National Council on Disability Document Archive

House Soc Sec testimony -- HEARINGS.TXT

Posted by: Jamal Mazrui
Date Mailed: Monday, July 28th 1997 11:12 AM

On July 23 and 24, the House Social Security Subcommittee held
hearings on problems and solutions in joining the work force for
people with disabilities who receive SSI (Supplemental Security
Income) or SSDI (Social Security Disability Insurance).  Below are
the 24 written statements submitted by witnesses.  (Bonnie O'Day
was incorrectly listed as the chair of NCD--she is the board member 
who leads our initiative on Social Security reform, and Marca Bristo 
is the chair of the Council.)

Since this document is about 330K in size, I've put
"End of Document" the bottom to indicate whether you received it
completely.  If not and you want it, let me know and I'll send it
on disk.

Jamal Mazrui
National Council on Disability


                             PREPARED STATEMENT OF
                               CHRISTINA METZLER
                               RETURNING TO WORK
                           WEDNESDAY, JULY 23, 1997

  The American Occupational Therapy Association (AOTA) commends the
  Social Security Subcommittee of the Ways and Means Committee for
  holding hearings on the critical issues which prevent individuals
  with disabilities from returning to work.
  AOTA supports the Subcommittee's efforts to encourage a review of
  current policies and practices. AOTA stands ready to assist the
  Subcommittee in its efforts to improve employment policies and
  enable all individuals to have the opportunity to work.
  Occupational therapy is a health and rehabilitation service
  reimbursed under Medicare, Medicaid, health insurance policies,
  the Rehabilitation Act, workers' compensation, and other programs.
  It provides therapeutic interventions, such as work simulation and
  conditioning activities, for the assessment and treatment of
  individuals with disabilities. Occupational therapy can assist
  individuals whose ability to function in a competitive work
  environment has been impaired by physical or emotional illness,
  injury or condition. Treatment provided by occupational therapy
  practitioners includes the assessment of functional limitations
  and capabilities to perform meaningful, productive work.
  Occupational therapy can be an important component of a program to
  enable individuals to return to work, tailoring rehabilitation,
  work training, job modifications and placement for the individual.
  The attached materials from AOTA provide background on the various
  roles and functions of occupational therapy in a complete return
  to work program.
  Occupational Therapy Services in Industrial Rehabilitation
  Programs Statement: Occupational Therapy in Work Practice
  (NOTE:  Attachments not transmittable)

                             PREPARED TESTIMONY OF
                              JERALD L. HURT, PT
                                VICE PRESIDENT,
                                NOVACARE, INC.
                              OUTPATIENT DIVISION
                           WEDNESDAY, JULY 23, 1997

  Mr. Chairman and Members of the Subcommittee:
  Thank you for permitting me the opportunity to submit this
  testimony related to the issue of facilitating the return of
  disabled persons to the work force.
  I have been a licensed physical therapist for more than twenty
  years. As a routine daily task during that time, whether directly
  as a treating therapist or indirectly as a manager, I have
  grappled with the challenge of helping people to overcome physical
  impairments, regain the capacity to function and return to
  productive lives. Restoration of function is the fundamental
  objective of physical therapy and other physical rehabilitation
  professions. It is the achievement of the ability to utilize
  remaining functional capabilities that reduces the impact of
  chronic disabilities.
  I presently serve as the Vice President of Clinical Services in
  the Outpatient Division of NovaCare, Inc. NovaCare is the nation's
  clinical leader in physical rehabilitation, operating 750
  outpatient rehabilitation, orthotics and prosthetics, and
  occupational health centers nationwide; and managing
  rehabilitation programs in 1,900 long-term care facilities.
  NovaCare is the nation's largest employer of rehabilitation
  clinicians with 17,000 employees across 43 states, treating 35,000
  patients per day.
  The specific purpose of my testimony is to support the inclusion
  of the Functional Capacity Evaluation (FCE) as an essential part
  of the return-to-work process for individuals who meet the
  qualifications for payment under the SSDI and SSI Programs.
  Additionally, inclusion of a course of restorative physical
  rehabilitation as an option for appropriate individuals, as
  determined through an objective, valid and reliable testing
  process, is also essential if a return-to-work program is to be as
  effective and successful as possible.
  The Dilemma
  As I write this testimony, I am acutely aware that the merits of
  my arguments and those of my colleagues will not constitute the
  sole basis for your final decision, or ultimately, that of the
  Congress. You rightfully expect us to present cogent, persuasive
  information. Rather, your final decision will be a function of
  your assessment of the relative merits of that which we present,
  compared to that of other sincere and persuasive positions. Even
  in the absence of arguments opposing any given objectives, you
  have limited, finite resources to allocate. You cannot include
  everything that has merit.
  In fact, the underlying issue of health care reform in general,
  and of a return-to-work program in particular, is that hard
  choices must be made among useful services, and those choices
  inevitably deny someone something they truly need. Instead
  of"medical necessity", health care reform is really a question
  of"relative medical necessity". This presents you a true dilemma,
  i.e., what justifiable and needed services will not be provided?
  It is this inability to include everything that must be one of the
  most difficult fundamental tasks you perform as legislators. You
  must husband the resources of the nation and apply them according
  to the will of the citizens. When it comes to health care, this
  task is particularly challenging because the apparent will of a
  given citizen often changes dramatically when he or she or their
  loved ones shift from the status of good health to that of ill
  health. The popular concept that there is an inalienable "right to
  health care" pits the finite resources of our nation against a
  literally infinite need. The term "infinite" is not an
  exaggeration. Only the achievement of "robust" immortality would
  reduce the need. Mere prolongation of life only adds years of
  individual need to the equation, and ultimately ends with death
  and its attendant need for increased resource utilization in any
  It is not my intent with this observation to paint current efforts
  to reform health care and control its costs as either futile or
  inappropriate. Nor is it my intent to suppose I am capable of
  telling you your job. Rather, my goal is to respectfully persuade
  this committee that it is critically important for you and,
  indeed, all the citizens of this nation to acknowledge that if
  those finite resources are disproportionately expended helping
  people survive their spells of illness or injury and too little is
  left with which to help them achieve an acceptable quality of life
  during the balance of their years, then those resources have not
  been well allocated. Proper balance between resource allocation
  for "life saving" intervention and for "quality of life"
  intervention must be achieved.
  In my experience, the preponderance of people have never really
  thought about this. Until, that is, they survive their own
  incident, thanks to the medical skills and technology available
  today, and need help rehabilitating their lives. If, at that
  point, the needs exceed the resources, the unfriendly, unkind
  aspects of our health care system become apparent. No doubt this
  reality formed the basis for the rule in primitive societies that
  obligated an individual who saved another's life to care and
  provide for that individual henceforth. I am certain no one in
  modem society would consider it honorable to intervene and prolong
  a person's life, only to knowingly abandon them to a life of
  suffering thereafter. Yet, that is exactly what we frequently
  accomplish. We expend heroic efforts and resources to save lives,
  then fail to provide adequate rehabilitation intervention to
  enable survivors to achieve and maintain what we would
  collectively acknowledge as a minimally acceptable quality of
  life. Examples of this "unintended consequence" abound in the
  ranks of the beneficiaries of SSDI and SSI support.
  I applaud the subcommittee for investigating the potential for
  returning chronically disabled citizens to the workforce. If a
  program such as the one being contemplated is successfully
  implemented, it will address the issue of balance in resource
  allocation in a meaningful way, offering these citizens, whatever
  the cause of their disability, a legitimate chance to escape
  dependency and regain a measure of control over their lives. As an
  added benefit, from the perspective of responsibly allocating
  finite resources, a successful program would also reduce costs,
  since the elimination of the cost of maintaining a citizen as a
  dependent of the state should more than offset the cost of
  providing the intervention necessary to do so.
  One obvious danger in creating such a program is that it might not
  accomplish its goals. If too few recipients of support return to
  the workforce, the benefit of the program compared to other
  possible uses of resources would be questionable. Another danger
  is that inappropriate beneficiaries might be either granted or
  denied support as a result of erroneous criteria for
  It is to address these dangers that I urge the inclusion of the
  Functional Capacity Evaluation and optional restorative physical
  rehabilitation as essential components of the program, however it
  may ultimately come to be configured. Doing so will significantly
  reduce the potential occurrence of these undesirable outcomes.
  An FCE, when properly done, provides quantified, objective
  baseline information regarding current functional performance.
  With this information, all interested parties can make informed
  decisions regarding the proper course of subsequent intervention
  for each individual. Without this information, physically
  restorative or functionally rehabilitative intervention of any
  sort, no matter how skilled, may be inappropriate for the
  individual in question. This would inevitably result in
  unnecessary costs to the program and less than optimal results.
  With this information, however, individuals can be efficiently and
  cost effectively triaged into programs suited to their needs.
  Comparable alternative methods for objectively measuring one's
  potential for returning to work do not exist. Assessment through
  observation by counselors or self-assessment by beneficiaries do
  not provide the objectively quantified measures of an FCE and do
  not, therefore, provide a comparable basis for targeted planning.
  They do not provide the full measure of available information that
  can enable both the disabled individual and the rehabilitation
  team members to agree on the steps necessary to achieve a level of
  function commensurate with a viable vocation.
  This shared agreement between the rehabilitation team members and
  the disabled individual regarding his or her potential and the
  plan of intervention that will achieve that potential is critical
  to success. The population in question, by definition, has chronic
  disability. In many instances they have multiple disabling
  conditions. Their return-to work will be achieved by enhancing and
  matching their remaining abilities with available vocations, not
  by eliminating all their disabilities.
  The process whereby those abilities are identified and applied to
  specific functional/work activities must be one which gives the
  disabled individual a sufficient measure of hope that he or she is
  motivated to work toward the goal. This, again, is the product of
  a properly performed FCE. Specific tasks which can be correlated
  with components of specific vocational activities are done by the
  individual. Objective measurements are taken which compare that
  person's capacity to perform the tasks to those required to
  succeed on a job.
  Analysis of the FCE results are utilized to pinpoint the
  impairments which are contributing to physical performance
  deficiencies, and a determination can be made as to whether the
  deficiencies may be overcome through various interventions. If
  physical impairments are targeted for a course of restorative
  physical rehabilitation, performance of an FCE thereafter will
  quantify the outcome of that rehabilitation and either validate
  the original determination of potential, or provide an objective
  basis for reassessment.
  Speaking as a physical therapist, I cannot overstate how important
  it is for the client/patient to truly believe that the goals of
  therapeutic intervention are, in fact, achievable. Otherwise, it
  is unlikely that the client will participate fully in the
  rehabilitation activities, and success is seldom the outcome. This
  is the case for all levels of injury or dysfunction, no matter how
  minor. It is especially true for cases involving long term,
  chronically disabling conditions such as those which define the
  population under consideration here. The objective information
  provided by an FCE is the best tool available with which to
  convince a person of his or her own potential.
  Speaking as a taxpayer, I endorse the concept of a staged program
  of intervention such as that presented in the testimony of my
  colleague, Dr. Matheson. If, at any point along the way toward
  return-to-work the individual no longer exhibits the physical and
  behavioral performance necessary to achieve a viable vocation, he
  or she must be excluded from further participation. The harsh
  reality is that many motivated individuals will have disabilities
  too great to overcome. The resources allocated to this program
  must be reserved for those who can demonstrate its success and
  justify its continuation for the benefit of future generations of
  disabled persons.
  Those of us in the provider community must likewise subject
  ourselves to standards of performance that justify our
  participation in the program. Initial demonstration of capability
  may be achieved through meeting criteria established by one or
  more external organizations such as CARF (Committee for the
  Accreditation of Rehabilitation Facilities), JCAHO (Joint
  Commission on the Accreditation of Health care Organizations),
  NCQA (National Commission on Quality Assurance) or others which
  might qualify for this role. Ongoing demonstration of capability
  through an accounting of results must also be included in the
  structure of the program. Just as an individual client/patient
  must continually justify participation by meeting established
  criteria, so too must providers justify their ability to
  participate. Only in this way will the resources allocated be
  protected from both abuse and misuse and, ultimately, produce the
  positive cost/benefit ratio anticipated.
  - Implementation of a program to systematically enable chronically
  disabled individuals who meet current criteria for SSDI and SSI
  support to return to the workforce is an excellent investment of
  the nation's resources.
  - Performance of a Functional Capacity Evaluation at one or more
  stages of the program is essential to provide the information
  necessary to determine the potential for any individual to succeed
  and to identify the rehabilitative interventions that are
  appropriate in each case.
  - Many potentially successful individuals will be in need of
  restorative physical rehabilitation to ameliorate physical
  impairments that will otherwise limit their capacity to function
  at a level necessary to engage in and sustain a viable vocation.
  -   Both individuals and providers who participate in the program
  should be subjected to ongoing evaluation so long as they continue
  to be involved.
  Thank you.

