c) Rpt--X-refer sections               31,450  One time.................             270         141,525
 411.145, 411.150, 411.325 (a), (b),
 (c), (d) & 411.320 (f).
411.325(e) Rpt--X-refer section                10,328  Quarterly................             120          20,656
 411.395 (b).
411.325(f) Dis--X-refer section                45,000  Occasional...............               5           3,750
 411.395(a).
411.190(a) Rpt--X-refer section                 1,000  One time.................              30             500
 411.195.
411.220(b)(1) Rpt--..................           1,000  One time.................              30             500
411.220(c)(1) Rpt--..................             500  One time.................               5              42
441.245(b)(1) Rec--..................          12,000  One time.................               1             200
411.325(d) Rpt--.....................           1,800  One time.................             480          14,400
411.365 Rpt--........................              82  One time.................             240             328
411.575 Rpt--X-refer section 411.500.          13,000  Daily....................              30           6,500
411.605(b) Dis--X-refer section                45,000  Occasional...............               5           3,750
 411.610.
411.435(c) Rpt--.....................           2,582  One time.................              60           2,582
411.615 Rpt--........................           3,000  One time.................              60           3,000
411.625 Rpt--........................           1,500  One time.................              60           1,500
411.210(b) Rpt--.....................           3,145  One time.................              30           1,573
411.590(b) Rpt--.....................             813  One time.................              60             813
411.655 Rpt--........................               1  30-per year..............             120              60
411.200 Rpt--........................               1  .........................               1               1
                                                                                                 ---------------
    Total Annual Respondents.........  ..............  .........................  ..............         172,202
    Total Annual Burden Hours........  ..............  .........................  ..............         201,680
----------------------------------------------------------------------------------------------------------------
 X-Refer--Burden for these sections has been accounted for under title section cited.
 411.200--Reflects a one hour places holder pending implementation and program experience.

    The below chart represents burden associated with forms SSA-1365, 
State Agency Ticket Assignment Form; SSA-1366, State Vocational 
Rehabilitation Ticket to Work Information Sheet, and SSA-1367, 
Individual Work Plans (IWP) Information Work Sheet, that have been 
cleared under OMB-0641. The clearance expires on April 30, 2002.

----------------------------------------------------------------------------------------------------------------
                                                                                  Average burden     Estimated
                      Forms                         Respondents    Frequency of    per response    annual burden
                                                                     response        (minutes)         hours
----------------------------------------------------------------------------------------------------------------
SSA-1365........................................              21           4,048               3           4,250
SSA-1366........................................              21             132               2              92
SSA-1367........................................          31,450               1               3           1,573
                                                                                                 ---------------
    Total burden................................  ..............  ..............  ..............           5,915
----------------------------------------------------------------------------------------------------------------

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

List of Subjects in 20 CFR Part 411

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

    Dated: December 18, 2001.
Jo Anne B. Barnhart,
Commissioner of Social Security.

    For the reasons set forth in the preamble, we are adding a new part 
411 to chapter III of title 20 of the Code of Federal Regulations to 
read as follows:

PART 411--The Ticket to Work and Self-Sufficiency Program

Subpart A--Introduction

Sec.
411.100   Scope.
411.105   What is the purpose of the Ticket to Work program?
411.110   How is the Ticket to Work program implemented?
411.115   Definitions of terms used in this part.
Subpart B--Tickets Under the Ticket to Work Program
411.120   What is a ticket under the Ticket to Work program?
411.125   Who is eligible to receive a ticket under the Ticket to 
Work program?
411.130   How will SSA distribute tickets under the Ticket to Work 
program?
411.135   What do I do when I receive a ticket?
411.140   When can I assign my ticket and how?
411.145   Once my ticket has been assigned to an EN or State VR 
agency, can it be taken out of assignment?
411.150   Can I reassign my ticket to a different EN or the State VR 
agency?
411.155   When does my ticket terminate?

[[Page 67421]]

Subpart C--Suspension of Continuing Disability Reviewsfor Beneficiaries 
Who are Using a Ticket

Introduction

411.160   What does this subpart do?
411.165   How does being in the Ticket to Work program affect my 
continuing disability reviews?
411.166   Glossary of terms used in this subpart.

Definition of Using a Ticket

411.170   When does the period of using a ticket begin?
411.171   When does the period of using a ticket end?
411.175   What if I assign my ticket after a continuing disability 
review has begun?

Guidelines for Timely Progress Toward Self-Supporting Employment

411.180   What is timely progress toward self-supporting employment?
411.185   How much do I need to earn to be considered to be working?
411.190   How is it determined if I am meeting the timely progress 
guidelines?
411.191   Table summarizing the guidelines for timely progress 
toward self-supporting employment.
411.195   How will the PM conduct my 24-month progress review?
411.200   How will the PM conduct my 12-month progress reviews?
411.205   What if I disagree with the PM's decision about whether I 
am making timely progress toward self-supporting employment?

Failure To Make Timely Progress

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

The Extension Period

411.220   What if my ticket is no longer assigned to an EN or State 
VR agency?
411.225   What if I reassign my ticket after the end of the 
extension period?
Subpart D--Use of One or More Program Managers To Assist in 
Administration of the Ticket to Work Program
411.230   What is a PM?
411.235  What qualifications are required of a PM?
411.240  What limitations are placed on a PM?
411.245  What are a PM's responsibilities under the Ticket to Work 
program?

Evaluation of Program Manager Performance

411.250  How will SSA evaluate a PM?
Subpart E--Employment Networks
411.300  What is an EN?
411.305  Who is eligible to be an EN?
411.310  How does an entity other than a State VR agency apply to be 
an EN and who will determine whether an entity qualifies as an EN?
411.315  What are the minimum qualifications necessary to be an EN?
411.320  What are an EN's responsibilities as a participant in the 
Ticket to Work program?
411.321  Under what conditions will SSA terminate an agreement with 
an EN due to inadequate performance?
411.325  What reporting requirements are placed on an EN as a 
participant in the Ticket to Work program?
411.330  How will SSA evaluate an EN's performance?
Subpart F--State Vocational Rehabilitation Agencies' Participation

Participation in the Ticket to Work Program

411.350  Must a State VR agency participate in the Ticket to Work 
program?
411.355  What payment options does a State VR agency have under the 
Ticket to Work program?
411.360  How does a State VR agency become an EN?
411.365  How does a State VR agency notify SSA about its choice of a 
payment system for use when functioning as an EN?
411.370  Does a State VR agency ever have to function as an EN?
411.375  Does a State VR agency continue to provide services under 
the requirements of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), when 
functioning as an EN?

Ticket Status

411.380  What does a State VR agency do if the State VR agency wants 
to determine whether a person seeking services has a ticket?
411.385  What does a State VR agency do if a beneficiary who is 
eligible for VR services has a ticket that is available for 
assignment or reassignment?
411.390  What does a State VR agency do if a beneficiary to whom it 
is already providing services has a ticket that is available for 
assignment?
411.395  Is a State VR agency required to provide periodic reports?

Referrals by Employment Networks to State VR Agencies

411.400  Can an EN to which a beneficiary's ticket is assigned refer 
the beneficiary to a State VR agency for services?

Agreements Between Employment Networks and State VR Agencies

411.405  When does an agreement between an EN and the State VR 
agency have to be in place?
411.410  Does each referral from an EN to a State VR agency require 
its own agreement?
411.415  Who will verify the establishment of agreements between ENs 
and State VR agencies?
411.420  What information should be included in an agreement between 
an EN and a State VR agency?
411.425  What should a State VR agency do if it gets an attempted 
referral from an EN and no agreement has been established between 
the EN and the State VR agency?
411.430  What should the PM do when it is informed that an EN has 
attempted to make a referral to a State VR agency without an 
agreement being in place?

Resolving Disputes Arising Under Agreements Between Employment Networks 
and State VR Agencies

411.435  How will disputes arising under the agreements between ENs 
and State VR agencies be resolved?
Subpart G--Requirements for Individual Work Plans
411.450  What is an Individual Work Plan?
411.455  What is the purpose of an IWP?
411.460  Who is responsible for determining what information is 
contained in the IWP?
411.465  What are the minimum requirements for an IWP?
411.470  When does an IWP become effective?
Subpart H--Employment Network Payment Systems
411.500  Definitions of terms used in this subpart.
411.505  How is an EN paid by SSA?
411.510  How is the State VR agency paid under the Ticket to Work 
program?
411.515  Can the EN change its elected payment system?
411.520   How are beneficiaries whose tickets are assigned to an EN 
affected by a change in that EN's elected payment system?
411.525   How are the EN payments calculated under each of the two 
EN payment systems?
411.530   How will the outcome payments be reduced when paid under 
the outcome-milestone payment system?
411.535   What are the milestones for which an EN can be paid?
411.540   What are the payment amounts for each of the milestones?
411.545   What are the payment amounts for outcome payment months 
under the outcome-milestone payment system?
411.550   What are the payment amounts for outcome payment months 
under the outcome payment system?
411.555   Can the EN keep the milestone and outcome payments even if 
the beneficiary does not achieve all 60 outcome months?
411.560   Is it possible to pay a milestone or outcome payment to 
more than one EN?
411.565   What happens if two or more ENs qualify for payment on the 
same ticket but have elected different EN payment systems?
411.570   Can an EN request payment from the beneficiary who 
assigned a ticket to the EN?
411.575   How does the EN request payment for milestones or outcome 
payment months achieved by a beneficiary who assigned a ticket to 
the EN?
411.580   Can an EN receive payments for milestones or outcome 
payment months that occur before the beneficiary assigns a ticket to 
the EN?
411.585   Can a State VR agency and an EN both receive payment for 
serving the same beneficiary?
411.587   Which provider will SSA pay if, with respect to the same 
ticket, SSA receives a request for payment from an EN or a State VR 
agency that elected

[[Page 67422]]

payment under an EN payment system and a request for payment from a 
State VR agency that elected payment under the cost reimbursement 
payment system?
411.590   What can an EN do if the EN disagrees with our decision on 
a payment request?
411.595   What oversight procedures are planned for the EN payment 
systems?
411.597   Will SSA periodically review the outcome payment system 
and the outcome-milestone payment system for possible modifications?
Subpart I--Ticket to Work Program Dispute Resolution

Disputes Between Beneficiaries and Employment Networks

411.600   Is there a process for resolving disputes between 
beneficiaries and ENs that are not State VR agencies?
411.605  What are the responsibilities of the EN that is not a State 
VR agency regarding the dispute resolution process?
411.610  When should a beneficiary receive information on the 
procedures for resolving disputes?
411.615  How will a disputed issue be referred to the PM?
411.620   How long does the PM have to recommend a resolution to the 
dispute?
411.625  Can the beneficiary or the EN that is not a State VR agency 
request a review of the PM's recommendation?
411.630  Is SSA's decision final?
411.635  Can a beneficiary be represented in the dispute resolution 
process under the Ticket to Work program?

Disputes Between Beneficiaries and State VR Agencies

411.640  Do the dispute resolution procedures of the Rehabilitation 
Act of 1973, as amended (29 U.S.C. 720 et seq.), apply to 
beneficiaries seeking services from the State VR agency?

Disputes Between Employment Networks and Program Managers

411.650  Is there a process for resolving disputes between ENs that 
are not State VR agencies and PMs, other than disputes on a payment 
request?
411.655   How will the PM refer the dispute to us?
411.660   Is SSA's decision final?
Subpart J--The Ticket to Work Program and Alternate Participants Under 
the Programs for Payments for Vocational Rehabilitation Services
411.700   What is an alternate participant?
411.705   Can an alternate participant become an EN?
411.710   How will an alternate participant choose to participate as 
an EN in the Ticket to Work program?
411.715   If an alternate participant becomes an EN, will 
beneficiaries for whom an employment plan was signed prior to 
implementation be covered under the Ticket to Work program payment 
provisions?
411.720   If an alternate participant chooses not to become an EN, 
can it continue to function under the programs for payments for VR 
services?
411.725   If an alternate participant becomes an EN and it has 
signed employment plans, both as an alternate participant and an EN, 
how will SSA pay for services provided under each employment plan?
411.730   What happens if an alternate participant signed an 
employment plan with a beneficiary before Ticket to Work program 
implementation in the State and the required period of substantial 
gainful activity is not completed by January 1, 2004?

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

Subpart A--Introduction


Sec. 411.100  Scope.

    The regulations in this part 411 relate to the provisions of 
section 1148 of the Social Security Act which establishes the Ticket to 
Work and Self-Sufficiency Program (hereafter referred to as the 
``Ticket to Work program''). The regulations in this part are divided 
into ten subparts:
    (a) Subpart A explains the scope of this part, explains the purpose 
and manner of implementation of the Ticket to Work program, and 
provides definitions of terms used in this part.
    (b) Subpart B contains provisions relating to the ticket under the 
Ticket to Work program.
    (c) Subpart C contains provisions relating to the suspension of 
continuing disability reviews for disabled beneficiaries who are 
considered to be using a ticket.
    (d) Subpart D contains provisions relating to the use of one or 
more program managers to assist us in the administration of the Ticket 
to Work program.
    (e) Subpart E contains provisions relating to employment networks 
in the Ticket to Work program.
    (f) Subpart F contains provisions relating to State vocational 
rehabilitation agencies' participation in the Ticket to Work program.
    (g) Subpart G contains provisions relating to individual work plans 
in the Ticket to Work program.
    (h) Subpart H contains provisions establishing employment network 
payment systems.
    (i) Subpart I contains provisions that establish a procedure for 
resolving disputes under the Ticket to Work program.
    (j) Subpart J contains provisions explaining how the implementation 
of the Ticket to Work program affects alternate participants under the 
programs for payments for vocational rehabilitation services under 
subpart V of part 404 and subpart V of part 416 of this chapter.


Sec. 411.105  What is the purpose of the Ticket to Work program?

    The purpose of the Ticket to Work program is to expand the universe 
of service providers available to individuals who are entitled to 
Social Security benefits based on disability or eligible for 
Supplemental Security Income (SSI) benefits based on disability or 
blindness in obtaining the services necessary to find, enter and retain 
employment. Expanded employment opportunities for these individuals 
also will increase the likelihood that these individuals will reduce 
their dependency on Social Security and SSI cash benefits.


Sec. 411.110   How is the Ticket to Work program implemented?

    We are implementing the Ticket to Work program in graduated phases 
at phase-in sites around the country. We are implementing the program 
at sites on a wide enough scale to allow for a thorough evaluation and 
ensure full implementation of the program on a timely basis.


Sec. 411.115  Definitions of terms used in this part.

    As used in this part:
    (a) ``The Act'' means the Social Security Act, as amended.
    (b) ``Commissioner'' means the Commissioner of Social Security.
    (c) ``Cost reimbursement payment system'' means the provisions for 
payment for vocational rehabilitation services under subpart V of part 
404 and subpart V of part 416 of this chapter.
    (d) ``Disabled beneficiary'' means a title II disability 
beneficiary or a title XVI disability beneficiary.
    (e) ``Employment network'' or ``EN'' means a qualified public or 
private entity that has entered into an agreement with us to serve 
under the Ticket to Work program and that assumes responsibility for 
the coordination and delivery of employment services, vocational 
rehabilitation services, or other support services to beneficiaries 
assigning tickets to it. The rules on employment networks are described 
in subpart E of this part (Secs. 411.300-411.330). A State vocational 
rehabilitation agency may choose, on a case-by-case basis, to function 
as an employment network with respect to a beneficiary under the Ticket 
to Work program. The rules on State vocational rehabilitation agencies' 
participation in the Ticket to Work program are described in subpart F 
of this part (Secs. 411.350-411.435).

