[Federal Register: December 28, 2001 (Volume 66, Number 249)]
[Rules and Regulations]               
[Page 67369-67442]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de01-23]                         


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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


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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 regulations@ssa.gov, 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 http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://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

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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://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=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

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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 part