                             PREPARED STATEMENT OF
                               ELIZABETH A. CORP
                        CRC, CDMS, D-ABDA, FLMI MANAGER
                                MET DISABILITY
                         IN THE RETURN TO WORK PROCESS
                           WEDNESDAY, JULY 23, 1997

  This testimony concerns the use of Functional Capacity Evaluations
  and their importance in the return to work process. Bills H.R.
  4230 - Bunning and H.R. 534 - Kennelly were also reviewed in
  preparation for this testimony.
  I have been asked to comment on Functional Capacity Evaluations
  (FCEs) and their relationship to return to work initiatives as a
  representative of a Group Short Term and Long Term Disability
  (STD/LTD) carrier, Met DisAbility, a division of Metropolitan Life
  Insurance Company (MetLife). Within Met DisAbility I am currently
  the Social Security program manager, a program that seeks to
  assist our clients in obtaining Social Security Disability
  Insurance benefits (SSDI) if they meet the SSA criteria for
  benefit payment. I also coordinate the Met DisAbility FCE vendor
  program and was the manager of the Met DisAbility Rehabilitation
  program through 11/96. Met DisAbility was awarded the 1996
  National Association of Rehabilitation Professionals in the
  Private Sector (NARPPS) award for Best Insurance Company as a
  result of our excellent rehabilitation program.
  Group STD/LTD Coverage
  Group STD/LTD coverage is disability insurance that an employer
  purchases as an employee benefit. Coverage may be 100% employer
  paid or a combination of employer/employee paid. While coverage
  levels vary they generally do not pay more than 60-70% of pre-
  disability earnings for LTD plans. STD plans of coverage are
  similar to LTD, but it is not unusual for STD coverage to provide
  up to 100% of pre-disability earnings for a period of 6 months.
  STD coverage pays for brief periods of illness or injury that may
  prevent someone from working for several weeks or months. However,
  most people return to work prior to the conclusion of the six
  month STD period of benefits.
  The intent of LTD coverage is to provide individuals with income
  replacement during a prolonged period of disability from accident
  or illness. Generally the insurance coverage is structured so that
  during the first two years of disability one need be disabled from
  his/her "own occupation" with any employer. After two years the
  disability language changes to provide benefits only to those who
  are disabled from "any occupation" for which they are reasonably
  qualified through education, training or experience. Once approved
  for these benefits, one can generally continue receiving benefits
  until age 65 as long as the disabling condition(s) remain
  consistent with the "any occupation" definition.
  At Met DisAbility we take very seriously our trade mark "We Put
  Abilities to Work". From the time a claim is filed with us, our
  team of claim professionals encourage return to work by discussing
  it with the client, the client's physician(s), and the employer.
  We actively work with employers to accommodate those who need it
  and to return people to ' work even when they cannot work full
  time. Our contracts are structured to encourage partial return to
  work efforts as it has been our experience that often times people
  need aperiod of modified or part time work as they regain their
  strength and stamina. We have in our employ medical and vocational
  rehabilitation specialists who coordinate medical management and
  return to work activities. As our clients are located all over the
  country and our disability offices are in five states,. we do most
  of our work telephonically and retain the assistance of local
  medical and vocational rehabilitation providers when necessary.
  Returning People to Work from a Period of Disability
  In our experience we have found that the earlier one returns to
  work after a period of illness or injury, the better. People who
  become disabled and receive benefits from us are people who have a
  sustained period of employment prior to their illness or injury
  and thus generally have a job to which they can return during the
  STD portion of their claim. However, once people become eligible
  for LTD benefits, it is not unusual for employers to terminate
  their employment as well. In those cases, the client is not only
  struggling with the emotional and financial consequences of a
  disabling condition, but they are now also facing the emotional
  and financial consequences of limited or no medical coverage,
  fewer dollars on which to live and the loss of employment. For
  these people the road back to work is often harder and more costly
  in both time and money.
  Often the condition that has rendered them disabled is one that
  will have some residual functional limitations - be they in terms
  of strength and mobility deficiencies, poor sitting/standing
  tolerances, lack of stamina, fatigue, impaired mental agility or
  emotional difficulties. For these people a return to work will not
  only involve providing the OPPORTUNITY for employment, but also
  the MEDICAL REHABILITATION SERVICES needed to render them capable
  of sustaining a prolonged work effort. Such services do not come
  cheaply, but when compared to the amount of benefit dollars paid
  out over many years to remain off of work, the price is very
  reasonable. In addition, the purchasing of medical rehabilitation
  services also helps us determine if the individual is truly
  capable of a sustained work effort or if their condition is such
  that a return to work will not be practical.
  At this juncture, I think it is important to note that the payment
  of rehabilitation services is generally an extra-contractual
  obligation. By that I mean that most of our contracts do not
  require the client to participate in rehabilitation services nor
  do they state that MetLife will be obligated to pay for those
  services. However, it has been our practice to provide
  rehabilitation services to clients who we determine will benefit
  from them in a return to work effort. After careful screening by
  our in-house rehabilitation staff, the clients are contacted and
  offered the services at no charge and we in turn pay for the
  medical and vocational services that are needed to render the
  client capable of returning to work. We do look to medical
  insurers to assist in this effort by talking directly with the
  medical carriers about the programming needed and then helping the
  client overcome the copayment obstacles by having the co-payment
  billed to us. When there is no medical insurance or if the medical
  carrier cannot pay for medical rehabilitation services we then
  will pay for those services on a time limited, results oriented
  basis. We do NOT pay for any medical or vocational services that
  are priced beyond the local reasonable and customary rate nor do
  we purchase services that are NOT geared toward a return to work
  effort. Rehabilitation efforts continue only as long as the client
  cooperates and participates fully in the programming and only as
  long as measurable goals are being achieved. We ask each of our
  rehabilitation clients to sign rehabilitation plans prior to the
  provision of services and those plans outline what we will
  provide, what the client's responsibilities are and what the
  projected outcomes will be. These plans are then amended as needed
  through out the rehabilitation program.
  We view rehabilitation as a process that starts with the
  submission of a claim and does not end until the client is either
  able to return to work or is determined to be unable to work. We
  continually talk about work and its positive emotional and
  financial benefits and we do not stop talking about it until it is
  clear that the client will never return to work. In this regard we
  are very different from SSA. SSA essentially determines that
  someone is totally disabled and the idea of returning to work is
  barely mentioned once someone has been approved for benefits. As a
  result, the average SSDI/SSI client does not seriously consider a
  return to work because the attainment of benefits means that the
  client is TOTALLY DISABLED. SSA will need to make a fundamental
  conceptual change in its method of processing disability claims
  before this concept filters down to all aspects of the
  organization. SSA will need to MANAGE their SSDI/SSI claims with a
  return to work attitude from the initial application and will need
  to re-vamp its CDR process to ensure that people are not left on
  claim for a number of years with no mention of return to work. In
  addition, SSA will need to look to public/private partnerships to
  help finance the cost of medical and vocational rehabilitation.
  One way to do that would be change the current structure within
  Medicare that allows only a limited number of physical or
  occupational therapy sessions regardless of the amount of therapy
  needed to return the patient to a level of functionality needed to
  meet the demands of an eight hour work day.
  Why Medical Rehabilitation Services, and FCEs in Particular, are
  In assessing the viability of a return to work effort, a number of
  factors are reviewed. Of importance are the client's physician's
  evaluation of the disabling condition and its impact on the
  client's ability to work. It is important here to clarify that
  physicians, by and large, are NOT knowledgeable of disability
  factors as they relate to work. Physicians are taught to diagnose
  and treat constellations of symptoms presented to them by the
  patient. They are NOT taught to be vocational or occupational
  experts and thus have limited knowledge of what the patient may do
  in their occupation and how the illness or injury that is being
  treated will impact the patient's ability to perform that
  occupation. They may know, for example, that their patient is a
  truck driver who delivers items to hardware stores, but they
  probably don't know if their patient is a long distance or local
  driver, if the truck is a semi trailer or a pick up, if the
  patient has to load or unload the truck, how much the pallets
  weigh, if the patient has to set up merchandise in the stores,take
  orders for new deliveries, accept payments and do other bill
  processing, or how the patient's job relates to the occupation of
  truck driver for any employer. All of these aspects are VERY
  important to a vocational counselor who determines which job
  duties can be still be performed and which cannot. Generally all
  the physician knows is what the patient says and most of the time
  patients give very brief job descriptions. Patients rarely go into
  length about what their jobs entail unless they are asked detailed
  As a result it is not at all unusual for physicians to answer very
  vaguely and briefly when confronted by the question - "is this
  person who you are treating disabled from their own occupation or
  any occupation?" Most of the time this question, if it is asked at
  all, receives a curt response of "yes" to the own occupation,
  especially during the acute portion of the illness or injury, and
  a "don't know" or "yes" for the second portion without any
  supporting evidence to prove that such a question was fully
  evaluated by the physician. When pressed to produce test results
  or other objective measures to support this opinion most doctors
  revert to the fact that the patient recently underwent surgery and
  is now recovering or that the MRI showed that the patient has a
  "slipped disc".
  Unfortunately, knowing that someone has an illness or injury and
  relating that to work requirements is not an easy task. It
  requires knowledge of anatomy and physiology as well as an in-
  depth knowledge of the requirements of occupations. One method to
  assist in making this determination is through a Functional
  Capacity Evaluation (FCE). FCEs are generally administered by
  physical or occupational therapists in therapy centers. These
  evaluations, and there are a number of types and kinds that have
  been proven valid and effective, are generally administered over
  several hours and sometimes days. Each evaluation looks at the
  client's ability to perform a variety of activities including
  strength evaluation, lifting, carrying, bending, walking,
  standing, and sitting tolerances, as well as recording the
  client's ability to follow directions, perform tasks repetitively
  and maneuver through various activities in a structured setting.
  Once the client has completed the evaluation, the results are
  tabulated and assessed looking first at the consistency of the
  client's actions as compared to the medical information and then
  comparing the client's performance with that needed to perform
  various occupations for which the client is suited through
  education, training or experience. It is only then that a
  rehabilitation plan of action can be developed to help build on
  the client's strengths and to diminish or eliminate those factors
  that are limiting the ability to return to work. It is not unusual
  for these plans to recommend periods of WORK HARDENING or MEDICAL
  REHABILITATION SERVICES in a effort to bring the client back to a
  level of physical capacity that has been lost due to inactivity or
  the effects of prolonged illness or injury.
  For those client's on SSDI/SSI the need for a FCE is critical to
  accurately evaluating what the client can and cannot do in
  relationship to work. For someone to met the SSA 7 definition of
  disability they must be completely unable to work for a period of
  at least 12 months. That in an of itself means that those who
  receive SSDI/SSI benefits probably have residual effects from the
  illness or injury that caused them to become disabled and those
  residuals need to be accurately assessed with an objective
  evaluation of their functional capabilities. Unless the client's
  functional abilities are evaluated and deficiencies strengthened
  or accommodated, vocational rehabilitation will not be effective
  in accurately matching abilities to job opportunities and the
  client will not be capable of
  sustained work activity.
  Impairment and Disability in Relation to the Assessment of
  According to the American Medical Association's book, "Disability
  Evaluation" there is a distinct difference between an impairment
  and a disability. An impairment is defined as "the inability to
  successfully complete a specific task based upon insufficient
  intellectual, creative, adaptive, social or physical skills."1
  Disability is defined as "a medical impairment that prevents
  remunerative employment."2 The writers expand upon this
  distinction by explaining that impairment assessment is a medical
  evaluation while disability assessment is determined within an
  occupational setting, such as one's work place or through the use
  of functional capacity evaluations.3
  As previously mentioned in this paper, the use of FCEs is an
  excellent way to determine a client's abilities and limitations or
  restrictions. My colleague, Dr. Leonard Matheson, wrote the
  chapter in "Disability Evaluation" that provides an excellent
  summary of what FCEs do and what they cannot do. I will not
  attempt to expand upon Dr. Matheson's excellent work, except to
  add that in our experience at Met DisAbility the information
  obtained from FCEs is invaluable to our disability management
  process. We have found that these evaluations provide objective,
  measurable information that clarifies the medical information we
  receive from the client's physician(s). Our experience has shown
  that FCEs are useful at several points during the disability claim
  process. During the "own occupation" portion of the claim, a FCE
  clarifies what is preventing the client from returning to his/her
  occupation and also helps us determine what medical and vocational
  services might be necessary to bring about a successful return to
  work. At the "any occupation" decision point, a FCE gives us
  information that allows a comparison of our client's abilities to
  those required of the occupations to which he/she may be capable
  based on education, training and experience. Even when someone has
  been approved for "any occupation" our management of the claim and
  return to work expectations do not end. We continue to manage the
  claim toward a return to work if at all possible and the use of
  FCEs helps us document which aspects of functionality can be
  increased through a concerted medical/rehabilitation effort and
  which aspects need to be considered permanently limited and/or
  needing accommodation. ?????1 Demeter SL, Smith GM, Anderson GBJ:
  Approach to Disability Evaluation, Disability Evaluation, 3, St.
  Louis, MO, 1996, Mosby
  2 Ibid, 3
  3 Ibid, 3?????It is our procedure to ask the client's attending
  (primary) physician to review all FCE results and to provide
  comment. Because we manage our claims using a triad of people the
  client, the attending physician and the employer - in conjunction
  with our claim professionals, we look for any opportunity to
  remove the "dis" from "disAbility". We use FCEs to help clarify
  the functional factors that are preventing a successful return to
  work. In doing so, we recognize that many times the ability to
  return to work is clouded by emotional factors as well as
  physical. As a result we have also partnered with one of the
  premier mental health managed care providers, United Behavioral
  Health, a division of United HealthCare, in piloting a program to
  increase provider awareness of disability issues to bring about a
  speedier return to work for those with acute and chronic mental
  health conditions. This pilot and others are part of Met
  DisAbility's on-going program of pro-active identification of the
  factors that are impeding successful return to work efforts and
  preventing people from realizing their true potential.
  Value of the FCE in the Determination Process and in the Provision
  of Services
  FCEs provide valuable objective information that can be used in
  making a determination of disability. As part of the determination
  process an FCE can provide accurate, measurable information that
  cannot be obtained from other sources. In particular, an FCE puts
  into precise terms the client's capabilities in regard to a
  variety of areas related to physical strength, endurance and
  stamina as well as cognitive abilities. Such information is often
  missing in routine medical reports and often is not quantified and
  objectified in physician narrative reporting. In addition, FCEs
  are conducted over several hours, four to six hours over one to
  two days is typical. An evaluation of this length is thus more
  reliable in predicting capabilities during an eight hour work day.
  FCEs should prove invaluable to the DDS and would be far superior
  to the current Residual Functional Capacity process due to their
  objectivity and uniform administration processes.
  Medical Management as a Precursor to Vocational Rehabilitation
  One of the realities of being out of work due to illness or injury
  is that an individual often becomes physically de-conditioned. The
  structure and routine of reporting to a work site on a daily basis
  is replaced with endless hours spent lying down or being inactive
  while the body heals. Unfortunately this level of inactivity often
  continues long after the acute phase of illness has passed. In
  addition, the stress of illness and the resulting physical
  inactivity often coincide with mental inactivity and that too
  contributes to being incapable of returning to a work place
  without a structured period of physical and mental preparation.
  At Met DisAbility we discovered several years ago that we needed
  the skills and resources of short-term medical rehabilitation
  programming for a percentage of our clients in order to move them
  from a period of disability back to full time work. Our
  rehabilitation nurses coordinate the medical rehabilitation
  programming that may consist of targeted medical intervention or
  occupational and physical therapy services for clients who need a
  structured method of re-building their physical and mental
  stamina. We work with local rehabilitation providers in
  conjunction with the client's physician to develop rehabilitation
  plans that are time limited and focused on a goal of return to
  work. In keeping with our claim philosophy, the client, the
  attending physician(s) and, when appropriate, the employer are
  parties to the planning process and we ask the client and likely
  that their skills have diminished and in some cases become
  obsolete. Any person entering the employment market today without
  basic computer abilities is facing a market that is limited and
  hostile. Computers have become a necessary part of today's
  corporate structure. The inability to use a computer and/or
  computer skills that are outdated will render someone marginally
  employable. As with SSI applicants, the longer an SSDI individual
  has been away from work, the more there will need to be time spent
  on skill enhancement or development prior to any sort of job
  placement activity. In addition, as has been previously noted, the
  provision of medical rehabilitation services are also recognized
  as being vital to successful work re-entry.
  Functional Capacity Evaluations in the Continuing Disability
  Review Process
  When beneficiaries are reviewed under the Continuing Disability
  Review (CDR) process, the Social Security Administration is
  seeking to determine if the beneficiary no longer meets the
  medical criteria for benefits. This process begins with a simple
  questionnaire that asks if the individual has worked. This is
  followed with questions regarding the individual's physical
  health, schooling and rehabilitation activities. How one answers
  these questions helps DDS determine if a more in-depth
  questionnaire is to be completed and if benefits are to be
  terminated due to substantial gainful employment and/or medical
  It is in this portion of the CDR process that functional
  measurements would be of great value. As noted previously, FCEs
  can help isolate those factors that are truly limited from those
  that are limited only because the client chooses to limit them. In
  these cases of client self-limitation, the physician can become
  supportive of efforts that the client needs to undertake to bring
  about increased levels of functionality. For DDS the ability to
  accurately determine medical improvement is critical in making
  precise and consistent decisions. The use of FCEs at this stage in
  the process will be critical to the development of decisions that
  will withstand judicial challenges.
  The FCE Process, the Disability Beneficiary and the RTW Process
  In this paper I have emphasized how the FCE process assists the
  disability examiner - be it the DDS or, as in our case, the
  STD/LTD carrier. However, the FCE process also assists the
  disability beneficiary by providing accurate, objective measures
  of capabilities and limitations. It is not uncommon for a
  beneficiary to have incorrect or inaccurate information regarding
  the extent of impairment. This is not due to poor or incompetent
  medical care. Rather, it is often due to a lack of accurate
  information in regard to what is expected in terms of physical
  recovery and what to expect in regard to the mental and physical
  factors that negatively impact the recovery process.
  By reviewing FCE results with both the disability beneficiary and
  the physician, a dialog may commence that will lead to more pro-
  active treatment and a better understanding of the true
  limitations and capabilities of the individual. The FCE can also
  delineate between which limitations are physically based and which
  are psychologically based. This in turn could help direct the
  treatment modalities and the time frames in which to complete
  treatment for a more rapid return to work.
  Financial Impact of FCE Utilization on the Social Security Trust
  The use of FCEs at approximately $600 per FCE - cost might be
  reduced based upon volume - would appear, on the face of it, to be
  an expensive proposition for SSA. However, the cost of keeping
  people on the SSDI/SSI roles is much more expensive and also more
  damaging to our society. Our economy needs to keep employed those
  who are capable of working and our citizens need to recognize the
  value of contributing to our national economic strength. The
  return to work ideas outlined in the Kennelly and Bunning bills
  are wonderful in terms of assisting people who are job ready,
  however, as has been noted, many SSDI/SSI beneficiaries are not
  job ready and need a period of medical rehabilitation programming
  as well as vocational programming. FCEs can help determine which
  beneficiaries are job ready and which ones will need additional
  medical services. FCEs will also help DDS determine who should be
  capable of using the return to work programming options outlined
  in the bills and who are incapable of a return to work either now
  or in the future. This can thus help save money that might
  otherwise be spent on vocational efforts that will not come to
  In addition to the use of FCEs to help determine who is
  appropriate for rehabilitation services, FCEs can also help
  beneficiaries understand the physical and mental requirements of
  successful return to work efforts. This in turn allows SSA the
  opportunity to more accurately predict who will be successful in
  their rehabilitation efforts, thus releasing trust fund dollars
  that might otherwise be paid out in benefits. Again, I must
  emphasize that the Administration must recognize that the cost of
  rehabilitation services needs to include medical as well as
  vocational rehabilitation components. Without this "full service"
  approach, results will be less than desired and may not be as long
  lasting as hoped. As a result, savings to the trust fund will not
  be significant if there is not a recognition of the long term
  effects of a poorly planned or incomplete rehabilitation program
  approach that only looks at vocational factors and not medical
  ones as well.
  Public - Private Partnerships
  The last item that I would like to mention is the need for strong
  public-private partnerships. The problems facing the SSA trust
  fund have a far reaching effect on all of society. At Met
  DisAbility we recognize that SSDI is not a panacea for every
  person with a disability. We continually look for rehabilitation
  opportunities and create those opportunities from the day a claim
  is filed until that option is no longer realistic for the client.
  We understand that for many people it is easier to think about
  what they cannot do rather than what they can do and we constantly
  work to help people recognize the abilities they retain and how
  those abilities can be utilized in the work force. We also look to
  other providers of service be they public or private in an effort
  to share cost and avoid duplication of effort. It is only when all
  avenues are explored that we can truly say that we have maximized
  the potential of those needing assistance.
  In regard to SSA, it is important that SSA foster relationships
  with not only the public and non-profit sectors, but also with
  private insurers and others who are working with SSDI/SSI
  beneficiaries. It is imperative that SSA not look to duplicate
  programming that already exists. SSA should also look for ways to
  share costs whenever possible. If the program goals are clearly
  stated and adaptable to what the beneficiary needs then the
  chances of partnering with public and private sector providers
  will increase. And as we know, when the chances of success
  increase the positive impact on the trust fund will also increase.