[[Page 67423]]

    (f) ``Employment plan'' means an individual work plan described in 
paragraph (i) of this section, or an individualized plan for employment 
described in paragraph (j) of this section. When used in subpart J of 
this part, ``employment plan'' also means a ``similar document'' 
referred to in Secs. 404.2114(a)(2) and 416.2214(a)(2) of this chapter 
under which an alternate participant under the programs for payments 
for vocational rehabilitation services (described in subpart V of part 
404 and subpart V of part 416 of this chapter) provides services to a 
disabled beneficiary under those programs.
    (g) ``Federal SSI cash benefits'' means a ``Supplemental Security 
Income benefit under title XVI'' based on blindness or disability as 
described in paragraphs (n) and (r) of this section.
    (h) ``I'', ``my'', ``you'', or ``your'' means the disabled 
beneficiary.
    (i) ``Individual work plan'' or ``IWP'' means an employment plan 
under which an employment network (other than a State vocational 
rehabilitation agency) provides services to a disabled beneficiary 
under the Ticket to Work program. An individual work plan must be 
developed under, and meet the requirements of, the rules in subpart G 
of this part (Secs. 411.450-411.470).
    (j) ``Individualized plan for employment'' or ``IPE'' means an 
employment plan under which a State vocational rehabilitation agency 
provides services to individuals with disabilities (including 
beneficiaries assigning tickets to it under the Ticket to Work program) 
under a State plan approved under title I of the Rehabilitation Act of 
1973, as amended (29 U.S.C. 720 et seq.). An individualized plan for 
employment must be developed under, and meet the requirements of, 34 
CFR 361.45 and 361.46.
    (k) ``Program manager'' or ``PM'' means an organization in the 
private or public sector that has entered into a contract with us to 
assist us in administering the Ticket to Work program. The rules on the 
use of one or more program managers to assist us in administering the 
program are described in subpart D of this part (Secs. 411.230-
411.250).
    (l) ``Social Security disability benefits'' means the benefits 
described in paragraph (q) of this section.
    (m) ``State vocational rehabilitation agency'' or ``State VR 
agency'' means a State agency administering or supervising the 
administration of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.). In 
those States that have one agency that provides VR services to non-
blind individuals and another agency that provides services to blind 
individuals, this term refers to either State agency.
    (n) ``Supplemental Security Income benefit under title XVI'' means 
a cash benefit under section 1611 or 1619(a) of the Act, and does not 
include a State supplementary payment, administered Federally or 
otherwise.
    (o) ``Ticket'' means a document described in Sec. 411.120 which the 
Commissioner may issue to disabled beneficiaries for participation in 
the Ticket to Work program.
    (p) ``Ticket to Work program'' or ``program'' means the Ticket to 
Work and Self-Sufficiency Program under section 1148 of the Act.
    (q) ``Title II disability beneficiary'' means an individual 
entitled to disability insurance benefits under section 223 or to 
monthly insurance benefits under section 202 of the Act based on such 
individual's disability as defined in section 223(d) of the Act. (See 
Sec. 404.1505 of this chapter.) An individual is a title II disability 
beneficiary for each month for which such individual is entitled to 
such benefits.
    (r) ``Title XVI disability beneficiary'' means an individual 
eligible for Supplemental Security Income benefits under title XVI on 
the basis of blindness (within the meaning of section 1614(a)(2) of the 
Act) (see Secs. 416.981 and 416.982 of this chapter) or disability 
(within the meaning of section 1614(a)(3) of the Act) (see Sec. 416.905 
of this chapter). An individual is a title XVI disability beneficiary 
for each month for which such individual is eligible for such benefits.
    (s) ``We'' or ``us'' means the Social Security Administration.

Subpart B--Tickets Under the Ticket to Work Program


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

    (a) A ticket under the Ticket to Work program is a document which 
provides evidence of the Commissioner's agreement to pay, under the 
rules in subpart H of this part, an employment network (EN) or a State 
VR agency to which a disabled beneficiary's ticket is assigned, for 
providing employment services, vocational rehabilitation services, and 
other support services to the beneficiary.
    (b) The ticket is a red, white and blue document approximately 6" 
by 9" in size. The left side of the document includes the beneficiary's 
name, ticket number, claim account number and the date we issued the 
ticket. The ticket number is 12 characters and comprises the 
beneficiary's own social security number, the letters ``TW'' and a 
number 1, 2, etc. A number 1 in the last position would signify that 
this is the first ticket the beneficiary has received, consistent with 
Sec. 411.125(b).
    (c) The right side of the ticket includes the signature of the 
Commissioner of Social Security, and the following language:

    This ticket is issued to you by the Social Security 
Administration under the Ticket to Work and Self-Sufficiency 
Program. If you want help in returning to work or going to work for 
the first time, you may offer this ticket to an Employment Network 
of your choosing or take it to your State vocational rehabilitation 
agency for services. If you choose an Employment Network and it 
agrees to take your ticket, or if you choose your State agency and 
you qualify for services, these providers can offer you the services 
you may need to go to work.
    An Employment Network provides the services at no cost to you. 
The Social Security Administration will pay the Employment Network 
if you assign your ticket to it, and the Employment Network helps 
you to go to work and complies with other requirements of the 
Program. An Employment Network serving under the Program has agreed 
to abide by the rules and regulations of the Program under the terms 
of its agreement with the Social Security Administration for 
providing services under the Program. Your State agency can tell you 
about its rules for getting services.

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

    (a) You will be eligible to receive a Ticket to Work in a month in 
which--
    (1) You are age 18 or older and have not attained age 65;
    (2)(i)(A) You are a title II disability beneficiary (other than a 
beneficiary receiving benefit payments under Sec. 404.316(c), 
Sec. 404.337(c), Sec. 404.352(d), or Sec. 404.1597a of this chapter); 
and
    (B) You are in current pay status for monthly title II cash 
benefits based on disability (see subpart E of part 404 of this chapter 
for our rules on nonpayment of title II benefits); or
    (ii)(A) You are a title XVI disability beneficiary (other than a 
beneficiary receiving disability or blindness benefit payments under 
Sec. 416.996 or Sec. 416.1338 of this chapter);
    (B) If you are an individual described in Sec. 416.987(a)(1) of 
this chapter, you are eligible for benefits under title XVI based on 
disability under the standard for evaluating disability for adults 
following a redetermination of your eligibility under Sec. 416.987 of 
this chapter; and
    (C) Your monthly Federal cash benefits based on disability or 
blindness under title XVI are not suspended (see

[[Page 67424]]

subpart M of part 416 of this chapter for our rules on suspension of 
title XVI benefit payments); and
    (3) Our records show that--
    (i) Your case is not designated as a medical improvement expected 
diary review case (see Secs. 404.1590 and 416.990 of this chapter for 
what we mean by a medical improvement expected diary review); or
    (ii) Your case is designated as a medical improvement expected 
diary review case, and we have conducted at least one continuing 
disability review in your case and made a final determination or 
decision that your disability continues (see subpart J of part 404 or 
subpart N of part 416 of this chapter for when a determination or 
decision becomes final).
    (b) You will not be eligible to receive more than one ticket during 
any period during which you are either--
    (1) Entitled to title II benefits based on disability (see 
Secs. 404.316(b), 404.337(b) and 404.352(b) of this chapter for when 
entitlement to title II disability benefits ends); or
    (2) Eligible for title XVI benefits based on disability or 
blindness and your eligibility has not terminated (see subpart M of 
part 416 of this chapter for our rules on when eligibility for title 
XVI benefits terminates).
    (c) If your entitlement to title II benefits based on disability 
ends and/or your eligibility for title XVI benefits based on disability 
or blindness terminates as described in Sec. 411.155(b)(1) or (2), you 
will be eligible to receive a new ticket in a month in which--
    (1) Your entitlement to title II benefits based on disability is 
reinstated under section 223(i) of the Act, or your eligibility for 
title XVI benefits based on disability or blindness is reinstated under 
section 1631(p) of the Act; and
    (2) You meet the requirements of paragraphs (a)(1) and (2) of this 
section.


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

    (a) We will distribute tickets in graduated phases at phase-in 
sites selected by the Commissioner, to permit a thorough evaluation of 
the Ticket to Work program and ensure that the most effective methods 
are in place for full implementation of the program. (See 
Sec. 411.110.)
    (b) We will distribute a ticket to you when we distribute tickets 
in your State, if you are eligible to receive a ticket under 
Sec. 411.125.


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

    Your participation in the Ticket to Work program is voluntary. When 
you receive your ticket, you are free to choose when and whether to 
assign it (see Sec. 411.140 for information on assigning your ticket). 
If you want to participate in the program, you can take your ticket to 
any EN you choose or to your State VR agency.


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

    (a) You may assign your ticket only during a month in which you 
meet the requirements of Sec. 411.125(a)(1) and (a)(2). You may assign 
your ticket to any EN which is serving under the program and is willing 
to provide you with services, or you may assign your ticket to a State 
VR agency if you are eligible to receive VR services according to 34 
CFR 361.42. You may not assign your ticket to more than one provider of 
services (i.e. an EN or a State VR agency) at a time. Once you have 
assigned your ticket to an EN or State VR agency, you may take your 
ticket out of assignment for any reason under the rules in 
Sec. 411.145(a). Also, you may reassign your ticket under the rules in 
Sec. 411.150.
    (b)(1) In determining which EN you want to work with, you may 
discuss your rehabilitation and employment plans with as many ENs in 
your area as you wish. You also may discuss your rehabilitation and 
employment plans with the State VR agency.
    (2) You can obtain a list of the approved ENs in your area from the 
program manager (PM) we have enlisted to assist in the administration 
of the Ticket to Work program. (See Sec. 411.115(k) for a definition of 
the PM.)
    (c) If you choose to work with an EN serving under the program, 
both you and the EN of your choice need to agree upon an individual 
work plan (IWP) (see Sec. 411.115(i) for a definition of an IWP). If 
you choose to work with a State VR agency, you must develop an 
individualized plan for employment (IPE) and your State VR counselor 
must agree to the terms of the IPE, according to the requirements 
established in 34 CFR 361.45 and 361.46. (See Sec. 411.115(j) for a 
definition of an IPE.) The IWP or IPE outlines the services necessary 
to assist you in achieving your chosen employment goal.
    (d) In order for you to assign your ticket to an EN or State VR 
agency, all of the following requirements must be met:
    (1)(i) If you decide to work with an EN, you and a representative 
of the EN must agree to and sign an IWP; or
    (ii) If you decide to work with a State VR agency, you and a 
representative of the State VR agency must agree to and sign both an 
IPE and a form that provides the information described in 
Sec. 411.385(a)(1), (2) and (3).
    (2) You must be eligible to assign your ticket under the rules in 
paragraph (a) of this section.
    (3) A representative of the EN must submit a copy of the signed IWP 
to the PM or a representative of the State VR agency must submit the 
completed and signed form (as described in Sec. 411.385(a) and (b)) to 
the PM.
    (4) The PM must receive the copy of the IWP or receive the required 
form, as appropriate.
    (e) If all of the requirements in paragraph (d) of this section are 
met, we will consider your ticket assigned to the EN or State VR 
agency. The effective date of the assignment of your ticket will be the 
first day on which the requirements of paragraphs (d)(1) and (2) of 
this section are met. See Secs. 411.160 through 411.225 for an 
explanation of how assigning your ticket may affect medical reviews 
that we conduct to determine if you are still disabled under our rules.


Sec. 411.145  Once my ticket has been assigned to an EN or State VR 
agency, can it be taken out of assignment?

    (a) If you assigned your ticket to an EN or a State VR agency, you 
may take your ticket out of assignment for any reason. You must notify 
the PM in writing that you wish to take your ticket out of assignment. 
The ticket will be no longer assigned to that EN or State VR agency 
effective with the first day of the month following the month in which 
you notify the PM in writing that you wish to take your ticket out of 
assignment. You may reassign your ticket under the rules in 
Sec. 411.150.
    (b) If your EN goes out of business or is no longer approved to 
participate as an EN in the Ticket to Work program, the PM will take 
your ticket out of assignment with that EN. The ticket will be no 
longer assigned to that EN effective on the first day of the month 
following the month in which the EN goes out of business or is no 
longer approved to participate in the Ticket to Work program. You will 
be sent a notice informing you that your ticket is no longer assigned 
to that EN. In addition, if your EN is no longer willing or able to 
provide you with services, or if your State VR agency stops providing 
services to you because you have been determined to be ineligible for 
VR services under 34 CFR 361.42, the EN or State VR agency may ask the 
PM to take your ticket out of assignment with that EN or State VR 
agency. The ticket will be no longer assigned to that EN or State VR 
agency effective on the first day of the month following the month in

[[Page 67425]]

which the EN or State VR agency makes a request to the PM that the 
ticket be taken out of assignment. You will be sent a notice informing 
you that your ticket is no longer assigned to that EN or State VR 
agency. You may reassign your ticket under the rules in Sec. 411.150.
    (c) For information about how taking a ticket out of assignment may 
affect medical reviews that we conduct to determine if you are still 
disabled under our rules, see Secs. 411.171(c) and 411.220.


Sec. 411.150  Can I reassign my ticket to a different EN or the State 
VR agency?

    (a) Yes. If you previously assigned your ticket and your ticket is 
no longer assigned (see Sec. 411.145) or you wish to change the 
assignment, you may reassign your ticket, unless you are receiving 
benefit payments under Sec. 404.316(c), Sec. 404.337(c), 
Sec. 404.352(d) or Sec. 404.1597a of this chapter, or you are receiving 
disability or blindness benefit payments under Sec. 416.996 or 
Sec. 416.1338 of this chapter (the provisions of paragraph (b)(3) of 
this section notwithstanding). If you previously assigned your ticket 
to an EN, you may reassign your ticket to a different EN which is 
serving under the program and is willing to provide you with services, 
or you may reassign your ticket to the State VR agency if you are 
eligible to receive VR services according to 34 CFR 361.42. If you 
previously assigned your ticket to the State VR agency, you may 
reassign your ticket to an EN which is serving under the program and is 
willing to provide you with services or to another State VR agency if 
you are eligible to receive services according to 34 CFR 361.42.
    (b) In order for you to reassign your ticket to an EN or State VR 
agency, all of the following requirements must be met:
    (1) Your ticket must be unassigned. If your ticket is assigned to 
an EN or a State VR agency, you must first tell the PM in writing that 
you want to take your ticket out of assignment (see Sec. 411.145).
    (2)(i) You and a representative of the new EN must agree to and 
sign a new IWP; or
    (ii) If you wish to reassign your ticket to a State VR agency, you 
and a representative of the State VR agency must agree to and sign both 
an IPE and a form that provides the information described in 
Sec. 411.385(a)(1), (2) and (3).
    (3) You must meet the requirements of Sec. 411.125(a)(1) and (2) on 
or after the day you and a representative of the new EN sign your IWP 
or you and a representative of the State VR agency sign your IPE and 
the required form, except if--
    (i) Your ticket is not in use (see Sec. 411.170 et seq.) and the 
requirements of paragraph (b)(2) of this section are met within 30 days 
of the effective date your ticket no longer was assigned to the 
previous EN or State VR agency (see Sec. 411.145); or
    (ii) Your ticket is in use (see Sec. 411.170 et seq.) and the 
requirements of paragraph (b)(2) of this section are met before the end 
of the 3-month extension period described in Sec. 411.220.
    (4) A representative of the EN must submit a copy of the signed IWP 
to the PM or a representative of the State VR agency must submit the 
completed and signed form (as described in Sec. 411.385(a) and (b)) to 
the PM.
    (5) The PM must receive the copy of the IWP or received the 
required form, as appropriate.
    (c) If all of the requirements in paragraphs (a) and (b) of this 
section are met, we will consider your ticket reassigned to the new EN 
or State VR agency. The effective date of the reassignment of your 
ticket will be the first day on which the requirements of paragraphs 
(a) and (b)(1), (2) and (3) of this section are met. See Secs. 411.160 
through 411.225 for an explanation of how reassigning your ticket may 
affect medical reviews that we conduct to determine if you are still 
disabled under our rules.