                             PREPARED TESTIMONY OF
                       THOMAS P. YANKOWSKI, M.S., C.V.E.
                           WEDNESDAY, JULY 23, 1997

  The Center for Career Evaluations (CCE) is a comprehensive
  vocational rehabilitation agency that assists people to return to
  work following an assessment of their functional abilities. CCE
  serves a wide range of clients, including industrially injured
  workers, disabled veterans, chronically unemployed individuals,
  and severely disabled individuals. As a private, employee-owned
  rehabilitation agency, CCE has provided evaluation services to
  more than 4,000 individuals in the past 12 years.
  Regarding my own experience, I am Past President of the California
  Association of Rehabilitation Professionals and Western Regional
  Representative of the National Vocational Evaluation and Work
  Adjustment Association. I am also currently Chairperson of a Task
  Force that developed standards of practice for the use of
  Functional Capacity Evaluations to assist doctors in the
  determination of permanent disability ratings for industrially
  injured workers in California. The Task Force was comprised of
  representatives from the California Chapter of the American
  Physical Therapy Association, the Occupational Therapy Association
  of California, and the California Vocational Evaluation and Work
  Adjustment Association.
  The cornerstone of CCE's Early Intervention Program is the
  Functional Capacity Evaluation. A Functional Capacity Evaluation
  is a systematic, objective assessment of an individual's current
  functional physical capacities on work-related tasks. It provides
  a baseline of physical functioning in critical work performance
  areas as defined by the Department of Labor, such as lifting,
  carrying, pushing, pulling, kneeling, stooping, bending, gripping,
  climbing and dexterity. At CCE, a Functional Capacity Evaluation
  consists of short-term, structured activities that measure
  critical work demands in a controlled setting over a 4-hour time
  period. It is conducted under the direct supervision of a
  qualified Work Capacity Specialist with a background in
  neuromuscular, cardiovascular, and bio-mechanical functioning, as
  well as vocational evaluation (VEWAA Standards, 1993).
  In the past, CCE has provided Functional Capacity Evaluations to
  severely disabled individuals for the purposes of eligibility
  determination, disability ratings, treatment planning, job
  matching, and work restriction identification. In addition, CCE
  recently participated in a pilot project with the Social Security
  Administration to field test applicants to determine benefit
  eligibility. It should also be noted that the Social Security
  Administration recommended the use of Functional Capacity
  Evaluations for disability decision-making in its Re-Engineering
  Proposal (Plan for a New Disability Claim Process, 1994).Five key
  issues emerge when determining an individual's work capacities in
  a Functional Capacity Evaluation. First, there is an important
  distinction to be established between the terms "medical
  impairment" and "vocational disability." The diagnosis of a
  medical impairment by a physician does not define the impact of
  the injury upon the individual's vocational alternatives. For
  example, a forklift driver with limited transferable skills who
  sustains a foot injury would have a more severe vocational
  disability than an accounts clerk with the same medical
  impairment. A Functional Capacity Evaluation is able to define the
  impact of the injury upon vocational options because the
  assessment is work-related. Even if physicians outline medical
  restrictions, they (1) rarely functionally define these
  limitations in terms of work and (2) rarely identify activities
  that the individual can perform in terms of work. A Functional
  Capacity Evaluation can do both.
  Second, the general work restrictions outlined by a doctor and
  used for a disability rating procedure can often be misleading or
  incomplete. The classic example is the person who is restricted to
  sedentary work by the doctor due to the walking or standing
  required on a light level job. However, the person's lifting
  capacity might be in the light or medium categories of physical
  demands as defined by the Department of Labor, which would greatly
  expand the number of vocational alternatives available. A
  Functional Capacity Evaluation would specifically provide
  information about a person's lifting capacity under a variety of
  conditions. A person with a shoulder injury may not be able to
  lift overhead, but is able to lift 50 pounds to table height.
  Another person with a knee injury may not be able to lift from the
  floor level, but is able to lift 20 pounds overhead from the table
  Even if medical doctors have completed a Physical Capacity
  Evaluation form, their opinions are not based upon actual
  performance testing unless a Functional Capacity Evaluation was
  completed. A recent referral involved a roofer who had sustained
  severe burns to over 40 percent of his body when he fell down a
  flight of stairs onto a floor covered with hot tar. The treating
  physicians, who were burn specialists, listed his restrictions as
  "avoid exposure to chemical solvents and extremes in temperature."
  However, the doctors did not address his functional losses,
  particularly those related to his hands which had undergone
  multiple skin graft operations. The Functional Capacity Evaluation
  revealed the individual was more severely restricted. Additional
  functional limitations were identified in the critical job demands
  of heavy lifting, fine manipulation, ladder climbing, and forceful
  or repetitive gripping activities.
  Third, a Functional Capacity Evaluation might be very helpful when
  the injured party expresses subjective complaints not
  substantiated by objective findings. The person's perception of
  the disability frequently differs from actual performance
  exhibited during the Functional Capacity Evaluation. It is
  critical for the Work Capacity Specialist to report only the
  physical signs and symptoms revealed in the Functional Capacity
  Evaluation, as "there is no truly reliable test for motivation"
  (Isemhagen, 1988). However, a Work Capacity Specialist is able to
  identify consistency of effort through the variety and
  reproduction of tests administered. The standardized testing
  procedures may also result in 'performance-based" substantiation
  of the injured party's perception of their level of impairment.
  The purpose of the assessment, therefore, is to accurately
  document the individual's physical abilities as well as
  Fourth, a Functional Capacity Evaluation provides an assessment of
  job modifications which can be critical to the development of
  viable vocational alternatives. On one case, a construction worker
  had a severe crush injury to his dominant right hand. He had
  limited transferable skills, a minimal educational background, and
  low vocational interests except construction work. During the
  Functional Capacity Evaluation, the injured party demonstrated an
  ability to write legibly for an hour using a writing aid and an
  ability to input data on a computer using a modified keyboard. As
  a result, the Work Capacity Specialist recommended a vocational
  training program for him to become a construction estimator with
  wages starting at $15 per hour. Using simple ergonomic aids and
  functional work simulations, the future earning capacity of the
  injured worker was significantly increased. With the advent of the
  Americans with Disabilities Act (ADA), it is imperative that
  functional testing procedures address the issue of reasonable
  accommodations. For severely disabled individuals in the Social
  Security program, the use of state-of-the-art technology will be
  critical in order to provide the necessary job modifications
  Finally, a Functional Capacity Evaluation can be used as a source
  of documentation to refer an individual to Work Hardening or Work
  Conditioning programs. These programs are often recommended by
  professionals in the rehabilitation field for persons with chronic
  pain or emotional barriers to returning to work. They are highly
  structured, goal-oriented, individualized treatment programs
  designed to maximize a person's ability to return to work. Work
  simulation and conditioning activities are increased on a
  graduated basis to improve overall physical tolerances, stamina,
  productivity, and work behaviors (VEWAA Standards, 1993).
  The Functional Capacity Evaluation provides a baseline of physical
  functioning which documents the rationale and recommended
  treatment plan for a Work Hardening/ Conditioning program. These
  programs may be particularly useful to recommend when the injured
  party claims to be totally disabled, has been unemployed for an
  extended period of time, or demonstrates an ability to improve
  work tolerances. On a recent case, the treating doctor set a 10
  pound lifting restriction for the injured party. However, it was
  the opinion of the Work Capacity Specialist that the individual
  could increase his lifting tolerances to 20 pounds in the light
  category of work following a four-week Work Hardening Program.
  Studies have shown a high return to work success rate following
  completion of a Work Hardening Program, particularly if the
  subject was referred early in the rehabilitation process (Beissner
  and Saunders, 1996).
  In conclusion, the Functional Capacity Evaluation provides an
  accurate, functional assessment from which to make a decision
  regarding the feasibility of the individual's ability to perform
  the various levels of physical demands as defined by the
  Department of Labor. The Functional Capacity Evaluations performed
  at CCE have assisted many people to return to work, particularly
  if accompanied by a comprehensive Return to Work Strategy and
  Early Intervention Referral Program.
  Even though three out of every ten Social Security Disability
  beneficiaries are estimated to be candidates for vocational
  rehabilitation, less than a half of one percent ever return to
  work (General Accounting Office Report). These rates are
  unacceptable. The lack of effort in the provision of
  rehabilitation services is a waste of human and monetary resources
  that will eventually result in the bankruptcy of the Trust Fund.
  People with disabilities deserve the opportunity to become fully
  independent members of society. Vocational rehabilitation can be
  the stepping stone for these individuals, but only if the door can
  first be opened. Functional Capacity Evaluations can provide such
  as a "gatekeeping role" for disability determinations in Return to
  Work programs within the Social Security Disability evaluation
  process. Standardized Functional Capacity Evaluations will ensure
  consistent and equitable decisions, resulting in an increased
  number of people who will be determined feasible for vocational
  rehabilitation, and ultimately be able to return to substantial
  gainful employment. Rather than being an obstacle for returning to
  work, Social Security Disability programs will act as a catalyst
  for people with disabilities to enter the workforce. The benefits
  of such a "gatekeeping" function far outweigh the costs.
  Any anticipated legislation by Congress should, therefore, include
  the provision of Functional Capacity Evaluations in order to
  ensure the most cost-effective delivery of Return to Work
  I thank you for the opportunity to present this testimony. If you
  have any questions or need clarification, I would be willing to
  provide oral testimony or respond to any correspondence.
  Thomas P. Yankowski, M.S., A.B.V.E.
  President, Certified Vocational Evaluator     Bibliography
  Beissner, K.L., Saunders, R.L., et al. (1996). "Factors Related to
  Successful Work
  Hardening Outcomes.' .physical Therapy, Vol. 76, No. 11 (pp. 1188-
  California Vocational Education and Work Adjustment Association
  (1993). Standards for Provisions of Vocational Evaluation,
  Assessment and Work Adjustment Services and Types and Time Frames:
  Work Evaluation Services and Modules. California VEWAA Standards
  Deutsch, Paul M. & Sawyer, Horace W. (1989). A Guide to
  Rehabilitation, New York, N.Y.: Matthew Bender & Co.
  Isemhagen, Susan J. (1988). Work Injury/Management and Prevention.
  Gaithersburg, Maryland: Aspen Publishers.
  May, Virgil R., III (1988). "Work Hardening and Work Capacity
  Evaluation: Definition and Process; Vocational Evaluation and Work
  Adjustment Bulletin, Vol. 21, No. 2 (pp. 61-64).
  Scheer, Steven J. (Ed.) (1991). Medical Perspectives in Vocational
  Assessment of Impaired Workers. Gaithersburg, Maryland: Aspen