Sec. 411.155  When does my ticket terminate?

    (a) Your ticket will terminate if and when you are no longer 
eligible to participate in the Ticket to Work program. If your ticket 
terminates, you may not assign or reassign it to an EN or State VR 
agency. We will not pay an EN (including a State VR agency) for 
milestones or outcomes achieved in or after the month in which your 
ticket terminates (see Sec. 411.525(c)). Your eligibility to 
participate in the Ticket to Work program will end, and your ticket 
will terminate, in the earliest of the following months:
    (1) The month in which your entitlement to title II benefits based 
on disability ends for reasons other than your work activity or 
earnings, or the month in which your eligibility for benefits under 
title XVI based on disability or blindness terminates for reasons other 
than your work activity or earnings, whichever is later;
    (2) If you are entitled to widow's or widower's insurance benefits 
based on disability (see Secs. 404.335 and 404.336 of this chapter), 
the month in which you attain age 65; or
    (3) If you are eligible for benefits under title XVI based on 
disability or blindness, the month following the month in which you 
attain age 65.
    (b) The rules in paragraph (c) of this section apply in determining 
when your eligibility to participate in the Ticket to Work program will 
end and your ticket will terminate if--
    (1) You were not a concurrent title II/title XVI disability 
beneficiary, and your entitlement to title II benefits based on 
disability ends or your eligibility for title XVI benefits based on 
disability or blindness terminates because of your work activity or 
earnings; or
    (2) You were a concurrent title II/title XVI disability beneficiary 
and--
    (i) Your entitlement to title II benefits based on disability ends 
because of work activity or earnings and your eligibility for title XVI 
benefits based on disability or blindness terminates for any reason; or
    (ii) Your eligibility for title XVI benefits based on disability or 
blindness terminates because of your work activity or earnings and your 
entitlement to title II benefits based on disability ends for any 
reason.
    (c) For purposes of paragraph (b) of this section, the ticket which 
you received in connection with the previous period during which you 
were either entitled to title II benefits based on disability or 
eligible for title XVI benefits based on disability or blindness (as 
described in Sec. 411.125(b)) will terminate, and your eligibility to 
participate in the Ticket to Work program based on that ticket will 
end, in the earliest of the following months:
    (1) If we make a final determination or decision that you are not 
entitled to have title II benefits based on disability reinstated under 
section 223(i) of the Act or eligible to have title XVI benefits based 
on disability or blindness reinstated under section 1631(p) of the Act, 
the month in which we make that determination or decision;
    (2) If we make a final determination or decision that you are not 
entitled to title II benefits based on disability or eligible for title 
XVI benefits based on disability or blindness after you file an 
application for benefits, the month in which we make that determination 
or decision;
    (3) The month you attain retirement age (as defined in section 
216(l) of the Act);
    (4) The month in which you die;
    (5) The month in which you become entitled to a title II benefit 
that is not based on disability or eligible for a title XVI benefit 
that is not based on disability or blindness;
    (6) The month in which you again become entitled to title II 
benefits based on disability, or eligible for title XVI benefits based 
on disability or

[[Page 67426]]

blindness, based on the filing of an application for such benefits; or
    (7) If your entitlement to title II benefits based on disability is 
reinstated under section 223(i) of the Act, or your eligibility for 
title XVI benefits based on disability or blindness is reinstated under 
section 1631(p) of the Act, the month in which you are eligible to 
receive a new ticket under Sec. 411.125(c).

Subpart C--Suspension of Continuing Disability Reviews for 
Beneficiaries Who Are Using a Ticket

Introduction


Sec. 411.160  What does this subpart do?

    (a) This subpart explains our rules about continuing disability 
reviews for disability beneficiaries who are participating in the 
Ticket to Work program.
    (b) Continuing disability reviews are reviews that we conduct to 
determine if you are still disabled under our rules (see 
Secs. 404.1589, 416.989 and 416.989a of this chapter for the rules on 
when we may conduct continuing disability reviews). For the purposes of 
this subpart, continuing disability reviews include the medical reviews 
we conduct to determine if your medical condition has improved (see 
Secs. 404.1594 and 416.994 of this chapter), but not any review to 
determine if your disability has ended under Sec. 404.1594(d)(5) of 
this chapter because you have demonstrated your ability to engage in 
substantial gainful activity (SGA), as defined in Secs. 404.1571-
404.1576 of this chapter.


Sec. 411.165  How does being in the Ticket to Work program affect my 
continuing disability reviews?

    We periodically review your case to determine if you are still 
disabled under our rules. However, if you are in the Ticket to Work 
program, we will not begin a continuing disability review during the 
period in which you are using a ticket. Sections 411.170 and 411.171 
describe when the period of using a ticket begins and ends. You must 
meet certain requirements for us to consider you to be using a ticket.


Sec. 411.166  Glossary of terms used in this subpart.

    (a) Active participation in your employment plan means you are 
engaging in activities outlined in your employment plan on a regular 
basis and in the approximate time frames specified in the employment 
plan.
    (b) Extension period is a period of up to three months during which 
you may reassign a ticket without being subject to continuing 
disability reviews. You may be eligible for an extension period if the 
ticket is in use and no longer assigned to an Employment Network (EN) 
or State VR agency (see Sec. 411.220).
    (c) Inactive status is a status in which you may place your ticket 
if you are temporarily unable to participate or not actively 
participating in your employment plan. You may place a ticket in 
inactive status only during the initial 24-month period. Months during 
which your ticket is in inactive status do not count toward the time 
limitations for making timely progress toward self-supporting 
employment. You may keep your ticket in inactive status as long as you 
choose. However, because the ticket is not in use during months in 
which it is in inactive status, you will be subject to continuing 
disability reviews during these months.
    (d) Initial 24-month period means the 24-month period that begins 
with the month following the month in which you first assigned your 
ticket. We do not count any month in which the ticket is not assigned 
to an EN or State VR agency, as described in Sec. 411.145, or any month 
during which the ticket is not in use because it is in inactive status 
(see Sec. 411.190(a)(2)) or because you were determined to be no longer 
making timely progress toward self-supporting employment under 
Sec. 411.190(a)(3) or Sec. 411.205.
    (e) Progress review means the reviews the program manager (PM) 
conducts to determine if you are meeting the timely progress guidelines 
described in these regulations. (See Sec. 411.115(k) for a definition 
of the PM.) The method for conducting the 24-month progress review is 
explained in Sec. 411.195 and the method for conducting 12-month 
progress reviews is explained in Sec. 411.200.
    (f) Timely progress guidelines means the guidelines we use to 
determine if you are making timely progress toward self-supporting 
employment. In general, we determine if you are making timely progress 
toward self-supporting employment using two distinct criteria with 
defined time frames. These criteria are active participation in your 
employment plan during the initial 24-month period and increased work 
and earnings during subsequent 12-month progress review periods (see 
Sec. 411.180 to Sec. 411.190, Sec. 411.195 and Sec. 411.200).
    (g) 12-month progress review period means the 12-month period that 
begins either following the end of the initial 24-month period or 
following the previous 12-month progress review period. We do not count 
any month during which your ticket is not assigned to an EN or State VR 
agency, as described in Sec. 411.145.
    (h) Using a ticket means that you have assigned a ticket to an EN 
or State VR agency and are making timely progress toward self-
supporting employment. (See Sec. 411.171 for a discussion of when the 
period of using a ticket ends.)

Definition of Using a Ticket


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

    The period of using a ticket begins on the effective date of the 
assignment of your ticket to an EN or State VR agency under 
Sec. 411.140.

    Note: If your period of using a ticket ends because you have 
previously failed to meet the timely progress guidelines under 
Secs. 411.180 through 411.190, the period of using a ticket will 
resume if you satisfy the requirements for re-entering in-use 
status. (See Sec. 411.210.)

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

    The period of using a ticket ends with the earliest of the 
following--
    (a) The month before the month in which the ticket terminates as a 
result of one of the events listed in Sec. 411.155;
    (b) The day before the effective date of a decision under 
Sec. 411.190; Sec. 411.195, Sec. 411.200, or Sec. 411.205 that you are 
no longer making timely progress toward self-supporting employment;
    (c) The close of the three-month extension period which begins with 
the first month in which your ticket is no longer assigned to an EN or 
State VR agency (see Sec. 411.145), unless you reassign your ticket 
within the three-month extension period (see Sec. 411.220 for an 
explanation of the three-month extension period);
    (d) The 60th month for which an outcome payment is made to your EN 
(including a State VR agency) under subpart H of this part; or
    (e) If you have assigned your ticket to a State VR agency which 
selects the cost reimbursement payment system, the 60th month for which 
an outcome payment would have been made had the State VR agency chosen 
to serve you as an EN.


Sec. 411.175  What if I assign my ticket after a continuing disability 
review has begun?

    (a) If we begin a continuing disability review before the date on 
which you assign a ticket, you may still assign the ticket and receive 
services under the Ticket to Work program. However, we will complete 
the continuing disability review. If in this review we determine that 
you are no longer disabled, in most cases you will no longer be 
eligible to receive benefit payments. However, if you assigned your 
ticket before we determined that you are no longer

[[Page 67427]]

disabled, in certain circumstances you may continue to receive benefit 
payments (see Secs. 404.316(c), 404.337(c), 404.352(d), and 416.1338 of 
this chapter). If you appeal the decision that you are no longer 
disabled, you may also choose to have your benefits continued pending 
reconsideration and/or a hearing before an administrative law judge on 
the cessation determination (see Secs. 404.1597a and 416.996 of this 
chapter).
    (b) The date on which we begin the continuing disability review is 
the date on the notice we send you that tells you that we are beginning 
to review your disability case.

Guidelines for Timely Progress Toward Self-Supporting Employment


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

    (a) General. The purpose of the Ticket to Work program is to 
provide you with the services and supports you need to work and reduce 
or eliminate your dependence on Social Security disability benefits 
and/or SSI benefits based on disability or blindness. We consider you 
to be making timely progress toward self-supporting employment when you 
show an increasing ability to work at levels which will reduce or 
eliminate your dependence on these benefits.
    (b) Definitions. As used in this subpart--
    (1) Initial 24-month period means the 24-month period that begins 
with the month following the month in which you first assigned your 
ticket. (See Secs. 411.220(e) and 411.225(c) for when a new initial 24-
month period may be established for you.) We do not count any month 
during which the ticket is not assigned to an EN or State VR agency, as 
described in Sec. 411.145, or any month during which the ticket is not 
in use because it is in inactive status (see Sec. 411.190(a)(2)) or 
because you were determined to be no longer making timely progress 
toward self-supporting employment under Sec. 411.190(a)(3) or 
Sec. 411.205.
    (2) 12-month progress review period means the 12-month period that 
begins either following the end of the initial 24-month period or 
following the previous 12-month progress review period. We do not count 
any month during which your ticket is not assigned to an EN or State VR 
agency, as described in Sec. 411.145.
    (c) Guidelines. We will determine whether you are making timely 
progress toward self-supporting employment by using the following 
guidelines:
    (1) During the initial 24-month period after you assign your 
ticket, you must be actively participating in your employment plan. 
``Actively participating in your employment plan'' means that you are 
engaging in activities outlined in your employment plan on a regular 
basis and in the approximate time frames specified in the employment 
plan. These activities may include employment, if agreed to in the 
employment plan. At the end of the initial 24-month period, you must 
successfully complete the 24-month progress review, as described in 
Sec. 411.195. If you worked in one or more months during the initial 
24-month period at the level of work applicable to the work requirement 
for the first 12-month progress review period, each such month of work 
may be used to reduce by one month the number of months of work 
referred to in Sec. 411.195(a)(2) and Sec. 411.195(a)(3) for purposes 
of meeting the requirements of those sections regarding a goal of three 
months of work during the first 12-month progress review period.
    (2) During your first 12-month progress review period, you must 
work (as defined in Sec. 411.185) for at least three of these 12 
months. The three months do not need to be consecutive. If you worked 
one or more months during the initial 24-month period at the level of 
work applicable to the work requirement for the first 12-month progress 
review period, each such month of work may be used to reduce by one 
month the number of months of work required for the first 12-month 
progress review period.
    (3) During your second 12-month progress review period, and in 
later 12-month progress review periods, you must work (as defined in 
Sec. 411.185) for at least six of these 12 months. The six months do 
not need to be consecutive.


Sec. 411.185  How much do I need to earn to be considered to be 
working?

    For the purpose of determining if you are meeting the timely 
progress requirements for continued ticket use, we will consider you to 
be working in each month in which you have earnings at the following 
levels:
    (a) For title II disability beneficiaries:
    (1) During your first and second 12-month progress review periods, 
we will consider you to be working in a month in which you have 
earnings from employment or self-employment at the SGA level for non-
blind beneficiaries, as defined in Secs. 404.1572 through 404.1576 of 
this chapter. For a month in which you are in a trial work period (see 
Sec. 404.1592 of this chapter), or if you are statutorily blind as 
defined in Sec. 404.1581 of this chapter, we will consider the 
following as fulfilling this requirement--
    (i) Gross earnings from employment, before any deductions for 
impairment related work expenses under Sec. 404.1576 of this chapter, 
that are more than the SGA threshold amount for non-blind beneficiaries 
in Sec. 404.1574(b)(2) of this chapter; or
    (ii) Net earnings from self-employment (as defined in 
Sec. 416.1110(b) of this chapter), before any deductions for impairment 
related work expenses under Sec. 404.1576 of this chapter, that are 
more than the SGA threshold amount for non-blind beneficiaries in 
Sec. 404.1574(b)(2) of this chapter.

    Note to paragraph (a)(1): If you worked in one or more months 
during the initial 24-month period at the level of work described in 
paragraph (a)(1) of this section, those months of work may be used 
to meet certain requirements of the 24-month progress review as 
explained in Sec. 411.180(c)(1) and the work requirements for the 
first 12-month progress review period as explained in 
Sec. 411.180(c)(2).


    (2) During your third 12-month progress review period, and during 
later 12-month progress review periods, we will consider you to be 
working in a month for which Social Security disability benefits are 
not payable to you because of your work or earnings.
    (b) For title XVI beneficiaries:
    (1) During your first and second 12-month progress review periods, 
we will consider you to be working in a month in which you have--
    (i) Gross earnings from employment, before any SSI income 
exclusions, that are more than the SGA threshold amount for non-blind 
beneficiaries in Sec. 404.1574(b)(2) of this chapter; or
    (ii) Net earnings from self-employment (as defined in 
Sec. 416.1110(b) of this chapter), before any SSI income exclusions, 
that are more than the SGA threshold amount for non-blind beneficiaries 
in Sec. 404.1574(b)(2) of this chapter.
      
    Example to paragraph (b)(1): If you earn $750 in January 2001, 
but exclude $200 of this income in a Plan for Achieving Self-Support 
(see Secs. 416.1180-416.1182 of this chapter), you would still be 
considered to be working in that month.

    Note to paragraph (b)(1): If you worked in one or more months 
during the initial 24-month period at the level of work described in 
paragraph (b)(1) of this section, those months of work may be used 
to meet certain requirements of the 24-month progress review as 
explained in Sec. 411.180(c)(1) and the work requirements for the 
first 12-month progress review period as explained in 
Sec. 411.180(c)(2).