                             PREPARED STATEMENT OF
                               JUDITH E. HEUMANN
                              ASSISTANT SECRETARY
                           WEDNESDAY, JULY 23, 1997

  Chairman Bunning and members of the Subcommittee, thank you very
  much for inviting me to speak with you on the issue of barriers
  that prevent disabled Social Security Disability Insurance (SSDI)
  and Supplemental Security Income (SSI) beneficiaries from engaging
  in.or returning to work.
  As the Department of Education's Assistant Secretary for the
  Office of Special Education and Rehabilitative Services (OSERS), I
  am responsible for providing leadership to the Rehabilitation
  Services Administration (RSA), the Federal agency that provides
  support to State vocational rehabilitation (VR) agencies and other
  service providers to assist individuals with disabilities to
  achieve employment and to live independently. My leadership also
  extends to the National Institute on Disability and Rehabilitation
  Research which -- through research, demonstration, and
  dissemination and utilization programs -identifies those best
  practices in technology, rehabilitation,and independent living
  that result in greater independence and productivity of
  individuals with disabilities.
  My appointment as Assistant Secretary and my ability to live
  independently would not have been possible without the broad array
  of rehabilitation and independent living services from which I
  have benefited along with my personal determination and family's
  When I was one and a half years old, I developed polio.
  When I was five, the public school officials would not allow me to
  enroll. They told my mother that because of my wheelchair, I was a
  fire hazard. Instead, the school system sent a tutor to my house.
  When I was nine, I finally got to go to school, but I was placed
  with other disabled kids in a room hidden in the school basement.
  I was the first student in my class to go on to high school -- but
  not until my mom and dad fought for this right.
  After graduating from high school, I went to college. I wanted to
  become a teacher, but the agency financing my education believed
  that people who use wheelchairs could not teach, so they refused
  to let me major in education. But I did manage to minor in it.
  When I graduated, I applied for a teaching license in the New York
  City school system. I passed the written test and the spoken test.
  But I failed the medical test because I used a wheelchair. The
  school officials would not give me a license to teach. But I knew
  I could be a good teacher. With the support of my parents, I
  challenged the school system, obtained my license, and finally got
  a job teaching.
  During this time, I became aware that other disabled people from
  all over the nation -- in fact, from around the world -were also
  advocating for equal rights. These people, and many other disabled
  people and their families, became part of the growing movement for
  the rights of the disabled.
  This broader movement enabled me to go on to graduate school, and
  to be a leader in the then new independent living movement. I
  helped found the first Center for Independent Living in Berkeley,
  Since my childhood, we, as a country, have made significant
  strides in improving educational opportunities for individuals
  with disabilities, particularly with the enactment of the
  Individuals with Disabilities Education Act (IDEA) in 1975. In
  addition to Congress' recent bipartisan reauthorization that
  further strengthened IDEA, we have also made significant progress
  in furthering opportunities for employment and independent living
  for individuals with disabilities through a broad range of
  programs that support both rehabilitation and independent living
  services and research and demonstrations and programs that protect
  the rights of individuals of disabilities from discrimination in
  employment, housing, and transportation. It is estimated that
  approximately 800,000 individuals with disabilities are now
  working because of the anti-discrimination protections provided by
  the Americans with Disabilities Act. But significant barriers
  remain to achieving the goals of independence, inclusion, and
  empowerment for all individuals with disabilities. Despite the
  opportunities afforded by the Individuals with Disabilities
  Education Act, the Rehabilitation Act, and the Americans with
  Disabilities Act, nearly half of working-age persons with
  disabilities are unemployed.
  These barriers include environmental barriers such as the lack of
  transportation and lack of affordable and accessible housing.
  Individuals like myself need access to personal assistance
  services in order to work. Many individuals need accommodations on
  the job such as assistive technology to perform effectively in the
  workplace. Despite the promise of the ADA, negative employer and
  individual attitudes regarding the employability of individuals
  with disabilities persist.
  Notably, federal policy aimed at assisting individuals with
  disabilities is also creating disincentives to work for many
  individuals with disabilities. For example, the potential loss of
  health care coverage represents a significant barrier to
  employment for SSDI and SSI recipients. Medicare for disabled SSDI
  beneficiaries and Medicaid for SSI recipients provide the majority
  of health care coverage for these groups. While there are
  provisions that extend these benefits once an individual returns
  to work, Medicare coverage is time limited and SSI recipients who
  go to work lose Medicaid if their earnings exceed caps that vary
  by State. As a result, it's possible that people who are eligible
  for SSI "mangage" their income to ensure that they keep Medicaid--
  by stopping work when they hit the caps, or even turning down
  promotions. In addition to primary health care services, the
  Medicaid program also offers a variety of optional services
  essential to the needs of severely disabled individuals that are
  both costly and difficult to obtain even if traditional employer-
  based health care coverage can be secured.
  In order to address this disincentive, the President's budget
  proposes to help people with disabilities work without losing
  their health care coverage. The President's proposal would create
  a new State option that would allow SSI beneficiaries with
  disabilities who earn more than those State caps to keep Medicaid
  by contributing to the cost of their coverage as their income
  rises. The President's budget also includes a proposal for a 4
  year demonstration project to extend Medicare coverage for SSDI
  recipient who return to work.
  Federal income policy regarding disability payments may also
  create disincentives to employment. SSDI benefits can continue for
  up to nine months after an individual attempts to return to work.
  At that point, SSA must determine if the SSDI beneficiary has
  achieved substantial gainful activity (SGA), which is a trigger
  for termination of cash benefits. SSI recipients can continue to
  receive their SSI checks while they work. As long as they remain
  disabled, they will continue to receive their SSI check until they
  reach a certain level of earnings. Our data suggest that many
  beneficiaries are well aware of the SGA threshold and earnings,
  and, as they approach them, tend to limit their hours of work or
  Ultimately, these barriers must be addressed if we are to achieve
  successful employment outcomes for many more individuals with
  The programs I administer at the Department of Education have
  played a significant role in our overall efforts to help
  individuals to be prepared for and engage in gainful employment
  and must continue to be part of a comprehensive strategy. One of
  the biggest programs is the Vocational Rehabilitation State Grants
  programs, which provides $2.2 billion in formula grant assistance
  to 82 State-operated VR service programs.    These programs
  provide consumers with a wide range of specialized services that
  include, but are not limited to, job development, job training and
  placement, counseling and guidance, assistive technology, personal
  assistance services, physical and mental restoration services,
  reader services, interpreter services, supported employment
  services, and school-to-work transition services. The essence of
  the VR program is to provide services that meet the aspirations,
  needs, abilities and priorities of each individual, consistent
  with the individual's informed choice. A VR counselor works as a
  partner with an individual with a disability to design a
  rehabilitation program that matches the individual's strengths and
  interests to a vocational outcome, and they jointly develop an
  employment plan.
  Since its creation seventy-seven years ago by the Smith-Fess Act,
  the VR State Grants program has assisted some nine million
  individuals with disabilities to achieve gainful employment.
  Presently, there are over 1.25 million eligible individuals
  receiving VR services, 77.5 percent of whom have significant
  disabilities. In FY 1996, 213,500 individuals who exited the VR
  system after receiving services achieved an employment outcome and
  showed notable gains in their economic status.
  The State VR agencies and the Social Security Administration have
  a long history, dating back to 1954, of working together to assist
  SSDI and SSI beneficiaries to return to work. The Social Security
  Amendments of 1965 authorized the use of Social Security trust
  funds to pay for VR services for beneficiaries. The goal of the
  Beneficiary Rehabilitation Program is to return the maximum number
  of disabled beneficiaries to work so that savings in reduced
  benefit payments and the Social Security contributions of the
  rehabilitated beneficiaries would equal or exceed the amount paid
  for rehabilitation services.
  Since 1983, VR agencies have been reimbursed by SSA only for
  beneficiaries who are terminated from benefits following a
  determination that the beneficiary has achieved substantial
  gainful activity. Payment is made to the VR agency only when
  savings to the trust fund are anticipated.
  In order to examine the success of the VR program in assisting
  individuals with disabilities to achieve sustainable improvement
  in employment, earnings, and independence, the Department is
  currently conducting a major longitudinal study. The study, which
  is being conducted by Research Triangle Institute, includes a
  sample of approximately 8,000 current and former VR consumers at
  37 VR offices over a three-year period. The time frame permits
  tracking of services and post-VR earnings, employment, and
  community integration of VR consumers. Specifically, the study
  -   short and long-term outcomes achieved by VR consumers;
  -   characteristics of consumers that affect access and receipt of
  services and outcomes;
  -     how receipt of specific services contributes to successful
  -     how local environmental factors influence services and
  -     what about the VR agency influences services and outcomes;
  -         the extent of return on the VR program's investment.
  Information obtained from this study will also enable the
  Department to conduct specific analysis relative to SSDI and SSI
  beneficiaries. Some of the preliminary data regarding the
  rehabilitation of SSI and SSDI beneficiaries may be of interest to
  you. These data show that 28 percent of all active VR clients are
  SSDI and SSI beneficiaries who have been receiving benefits for an
  average of 55 months and include recipients who have initiated
  contact with the VR program or who have self-referred. SSI/DI
  beneficiaries referred to the VR program directly by SSA or SSA's
  Disability Determination Service represent only 3.6 percent of all
  beneficiaries who apply for services because these referrals are
  made much earlier in the process, e.g., when they first start to
  receive benefits and are not yet ready to return to work.
  Beneficiaries entered the VR system far more often through self-
  referral, community health and rehabilitation programs, and
  schools. One implication of these data is that a majority of
  beneficiaries who elect to enter the vocational rehabilitation
  system do so after a period of receiving SSA benefits, rather than
  concurrent with the initiation of the receipt of benefits.
  The data also show some significant differences between the SSA
  beneficiary population and the general population served by the VR
  program. Beneficiaries tend to have higher percentages of some
  severe disabilities. These include higher percentages of visual
  disabilities, severe mental illness, mental retardation, and
  prelingual deafness. One result of the more severe disability mix
  is higher cost of services. For example, in 1995, the average cost
  of purchased services for beneficiaries was 49 percent higher than
  for non-beneficiaries ($4,724 compared to $3,168) .
  The Department is committed to closely monitoring program outcomes
  to improve performance and is also in the process of developing
  evaluation standards and performance indicators for the VR program
  in order to improve program performance.
  The 1992 amendments to the Rehabilitation Act made a number of
  important changes to the VR State Grants program that will enhance
  employment opportunities for individuals with disabilities. For
  example, the amendments modified the criteria for determining
  eligibility for services to streamline the process and set forth
  the policy that individuals with disabilities are to be active
  participants in their own rehabilitation programs.
  In preparing for the pending reauthorization of the Rehabilitation
  Act, we have invited input from a broad range of groups and
  individuals to get their ideas for further improving the Act, and
  we are prepared to make a number of specific recommendations for
  changes that are aimed at improving results for individuals with
  disabilities in the areas of employment and independent living.
  These include further streamlining the eligibility determination
  process to establish presumptive eligibility for VR services for
  recipients of disability benefits under Titles II and XVI of the
  Social Security Act, and streamlining the Individualized Written
  Rehabilitation Plan (renamed the Individualized Employment Plan)
  to eliminate unnecessary process requirements and give consumers
  who want to take responsibility for developing their plan the
  option of doing so. We also support an amendment that clarifies
  that consumers have the right to choice in regard to the selection
  of their employment goal, the services needed to reach their goal,
  the providers of such services, and the methods to be used to
  procure the services.
  At the same time, we recognize that vocational rehabilitation is
  only part of the solution to the unemployment of individuals with
  disabilities, and we support other options to maximize return-to-
  work opportunities. For example, the Social Security
  Administration has recently transmitted its Ticket to Independence
  proposal, which would authorize a new public-private partnership
  to assist individuals who receive SSDI or SSI benefits on the
  basis of disability to return to work. We look forward to working
  with the Social Security Administration on this effort.
  We must continue to explore ways to address the broad range of
  factors contributing to the high unemployment of individuals with
  disabilities. I am convinced that by working together, the
  Administration, Congress, individuals with disabilities and their
  advocates, service providers, and employers can turn the wasted
  talents of disabled people into an important resource for securing
  our nation's future.
  I want to assure the Subcommittee of my sincere desire to work
  with you and our partners at SSA to achieve our common goal of
  assisting individuals with disabilities to achieve gainful
  employment and to become contributing members of our society.

                             PREPARED TESTIMONY OF
                               RICHARD C. BARON
                           MATRIX RESEARCH INSTITUTE
                           WEDNESDAY, JULY 23, 1997

  Good morning. My name is Richard Baron, and I want to thank the
  Subcommittee for the opportunity to testify today. I am the
  Director of Matrix Research Institute and it's Research and
  Training Center on Vocational Rehabilitation Services for Persons
  with Mental Illness. I'll be speaking today also as a
  representative of the International Association of Psychosocial
  Rehabilitation Services.
  A staggering 90% of Americans who struggle with a serious mental
  illness are unemployed, the vast majority of whom rely on SSI and
  SSDI both for cash assistance and medical coverage.
  The largest group of SSA recipients are those with mental illness,
  and they are the group currently most likely to remain on the
  rolls for their entire adult lives. Although the symptoms of
  serious mental illness are considerable barriers to effective job
  performance, a wide array of transitional and supported
  rehabilitation programs have been proven to be dramatically
  effective in helping people to work, but such programs remain in
  short supply.
  More importantly, the barriers to employment implicit in our
  public policies dissuade many people who should be working to opt
  instead for dependency, and both the President and the Congress
  are to be congratulated for their recent initiatives to reshape
  the nation's approach; how0ver, I want to note a few of the most
  critical barriers that new public politics will need to
  address.First, the long-standing public policy pre-occupation with
  "getting people off the SSA rolls" is its own barrier. What we
  need instead is legislation that encourages more people to work at
  their individual capacity as frequently and as often as they can,
  even if that employment is less than full-time or is only
  intermittent. The vast majority of people with serious mental
  illness can build substantial careers if we encourage both part-
  time and full-time options, and we believe that financial savings
  from such policies -- because of widespread and sustained
  reductions in cash assistance -- will be dramatic, and far more
  effective than concentrating our rehabilitation efforts on the
  relatively limited number of people who can afford to escape the
  SSA rolls because they have the capacity to return to full-time
  jobs in white collar professions. Both groups of people deserve
  the attention of this Subcommittee.
  Second, any new system must address the barrier represented by the
  potential loss of medical insurance for those who work, limiting
  access to the very supports that make work possible in the first
  place. Although I know that Medicaid and Medicare provisions are
  beyond the purview of this Committee, because people with serious
  mental illness use SSI and/or SSDI eligibility as the portal to
  medical support, any program that seeks to offer new incentives
  for employment must find a way -- as in a national health care
  program or the states' 1115 waiver programs -- to insure
  enrollees' continued access to Medicaid and Medicare.
  A third barrier to employment has been a presumption that mental
  health or vocational rehabilitation professionals -- or SSA
  personnel -- can accurately assess 'rehabilitation potential:' any
  system that attempts to determine at the outset which clients do
  and do not have a capacity for employment is wrong-headed: there
  is no evidence that we have the tools to make accurate
  prognostications of this sort, and forcing rehabilitation
  professionals to pretend to do so will only result in eliminating
  from potential employment all but a few higher functioning
  clients. New approaches must encourage each client to reach for
  his or her vocational potential.
  A fourth barrier has been our tendency to assume that
  rehabilitation is a straight-line process; many people will need
  to be assured that they can try once, fail, and then try again,
  and yet again. Many of us would hate to see a 'ticket' or
  'voucher' program put in place a system that only offered one-
  point-in-time opportunity for people to enter the working world,
  or one that placed arbitrary time limits on needed support.
  Fifth, delaying payment to vocational rehabilitation agencies
  until the 'end' of the process -- when the client has achieved a
  prescribed goal such as leaving the SSA rolls or remaining
  employed consistently for 12 months -- only creates new barriers:
  the agencies will want to serve only those clients who will appear
  -- often erroneously -- to be 'good bets'. The emerging system, to
  encourage agency engagement, will need to offer payments at
  various milestones in each client's progress toward employment,
  and then provide for the ongoing occasional assistance some will
  need to build lifetime careers.
  Sixth, the complexities of the current work incentive provisions
  are considerable barriers as well. Although not perfect, the
  current work incentives are quite positive, yet they are largely
  unknown or unutilized by most consumers, and are largely ignored
  or misunderstood by mental health, vocational rehabilitation, and
  Social Security staff Any future changes to incentives must be
  accompanied by a financial commitment to provide expertise, at the
  local level, that consumers need to manage these complicated
  Finally, let me say just a word about the consequences of
  continuing to ignore the vocational potential of persons with
  serious mental illness, people who should be working because it is
  in their own best interest, who could be working because
  rehabilitation programs make it possible, and who would be working
  because work endures as a primary goal for the majority of those
  people now completely dependent on SSA. To fail to offer new
  opportunities and new incentives is to risk the loss of yet
  another generation of disabled people who are prepared to face the
  challenges of work, a loss neither they nor their nation can