[[Page 67428]]


    (2) During your third 12-month progress review period, and during 
any later 12-month progress review periods, we will consider you to be 
working in a month in which you have earnings from employment or self-
employment that are sufficient to preclude the payment of Federal SSI 
cash benefits for a month.
    (c) For concurrent title II and title XVI beneficiaries:
    (1) During your first and second 12-month progress review periods, 
we will consider you to be working in a month in which you have 
earnings from employment or self-employment at the SGA level for non-
blind beneficiaries as defined in Secs. 404.1572 through 404.1576 of 
this chapter. For a month in which you are in a trial work period (see 
Sec. 404.1592 of this chapter), or if you are statutorily blind as 
defined in Sec. 404.1581 of this chapter, we will consider the 
following as fulfilling this requirement--
    (i) Gross earnings from employment, before any SSI income 
exclusions or deductions for impairment related work expenses under 
Sec. 404.1576 of this chapter, that are more than the SGA threshold 
amount for non-blind beneficiaries in Sec. 404.1574(b)(2) of this 
chapter; or
    (ii) Net earnings from self-employment (as defined in 
Sec. 416.1110(b) of this chapter), before any SSI income exclusions or 
deductions for impairment related work expenses under Sec. 404.1576 of 
this chapter, that are more than the SGA threshold amount for non-blind 
beneficiaries in Sec. 404.1574(b)(2) of this chapter.

    Note to paragraph (c)(1): If you worked in one or more months 
during the initial 24-month period at the level of work described in 
paragraph (c)(1) of this section, those months of work may be used 
to meet certain requirements of the 24-month progress review as 
explained in Sec. 411.180(c)(1) and the work requirements for the 
first 12-month progress review period as explained in 
Sec. 411.180(c)(2).


    (2) During your third 12-month progress review period, and during 
later 12-month progress review periods, we will consider you to be 
working in a month in which you have earnings from employment or self-
employment sufficient to preclude the payment of Social Security 
disability benefits and Federal SSI cash benefits for a month.


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

    (a) During the initial 24-month period.
    (1) General. During the initial 24-month period after you assign 
your ticket, you must be actively participating in your employment 
plan, as defined in Sec. 411.180(c)(1). Active participation in your 
employment plan will be presumed unless you or your EN or State VR 
agency tell the program manager (PM) that you are not actively 
participating. (See Sec. 411.115(k) for a definition of the PM.) If you 
or your EN or State VR agency report to the PM that you are temporarily 
unable to participate or are not actively participating in your 
employment plan during the initial 24-month period after you assign 
your ticket, the PM will give you the choice of placing your ticket in 
inactive status or resuming active participation in your employment 
plan.
    (2) Inactive status. If you choose to place the ticket in inactive 
status, your ticket will be placed in inactive status beginning with 
the first day of the month following the month in which you make your 
request. You are not considered to be using a ticket during months in 
which your ticket is in inactive status. Therefore, you will be subject 
to continuing disability reviews during those months. The months in 
which your ticket is in inactive status do not count toward the time 
limitations for making timely progress toward self-supporting 
employment. You may not place your ticket in inactive status after the 
initial 24-month period.
    (i) To place a ticket in inactive status, you must submit a written 
request to the PM asking that your ticket be placed in inactive status. 
The request must include a statement from your EN or State VR agency 
that you will not be participating in your plan or receiving services 
from them during the period of inactive status.
    (ii) If your ticket is still assigned to an EN or State VR agency, 
you may reactivate your ticket and return to in-use status at any time 
by submitting a written request to the PM. Your ticket will be 
reactivated beginning with the first day of the month following the 
month in which the PM receives your request.
    (3) Resuming active participation. If you choose to resume active 
participation in your employment plan, you will be allowed three months 
to demonstrate this active participation to the PM. During this period, 
you will be considered to be making timely progress toward self-
supporting employment, and these months will count toward your initial 
24-month period. The PM will contact your EN or State VR agency after 
the three months to determine whether you have been actively 
participating in your employment plan during these three months. If the 
EN or State VR agency reports that you have been actively participating 
in your employment plan during these three months, you will continue to 
be considered to be making timely progress toward self-supporting 
employment. If the EN or State VR agency reports that you have not been 
actively participating in your employment plan during these three 
months, the PM will find that you are no longer making timely progress 
toward self-supporting employment. The PM will send a written notice of 
this decision to you at your last known address. The notice will 
explain the reasons for the decision and inform you of the right to ask 
us to review the decision. The decision will become effective 30 days 
after the date on which the PM sends the notice of the decision to you, 
unless you request that we review the decision under Sec. 411.205.
    (b) After the initial 24-month period. (1) After the initial 24-
month period, the PM will conduct progress reviews to determine if you 
are meeting the timely progress guidelines for continuing to be 
considered to be using a ticket.
    (2) The PM will conduct a 24-month progress review at the end of 
the initial 24-month period. (See Sec. 411.195.)
    (3) If you successfully complete your 24-month progress review, the 
PM will then conduct 12-month progress reviews at the end of each 12-
month progress review period. (See Sec. 411.200.)


Sec. 411.191  Table summarizing the guidelines for timely progress 
toward self-supporting employment.

    You may use the following table as a general guide to determine 
what you need to do to meet the guidelines for timely progress toward 
self-supporting employment. For more detail, refer to Secs. 411.180-
411.190, and Secs. 411.195 and 411.200.

[[Page 67429]]



----------------------------------------------------------------------------------------------------------------
                                                                                               At the end of the
             If you:                You are in this     You must work:    With this level of    period we will
                                        period:                                earnings:         conduct your:
----------------------------------------------------------------------------------------------------------------
(a) First assigned your ticket    Initial 24-month    No work             Not applicable....  24-month progress
 less than 24 months ago (not      period.             requirement. Must                       review.
 counting any months during                            be actively
 which your ticket was                                 participating in
 unassigned or was not in use).                        employment plan.
(b) First assigned your ticket    First 12-month      3 months out of 12  Earnings at the     First 12-month
 25 to 36 months ago, not          progress review     \2\.                SGA level for non-  progress review.
 counting certain months \1\.      period.                                 blind
                                                                           beneficiaries; \3
                                                                           \ or If you are
                                                                           an SSI-only
                                                                           beneficiary,
                                                                           gross earnings
                                                                           from employment
                                                                           or net earnings
                                                                           from self-
                                                                           employment which,
                                                                           before SSI income
                                                                           exclusions, are
                                                                           more than the SGA
                                                                           threshold amount
                                                                           for non-blind
                                                                           beneficiaries.
(c) First assigned your ticket    Second 12-month     6 months out of 12  Earnings at the     Second 12-month
 37 to 48 months ago, not          progress review                         SGA level for non-  progress review.
 counting certain months \1\.      period.                                 blind
                                                                           beneficiaries; \2
                                                                           \ or If you are
                                                                           an SSI-only
                                                                           beneficiary,
                                                                           gross earnings
                                                                           from employment
                                                                           or net earnings
                                                                           from self-
                                                                           employment which,
                                                                           before SSI income
                                                                           exclusions, are
                                                                           more than the SGA
                                                                           threshold amount
                                                                           for non-blind
                                                                           beneficiaries.
(d) First assigned your ticket    Third 12-month      6 months out of 12  Earnings            Third 12-month
 49 to 60 months ago, not          progress review                         sufficient to       progress review.
 counting certain months \3\.      period.                                 preclude Social
                                                                           Security
                                                                           disability and
                                                                           Federal SSI cash
                                                                           benefits for a
                                                                           month.
----------------------------------------------------------------------------------------------------------------
Note to table: In later 12-month progress review periods, the work and earnings requirements are the same as in
  the third 12-month progress review period.
\1\ In counting the 24 months which make up the initial 24-month period that begins after you assign your
  ticket, we do not count any months during which your ticket was unassigned or was not in use (see Sec.
  411.180(b)(1)). In counting the 12 months which make up any subsequent 12-month progress revieww period, we do
  not count any months during which your ticket was unassigned (see Sec.  411.180(b)(2)).
\2\ If you worked in one or more months during the initial 24-month period at the level of work applicable to
  the work requirement for the first 12-month progress review period, each such month of work may be used to
  reduce by one month the number of months of work required for the first 12-month progress review period (see
  Sec.  411.180(c)(2)).
\3\ For an explanation of how we determine if you meet this requirement if you are in a trial work period or if
  you are blind, see Sec.  411.185(a)(1) or (c)(1).

Sec. 411.195  How will the PM conduct my 24-month progress review?

    (a) In this review the PM will consider the following:
    (1) Are you actively participating in your employment plan? By 
``actively participating in your employment plan,'' we mean that you 
are engaging in activities outlined in your employment plan on a 
regular basis and in the approximate time frames specified in the plan. 
These activities may include employment, if agreed to in the employment 
plan.
    (2) Does your employment plan have a goal of at least three months 
of work (as defined in Sec. 411.185) by the time of your first 12-month 
progress review?
    (3) Given your current progress in your employment plan, can you 
reasonably be expected to reach this goal of at least three months of 
work (as defined in Sec. 411.185) at the time of your first 12-month 
progress review?

    Note to paragraph (a): If you worked in one or more months 
during the initial 24-month period at the level of work applicable 
to the work requirement for the first 12-month progress review 
period, each such month of work may be used to reduce by one month 
the number of months of work referred to in paragraphs (a)(2) and 
(3) of this section and the number of months of work required for 
the first 12-month progress review period (see Sec. 411.180(c)(1) 
and (2)).

    (b) If the answer to all three of these questions is yes, the PM 
will find that you are making timely progress toward self-supporting 
employment. We will consider you to be making timely progress toward 
self-supporting employment until your first 12-month progress review.
    (c) If the answer to any of these questions is no, the PM will find 
that you are not making timely progress toward self-supporting 
employment. The PM will send a written notice of the decision to you at 
your last known address. The notice will explain the reasons for the 
decision and inform you of the right to ask us to review the decision. 
The decision will be effective 30 days after the date on which the PM 
sends the notice of the decision to you, unless you request that we 
review the decision under Sec. 411.205.

[[Page 67430]]

Sec. 411.200  How will the PM conduct my 12-month progress reviews?

    (a) The 12-month progress review is a two step process:
    (1) Step one--Retrospective review. Did you complete the work 
requirements (as specified in Sec. 411.180 and Sec. 411.185) in the 
just completed 12-month progress review period?
    (i) If you have not completed the work requirements, the PM will 
find that you are not making timely progress toward self-supporting 
employment.
    (ii) If you have completed the work requirements, the PM will go to 
step two.
    (2) Step two--Anticipated work level. Do both you and your EN or 
State VR agency expect that you will work at the level required during 
the next 12-month progress review period?
    (i) If not, the PM will find that you are not making timely 
progress toward self-supporting employment.
    (ii) If so, the PM will find that you are making timely progress 
toward self-supporting employment. We will consider you to be making 
timely progress toward self-supporting employment until your next 12-
month progress review.
    (b) If the PM finds that you are not making timely progress toward 
self-supporting employment, the PM will send a written notice of the 
decision to you at your last known address. The notice will explain the 
reasons for the decision and inform you of the right to ask us to 
review the decision. The decision will be effective 30 days after the 
date on which the PM sends the notice of the decision to you, unless 
you request that we review the decision under Sec. 411.205.


Sec. 411.205  What if I disagree with the PM's decision about whether I 
am making timely progress toward self-supporting employment?

    If you disagree with the PM's decision, you may request that we 
review the decision. You must make the request before the 30th day 
after the date on which the PM sends the notice of its decision to you. 
We will consider you to be making timely progress toward self-
supporting employment until we make a decision. We will send a written 
notice of our decision to you at your last known address. If we decide 
that you are no longer making timely progress toward self-supporting 
employment, our decision will be effective on the date on which we send 
the notice of the decision to you.

Failure To Make Timely Progress


Sec. 411.21  What happens if I do not make timely progress toward self-
supporting employment?

    (a) General. If it is determined that you are not making timely 
progress toward self-supporting employment, we will find that you are 
no longer using a ticket. If this happens, you will once again be 
subject to continuing disability reviews. However, you may continue 
participating in the Ticket to Work program. Your EN (including a State 
VR agency which is serving you as an EN) also may receive any milestone 
or outcome payments for which it is eligible under Sec. 411.500 et seq. 
If you are working with a State VR agency which elected payment under 
the cost reimbursement payment system, your State VR agency may receive 
payment for which it is eligible under the cost reimbursement payment 
system (see subparts F and H of this part).
    (b) Re-entering in-use status. If you failed to meet the timely 
progress guidelines for continuing to use a ticket, you may re-enter 
in-use status. If you believe that you meet the requirements for re-
entering in-use status described in paragraph (b)(1), (b)(2), (b)(3), 
(b)(4) or (b)(5) of this section, you may request that you be 
reinstated to in-use status. You must submit a written request to the 
PM asking that you be reinstated to in-use status. The PM will decide 
whether you have satisfied the applicable requirements for re-entering 
in-use status. The requirements for re-entering in-use status depend on 
how far you progressed before you failed to meet the timely progress 
guidelines.
    (1) If you failed to meet the timely progress guidelines during the 
initial 24-month period.
    (i) If you failed to meet the timely progress guidelines during the 
initial 24-month period, you may re-enter in-use status by 
demonstrating three consecutive months of active participation in your 
employment plan (see Sec. 411.166(a)).
    (ii) When you have satisfied this requirement, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency. See paragraph (c) of this section for when 
your reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next review 
will be the 24-month progress review described in Sec. 411.195.
    (2) If you failed to meet the timely progress guidelines in your 
24-month progress review.
    (i) If you failed to meet the timely progress guidelines in your 
24-month progress review, you may re-enter in-use status by completing 
three months of work (as defined in Sec. 411.185(a)(1), (b)(1) or 
(c)(1)) within a rolling 12-month period. The rolling 12-month period 
must begin after the effective date of the decision that you failed to 
meet the timely progress guidelines. You also must satisfy the test of 
Sec. 411.200(a)(2) regarding the anticipated level of your work during 
the 12-month progress review period that may begin under paragraph 
(b)(2)(iii) of this section. The work requirements for this 12-month 
progress review period will be the work requirements applicable during 
the second 12-month progress review period.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency. See paragraph (c) of this section for when 
your reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, the second 12-
month progress review period will begin. During this 12-month progress 
review period, you will be required to work (as defined in 
Sec. 411.185(a)(1), (b)(1) or (c)(1)) at least six months. The PM will 
conduct a 12-month progress review at the end of this 12-month progress 
review period to determine if you have met this requirement. After 
this, the PM will conduct 12-month progress reviews in the usual 
manner.
    (3) If you failed to meet the timely progress guidelines in your 
first 12-month progress review.
    (i) If you failed to meet the timely progress guidelines in your 
first 12-month progress review, you may re-enter in-use status by 
completing three months of work (as defined in Sec. 411.185(a)(1), 
(b)(1) or (c)(1)) within a rolling 12-month period. The rolling 12-
month period must begin after the effective date of the decision that 
you failed to meet the timely progress guidelines. You also must 
satisfy the test of Sec. 411.200(a)(2) regarding the anticipated level 
of your work during the next 12-month progress review period that may 
begin under paragraph (b)(3)(iii) of this section.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency. See paragraph (c) of this section for when 
your reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next 12-month 
progress review period will begin. During this 12-month progress review 
period, you will be required to work (as defined in

[[Page 67431]]