                             PREPARED STATEMENT OF
                                 JANE L. ROSS
                           WEDNESDAY, JULY 23, 1997

  Mr. Chairman and Members of the Subcommittee:
  Thank you for inviting me to testify on return-to-work issues
  facing the Disability Insurance (DI) and Supplemental Security
  Income (SSI) programs and to discuss various alternatives the
  Social Security Administration (SSA) could use in developing
  strategies to help more people with disabilities to work. Each
  week, SSA pays over $1 billion in cash payments to DI and SSI
  beneficiaries. While providing a measure of income security, these
  payments, for the most part, do little to enhance work capacities
  and promote beneficiaries' economic independence. Yet, as embodied
  in the Americans With Disabilities Act (ADA), societal attitudes
  have shifted toward goals of economic self-sufficiency and the
  right of people with disabilities to full participation in
  society. Moreover, medical advances and new technologies now
  provide more opportunities than ever before for people with
  disabilities to work.
  The DI and SSI programs, however, have not kept pace with the
  trend toward returning people with disabilities to the work place:
  Fewer than 1 percent of DI beneficiaries, and few SSI
  beneficiaries, leave the rolls to return to work each year. Yet,
  even relatively small improvements in return-to-work outcomes
  offer the potential for significant savings in program outlays.
  For example, if an additional 1 percent of the 6.6 million
  working-age SSI and DI beneficiaries were to leave SSA's
  disability rolls by returning to work, lifetime cash benefits
  would be reduced by an estimated $3 billion./1
  Because the current structure of DI and SSI does not encourage
  return to work, many proposals are being discussed to address this
  problem. Over the past few years, we have issued a series of
  reports that have recommended that SSA place much greater priority
  on helping DI and SSI beneficiaries maximize their work potential-
  whether part- or full-time-and we continue to urge SSA to act
  expeditiously in developing an integrated and comprehensive
  strategy to do so. Our work has demonstrated that SSA's success in
  redesigning the disability programs is likely to require a
  multifaceted approach, including earlier intervention, providing
  return-to-work supports and assistance, and structuring benefits
  to encourage work.
  At the same time, we recognize the dearth of empirical analysis
  with which to predict outcomes of possible interventions. In
  particular, because measures of work responses to changes in work
  incentives and other return-to-work measures are unknown, any
  estimates of the net effect on caseloads and taxpayer costs are
  likely to involve a high degree of uncertainty. Moreover, our
  analysis of some of the proposed changes to the work incentives
  illustrates the difficult trade-offs that will be involved in any
  attempt to change the work incentives. With this in mind, today, I
  would like to discuss the challenges and trade-offs faced in
  redesigning the disability programs. We strongly encourage testing
  and evaluating alternatives to determine what strategies can best
  tap the work potential of beneficiaries without jeopardizing the
  availability of benefits for those who cannot work. My testimony
  is based on our published reports and prior testimonies and our
  recent analysis of work incentives conducted for Representative
  Kennelly. (A list of related GAO products appears at the end of
  this statement.)
  DI and SSI-the two largest federal programs providing cash and
  medical assistance to people with disabilities-have grown rapidly
  between 1985 and 1995, with the size of the working-age
  beneficiary population increasing from 4.0 to 6.6 million.
  Administered by SSA and state disability determination service
  (DDS) offices, DI and SSI paid cash benefits approaching $60
  billion in 1995. To be considered disabled by either program, an
  adult must be unable to engage in any substantial gainful activity
  because of any medically determinable physical or mental
  impairment that can be expected to result in death or that has
  lasted or can be expected to last at least I year. Moreover, the
  impairment must be of such severity that a person not only is
  unable to do his or her previous work but, considering his or her
  age, education, and work experience, is unable to do any other
  kind of substantial work that exists in the national economy.
  Established in 1956, DI is an insurance program funded by Social
  Security payroll taxes. The program is for workers who, having
  worked long enough and recently enough to become insured under DI,
  have lost their ability to work-and, hence, their income-because
  of disability. Medicare coverage is provided to DI beneficiaries
  after they have received cash benefits for 24 months. About 4.2
  million working-age people (aged 18 to 64) received about $36.6
  billion in DI cash benefits in 1995./2
  In contrast, SSI is a means-tested income assistance program for
  disabled, blind, or aged individuals regardless of their prior
  participation in the labor force.3 Established in 1972 for
  individuals with low income and limited resources, SSI is financed
  from general revenues. In most states, SSI entitlement ensures an
  individual's eligibility for Medicaid benefits./4 In 1995, about
  2.4 million working-age people with disabilities received SSI
  benefits; federal SSI cash benefits paid to these and other
  beneficiaries amounted to $20.6 billion?
  The Social Security Act states that people applying for disability
  benefits should be promptly referred to state vocational
  rehabilitation (VR) agencies for services in order to maximize the
  number of such individuals who can return to productive activity.6
  Furthermore, to reduce the risk a beneficiary faces in trading
  guaranteed monthly income and subsidized health coverage for the
  uncertainties of employment, the Congress has established various
  work incentives intended to safeguard cash and health benefits
  while a beneficiary tries to return to work.
  In a series of reports, we have discussed how the DI and SSI
  programs' design and operational weaknesses do not encourage
  beneficiaries to maximize their work potential.? The lengthy
  disability determination process, which presumes that certain
  medical impairments preclude employment, requires applicants to
  emphasize their work incapacities. To address the erosion in
  motivation to work that could result from applying for benefits,
  we have recommended that SSA develop strategies to intervene
  earlier in the application process. For example, before awarding
  benefits, SSA could help applicants assess their work capacity
  and, in turn, their ability to maintain economic independence or
  delay their application for benefits. This would likely involve
  SSA's collaboration with other federal agencies, such as the
  Departments of Labor and Education. Significant savings could be
  achieved by reducing the need for people with disabilities to rely
  on DI and SSI. Although full-time work may not be achievable, even
  part-time work could reduce their reliance on benefits.
  Regarding those people currently on the rolls, we have also
  reported that SSA has done little to promote return-to-work
  measures, such as VR and economic incentives to work. VR services
  include, for example, guidance, counseling, and job training and
  placement. VR can help beneficiaries return to work by improving
  their skills and making them more marketable and competitive. A
  beneficiary who engages in work encounters additional challenges,
  however. By returning to work, a beneficiary trades guaranteed
  monthly income and premium-free medical coverage for the
  uncertainties of employment. Work incentives, such as access to
  medical coverage or retention of a portion of their cash benefits
  while working, are intended to encourage beneficiaries to return
  to work-and, possibly, leave the rolls-by making work more
  financially attractive.
  In the last couple of years, numerous changes to the work
  incentives and to the delivery of and payment for VR services have
  been proposed in legislation and by various interest groups. Most
  recently, SSA has proposed a VR system emphasizing provider
  choice. Beneficiaries would get a voucher, usually referred to as
  a "ticket," which they could use to obtain services from public or
  private VR providers and which would be reimbursed on the basis of
  outcomes. In our March 1997 report, we advocated the critical
  importance of testing and evaluating new measures to return
  beneficiaries to work. We also cautioned against focusing on one
  option to the exclusion of alternative measures. We noted, for
  example, that if SSA tests only one type of VR service delivery
  system, the agency will forgo the opportunity to compare the
  results of the proposed outcome-based payment system with those of
  alternative plans, such as combining outcome-based payments with
  reimbursements to providers on the basis of milestones reached
  before the beneficiary leaves the rolls.
  In addition, others have proposed changes to financial incentives,
  including making DI similar to SSI by reducing benefits $1 for
  every $2 in earnings and revising the deduction of impairment-
  related expenses. New tax incentives have also been proposed,
  including tax credits to individuals-making work more financially
  attractive-and tax credits to employers-encouraging them to hire
  people with disabilities. Proposed changes to medical benefits
  include extending premium-free Medicare coverage, scaling Medicare
  buy-in premiums to earnings, expanding Medicare and Medicaid
  eligibility, and creating a Medicaid buy-in.
  Our work has called for SSA to develop a comprehensive, integrated
  return-to-work strategy that includes (1) intervening earlier, (2)
  providing return-to-work supports and assistance, and (3)
  structuring benefits to encourage work. SSA has agreed that
  compelling reasons exist to try new return-to-work approaches and,
  as mentioned, has proposed the creation of a VR ticket to expand
  beneficiaries' access to VR providers. We believe a successful
  strategy would incorporate all three components, working in
  concert, and that beneficiaries are likely to return to work only
  if it is financially advantageous for them to do so. The remainder
  of this testimony focuses on the work incentives, the proposed
  changes to them, and the difficulties and trade-offs involved in
  their reform.
  The work incentive provisions of the two programs differ
  significantly, providing very different levels of benefit
  protection for DI and SSI beneficiaries. One significant
  difference is that a DI beneficiary's cash benefit stops
  completely after a period of time, if earnings exceed a specified
  level, while an SSI recipient's cash benefit is gradually reduced
  to ease the transition back to work. The gradual reduction in SSI
  cash benefits yields savings to the government, even if recipients
  work part time. In contrast, DI beneficiaries who work yield no
  program savings unless they leave the rolls, because their
  benefits are not offset. Another difference is that a DI
  beneficiary can purchase Medicare coverage after premium-free
  coverage ends (although lower-wage earners may find it too
  expensive to do so), but an SSI recipient loses Medicaid and is
  unable to purchase further coverage once he or she exceeds a
  certain income level. Table 1 highlights each program's work
  incentive provisions.
  Despite providing some financial protection for those who want to
  work, the DI work incentives do not appear to be sufficient to
  overcome the prospect of a drop in income for those facing low-
  wage work. Moreover, the work incentives do not allay DI or SSI
  beneficiaries' fear of losing medical or other benefits, which
  could accompany return to work. In addition, the current package
  of work incentive provisions is complex and difficult to
  understand, which further discourages work effort. This difficulty
  in understanding the work incentives is heightened for the 694,000
  beneficiaries (11 percent of the beneficiary population) who are
  dually eligible for DI and SSI. For these concurrent
  beneficiaries, SSI work incentive provisions apply to the SSI
  portion of their cash benefit and DI provisions apply to the DI
  portion of their cash benefit. This adds administrative
  complexities to the system because earnings must be reported to
  both programs, each of which has its own reporting requirements
  and processes. Because SSA does not promote the work incentives
  extensively, few beneficiaries are even aware that these
  provisions exist.
  Some work incentive changes may help some beneficiaries, or some
  groups of beneficiaries, more than others. Data from Virginia
  Commonwealth University's Employment Support Institute illustrate
  this point./8 For example, figure i shows that under current law,
  a DI beneficiary's net income may drop at two points, even as
  gross earnings increase. The first "income cliff' occurs when a
  person loses all of his or her cash benefits because countable
  earnings are above $500 a month and the trial work and grace
  periods have ended. A second income cliff may occur if Medicare is
  purchased when premium-free Medicare benefits are exhausted.
  Figure 1 also illustrates what happens to net income when a tax
  credit is combined with a Medicare buy-in that scales premiums to
  earnings. In this particular example, although the tax credit may
  cushion the impact of the drop in net income caused by loss of
  benefits, it does not eliminate the entire drop. However, as
  figure 2 shows, this income cliff is eliminated when benefits are
  reduced $1 for every $2 of earnings above SGA.
  Because there are complex interactions between earnings and
  benefits, changing the work incentives may or may not increase the
  work effort of current beneficiaries, depending on their behavior
  in response to the type of change and their capacity for work and
  earnings. But, even if the changes in the work incentives increase
  the work effort of the current beneficiaries, a net increase in
  work effort may not be achieved. This point is emphasized by
  economists who have noted that improving the work incentives may
  make the program attractive to those not currently in it.9
  Allowing people to keep more of their earnings would make the
  program more generous and could cause people who are currently not
  in the program to enter it. Such an entry effect could reduce
  overall work effort because those individuals not in the program
  could reduce their work effort in order to become eligible for
  benefits. Moreover, improving the work incentives could also keep
  some in the program who might otherwise have left. Allowing people
  to keep more of their earnings would also mean that they would not
  leave the program, as they once did, for a given level of
  earnings. Such a decrease in this exit rate could reduce overall
  work effort because people on the disability rolls tend to work
  less than people off the rolls. The extent to which increased
  entry occurs and decreased exit occurs will affect how expensive
  these changes could be in terms of program costs.
  However, determining the effectiveness of any of these proposed
  policies in increasing work effort and reducing caseloads requires
  that major gaps in research be filled. The economists considered
  entry and exit effects in their analysis by using economic theory
  and numerical simulations of how net income (earnings plus
  benefits plus earnings subsidies) is affected when individuals
  work for different numbers of hours at different wage rates. But
  the economists were not able to simulate changes in work effort in
  response to program changes because that would require information
  that is not currently available from the literature. Such
  information would measure how beneficiaries' work efforts change
  in response to changes in income, including the value of noncash
  benefits, resulting from program changes.
  The costs of the proposed reforms are difficult to estimate with
  certainty because of the lack of information on entry and exit
  effects. SSA has tried to account for potential entry and exit
  effects when estimating the cost of various proposed reforms. But
  the agency has noted that such estimates are subject to
  significant uncertainty because of the lack of information on
  changes in work effort.
  Mr. Chairman, this concludes my prepared statement. At this time,
  I will be happy to answer any questions you or the other
  Subcommittee Members may have.
  1. The estimated reductions are based on fiscal year 1995 data
  provided by SSA's actuarial staff and represent the discounted
  present value of the cash benefits that would have been paid over
  a lifetime if the individual had not left the disability rolls by
  returning to work. These reductions, however, would be offset, at
  least in part, by rehabilitation and other costs that might be
  necessary to return a person with disabilities to work.
  2. Included among the 4.2 million DI beneficiaries are about
  694,000 beneficiaries who were dually eligible for SSI disability
  benefits because of the low level of their income and resources.
  3. References to the SSI program throughout the remainder of this
  testimony address blind or disabled, not aged, recipients.
  4. States can opt to use the financial standards and definitions
  for disability they had in effect in January 1972 to determine
  Medicaid eligibility for their aged, blind, and disabled
  residents, rather than making all SSI recipients automatically
  eligible for Medicaid. Often, the Medicaid financial standards
  used by states are more restrictive than SSI's.
  5. The 2.4 million SSI beneficiaries do not include individuals
  who were dually eligible for SSI and DI benefits. The $20.6
  billion represents payments to all SSI blind and disabled
  beneficiaries regardless of age.
  6. State VR agencies also provide rehabilitation services to
  people not involved with the DI and SSI programs.
  7. SSA Disability: Program Redesign Necessary to Encourage Return
  to Work (GAO/HEHS-96-62, Apr. 24, 1996); SSA Disability: Return-
  to-Work Strategies From Other Systems May Improve Federal Programs
  (GAO/HEHS-96-133, July 11, 1996); and Social Security: Disability
  Programs Lag in Promoting Return to Work (GAO/HEHS-97-46, Mar. 17,
  8. The Employment Support Institute at Virginia Commonwealth
  University developed Work WORLD software, which allows one to
  compare what happens to an individual's net income (defined as an
  individual's gross income plus noncash subsidies minus taxes and
  medical and work expenses) as earnings levels change under current
  law and when work incentives are changed.
  9. See Hillary Williamson Hoynes and Robert Moffitt, "The
  Effectiveness of Financial Work Incentives in Social Security
  Disability Insurance and Supplemental Security Income: Lessons
  from Other Transfer Programs," in Disability, Work, and Cash
  Benefits, edited by Jerry L. Mashaw, Virginia Reno, Richard V.
  Burkhauser, and Monroe Berkowitz (Kalamazoo, Michigan: W.E. Upjohn
  Institute for Employment Research, 1996) and Hillary Williamson
  Holmes and Robert Moffitt, "Tax Rates and Work Incentives in the
  Social Security Disability Insurance Program: Current Law and
  Alternative Reforms," May 1997, unpublished.

                             PREPARED TESTIMONY OF
                             BRUCE GROWICK, PH.D.
                              ASSOCIATE PROFESSOR
                           THE OHIO STATE UNIVERSITY
                           WEDNESDAY, JULY 23, 1997

  Chairman Bunning and members of the Subcommittee, thank you very
  much for this opportunity to share with you both my professional
  experiences in the field of vocational rehabilitation, and my
  personal suggestions and recommendations for improving on the
  delivery of rehabilitation services in America.
  My name is Bruce Growick, and I am an Associate Professor in the
  College of Education at The Ohio State University (OSU) where I
  teach classes, conduct research, and advise students in the
  Rehabilitation Services program. I am also a past-president and
  active member of the National Association of Rehabilitation
  Professionals in the Private Sector (NARPPS). However, I am here
  today in my capacity as an Associate Professor of rehabilitation.
  The training program at OSU has graduated over 120 students at
  both the master's and doctoral level over the last fifteen years.
  Many, if not most, of these graduates have obtained employment in
  our field, and are contributing to the rehabilitation of
  individuals with disabilities. In addition, we at OSU have also
  conducted federally-funded research on different aspects of the
  rehabilitation system including predictors of rehabilitation
  success, counselor satisfaction and performance, and the Americans
  with Disabilities Act.
  An interesting trend has emerged over the last few years. More and
  more of our graduates are obtaining employment in the private-
  sector of rehabilitation rather than the public-sector. Many of
  our graduates are now employed by private, non-profit and for
  profit. agencies and companies helping individuals with
  disabilities either enter or return to employment. Most of these
  entities in the private-sector counsel individuals who are covered
  by personal injury, workers' compensation, and/or Social Security
  insurance. In the area of private-sector rehabilitation,
  counselors who can help individuals obtain work are valuable
  because they remove an outstanding portion of the liability that
  is covered by the insurance policy. The insurance industry has
  discovered that it is cheaper and better to help their
  beneficiaries return to work than it is to pay off a claim. This
  is especially true in workers' compensation cases where employers
  are clearly liable for wages lost by individuals who are injured
  on the job.
  Many of our graduates prefer this kind of work because, unlike the
  public state/federal rehabilitation system, they are unencumbered
  by unnecessary paperwork, they often feel they can help people
  quicker and more easily, and their salary is higher. In contrast
  to the public-sector, the world of private-sector rehabilitation
  is relatively new, but has been growing tremendously over the last
  ten years. As with most services which start in the public-sector
  like health care and education, the field of rehabilitation has
  seen a transformation from the monopolistic domination of the
  public-sector to the healthy addition of the private-sector and
  competition. Nothing improves on the delivery of a service or the
  development of a product like competition. The United States is a
  competitive society and policies that spur competition are healthy
  and good.
  During a two-year leave of absence from The Ohio State University
  (1989-1990), I also had the honor of being the Director of
  Rehabilitation for the Ohio Bureau of Workers' Compensation. As
  Director, I had responsibility for twelve field offices located
  throughout the State of Ohio, two rehabilitation Centers (Columbus
  and Cleveland), and over 400 employees with an annual budget of
  $48 million dollars. During 1990, the Rehabilitation Division of
  the Ohio Bureau of Workers' Compensation returned to work over two
  thousand injured workers. Ohio is somewhat unique in that it
  offers industrial rehabilitation services directly to injured
  workers by a separate state agency. As you can see, this agency is
  quite similar to the public rehabilitation system.
  Over the last five years in Ohio, more and more of the delivery of
  industrial rehabilitation services have been provided by the
  private-sector. Our state agency is no longer both the regulator
  and the sole provider of rehabilitation services. An analogy may
  be appropriate here that the state/federal system of
  rehabilitation services might be more efficient and effective if
  it were not the sole provider of services to beneficiaries of
  Social Security. A critical component of any new legislation
  should be provisions for informed choice throughout the
  rehabilitation process. In addition to consumers having the right
  to select an employment goal, and a choice in services needed to
  reach their goal, consumers should be able to choose from whom
  they would like to receive services, no longer being limited to
  just state Vocational Rehabilitation agencies. Individual choice
  simply increases involvement and the quality of services provided.
  The Social Security Subcommittee should codify the need for and
  value of allowing the private sector to compete in the area of
  rehabilitating Americans with disabilities based on cost, quality,
  and outcome.
  Changes are necessary in the way in which beneficiaries of Social
  Security can receive rehabilitation services and return to work.
  The current climate represents a historic opportunity to instill
  needed change into a system that has, to date, been inefficient
  and insufficient in its provision of vocational rehabilitation to
  persons with disabilities. A recent GAO study documented the
  unacceptable return to work rate of the state/federal system. In
  contrast, the private-sector has a proven history of providing
  cost-effective and successful return to work outcomes within the
  insurance industry. In fact, the private sector continues to exist
  and prosper specifically because of its ability to return
  individuals with disabling conditions to gainful employment for a
  sustained period of time and resolve outstanding liabilities.
  There have also been many successful cooperative partnerships
  between state governments and the private sector in the areas of
  welfare, workers' compensation, unemployment, etc. The role of
  government should be to assist and encourage persons with
  disabilities towards employment, but by the same token, the system
  should include the private sector as an expanded and successfully
  proven option. A good mechanism for the referral of SSA
  beneficiaries to the private sector needs to be developed as soon
  as possible.
  In conclusion, more of my students have been taking advantage of
  the benefits of the private-sector. Now it is time to give SSA
  beneficiaries that same choice. The private sector has a long and
  proven history of providing cost effective and successful return-
  to-work outcomes within the insurance industry. In fact, return on
  investment in private-sector rehabilitation is so good that our
  industry continues to grow. In the private-sector, rehabilitation
  providers operate under earned dollars, not appropriated dollars.
  If we are to reduce the disability rolls than we must provide true
  consumer choice for SSA beneficiaries, and that choice needs to
  include private-sector rehabilitation services.
  I respectfully offer the following five recommendations as you
  consider new legislation in this area:
          1 )    Reduce the disincentives for return-to-work for SSA
  beneficiaries by providing a means to continue medical coverage
  upon return to work.
         2)      Include choice of the private-sector for return-to-
  work services with a payment model for providers that is viable
  and realistic.
         3)      Avoid increasing the work load of SSA; this new
  return-to-work system should be as streamlined and efficient as
         4)      Develop an incentive for employers to hire SSA
  beneficiaries, such as a FICA Tax Credit.
         5)      And that you and your staff feel free to call on me
  as a valuable tool in your efforts to improve the state/federal
  vocational rehabilitation system.
  Again, Mr. Chairman, thank you for the opportunity to present
  today before the Subcommittee, and I am happy to answer any
  questions that the Subcommittee might have.
  (Attachment not transmittable)

                             PREPARED TESTIMONY OF
                              JOHN KREGEL, ED.D.
                               RESEARCH DIRECTOR
                            ON SUPPORTED EMPLOYMENT
                           WEDNESDAY, JULY 23, 1997

  It is an honor for me to be with you this morning. The suggestions
  and recommendations I will share in the next few minutes are the
  result of research activities completed by the Rehabilitation
  Research and Training Center at Virginia Commonwealth University
  in 1995-96 through joint funding provided by NIDRR and the Social
  Security Administration.
  As a part of this research effort, we conducted focus groups
  comprised of representatives of local provider agencies and
  completed over 300 structured telephone interviews with directors
  of local agencies from 40 different states. Questions focused on
  the agencies' perceptions of the potential effectiveness of
  various provider incentive proposals.
  I would like to briefly share with you recommendations three
  areas: (1) the perceived need for milestone payments; (2)
  strategies that will enhance the ability of smaller agencies to
  participate in the program; and (3) the need for strong program
  management structures external to SSA.
  Need for Milestone Payments
  While the notion of paying providers only for results is logically
  and fiscally sound, in practice this approach will greatly reduce
  the number of agencies that will participate in the program and
  limit the overall size of the return to work initiative.
  Participation will likely be limited to large, highly capitalized
  agencies which receive sizable amounts of support from charitable
  organizations, or which are able to generate revenue through
  various enterprises. Lack of milestone payments will limit the
  participation of various categories of provider agencies,
      -   smaller agencies which simply don't have the fiscal
  resources to provide services for prolonged periods of time
  without some reimbursement for incurred costs; and
     -   programs in rural communities, which are generally small
  and face additional costs associated with providing employment
  services in rural areas.
  In addition, it should be anticipated that individuals who are
  either viewed as too challenging (i.e. costly) to serve or too
  poor a risk for meeting the success criterion of the program, such
  as individuals with persistent mental illness or brain injuries,
  will have extreme difficulties locating providers willing to
  assist them.
  Strategies for Promoting the Participation of Smaller Agencies
  Return to work programs should be designed so that payments to
  providers are viewed as a premium resulting from savings to the
  Trust Fund or General Fund, rather than as a cost reimbursement
  mechanism. Provider incentive proposals should carefully consider
  "dual funding" arrangements as a mechanism for encouraging the
  participation of small and medium-sized agencies.
  For example, agencies should be allowed to serve as both the
  employer and the provider agency for individuals who select them
  for service provision. This will allow agencies providing
  employment opportunities through JWOD or other programs to focus
  their efforts on serving individuals participating in the return
  to work program.
  In addition, local employment agencies should be allowed to seek
  reimbursement from other funding agencies for services provided to
  individuals participating in the return to work program. For
  example, agencies should be able to receive funding from a local
  mental health/mental retardation authority, state rehabilitation
  agency, or other funding entity which would partially or fully
  reimburse agencies for the costs of providing services. Payments
  that are provided to the agency through the return to work program
  would then be a premium over and above those received from other
  funding agencies.
  Need for a Strong External Management Structure
  A strong management structure, external to SSA, is required to
  resolve the numerous issues that will inevitably arise during the
  implementation of the return to work program. The programs being
  considered will dramatically change the relationship between
  consumers and employment service agencies. While this change is
  highly desirable, it cannot be assumed that numerous
  implementation issues will be quickly or automatically resolved.
  Consider the following scenarios.
  An individual attempts to resign from an unsatisfactory employment
  situation seven months after initially entering the job. The
  provider agency, having already expended extensive resources,
  places undue pressure on the individual to remain in an
  unsatisfactory employment setting rather than jeopardize the
  agency's potential reimbursement.
  -   An individual who has been working for five months becomes
  dissatisfied with the services delivered by the provider agency.
  The individual changes to a different provider agency and remains
  in employment until ultimately leaving the disability rolls.
      To what extent does the first provider agency have a
  legitimate claim to subsequent payments from SSA?
  These are but two of a myriad of implementation issues which will
  eventually arise as the return to work program evolves. Many of
  these issues have only marginally been recognized in the
  development of the proposed plans. Management structures external
  to SSA are needed that will coordinate implementation policies and
  guidelines across the country while simultaneously allowing
  flexibility to address regional and local needs.

                             PREPARED TESTIMONY OF
                               MONROE BERKOWITZ
                              RUTGERS UNIVERSITY
                           WEDNESDAY, JULY 23, 1997

  My name is Monroe Berkowitz. I am professor of economics emeritus
  at Rutgers University. For over four decades, I have been
  concerned with research in the area of economics of disability
  with emphasis on return to work. I am a member of the National
  Academy of Social Insurance and served on its Disability Panel.
  The views I express are my own and not necessarily endorsed by the
  Panel. I am most grateful for the opportunity to appear before the
  I heartily endorse a simple return to work program for persons on
  the Social Security Disability benefit rolls for the following
  1. The system is broke and needs fixing. Once on the rolls, person
  leave only as they die or become old enough to switch to old-age
  benefits. Less than one half of one percent of the persons on the
  rolls return to work. We should be able to improve that record.
  2. Persons on the rolls are a diverse lot. Some are mature persons
  with work experience who can no longer carry on. Others are
  persons who have never worked and who are consigned to a life of
  benefits. This heterogeneous population needs a variety of
  services. Clearly this is not a case of one size fits all.
  3. How can we get more people back to work? Social Security cannot
  do the job. We made the decision back in 1956, that Social
  Security should not get into the rehabilitation business. The
  joint federal-state vocational rehabilitation programs are doing a
  fine job addressing the priorities Congress has assigned to them.
  They may have a role to play in returning beneficiaries to work,
  but it is increasingly evident that they cannot do the job alone.
  4. We are fortunate in having in this country a thriving industry
  of private sector rehabilitation providers. These are imaginative
  hard working people who have years of experience in helping
  injured workers return to the job. They can provide the flexible,
  adaptive type of services that can return SSA beneficiaries to
  5. How can we bring the energies and creativity of the private
  sector to bear on this problem? It is my judgment that Social
  Security cannot do a very good job of negotiating with private
  providers. To go down the road of negotiating fee schedules and
  utilization protocols is to end up providing jobs for the federal
  bureaucracy but not for persons on the disability rolls.
  6. The conviction that there has to be a better way led to the
  development of the ticket plan. Here is simplicity itself that
  takes into account the heterogeneity of persons on the rolls and
  that enlists the creativity and energies of providers.
   - Persons entering the rolls are issued a ticket. They need not
  do anything with the ticket. The essence of the plan is that it is
  voluntary in all of its aspects.
  - They may choose to deposit the ticket with a provider. Visualize
  a wide variety of providers. The variety of problems should be
  matched with a variety of providers offering a medley of
  approaches and services.
  - Once deposited with the provider, the ticket becomes a contract
  between the provider and the Social Security Administration to pay
  the provider a percentage of the benefits that would have been
  paid once the person goes back to work and is off the rolls.
  Nothing gets paid until the beneficiary is back at work, and then
  only after the savings are actually realized.
  7. The Panel debated the ticket proposal for many sessions. I have
  had the advantage of discussing it before many groups of persons
  working for the government, persons drawn from the disability
  community and private and public sector providers. In the course
  of these discussion, I believe we have touched on each of the
  issues and the possible problem areas and I would be happy to
  discuss these if there-are any questions.
  Let me conclude by noting that details can differ, but the essence
  of the plan is contained in these essential principles.
  - The plan must be voluntary. Years of experience in workers'
  compensation in this and other countries in the world convinces me
  that a compulsory plan will not work.
  - All risks must be borne by the providers. If we pay for
  milestones, we will get milestones.
   That is not what we want. We want return to work and that is what
  we should pay for.
  Pick up any newspaper and note the ads for lawyers who are
  soliciting clients to get them on the disability rolls. These
  lawyers are working on a contingency fee basis and no one is
  offering them interim payments. They get paid once the person is
  on the disability rolls. Why cannot we enlist that same
  entrepreneurial energy to get people off the rolls and back to
  Thank you Mr. Chairman. I appreciate the opportunity to present my
  views on this important subject and will be happy to answer any

                             PREPARED TESTIMONY OF
                               VIRGINIA P. RENO
                             DIRECTOR OF RESEARCH
                          ACADEMY OF SOCIAL INSURANCE
                           WEDNESDAY, JULY 23, 1997