Sec. 411.185(a)(1), (b)(1) or (c)(1)) at least six months. The PM will 
conduct a 12-month progress review at the end of this 12-month progress 
review period to determine if you have met this requirement. After 
this, the PM will conduct 12-month progress reviews in the usual 
manner.
    (4) If you failed to meet the timely progress guidelines in your 
second 12-month progress review.
    (i) If you failed to meet the timely progress guidelines in your 
second 12-month progress review, you may re-enter in-use status by 
completing six months of work (as defined in Sec. 411.185(a)(1), (b)(1) 
or (c)(1)) within a rolling 12-month period. The rolling 12-month 
period must begin after the effective date of the decision that you 
failed to meet the timely progress guidelines. You also must satisfy 
the test of Sec. 411.200(a)(2) regarding the anticipated level of your 
work during the next 12-month progress review period that may begin 
under paragraph (b)(4)(iii) of this section.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency. See paragraph (c) of this section for when 
your reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next 12-month 
progress review period will begin. During this 12-month progress review 
period, you will be required to work (as defined in Sec. 411.185(a)(2), 
(b)(2) or (c)(2)) at least six months. The PM will conduct a 12-month 
progress review at the end of this 12-month progress review period to 
determine if you have met this requirement. After this, the PM will 
conduct 12-month progress reviews in the usual manner.
    (5) If you failed to meet the timely progress guidelines in any 
progress review after your second 12-month progress review.
    (i) If you failed to meet the timely progress guidelines in any 
progress review after your second 12-month progress review, you may re-
enter in-use status by completing six months of work within a rolling 
12-month period with earnings in each of the six months at the level 
specified in Sec. 411.185(a)(2), (b)(2) or (c)(2). The rolling 12-month 
period must begin after the effective date of the decision that you 
failed to meet the timely progress guidelines. You also must satisfy 
the test in Sec. 411.200(a)(2) regarding the anticipated level of your 
work during the next 12-month progress review period that may begin 
under paragraph (b)(5)(iii) of this section.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to 
an EN or State VR agency. See paragraph (c) of this section for when 
your reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next 12-month 
progress review period will begin. During this 12-month progress review 
period, you will be required to work at least six months with earnings 
at the level specified in Sec. 411.185(a)(2), (b)(2) or (c)(2). The PM 
will conduct a 12-month progress review at the end of this 12-month 
progress review period to determine if you have met this requirement. 
After this, the PM will conduct 12-month progress reviews in the usual 
manner.
    (c) Decisions on whether you have satisfied the requirements for 
re-entering in-use status.
    (1) After you have submitted a written request to the PM asking 
that you be reinstated to in-use status, the PM will decide whether you 
have satisfied the applicable requirements in this section for re-
entering in-use status. The PM will send a written notice of the 
decision to you at your last known address. The notice will explain the 
reasons for the decision and inform you of the right to ask us to 
review the decision. If the PM decides that you have satisfied the 
requirements for re-entering in-use status (including the requirement 
that your ticket be assigned to an EN or State VR agency), you will be 
reinstated to in-use status effective with the date on which the PM 
sends the notice of the decision to you. If the PM decides that you 
have not satisfied the requirements for re-entering in-use status, you 
may request that we review the decision under paragraph (c)(2) of this 
section.
    (2) If you disagree with the PM's decision, you may request that we 
review the decision. You must make the request before the 30th day 
after the date on which the PM sends the notice of its decision to you. 
We will send you a written notice of our decision at your last known 
address. If we decide that you have satisfied the requirements for re-
entering in-use status (including the requirement that your ticket be 
assigned to an EN or State VR agency), you will be reinstated to in-use 
status effective with the date on which we send the notice of the 
decision to you.

The Extension Period


Sec. 411.220  What if my ticket is no longer assigned to an EN or State 
VR agency?

    (a) If your ticket was once assigned to an EN or State VR agency 
and is no longer assigned, you are eligible for an extension period of 
up to three months to reassign your ticket. You are eligible for an 
extension period if your ticket is in use and no longer assigned 
because--
    (1) You retrieved your ticket because you were dissatisfied with 
the services being provided (see Sec. 411.145(a)) or because you 
relocated to an area not served by your previous EN or State VR agency; 
or
    (2) Your EN went out of business, is no longer approved to 
participate as an EN in the Ticket to Work program, or is no longer 
willing or able to provide you with services as described in 
Sec. 411.145(b), or your State VR agency stopped providing services to 
you as described in Sec. 411.145(b).
    (b) During the extension period, the ticket will still be 
considered to be in use. This means that you will not be subject to 
continuing disability reviews during this period.
    (c) Time spent in the extension period will not count toward the 
time limitations for the timely progress guidelines.
    (d) The extension period--
    (1) Begins on the first day on which the ticket is no longer 
assigned (see Sec. 411.145); and
    (2) Ends three months after it begins or when you assign your 
ticket to a new EN or State VR agency, whichever is sooner.
    (e) If your extension period began during the initial 24-month 
period, and you reassign your ticket to an EN or State VR agency (other 
than the EN or State VR agency to which the ticket was previously 
assigned), you will have a new initial 24-month period when you 
reassign your ticket. This initial 24-month period will begin with the 
first month beginning after the day on which the reassignment of your 
ticket is effective under Sec. 411.150(c).
    (f) If you do not assign your ticket by the end of the extension 
period, the ticket will no longer be in use and you will once again be 
subject to continuing disability reviews.


Sec. 411.225  What if I reassign my ticket after the end of the 
extension period?

    (a) General. You may reassign your ticket after the end of the 
extension period under the conditions described in Sec. 411.150. If you 
reassign your ticket after the end of the extension period, you will be 
reinstated to in-use status beginning on the day on which the 
reassignment of your ticket is effective under Sec. 411.150(c).
    (b) Time limitations for the timely progress guidelines. Any month 
during which your ticket is not assigned, either during or after the 
extension period,

[[Page 67432]]

will not count toward the time limitations for the timely progress 
guidelines. See Sec. 411.180(b)(1) and (2).
    (c) If your extension period began during the initial 24-month 
period. If your extension period began during the initial 24-month 
period, and you reassign your ticket to an EN or State VR agency (other 
than the EN or State VR agency to which the ticket was previously 
assigned), you will have a new initial 24-month period when you 
reassign your ticket. This initial 24-month period will begin with the 
first month beginning after the day on which the reassignment of your 
ticket is effective under Sec. 411.150(c).
    (d) If your extension period began during any 12-month progress 
review period. If your extension period began during a 12-month 
progress review period and you reassign your ticket after the end of 
the extension period, the period comprising the remaining months in 
that 12-month progress review period (see Sec. 411.180(b)(2)) will 
begin with the first month beginning after the day on which the 
reassignment of your ticket is effective under Sec. 411.150(c).

Subpart D--Use of One or More Program Managers To Assist in 
Administration of the Ticket to Work Program


Sec. 411.230  What is a PM?

    A program manager (PM) is an organization in the private or public 
sector that has entered into a contract to assist us in administering 
the Ticket to Work program. We will use a competitive bidding process 
to select one or more PMs.


Sec. 411.235  What qualifications are required of a PM?

    A PM must have expertise and experience in the field of vocational 
rehabilitation or employment services.


Sec. 411.240  What limitations are placed on a PM?

    A PM is prohibited from directly participating in the delivery of 
employment services, vocational rehabilitation services, or other 
support services to beneficiaries with tickets in the PM's designated 
service delivery area. A PM is also prohibited from holding a financial 
interest in an employment network (EN) or service provider that 
provides services under the Ticket to Work program in the PM's 
designated service delivery area.


Sec. 411.245  What are a PM's responsibilities under the Ticket to Work 
program?

    A PM will assist us in administering the Ticket to Work program by 
conducting the following activities:
    (a) Recruiting, recommending, and monitoring ENs. A PM must recruit 
and recommend for selection by us public and private entities to 
function as ENs under the program. A PM is also responsible for 
monitoring the ENs operating in its service delivery area. Such 
monitoring must be done to the extent necessary and appropriate to 
ensure that adequate choices of services are made available to 
beneficiaries with tickets. A PM may not limit the number of public or 
private entities being recommended to function as ENs.
    (b) Facilitating access by beneficiaries to ENs. A PM must assist 
beneficiaries with tickets in accessing ENs.
    (1) A PM must establish and maintain lists of the ENs available to 
beneficiaries with tickets in its service delivery area and make these 
lists generally available to the public.
    (2) A PM must ensure that all information provided to beneficiaries 
with tickets about ENs is in accessible formats. For purposes of this 
section, accessible format means by media that is appropriate to a 
particular beneficiary's impairment(s).
    (3) A PM must take necessary measures to ensure that sufficient ENs 
are available and that each beneficiary under the Ticket to Work 
program has reasonable access to employment services, vocational 
rehabilitation services, and other support services. The PM shall 
ensure that services such as the following are available in each 
service area, including rural areas: case management, work incentives 
planning, supported employment, career planning, career plan 
development, vocational assessment, job training, placement, follow-up 
services, and other services that we may require in an agreement with a 
PM.
    (4) A PM must ensure that each beneficiary with a ticket is allowed 
to change ENs. When a change in the EN occurs, the PM must reassign the 
ticket based on the choice of the beneficiary.
    (c) Facilitating payments to ENs. A PM must facilitate payments to 
the ENs in its service delivery area. Subpart H explains the EN payment 
systems and the PM's role in administering these systems.
    (1) A PM must maintain documentation and provide regular assurances 
to us that payments to an EN are warranted. The PM shall ensure that an 
EN is complying with the terms of its agreement and applicable 
regulations.
    (2) Upon the request of an EN, the PM shall make a determination of 
the allocation of the outcome or milestone payments due to an EN based 
on the services provided by the EN when a beneficiary has been served 
by more than one EN.
    (d) Administrative requirements. A PM will perform such 
administrative tasks as are required to assist us in administering and 
implementing the Ticket to Work program. Administrative tasks required 
for the implementation of the Program may include, but are not limited 
to:
    (1) Reviewing individual work plans (IWPs) submitted by ENs for 
ticket assignment. These reviews will be conducted to ensure that the 
IWPs meet the requirements of Sec. 411.465. (The PM will not review 
individualized plans for employment developed by State VR agencies and 
beneficiaries.)
    (2) Reviewing amendments to IWPs to ensure that the amendments meet 
the requirements in Sec. 411.465.
    (3) Ensuring that ENs only refer an individual to a State VR agency 
for services pursuant to an agreement regarding the conditions under 
which such services will be provided.
    (4) Resolving a dispute between an EN and a State VR agency with 
respect to agreements regarding the conditions under which services 
will be provided when an individual is referred by an EN to a State VR 
agency for services.

Evaluation of Program Manager Performance


Sec. 411.250  How will SSA evaluate a PM?

    (a) We will periodically conduct a formal evaluation of the PM. The 
evaluation will include, but not be limited to, an assessment examining 
the following areas:
(1) Quality of services;
(2) Cost control;
(3) Timeliness of performance;
(4) Business relations; and
(5) Customer satisfaction.
    (b) Our Project Officer will perform the evaluation. The PM will 
have an opportunity to comment on the evaluation, and then the 
Contracting Officer will determine the PM's final rating.
    (c) These performance evaluations will be made part of our database 
on contractor past performance to which any Federal agency may have 
access.
    (d) Failure to comply with the standards used in the evaluation may 
result in early termination of our agreement with the PM.

[[Page 67433]]

Subpart E--Employment Networks


Sec. 411.300  What is an EN?

    An employment network (EN) is any qualified entity that has entered 
into an agreement with us to function as an EN under the Ticket to Work 
program and assume responsibility for the coordination and delivery of 
employment services, vocational rehabilitation services, or other 
support services to beneficiaries who have assigned their tickets to 
that EN.


Sec. 411.305  Who is eligible to be an EN?

    Any qualified agency or instrumentality of a State (or political 
subdivision thereof) or a private entity that assumes responsibility 
for the coordination and delivery of services under the Ticket to Work 
program to disabled beneficiaries is eligible to be an EN. A single 
entity or an association of or consortium of entities combining their 
resources is eligible to be an EN. The entity may provide these 
services directly or by entering into an agreement with other 
organizations or individuals to provide the appropriate services or 
other assistance that a beneficiary with a ticket may need to find and 
maintain employment that reduces dependency on disability benefits. ENs 
may include, but are not limited to:
    (a) Any public or private entity, including charitable and 
religious organizations, that can provide directly, or arrange for 
other organizations or entities to provide, employment services, 
vocational rehabilitation services, or other support services.
    (b) State agencies administering or supervising the administration 
of the State plan approved under title I of the Rehabilitation Act of 
1973, as amended (29 U.S.C. 720 et seq.) may choose, on a case-by-case 
basis, to be paid as an EN under the payment systems described in 
subpart H of this part. For the rules on State VR agencies' 
participation in the Ticket to Work program, see subpart F of this 
part. The rules in this subpart E apply to entities other than State VR 
agencies.
    (c) One-stop delivery systems established under subtitle B of title 
I of the Workforce Investment Act of 1998 (29 U.S.C. 2841 et seq.).
    (d) Alternate participants currently operating under the authority 
of section 222(d)(2) of the Social Security Act.
    (e) Organizations administering Vocational Rehabilitation Services 
Projects for American Indians with Disabilities authorized under 
section 121 of part C of title I of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 750 et seq.).
    (f) Public or private schools that provide VR or employment 
services, conduct job training programs, or make services or programs 
available that can assist students with disabilities in acquiring 
specific job skills that lead to employment. This includes transition 
programs that can help students acquire work skills.
    (g) Employers that offer job training or other support services or 
assistance to help individuals with disabilities obtain and retain 
employment or arrange for individuals with disabilities to receive 
relevant services or assistance.


Sec. 411.310  How does an entity other than a State VR agency apply to 
be an EN and who will determine whether an entity qualifies as an EN?

    (a) An entity other than a State VR agency applies by responding to 
our Request for Proposal (RFP), which we published in the Commerce 
Business Daily and which is available online through the Federal 
government's electronic posting system (http://www.eps.gov). This RFP 
also is available through SSA's website, http://www.ssa.gov/work. Since 
recruitment of ENs will be an ongoing process, the RFP is open and 
continuous. The entity must respond in a format prescribed in the RFP 
announcement. In its response, the entity must assure SSA that it is 
qualified to provide employment services, vocational rehabilitation 
services, or other support services to disabled beneficiaries, either 
directly or through arrangements with other entities.
    (b) The PM will solicit service providers and other qualified 
entities to respond to the RFP on an ongoing basis. (See 
Sec. 411.115(k) for a definition of the PM.) The PM will conduct a 
preliminary review of responses to the RFP from applicants located in 
the PM's service delivery area and make recommendations to the 
Commissioner regarding selection. The Commissioner will decide which 
applicants will be approved to serve as ENs under the program.
    (c) State VR agencies must comply with the requirements in subpart 
F of this part to participate as an EN in the Ticket to Work program. 
(See Secs. 411.360ff).


Sec. 411.315  What are the minimum qualifications necessary to be an 
EN?

    To serve as an EN under the Ticket to Work program, an entity must 
meet and maintain compliance with both general selection criteria and 
specific selection criteria.
    (a) The general criteria include:
    (1) having systems in place to protect the confidentiality of 
personal information about beneficiaries seeking or receiving services;
    (2) being accessible, both physically and programmatically, to 
beneficiaries seeking or receiving services (examples of being 
programmatically accessible include the capability of making documents 
and literature available in alternate media including Braille, recorded 
formats, enlarged print, and electronic media; and insuring that data 
systems available to clients are fully accessible for independent use 
by persons with disabilities);
    (3) not discriminating in the provision of services based on a 
beneficiary's age, gender, race, color, creed, or national origin;
    (4) having adequate resources to perform the activities required 
under the agreement with us or the ability to obtain them;
    (5) complying with the terms and conditions in the agreement with 
us, including delivering or coordinating the delivery of employment 
services, vocational rehabilitation services, and other support 
services; and
    (6) implementing accounting procedures and control operations 
necessary to carry out the Ticket to Work program.
    (b) The specific criteria that an entity must meet to qualify as an 
EN include:
    (1)(i) Using staff who are qualified under applicable 
certification, licensing, or registration standards that apply to their 
profession including certification or accreditation by national 
accrediting or certifying organizations; or
    (ii) Using staff that are otherwise qualified based on education or 
experience, such as by using staff with experience or a college degree 
in a field related to the services the EN wants to provide, such as 
vocational counseling, human relations, teaching, or psychology; and
    (2) Taking reasonable steps to assure that if any medical and 
related health services are provided, such medical and health related 
services are provided under the formal supervision of persons licensed 
to prescribe or supervise the provision of these services in the State 
in which the services are performed.
    (c) Any entity must have applicable certificates, licenses or other 
credentials if such documentation is required by State law to provide 
vocational rehabilitation services, employment services or other 
support services.
    (d) We will not use the following as an EN:
    (1) any entity that has had its license, accreditation, 
certification, or registration suspended or revoked for reasons 
concerning professional

[[Page 67434]]

competence or conduct or financial integrity;
    (2) any entity that has surrendered a license, accreditation, 
certification, or registration with a disciplinary proceeding pending; 
or
    (3) any entity that is precluded from Federal procurement or non-
procurement programs.


Sec. 411.320  What are an EN's responsibilities as a participant in the 
Ticket to Work program?

    An EN must--
    (a) Enter into an agreement with us.
    (b) Serve a prescribed service area. The EN must designate the 
geographic area in which it will provide services. This will be 
designated in the EN's agreement with us.
    (c) Provide services directly, or enter into agreements with other 
entities to provide employment services, vocational rehabilitation 
services, or other support services to beneficiaries with tickets.
    (d) Ensure that employment services, vocational rehabilitation 
services, and other support services provided under the Ticket to Work 
program are provided under appropriate individual work plans (IWPs).
    (e) Elect a payment system at the time of signing an agreement with 
us (see Sec. 411.505).
    (f) Develop and implement each IWP in partnership with each 
beneficiary receiving services in a manner that affords the beneficiary 
the opportunity to exercise informed choice in selecting an employment 
goal and specific services needed to achieve that employment goal. Each 
IWP must meet the requirements described in Sec. 411.465.


Sec. 411.321  Under what conditions will SSA terminate an agreement 
with an EN due to inadequate performance?

    We will terminate our agreement with an EN if it does not comply 
with the requirements under Secs. 411.320, Sec. 411.325, or the 
conditions in the agreement between SSA and the EN, including minimum 
performance standards relating to beneficiaries achieving self-
supporting employment and leaving the benefit rolls.


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

    An EN must:
    (a) Report to the PM each time it accepts a ticket for assignment;
    (b) Submit a copy of each signed IWP to the PM;
    (c) Submit to the PM copies of amendments to a beneficiary's IWP;
    (d) Submit to the PM a copy of any agreement the EN has established 
with a State VR agency regarding the conditions under which the State 
VR agency will provide services to beneficiaries who are referred by 
the EN under the Ticket to Work program;
    (e) Submit information to assist the PM conducting the reviews 
necessary to assess a beneficiary's timely progress towards self-
supporting employment to determine if a beneficiary is using a ticket 
for purposes of suspending continuing disability reviews (see subpart C 
of this part);
    (f) Report to the PM the specific outcomes achieved with respect to 
specific services the EN provided or secured on behalf of beneficiaries 
whose tickets it accepted for assignment. Such reports shall conform to 
a national model prescribed by us and shall be submitted to the PM at 
least annually;
    (g) Provide a copy of its most recent annual report on outcomes to 
each beneficiary considering assigning a ticket to it and assure that a 
copy of its most recent report is available to the public while 
ensuring that personal information on beneficiaries is kept 
confidential;
    (h) Meet our financial reporting requirements. These requirements 
will be described in the agreements between ENs and the Commissioner, 
and will include submitting a financial report to the program manager 
on an annual basis;
    (i) Collect and record such data as we shall require, in a form 
prescribed by us; and
    (j) Adhere to all requirements specified in the agreement with the 
Commissioner and all regulatory requirements in this part 411.


Sec. 411.330  How will SSA evaluate an EN's performance?

    (a) We will periodically review the results of the work of each EN 
to ensure effective quality assurance in the provision of services by 
ENs.
    (b) In conducting such a review, we will solicit and consider the 
views of the individuals the EN serves and the PM which monitors the 
EN.
    (c) ENs must make the results of these periodic reviews available 
to disabled beneficiaries to assist them in choosing among available 
ENs.

Subpart F--State Vocational Rehabilitation Agencies' Participation

Participation in the Ticket to Work Program


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

    Yes. Each State agency administering or supervising the 
administration of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), must 
participate in the Ticket to Work program if it wishes to receive 
payments from SSA for serving disabled beneficiaries who are issued a 
ticket.


Sec. 411.355  What payment options does a State VR agency have under 
the Ticket to Work program?

    (a) The Ticket to Work program provides different payment options 
that are available to a State VR agency for providing services to 
disabled beneficiaries who have a ticket. A State VR agency 
participates in the program in one of two ways when providing services 
to a particular disabled beneficiary under the program. On a case-by-
case basis, subject to the limitations in Sec. 411.585, the State VR 
agency may participate either--
    (1) As an employment network (EN); or
    (2) Under the cost reimbursement payment system (see subpart V of 
part 404 and subpart V of part 416 of this chapter).
    (b) When the State VR agency serves a beneficiary with a ticket as 
an EN, the State VR agency will use the EN payment system it has 
elected for this purpose, either the outcome payment system or the 
outcome-milestone payment system (described in subpart H of this part). 
The State VR agency will have periodic opportunities to change the 
payment system it uses when serving as an EN.
    (c) The State VR agency may seek payment only under its elected EN 
payment system whenever it serves as an EN. When serving a beneficiary 
who was not issued a ticket, the State VR agency may seek payment only 
under the cost reimbursement payment system.
    (d) A State VR agency can choose to function as an EN or to receive 
payment under the cost reimbursement payment system each time that a 
ticket is assigned or reassigned to it if payment has not previously 
been made with respect to that ticket. If payment has previously been 
made with respect to that ticket, the State VR agency can receive 
payment only under the payment system under which the earlier payment 
was made.


Sec. 411.360  How does a State VR agency become an EN?

    (a) As the Ticket to Work program is implemented in States, we will 
notify the State VR agency by letter about payment systems available 
under the program. The letter will ask the State VR agency to choose a 
payment system to use when it functions as an EN.

[[Page 67435]]

    (b) When serving a beneficiary holding a ticket, the State VR 
agency may choose, on a case-by-case basis, to seek payment under its 
elected EN payment system or under the cost reimbursement payment 
system, subject to the limitations in Sec. 411.585.


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

    (a) When the State VR agency receives our letter described in 
Sec. 411.360(a) regarding implementation of the Ticket to Work program, 
the State VR agency must respond by sending us a letter telling us 
which EN payment system it will use when it functions as an EN with 
respect to a beneficiary who has a ticket.
    (b) The director of the State agency administering or supervising 
the administration of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), or the 
director's designee must sign the State VR agency's letter described in 
paragraph (a) of this section.


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

    A State VR agency does not have to function as an EN when serving a 
beneficiary with a ticket if the ticket has not previously been 
assigned to an EN or State VR agency or, if it has been previously 
assigned, we have not made payment under an EN payment system with 
respect to that ticket. However, as described in Sec. 411.585(b), a 
State VR agency is precluded from being paid under the cost 
reimbursement payment system if an EN or a State VR agency serving a 
beneficiary as an EN has been paid by us under one of the EN payment 
systems with respect to the same ticket.


Sec. 411.375  Does a State VR agency continue to provide services under 
the requirements of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), when 
functioning as an EN?

    Yes. The State VR agency must continue to provide services under 
the requirements of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), even 
when functioning as an EN.

Ticket Status


Sec. 411.380  What does a State VR agency do if the State VR agency 
wants to determine whether a person seeking services has a ticket?

    A State VR agency can contact the Program Manager (PM) to determine 
if a person seeking VR services has a ticket and, if so, whether the 
ticket may be assigned to the State VR agency (see Sec. 411.140) or 
reassigned to the State VR agency (see Sec. 411.150). (See 
Sec. 411.115(k) for a definition of the PM.)


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

    (a) Once the State VR agency determines that a beneficiary is 
eligible for VR services, the beneficiary and a representative of the 
State VR agency must agree to and sign the individualized plan for 
employment (IPE) required under section 102(b) of the Rehabilitation 
Act of 1973, as amended (29 U.S.C. 722(b)). This requirement must be 
met in order for a beneficiary to assign or reassign his or her ticket 
to the State VR agency. Section 411.140(d) describes the other 
requirements which must be met in order for a beneficiary to assign a 
ticket. Section 411.150(a) and (b) describe the other requirements 
which must be met in order for a beneficiary to reassign a ticket. 
Under Sec. 411.140(d)(3) and Sec. 411.150(b)(4), the State VR agency 
must submit the following information to the PM in order for the 
beneficiary's ticket to be assigned or reassigned to the State VR 
AGENCY:
    (1) A statement that the beneficiary has decided to assign or 
reassign the ticket to the State VR agency and that an IPE has been 
agreed to and signed by both the beneficiary and a representative of 
the State VR agency;
    (2) A statement of the vocational goal outlined in the 
beneficiary's IPE; and
    (3) A statement of the State VR agency's selection of the payment 
system (either the cost reimbursement payment system or the previously 
elected EN payment system) under which the State VR agency will seek 
payment for providing services to the beneficiary.
    (b) This information must be submitted to the PM in a format 
prescribed by us and must include the signatures of both the 
beneficiary, or a representative of the beneficiary, and a 
representative of the State VR agency.


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

    If a beneficiary who is receiving services from the State VR agency 
under an existing IPE becomes eligible for a ticket that is available 
for assignment and decides to assign the ticket to the State VR agency, 
the State VR agency must submit the information required in 
Sec. 411.385(a)(1)-(3) and (b) to the PM. This requirement must be met 
in order for the beneficiary to assign his or her ticket to the State 
VR agency. Section 411.140(d) describes the other requirements which 
must be met in order for a beneficiary to assign a ticket.


Sec. 411.395  Is a State VR agency required to provide periodic 
reports?

    (a) For cases where a State VR agency provided services functioning 
as an EN, the State VR agency will be required to prepare periodic 
reports on the specific outcomes achieved with respect to the specific 
services the State VR agency provided to or secured for disabled 
beneficiaries whose tickets it accepted for assignment. These reports 
must be submitted to the PM at least annually.
    (b) Regardless of the payment method selected, a State VR agency 
must submit information to assist the PM conducting the reviews 
necessary to assess a beneficiary's timely progress toward self-
supporting employment to determine if a beneficiary is using a ticket 
for purposes of suspending continuing disability reviews (see 
Secs. 411.190, 411.195 and 411.200).

Referrals by Employment Networks to State VR Agencies


Sec. 411.400  Can an EN to which a beneficiary's ticket is assigned 
refer the beneficiary to a State VR agency for services?

    Yes. An EN may refer a beneficiary it is serving under the Ticket 
to Work program to a State VR agency for services. However, a referral 
can be made only if the State VR agency and the EN have an agreement 
that specifies the conditions under which services will be provided by 
the State VR agency. This agreement must be in writing and signed by 
the State VR agency and the EN prior to the EN referring any 
beneficiary to the State VR agency for services.

Agreements Between Employment Networks and State VR Agencies


Sec. 411.405  When does an agreement between an EN and the State VR 
agency have to be in place?

    Each EN must have an agreement with the State VR agency prior to 
referring a beneficiary it is serving under the Ticket to Work program 
to the State VR agency for specific services.


Sec. 411.410  Does each referral from an EN to a State VR agency 
require its own agreement?

    No. The agreements between ENs and State VR agencies should be 
broad-based and apply to all beneficiaries who may be referred by the 
EN to the State VR agency for services, although an EN and a State VR 
agency may want to

[[Page 67436]]

enter into an individualized agreement to meet the needs of a single 
beneficiary.


Sec. 411.415  Who will verify the establishment of agreements between 
ENs and State VR agencies?

    The PM will verify the establishment of these agreements. Each EN 
is required to submit a copy of the agreement it has established with 
the State VR agency to the PM.


Sec. 411.420  What information should be included in an agreement 
between an EN and a State VR agency?

    The agreement between an EN and a State VR agency should state the 
conditions under which the State VR agency will provide services to a 
beneficiary when the beneficiary is referred by the EN to the State VR 
agency for services. Examples of this information include-
    (a) Procedures for making referrals and sharing information that 
will assist in providing services;
    (b) A description of the financial responsibilities of each party 
to the agreement;
    (c) The terms and procedures under which the EN will pay the State 
VR agency for providing services; and
    (d) Procedures for resolving disputes under the agreement.


Sec. 411.425  What should a State VR agency do if it gets an attempted 
referral from an EN and no agreement has been established between the 
EN and the State VR agency?

    The State VR agency should contact the EN to discuss the need to 
establish an agreement. If the State VR agency and the EN are not able 
to negotiate acceptable terms for an agreement, the State VR agency 
should notify the PM that an attempted referral has been made without 
an agreement.


Sec. 411.430  What should the PM do when it is informed that an EN has 
attempted to make a referral to a State VR agency without an agreement 
being in place?

    The PM will contact the EN to explain that a referral cannot be 
made to the State VR agency unless an agreement has been established 
that sets out the conditions under which services will be provided when 
a beneficiary's ticket is assigned to the EN and the EN is referring 
the beneficiary to the State VR agency for specific services.

Resolving Disputes Arising Under Agreements Between Employment 
Networks and State VR Agencies


Sec. 411.435  How will disputes arising under the agreements between 
ENs and State VR agencies be resolved?

    Disputes arising under agreements between ENs and State VR agencies 
must be resolved using the following steps:
    (a) When procedures for resolving disputes are spelled out in the 
agreement between the EN and the State VR agency, those procedures must 
be used.
    (b) If procedures for resolving disputes are not included in the 
agreement between the EN and the State VR agency and procedures for 
resolving disputes under contracts and interagency agreements are 
provided for in State law or administrative procedures, the State 
procedures must be used to resolve disputes under agreements between 
ENs and State VR agencies.
    (c) If procedures for resolving disputes are not spelled out in the 
agreement or in State law or administrative procedures, the EN or the 
State VR agency may request that the PM recommend a resolution to the 
dispute.
    (1) The request must be in writing and include:
    (i) a copy of the agreement;
    (ii) information on the issue(s) in dispute; and
    (iii) information on the position of both the EN and the State VR 
agency regarding the dispute.
    (2) The PM has 20 calendar days after receiving a written request 
to recommend a resolution to the dispute. If either the EN or the State 
VR agency does not agree with the PM's recommended resolution to the 
dispute, the EN or the State VR agency has 30 calendar days after 
receiving the PM's recommendation to request a decision by us on the 
matter in dispute.

Subpart G--Requirements For Individual Work Plans


Sec. 411.450  What is an Individual Work Plan?

    An individual work plan (IWP) is a required written document signed 
by an employment network (EN) (other than a State VR agency) and a 
beneficiary, or a representative of a beneficiary, with a ticket. It is 
developed and implemented in partnership when a beneficiary and an EN 
have come to a mutual understanding to work together to pursue the 
beneficiary's employment goal under the Ticket to Work program.


Sec. 411.455  What is the purpose of an IWP?

    The purpose of an IWP is to outline the specific employment 
services, vocational rehabilitation services and other support services 
that the EN and beneficiary have determined are necessary to achieve 
the beneficiary's stated employment goal. An IWP provides written 
documentation for both the EN and beneficiary. Both parties should 
develop and implement the IWP in partnership. The EN shall develop and 
implement the plan in a manner that gives the beneficiary the 
opportunity to exercise informed choice in selecting an employment 
goal. Specific services needed to achieve the designated employment 
goal are discussed and agreed to by both parties.


Sec. 411.460  Who is responsible for determining what information is 
contained in the IWP?

    The beneficiary and the EN share the responsibility for determining 
the employment goal and the specific services needed to achieve that 
employment goal. The EN will present information and options in a way 
that affords the beneficiary the opportunity to exercise informed 
choice in selecting an employment goal and specific services needed to 
achieve that employment goal.


Sec. 411.465  What are the minimum requirements for an IWP?

    (a) An IWP must include at least--
    (1) A statement of the vocational goal developed with the 
beneficiary, including, as appropriate, goals for earnings and job 
advancement;
    (2) A statement of the services and supports necessary for the 
beneficiary to accomplish that goal;
    (3) A statement of any terms and conditions related to the 
provision of these services and supports;
    (4) A statement that the EN may not request or receive any 
compensation for the costs of services and supports from the 
beneficiary;
    (5) A statement of the conditions under which an EN may amend the 
IWP or terminate the relationship;
    (6) A statement of the beneficiary's rights under the Ticket to 
Work program, including the right to retrieve the ticket at any time if 
the beneficiary is dissatisfied with the services being provided by the 
EN;
    (7) A statement of the remedies available to the beneficiary, 
including information on the availability of advocacy services and 
assistance in resolving disputes through the State Protection and 
Advocacy (P&A) System;
    (8) A statement of the beneficiary's rights to privacy and 
confidentiality regarding personal information, including information 
about the beneficiary's disability;
    (9) A statement of the beneficiary's right to seek to amend the IWP 
(the IWP can be amended if both the beneficiary and the EN agree to the 
change); and
    (10) A statement of the beneficiary's right to have a copy of the 
IWP made

[[Page 67437]]

available to the beneficiary, including in an accessible format chosen 
by the beneficiary.
    (b) The EN will be responsible for ensuring that each IWP contains 
this information.


Sec. 411.470  When does an IWP become effective?

    (a) An IWP becomes effective if the following requirements are 
met--
    (1) It has been signed by the beneficiary or the beneficiary's 
representative, and by a representative of the EN;
    (2)(i) The beneficiary is eligible to assign his or her ticket 
under Sec. 411.140(a); or
    (ii) The beneficiary is eligible to reassign his or her ticket 
under Sec. 411.150(a) and (b); and
    (3) A representative of the EN submits a copy of the signed IWP to 
the PM and the PM receives the copy of the IWP.
    (b) If all of the requirements in paragraph (a) of this section are 
met, the IWP will be effective on the first day on which the 
requirements of paragraphs (a)(1) and (a)(2) of this section are met.

Subpart H--Employment Network Payment Systems


Sec. 411.500  Definitions of terms used in this subpart.

    (a) Payment Calculation Base means for any calendar year--
    (1) In connection with a title II disability beneficiary (including 
a concurrent title II/title XVI disability beneficiary), the average 
monthly disability insurance benefit payable under section 223 of the 
Act for months during the preceding calendar year to all beneficiaries 
who are in current pay status for the month for which the benefit is 
payable; and
    (2) In connection with a title XVI disability beneficiary (who is 
not concurrently a title II disability beneficiary), the average 
monthly payment of Supplemental Security Income (SSI) benefits based on 
disability payable under title XVI (excluding State supplementation) 
for months during the preceding calendar year to all beneficiaries 
who--
    (i) Have attained age 18 but have not attained age 65;
    (ii) Are not concurrent title II/title XVI beneficiaries; and
    (iii) Are in current pay status for the month for which the payment 
is made.
    (b) Outcome Payment Period means a period of 60 months, not 
necessarily consecutive, for which Social Security disability benefits 
and Federal SSI cash benefits are not payable to the individual because 
of the performance of substantial gainful activity (SGA) or by reason 
of earnings from work. This period begins with the first month, ending 
after the date on which the ticket was first assigned, for which such 
benefits are not payable due to SGA or earnings. This period ends with 
the 60th month, consecutive or otherwise, ending after such date, for 
which such benefits are not payable due to SGA or earnings.
    (c) Outcome Payment System is a system providing a schedule of 
payments to an employment network (EN) for each month, during an 
individual's outcome payment period, for which Social Security 
disability benefits and Federal SSI cash benefits are not payable to 
the individual because of work or earnings.
    (d) Outcome Payment means the payment for an outcome payment month.
    (e) Outcome Payment Month means a month, during the individual's 
outcome payment period, for which Social Security disability benefits 
and Federal SSI cash benefits are not payable to the individual because 
of work or earnings. The maximum number of outcome payment months for 
each ticket is 60.
    (f) Outcome-Milestone Payment System is a system providing a 
schedule of payments to an EN that includes, in addition to any outcome 
payments which may be made during the individual's outcome payment 
period, payment for completion by a beneficiary of up to four 
milestones directed toward the goal of permanent employment. The 
milestones for which payment may be made must occur prior to the 
beginning of the individual's outcome payment period.


Sec. 411.505  How is an EN paid by SSA?

    An EN can elect to be paid under either the outcome payment system 
or the outcome-milestone payment system. The EN will elect a payment 
system at the time the EN enters into an agreement with SSA. (For State 
VR agencies, see Sec. 411.365.) The EN may periodically change its 
elected payment system as described in Sec. 411.515.


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

    (a) The State VR agency's payment choices are described in 
Sec. 411.355.
    (b) The State VR agency's decision to serve the beneficiary must be 
communicated to the program manager (PM). (See Sec. 411.115(k) for a 
definition of the PM.) At the same time, the State VR agency must 
notify the PM of its selected payment system for that beneficiary.
    (c) For each beneficiary who is already a client of the State VR 
agency prior to receiving a ticket, the State VR agency will notify the 
PM of the payment system election for each such beneficiary at the time 
the beneficiary decides to assign the ticket to the State VR agency.


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

    (a) Yes. Any change by an EN in its elected EN payment system will 
apply to beneficiaries who assign their ticket to the EN after the EN's 
change in election becomes effective. A change in the EN's election 
will become effective with the first day of the month following the 
month in which the EN notifies us of the change. For beneficiaries who 
already assigned their ticket to the EN under the EN's earlier elected 
payment system, the EN's earlier elected payment system will continue 
to apply. These rules also apply to a change by a State VR agency in 
its elected EN payment system for cases in which the State VR agency 
serves a beneficiary as an EN.
    (b) After an EN (or a State VR agency) first elects an EN payment 
system, the EN (or State VR agency) can choose to make one change in 
its elected payment system at any time prior to the close of which of 
the following is later:
    (1) The 12th month following the month in which the EN (or State VR 
agency) first elects an EN payment system; or
    (2) The 12th month following the month in which we implement the 
Ticket to Work program in the State in which the EN (or State VR 
agency) operates.
    (c) After an EN (or a State VR agency) first elects a payment 
system, as part of signing the EN agreement with us (for State VR 
agencies, see Sec. 411.365), the EN (or State VR agency) will have the 
opportunity to change from its existing elected payment system during 
times announced by us. We will offer the opportunity for each EN (and 
State VR agency) to make a change in its elected payment system at 
least every 18 months.


Sec. 411.520  How are beneficiaries whose tickets are assigned to an EN 
affected by a change in that EN's elected payment system?

    A change in an EN's (or State VR agency's) elected payment system 
has no effect upon the beneficiaries who have assigned their ticket to 
the EN (or State VR agency).

[[Page 67438]]

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

    (a) For payments for outcome payment months, both EN payment 
systems use the payment calculation base as defined in 
Sec. 411.500(a)(1) or (a)(2), as appropriate.
    (1)(i) Under the outcome payment system, we can pay up to 60 
monthly payments to the EN. For each month for which Social Security 
disability benefits and Federal SSI cash benefits are not payable to 
the individual because of work or earnings, the EN is eligible for a 
monthly outcome payment. Payment for an outcome payment month under the 
outcome payment system is equal to 40 percent of the payment 
calculation base for the calendar year in which such month occurs, 
rounded to the nearest whole dollar. (See Sec. 411.550.)
    (ii) If a disabled beneficiary's entitlement to Social Security 
disability benefits ends (see Secs. 404.316(b), 404.337(b) and 
404.352(b) of this chapter) or eligibility for SSI benefits based on 
disability or blindness terminates (see Sec. 416.1335 of this chapter) 
because of the performance of SGA or by reason of earnings from work 
activity, we will consider any month after the month with which such 
entitlement ends or eligibility terminates to be a month for which 
Social Security disability benefits and Federal SSI cash benefits are 
not payable to the individual because of work or earnings if--
    (A) The individual has gross earnings from employment (or net 
earnings from self-employment as defined in Sec. 416.1110(b) of this 
chapter) in that month that are more than the SGA threshold amount in 
Sec. 404.1574(b)(2) of this chapter (or in Sec. 404.1584(d) of this 
chapter for an individual who is statutorily blind); and
    (B) The individual is not entitled to any monthly benefits under 
title II or eligible for any benefits under title XVI for that month.
    (2) Under the outcome-milestone payment system, we can pay the EN 
for up to four milestones achieved by a beneficiary who has assigned 
his or her ticket to the EN. The milestones for which payment may be 
made must occur prior to the beginning of the beneficiary's outcome 
period and meet the requirements of Sec. 411.535. In addition to the 
milestone payments, monthly outcome payments can be paid to the EN 
during the outcome payment period.
    (b) The outcome-milestone payment system is designed so that the 
total payments to the EN for a beneficiary are less than the total 
amount to which payments would be limited if the EN were paid under the 
outcome payment system. Under the outcome-milestone payment system, the 
EN's total potential payment is about 85 percent of the total that 
would have been potentially payable under the outcome payment system 
for the same beneficiary.
    (c) We will pay an EN to whom the individual has assigned a ticket 
only for milestones or outcomes achieved in months prior to the month 
in which the ticket terminates (see Sec. 411.155). We will not pay a 
milestone or outcome payment to an EN based on an individual's work 
activity or earnings in or after the month in which the ticket 
terminates.


Sec. 411.530  How will the outcome payments be reduced when paid under 
the outcome-milestone payment system?

    Under the outcome-milestone payment system, each outcome payment 
made to an EN with respect to an individual will be reduced by an 
amount equal to \1/60\th of the milestone payments made to the EN with 
respect to the same individual.


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

    (a) Under the outcome-milestone payment system, there are four 
milestones for which the EN can be paid. The milestones occur after the 
date on which the ticket was first assigned and after the beneficiary 
starts to work. The milestones are based on the earnings levels that we 
use when we consider if work activity is SGA. We will use the SGA 
threshold amount in Sec. 404.1574(b)(2) of this chapter for 
beneficiaries who are not statutorily blind, and we will use the SGA 
threshold amount in Sec. 404.1584(d) of this chapter for beneficiaries 
who are statutorily blind. We will use these SGA threshold amounts in 
order to measure if the beneficiary's earnings level meets the 
milestone objective.
    (1) The first milestone is met when the beneficiary has worked for 
one calendar month and has gross earnings from employment (or net 
earnings from self-employment as defined in Sec. 416.1110(b) of this 
chapter) for that month that are more than the SGA threshold amount.
    (2) The second milestone is met when the beneficiary has worked for 
three calendar months within a 12-month period and has gross earnings 
from employment (or net earnings from self-employment as defined in 
Sec. 416.1110(b) of this chapter) for each of the three months that are 
more than the SGA threshold amount. The month used to meet the first 
milestone can be included in the three months used to meet the second 
milestone.
    (3) The third milestone is met when the beneficiary has worked for 
seven calendar months within a 12-month period and has gross earnings 
from employment (or net earnings from self-employment as defined in 
Sec. 416.1110(b) of this chapter) for each of the seven months that are 
more than the SGA threshold amount. Any of the months used to meet the 
first two milestones can be included in the seven months used to meet 
the third milestone.
    (4) The fourth milestone is met when the beneficiary has worked for 
12 calendar months within a 15-month period and has gross earnings from 
employment (or net earnings from self-employment as defined in 
Sec. 416.1110(b) of this chapter) for each of the 12 months that are 
more than the SGA threshold amount. Any of the months used to meet the 
first three milestones can be included in the 12 months used to meet 
the fourth milestone.
    (b) An EN can be paid for a milestone only if the milestone is 
attained after a beneficiary has assigned his or her ticket to the EN. 
See Sec. 411.575 for other milestone payment criteria.


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

    (a) The payment for the first milestone is equal to 34 percent of 
the payment calculation base for the calendar year in which the month 
of attainment of the milestone occurs, rounded to the nearest whole 
dollar.
    (b) The payment for the second milestone is equal to 68 percent of 
the payment calculation base for the calendar year in which the month 
of attainment of the milestone occurs, rounded to the nearest whole 
dollar.
    (c) The payment for the third milestone is equal to 136 percent of 
the payment calculation base for the calendar year in which the month 
of attainment of the milestone occurs, rounded to the nearest whole 
dollar.
    (d) The payment for the fourth milestone is equal to 170 percent of 
the payment calculation base for the calendar year in which the month 
of attainment of the milestone occurs, rounded to the nearest whole 
dollar.
    (e) The month of attainment of the first milestone is the first 
month in which the individual has the required earnings as described in 
Sec. 411.535.
    (f) The month of attainment of the second milestone is the 3rd 
month, within a 12-month period, in which the individual has the 
required earnings as described in Sec. 411.535.
    (g) The month of attainment of the third milestone is the 7th 
month, within

[[Page 67439]]

a 12-month period, in which the individual has the required earnings as 
described in Sec. 411.535.
    (h) The month of attainment of the fourth milestone is the 12th 
month, within a 15-month period, in which the individual has the 
required earnings as described in Sec. 411.535.


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

    The amount of each monthly outcome payment under the outcome-
milestone payment system is equal to 34 percent of the payment 
calculation base for the calendar year in which the month occurs, 
rounded to the nearest whole dollar, and reduced, if necessary, as 
described in Sec. 411.530.


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

    Under the outcome payment system, the payment for an outcome 
payment month is equal to 40 percent of the payment calculation base 
for the calendar year in which the month occurs, rounded to the nearest 
whole dollar.


Sec. 411.555  Can the EN keep the milestone and outcome payments even 
if the beneficiary does not achieve all 60 outcome months?

    (a) Yes. The EN can keep each milestone and outcome payment for 
which the EN is eligible, even though the beneficiary does not achieve 
all 60 outcome months.
    (b) Payments which we make or deny to an EN or State VR agency 
serving a beneficiary as an EN may be subject to adjustment (including 
recovery, as appropriate) if we determine that more or less than the 
correct amount was paid. This may happen, for example, because we 
determine that the payment determination was in error or because of--
    (1) An allocation of a payment under Sec. 411.560; or
    (2) A determination or decision we make about an individual's right 
to benefits which causes the payment or denial of a payment to be 
incorrect (see Sec. 411.590(d)).
    (c) If we determine that an overpayment or underpayment has 
occurred, we will notify the EN or State VR agency serving a 
beneficiary as an EN of the adjustment. Any dispute which the EN or 
State VR agency has regarding the adjustment may be resolved under the 
rules in Sec. 411.590(a) and (b).


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

    Yes. It is possible for more than one EN to receive payment based 
on the same milestone or outcome. If the beneficiary has assigned the 
ticket to more than one EN at different times, and more than one EN 
requests payment for the same milestone or outcome payment under its 
elected payment system, the PM will make a determination of the 
allocation of payment to each EN. The PM will make this determination 
based upon the contribution of the services provided by each EN toward 
the achievement of the outcomes or milestones. Outcome and milestone 
payments will not be increased because the payments are shared between 
two or more ENs.


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

    We will pay each EN according to its elected EN payment system in 
effect at the time the beneficiary assigned the ticket to the EN.


Sec. 411.570  Can an EN request payment from the beneficiary who 
assigned a ticket to the EN?

    No. Section 1148(b)(4) of the Act prohibits an EN from requesting 
or receiving compensation from the beneficiary for the services of the 
EN.


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

    The EN will send its request for payment, evidence of the 
beneficiary's work or earnings and other information to the PM.
    (a) Milestone payments. (1) We will pay the EN for milestones only 
if--
    (i) The outcome-milestone payment system was the EN's elected 
payment system in effect at the time the beneficiary assigned a ticket 
to the EN;
    (ii) The milestones occur prior to the outcome payment period (see 
Sec. 411.500(b));
    (iii) The requirements in Sec. 411.535 are met; and
    (iv) The ticket has not terminated for any of the reasons listed in 
Sec. 411.155.
    (2) The EN must request payment for each milestone achieved by a 
beneficiary who has assigned a ticket to the EN. The request must 
include evidence that the milestone was achieved, and other information 
as we may require, to evaluate the EN's request. We do not have to stop 
monthly benefit payments to the beneficiary before we can pay the EN 
for milestones achieved by the beneficiary.
    (b) Outcome payments. (1) We will pay an EN an outcome payment for 
a month if--
    (i)(A) Social Security disability benefits and Federal SSI cash 
benefits are not payable to the individual for that month due to work 
or earnings; or
    (B) The requirements of Sec. 411.525(a)(1)(ii) are met in a case 
where the beneficiary's entitlement to Social Security disability 
benefits has ended or eligibility for SSI benefits based on disability 
or blindness has terminated because of work activity or earnings; and
    (ii) We have not already paid for 60 outcome payment months on the 
same ticket; and
    (iii) The ticket has not terminated for any of the other reasons 
listed in Sec. 411.155.
    (2) The EN must request payment for outcome payment months on at 
least a quarterly basis. Along with the request, the EN must submit 
evidence of the beneficiary's work or earnings (e.g. a statement of 
monthly earnings from the employer or the employer's designated payroll 
preparer, an unaltered copy of the beneficiary's pay stub). Exception: 
If the EN does not currently hold the ticket because it is unassigned 
or assigned to another EN, the EN must request payment, but is not 
required to submit evidence of the beneficiary's work or earnings.


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

    No. An EN may be paid only for milestones or outcome payment months 
that are achieved after the ticket is assigned to the EN.


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

    Yes. It is possible if the State VR agency serves the beneficiary 
as an EN. In this case, both the State VR agency serving as an EN and 
the other EN may be eligible for payment based on the same ticket (see 
Sec. 411.560).
    (a) If a State VR agency is paid by us under the cost reimbursement 
payment system with respect to a ticket, such payment precludes any 
subsequent payment by us based on the same ticket to an EN or to a 
State VR agency serving as an EN under either the outcome payment 
system or the outcome-milestone payment system.
    (b) If an EN or a State VR agency serving a beneficiary as an EN is 
paid by us under one of the EN payment systems with respect to a 
ticket, such payment precludes subsequent payment to a State VR agency 
under the cost

[[Page 67440]]

reimbursement payment system based on the same ticket.


Sec. 411.587  Which provider will SSA pay if, with respect to the same 
ticket, SSA receives a request for payment from an EN or a State VR 
agency that elected payment under an EN payment system and a request 
for payment from a State VR agency that elected payment under the cost 
reimbursement payment system?

    (a) We will pay the provider that first meets the requirements for 
payment under its elected payment system applicable to the beneficiary 
who assigned the ticket.
    (b) In the event that both providers first meet the requirements 
for payment under their respective payment systems in the same month, 
we will pay the claim of the provider to which the beneficiary's ticket 
is currently assigned or, if the ticket is not currently assigned to 
either provider, the claim of the provider to which the ticket was most 
recently assigned.


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

    (a) If an EN other than a State VR agency has a payment dispute 
with us, the dispute shall be resolved under the dispute resolution 
procedures contained in the EN's agreement with us.
    (b) If a State VR agency serving a beneficiary as an EN has a 
dispute with us regarding payment under an EN payment system, the State 
VR agency may, within 60 days of receiving notice of our decision, 
request reconsideration in writing. The State VR agency must send the 
request for reconsideration to the PM. The PM will forward to us the 
request for reconsideration and a recommendation. We will notify the 
State VR agency of our reconsidered decision in writing.
    (c) An EN (including a State VR agency) cannot appeal 
determinations we make about an individual's right to benefits (e.g. 
determinations that disability benefits should be suspended, 
terminated, continued, denied, or stopped or started on a different 
date than alleged). Only the beneficiary or applicant or his or her 
representative can appeal these determinations. See Sec. 404.900 et 
seq. and 416.1400 et seq. of this chapter.
    (d) Determinations or decisions which we make about an individual's 
right to benefits may affect an EN's eligibility for payment, and may 
cause payments which we have already made to an EN (or a denial of a 
payment to an EN) to be incorrect, resulting in an overpayment or 
underpayment to the EN. If this happens, we will make any necessary 
adjustments to the payments (see Sec. 411.555). While an EN cannot 
appeal our determination about an individual's right to benefits, the 
EN may furnish any evidence the EN has which relates to the issue(s) to 
be decided on appeal if the individual appeals our determination.


Sec. 411.595  What oversight procedures are planned for the EN payment 
systems?

    We use audits, reviews, studies and observation of daily activities 
to identify areas for improvement. Internal reviews of our systems 
security controls are regularly performed. These reviews provide an 
overall assurance that our business processes are functioning as 
intended. The reviews also ensure that our management controls and 
financial management systems comply with the standards established by 
the Federal Managers' Financial Integrity Act and the Federal Financial 
Management Improvement Act. These reviews operate in accordance with 
the Office of Management and Budget Circulars A-123, A-127 and Appendix 
III to A-130. Additionally, our Executive Internal Control Committee 
meets periodically and provides further oversight of program and 
management control issues.


Sec. 411.597  Will SSA periodically review the outcome payment system 
and the outcome-milestone payment system for possible modifications?

    (a) Yes. We will periodically review the system of payments and 
their programmatic results to determine if they provide an adequate 
incentive for ENs to assist beneficiaries to enter the work force, 
while providing for appropriate economies.
    (b) We will specifically review the limitation on monthly outcome 
payments as a percentage of the payment calculation base, the 
difference in total payments between the outcome-milestone payment 
system and the outcome payment system, the length of the outcome 
payment period, and the number and amount of milestone payments, as 
well as the benefit savings and numbers of beneficiaries going to work. 
We will consider altering the payment system conditions based upon the 
information gathered and our determination that an alteration would 
better provide for the incentives and economies noted above.

Subpart I--Ticket to Work Program Dispute Resolution

Disputes Between Beneficiaries and Employment Networks


Sec. 411.600  Is there a process for resolving disputes between 
beneficiaries and ENs that are not State VR agencies?

    Yes. After an IWP is signed, a process is available which will 
assure each party a full, fair and timely review of a disputed matter. 
This process has three steps.
    (a) The beneficiary can seek a solution through the EN's internal 
grievance procedures.
    (b) If the EN's internal grievance procedures do not result in an 
agreeable solution, either the beneficiary or the EN may seek a 
resolution from the PM. (See Sec. 411.115(k) for a definition of the 
PM.)
    (c) If either the beneficiary or the EN is dissatisfied with the 
resolution proposed by the PM, either party may request a decision from 
us.


Sec. 411.605  What are the responsibilities of the EN that is not a 
State VR agency regarding the dispute resolution process?

    The EN must:
    (a) Have grievance procedures that a beneficiary can use to seek a 
resolution to a dispute under the Ticket to Work program;
    (b) Give each beneficiary seeking services a copy of its internal 
grievance procedures;
    (c) Inform each beneficiary seeking services of the right to refer 
a dispute first to the PM for review, and then to us for a decision; 
and
    (d) Inform each beneficiary of the availability of assistance from 
the State P&A system.


Sec. 411.610  When should a beneficiary receive information on the 
procedures for resolving disputes?

    Each EN that is not a State VR agency must inform each beneficiary 
seeking services under the Ticket to Work program of the procedures for 
resolving disputes when--
    (a) The EN and the beneficiary complete and sign the IWP;
    (b) Services in the beneficiary's IWP are reduced, suspended or 
terminated; and
    (c) A dispute arises related to the services spelled out in the 
beneficiary's IWP or to the beneficiary's participation in the program.


Sec. 411.615  How will a disputed issue be referred to the PM?

    The beneficiary or the EN that is not a State VR agency may ask the 
PM to review a disputed issue. The PM will

[[Page 67441]]

contact the EN to submit all relevant information within 10 working 
days. The information should include:
    (a) A description of the disputed issue(s);
    (b) A summary of the beneficiary's position, prepared by the 
beneficiary or a representative of the beneficiary, related to each 
disputed issue;
    (c) A summary of the EN's position related to each disputed issue; 
and
    (d) A description of any solutions proposed by the EN when the 
beneficiary sought resolution through the EN's grievance procedures, 
including the reasons the beneficiary rejected each proposed solution.


Sec. 411.620  How long does the PM have to recommend a resolution to 
the dispute?

    The PM has 20 working days to provide a written recommendation. The 
recommendation should explain the reasoning for the proposed 
resolution.


Sec. 411.625  Can the beneficiary or the EN that is not a State VR 
agency request a review of the PM's recommendation?

    (a) Yes. After receiving the PM's recommendation, either the 
beneficiary or the EN may request a review by us. The request must be 
in writing and received by the PM within 15 working days of the receipt 
of the PM's recommendation for resolving the dispute.
    (b) The PM has 10 working days to refer the request for a review to 
us. The request for a review must include:
(1) A copy of the beneficiary's IWP;
(2) Information and evidence related to the disputed issue(s); and
(3) The PM's conclusion(s) and recommendation(s).


Sec. 411.630  Is SSA's decision final?

    Yes. Our decision is final. If either the beneficiary or the EN 
that is not a State VR agency is unwilling to accept our decision, 
either has the right to terminate its relationship with the other.


Sec. 411.635  Can a beneficiary be represented in the dispute 
resolution process under the Ticket to Work program?

    Yes. Both the beneficiary and the EN that is not a State VR agency 
may use an attorney or other individual of their choice to represent 
them at any step in the dispute resolution process. The P&A system in 
each State and U.S. Territory is available to provide assistance and 
advocacy services to beneficiaries seeking or receiving services under 
the Ticket to Work program, including assistance in resolving issues at 
any stage in the dispute resolution process.

Disputes Between Beneficiaries and State VR Agencies


Sec. 411.640  Do the dispute resolution procedures of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), apply 
to beneficiaries seeking services from the State VR agency?

    Yes. The procedures in the Rehabilitation Act of 1973, as amended 
(29 U.S.C. 720 et seq.) apply to any beneficiary who has assigned a 
ticket to a State VR agency. ENs that are State VR agencies are subject 
to the provisions of the Rehabilitation Act. The Rehabilitation Act 
requires the State VR agency to provide each person seeking or 
receiving services with a description of the services available through 
the Client Assistance Program authorized under section 112 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 732). It also 
provides the opportunity to resolve disputes using formal mediation 
services or the impartial hearing process in section 102(c) of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 722(c)). ENs that are 
not State VR agencies are not subject to the provisions of Title I of 
the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.).

Disputes Between Employment Networks and Program Managers


Sec. 411.650  Is there a process for resolving disputes between ENs 
that are not State VR agencies and PMs, other than disputes on a 
payment request?

    Yes. Under the agreement to assist us in administering the Ticket 
to Work program, a PM is required to have procedures to resolve 
disputes with ENs that do not involve an EN's payment request. (See 
Sec. 411.590 for the process for resolving disputes on EN payment 
requests.) This process must ensure that:
    (a) The EN can seek a solution through the PM's internal grievance 
procedures; and
    (b) If the PM's internal grievance procedures do not result in a 
mutually agreeable solution, the PM shall refer the dispute to us for a 
decision.


Sec. 411.655  How will the PM refer the dispute to us?

    The PM has 20 working days from the failure to come to a mutually 
agreeable solution with an EN to refer the dispute to us with all 
relevant information. The information should include:
    (a) A description of the disputed issue(s);
    (b) A summary of the EN's and PM's position related to each 
disputed issue; and
    (c) A description of any solutions proposed by the EN and PM when 
the EN sought resolution through the PM's grievance procedures, 
including the reasons each party rejected each proposed solution.


Sec. 411.660  Is SSA's decision final?

    Yes. Our decision is final.

Subpart J--The Ticket to Work Program and Alternate Participants 
Under the Programs For Payments For Vocational Rehabilitation 
Services


Sec. 411.700  What is an alternate participant?

    An alternate participant is any public or private agency (other 
than a participating State VR agency described in Secs. 404.2104 and 
416.2204 of this chapter), organization, institution, or individual 
with whom the Commissioner has entered into an agreement or contract to 
provide VR services to disabled beneficiaries under the programs 
described in subpart V of part 404 and subpart V of part 416 of this 
chapter. In this subpart J, we refer to these programs as the programs 
for payments for VR services.


Sec. 411.705  Can an alternate participant become an EN?

    In any State where the Ticket to Work program is implemented, each 
alternate participant whose service area is in that State will be asked 
to choose if it wants to participate in the program as an EN.


Sec. 411.710  How will an alternate participant choose to participate 
as an EN in the Ticket to Work program?

    (a) When the Ticket to Work program is implemented in a State, each 
alternate participant whose service area is in that State will be 
notified of its right to choose to participate as an EN in the program 
in that State. The notification to the alternate participant will 
provide instructions on how to become an EN and the requirements that 
an EN must meet to participate in the Ticket to Work program.
    (b) An alternate participant who chooses to become an EN must meet 
the requirements to be an EN, including--
(1) Enter into an agreement with SSA to participate as an EN under the 
Ticket to Work program (see Sec. 411.320);
(2) Agree to serve a prescribed service area (see Sec. 411.320);
(3) Agree to the EN reporting requirements (see Sec. 411.325); and
(4) Elect a payment option under one of the two EN payment systems (see 
Sec. 411.505).


Sec. 411.715  If an alternate participant becomes an EN, will 
beneficiaries for whom an employment plan was signed prior to 
implementation be covered under the Ticket to Work program payment 
provisions?

    No. When an alternate participant becomes an EN in a State in which 
the

[[Page 67442]]

Ticket to Work program is implemented, those beneficiaries for whom an 
employment plan was signed prior to the date of implementation of the 
program in the State, will continue to be covered for a limited time 
under the programs for payments for VR services (see Sec. 411.730).


Sec. 411.720  If an alternate participant chooses not to become an EN, 
can it continue to function under the programs for payments for VR 
services?

    Once the Ticket to Work program has been implemented in a State, 
the alternate participant programs for payments for VR services begin 
to be phased-out in that State. We will not pay any alternate 
participant under these programs for any services that are provided 
under an employment plan that is signed on or after the date of 
implementation of the Ticket to Work program in that State. If an 
employment plan was signed before that date, we will pay the alternate 
participant, under the programs for payments for VR services, for 
services provided prior to January 1, 2004 if all other requirements 
for payment under these programs are met. We will not pay an alternate 
participant under these programs for any services provided on or after 
January 1, 2004.


Sec. 411.725  If an alternate participant becomes an EN and it has 
signed employment plans, both as an alternate participant and an EN, 
how will SSA pay for services provided under each employment plan?

    We will continue to abide by the programs for payments for VR 
services in cases where services are provided to a beneficiary under an 
employment plan signed prior to the date of implementation of the 
Ticket to Work program in the State. However, we will not pay an 
alternate participant under these programs for services provided on or 
after January 1, 2004. For those employment plans signed by a 
beneficiary and the EN after implementation of the program in the 
State, the EN's elected EN payment system under the Ticket to Work 
program applies.


Sec. 411.730  What happens if an alternate participant signed an 
employment plan with a beneficiary before Ticket to Work program 
implementation in the State and the required period of substantial 
gainful activity is not completed by January 1, 2004?

    The beneficiary does not have to complete the nine-month continuous 
period of substantial gainful activity (SGA) prior to January 1, 2004, 
in order for the costs of the services to be payable under the programs 
for payments for VR services. The nine-month SGA period can be 
completed after January 1, 2004. However, SSA will not pay an alternate 
participant under these programs for the costs of any services provided 
after December 31, 2003.

[FR Doc. 01-31567 Filed 12-27-01; 8:45 am]
BILLING CODE 4191-02-P