  Mr. Chairman, we commend you for your leadership on the important
  issue of Social Security and return to work. We appreciate the
  opportunity to report to you on key findings and recommendations
  of the Academy's Disability Policy Panel. With me today is Monroe
  Berkowitz, Professor of Economics, Emeritus of Rutgers University
  who served on the Panel.
  I will briefly summarize the Panel's findings and recommendations.
  Professor Berkowitz will spend most of our time discussing the
  return-to-work ticket proposal. Summaries of the Panel's report,
  Balancing Security and Opportunity: The Challenge of Disability
  Income Policy, are available here today.
  The Academy is a nonprofit, nonpartisan organization made up of
  many of the Nation's leading scholars on social insurance. Its
  purpose is to promote research and to be a forum for exchange of
  new ideas in social insurance.
  The Academy convened a panel of 18 of the Nation's leading experts
  on varied aspects of disability policy to conduct its analysis.
  The list of panel members is on page 2.
  The findings and recommendations we are presenting are those of
  the Panel. They do not represent an official position of the
  National Academy of Social Insurance, which does not take
  positions on legislation. 1
  The Panel was asked to answer to three basic questions.
  (1) Do disability cash benefits provide a strong deterrent to
  (2) Can an emphasis on rehabilitation be built into the Social
  Security disability insurance (DI) program without greatly
  expanding costs or weakening the right to benefits?
  (3) Are there ways to restructure disability income policy to
  better promote work?
  The short answers are no, yes, and yes. The reasons for these
  answers and the Panel's recommendations follow.
  Benefits and Work
  First, the Panel concluded that current benefits are not a strong
  deterrent to work.2 That conclusion is based on the Panel's review
  of the strict and frugal design of the DI and Supplemental
  Security Income (SSI) programs, the attributes of beneficiaries,
  and a comparison of U.S. disability spending with that in other
  Western countries.
  The strict and frugal design of DI and SSI is evident in three
  ways: First, the test of disability is among the strictest used in
  any disability program in the United States, public or private.
  And it is stricter than in most European countries.
  Second, there is a 5-month waiting period after the onset of
  disability before DI benefits are paid and another 24-month
  waiting period before Medicare coverage begins. Virtually all
  private systems, and most foreign systems, assure short-term
  benefits before long-term benefits are paid. And virtually all are
  accompanied by secure health care coverage before and after
  Third, the benefits are modest. Replacement rates in DI are lower
  than those provided by U.S. private disability insurance or in the
  public systems in other countries. Those systems typically pay
  between 50 and 70 percent replacement rates. DI in contrast, pays
  replacement rates ranging from 43 percent for a person earning
  $25,000 to about 26 percent for one earning $60,000.3 At lower
  earnings levels, say $15,000, benefits replace half the worker's
  prior earnings, but are nonetheless below the poverty threshold.
  The modest replacement rates from Social Security reflect an
  expectation that benefits will be supplemented by pensions or
  savings. When compared with retirees, disabled workers had lower
  incomes and less often had pensions, insurance or savings to
  supplement their Social Security. Their vastly smaller asset
  holdings is particularly striking. Their modest savings no doubt
  reflect the fact that disability occurs unexpectedly, before they
  have completed saving for retirement; and the unexpected costs of
  disability eroded their savings.
  SSI benefits are more modest. They are paid subject to the same
  strict test of disability and a strict test of means. In 1997, the
  maximum federal SSI benefit is $484 a month. While some states
  supplement the federal benefits, the federal guarantee, alone,
  amounts to about 70 percent of the poverty threshold. These
  benefits, too, are an unappealing alternative to work for those
  who can earn a living wage.
  Foreign Comparisons. When the Panel compared U.S. disability
  spending with that in other countries, it found that U.S. spending
  is relatively low. U.S. spending for DI and SSI combined amounted
  to 0.7 percent of our gross domestic product (GDP) in 1991, less
  than half the share spent in the United Kingdom (1.9 percent) and
  less than a fourth of the spending in Sweden (3.3 percent of GDP).
  Even Germany spends far more than the United States on long-term
  disability benefits (2.0 percent). This is despite the Germans'
  emphasis on "rehabilitation before pensions" and provisions for
  quotas, tax penalties and subsidies for job accommodations to
  encourage private employers to hire disabled workers.
  Our conclusion, therefore, is that U.S. cash benefits programs for
  disabled workers are strictly and frugally designed and do not
  provide a strong deterrent to work.
  Health Care Coverage and Work
  While neither DI nor SSI, in and of themselves, pose strong
  incentives to claim benefits in lieu of working, the Panel
  concluded that constraints on access to health care can be a
  significant barrier to employment.
  Persons with chronic health conditions, are at risk of very high
  health care costs. They often cannot gain coverage in the private
  insurance market, and even when they do have private coverage, it
  often does not cover the range of services and long-term supports
  they may need in order to live independently. Medicare or
  Medicaid, therefore, are crucial supports.
  Furthermore, health care coverage has declined in recent years and
  the number of uninsured has grown among the entire working-aged
  population and among those with disabilities. Between 1988 and
  1993, the number of persons with work disabilities who lacked
  health coverage from either private insurance or public programs
  grew from 2.3 million to 2.9 million.4
  The Panel recommended a way to make Medicare coverage more
  affordable and secure for DI beneficiaries who leave the rolls
  because of work. It also urged States to adopt similar
  arrangements in their Medicaid programs.
  Return to Work Tickets
  On the question of linking beneficiaries with rehabilitation
  services, the Panel recommended a radical new approach.
  Beneficiaries would receive a return to work (RTW) ticket, that
  they could use to shop among providers of rehabilitation or RTW
  services in either the public or private sector. Once a
  beneficiary deposited the ticket with a service provider, the
  Security Administration would have an obligation to pay the
  provider, but only after the beneficiary returned to work and left
  the benefit rolls. A provider whose client successfully returned
  to work would, each year, receive in payment a fraction of the
  benefit savings that accrue to the Social Security trust funds
  because their customer -- the former beneficiary -- is at work and
  not receiving benefits.
  This market approach rests on a few basic principles:
  -    Beneficiary choice. For the market approach to work, the
  beneficiary's choice to use the ticket has to be voluntary. And
  the provider's choice to accept the ticket has to be voluntary.
  -    Innovation. Beneficiaries and providers would decide on a
  case-by-case basis, the approach that will work to get the desired
  -    Paying for the result you want -- beneficiaries in long-term
  jobs and off the benefit rolls.
  The Panel concluded that each of these principles is essential to
  the overall effectiveness of the proposal. And, with these
  features, it can be effectively administered by the Social
  Security Administration. To deviate from these basic principles --
  choice, innovation and paying for results -- means a much greater
  role of government in decisions that the Panel believes are most
  effectively made directly between customers and providers. If
  choices are not made voluntarily, the government inevitably must
  be involved in deciding who is obligated to do what for whom; who
  has "good cause" for not doing what the other party wants; and so
  forth. Professor Berkowitz will elaborate on the Return-to-Work
  ticket developed by the Panel.
  Other Policies to Promote Work
  In response to the question about changes in cash benefit policies
  that would promote work the Panel recommended a wage subsidy, a
  tax credit for personal assistance services, and improvements in
  the implementation of existing work incentives.
  Wage Subsidy for Low-Income Workers with Disabilities. The
  disabled worker tax credit (DWTC) the Panel recommended would be
  separate from the Social Security system. It would be paid to low-
  income persons, not because they are unable to work, but because
  they work despite their impairments. Patterned after the earned
  income tax credit, it would reward work for low earners with
  disabilities without increasing reliance on disability benefit
  programs that are designed primarily for persons who are unable to
  work. It is designed for three groups in particular.
  -    Older workers who experience a decline in hours of work or
  wage rates due to progressive impairments.
  -    Young people with developmental disabilities who are entering
  the work force for the first time.
  -    People who leave the DI or SSI rolls because they return to
  work. The wage subsidy would ease the income "cliff" that DI
  beneficiaries now face.
  Personal Assistance Tax Credit. The Panel recommended a personal
  assistance tax credit to compensate working people for part of the
  cost of personal assistance services they need in order to work.
  Some people who require personal assistance services are able to
  work in the competitive labor market. But they face a dilemma. If
  they work successfully, their income may disqualify them from
  receiving publicly-financed services, yet they do not earn enough
  to pay for the services on their own. The Panel recommended a tax
  credit to compensate working people for part of the cost of
  personal assistance services people need and pay for in order to
  Administering DI and SSI Work Incentives. The Panel believes that
  the most important enhancement needed in existing work incentives
  in DI and SSI is to improve the way in which they are implemented.
  Such improvements would involve both service providers who assist
  beneficiaries and the Social Security Administration. After in-
  depth analysis and extensive field research, the Panel concluded
  -  Work incentive provisions are inherently complex. Efforts to
  simplify them by redesigning them are not particularly promising.
  Therefore, beneficiaries need help to understand the rules and
  comply with them when they work.
  -    Some kinds of help could be offered by service providers who
  assist beneficiaries in returning to work -- such as those who
  accept the RTW tickets the Panel recommends. They would need to
  understand the rules and consider it part of their job to assist
  their clients in complying with them.
  -    Some tasks can only be performed by the Social Security
  Administration or an entity it employs. These include prompt
  processing of earnings reports so that benefits are adjusted
  promptly as beneficiaries' circumstances change. If return to work
  is a priority, personnel and systems support for these functions
  are essential.
  In closing, I want to the emphasize two themes of the Panel's
  report. First, many of the barriers to employment for persons with
  disabilities lie outside cash benefit programs. Consequently, many
  of the promising interventions also lie outside of cash these
  programs -in health care, the structure of jobs, education and
  training. The Panel focused its recommendations only on federal
  benefit and tax policy.
  Finally, as indicated in the title of their report, Balancing
  Security and Opportunity, the Panel concluded that disability
  income policy must strive for balance -- between providing secure
  and dignified income benefits to benefits to those who are unable
  to work, on the one hand, while providing realistic opportunities
  and supports for those who have the capacity to work, on the
  other. In the final analysis, our nation's disability policies
  will be judged by how well they achieve this balance.
  1 The Disability Polity Panel's work was funded from private
  sources -- The Pew Charitable Trusts, the Robert Wood Johnson
  Foundation, and by corporate members of the Health Insurance
  Association of America that offer long term disability insurance.
  It also received an in-kind contribution from the Social Security
  Administration in the loan of an employee under an
  Intergovernmental Personnel Act (IPA) assignment.
  2 In reaching this conclusion, the Panel recognized that any
  income support can, to some degree, be viewed as a work
  disincentive. This is because the purpose of income support is to
  provide income to substitute for earnings when that is warranted.
  3 Replacement rates can be up to 50 percent higher for the 1 in 5
  beneficiaries who receive an allowance for dependents.
  4 Tabulations of the March 1994 Current Population Survey provided
  by the Employee Benefit Research Institute, Washington, D.C.

                             PREPARED STATEMENT BY
                               JOHN J. CALLAHAN
                              ACTING COMMISSIONER
                           WEDNESDAY, JULY 23, 1997

  Mr. Chairman and Members of the Subcommittee:
  A large and growing number of people with disabilities can work,
  and want to work. With the Americans With Disabilities Act,
  changes in societal attitudes, and advances in technology, it is
  clearer than ever that being disabled does not mean that you can't
  contribute to our nation's economy. However, people with
  disabilities face a variety of complex barriers to work. Now is
  the right time to launch new initiatives to help break these
  Today, too few of our approximately 8 million Social Security and
  Supplemental Security Income (SSI) disability recipients leave the
  disability rolls each year because of work. In fiscal year 1996,
  SSA paid State vocational rehabilitation (VR) agencies about $65.5
  million for their services provided to approximately 6,000
  beneficiaries with disabilities who worked at least 9 months
  earning more than $500 per month. However, many State VR agencies
  have waiting lists for services, and many more of our customers
  with disabilities tell us they want to work and will do so if the
  incentives are right and the services they need are available. We
  look forward to working with Congress, the Rehabilitation Services
  Administration, and other Federal agencies to turn our customers'
  dreams of economic independence into reality. I am enthusiastic
  about the possibilities for the future, particularly the
  President's "Ticket to Independence" proposal.
  This plan creates new ways to help people find work and achieve
  their goals. The Administration looks forward to working with the
  Hill to enact these proposals. Since there are members of Congress
  from both sides of the aisle who are also working to solve this
  problem, we are looking forward to a constructive dialogue with
  you on this issue that will lead to the enactment of legislation,
  and we believe that our proposal merits your support.
  The "Ticket to Independence" is a public-private partnership
  designed to expand opportunities for individuals with
  disabilities, including individuals who are blind. This
  partnership would give people receiving disability payments what
  they want and need--the control and flexibility to secure services
  tailored to their individual requirements from their choice of
  providers. The Ticket is fiscally responsible, since providers
  would be paid only for results, i.e., placing individuals in jobs
  and eliminating Federal cash assistance.
  Some have been critical of the current system for not improving
  the work capacity of our beneficiaries. We know that many highly
  skilled, outcome-focused agencies and professionals could be
  successful in assisting our diverse beneficiaries to return to
  work and that individualized planning and support is essential to
  successful work re-entry. The President's proposal builds on this
  We believe that the "Ticket to Independence" proposal will result
  in more opportunities for our beneficiaries to receive the
  services they need in order to work. We must keep in mind,
  however, that many of our beneficiaries have disabilities so
  severe and permanent that they will be unable to work even with
  the best VR services.
  The "Ticket to Independence" Proposal
  Included in the President's fiscal year 1998 budget is a historic
  proposal to help more beneficiaries achieve their goals of
  obtaining a job and leaving the benefit rolls. This is the first
  time that a President has submitted a proposal to significantly
  expand return to work efforts. The"Ticket to Independence" is
  grounded in a four part vision.
  - Customer Choice: SSA's customers desire and need maximum
  flexibility and choice in pursuing services which will help them
  to become gainfully employed. Beneficiaries with disabilities will
  receive a "Ticket to Independence" to use with a participating
  public or private employment or rehabilitation provider of their
  choice. Our experience indicates that customer choice is a key
  element in their decision to seek services.
  - Encouraging Innovation: The Administration's proposal seeks to
  encourage widespread innovations in the private and public sectors
  by creating opportunities for Federal and State agencies, local
  non-profit and for-profit providers, employers, and beneficiaries
  to work together.
  - Paying for Results: Beneficiaries and providers alike should
  focus on the goal of stable employment. The provider will be paid
  only when the beneficiary's earnings from work result in benefit
  savings. The "Ticket to Independence" rewards success and frugally
  uses public funds in an accountable and targeted way. And, since
  stable employment is the only goal that reaps a financial return,
  fewer resources are needed to monitor methods, expenditures, case
  files, etc.
  - Health Care Incentives: Health care security is viewed by
  beneficiaries as an essential factor in deciding whether or not to
  try to work. Opportunities to obtain employment should be as
  health-care neutral as possible for individuals with disabilities.
  As you know, the President's Budget proposal included two new
  approaches to removing disincentives to returning to work.
  We are pleased that the Senate Reconciliation bill includes a
  proposal similar to that proposed by the President that would
  permit states to allow workers with disabilities to buy into
  Medicaid. The Administration has urged the Conferees to adopt the
  President's version which would not limit eligibility for this
  program to people whose earnings are below 250 percent of poverty.
  Unfortunately, the Administration's proposal for a 4-year
  demonstration to extend premium-free Part A Medicare eligibility
  for beneficiaries who leave the cash benefit rolls and continue
  working beyond the current period of Medicare eligibility (39
  months) was not included in Reconciliation. The Administration
  continues to believe that such a demonstration, coupled with the
  "Ticket to Independence," is good policy and continues to support
  changes in Medicare to reduce disincentives to return to work.
  How the Ticket Will Work
  After SSA determines that individuals are eligible for benefits,
  we will issue them tickets. The beneficiary may still apply to the
  State VR agency for services regardless of whether it is
  participating in this program, or give the ticket to another
  participating provider of his/her choice in exchange for
  rehabilitation and employment services. If the beneficiary returns
  to work and benefits cease due to earnings, the provider holding
  the ticket will receive a portion of the savings for a fixed
  period of time.
  Phased Roll-Out
  SSA will select 5-10 States to begin. Tickets will be issued and
  providers will be solicited for participation. State VR agencies
  and alternate providers will have the option to participate in
  either the "Ticket to Independence" or the current SSA VR
  Reimbursement Program.
  For State VR agencies or alternate providers which choose to
  participate in the pilot, claims filed under the current program
  prior to the start of the pilot will continue to be processed
  under that program. Also, the State VR agencies in pilot States
  will not have first priority access to referrals of beneficiaries
  who have tickets.
  All disability beneficiaries in roll-out States, except those
  whose medical conditions are expected to improve, will be eligible
  to receive a ticket. Beneficiaries who are expected to improve
  will be eligible for a ticket if their benefits are continued as a
  result of a continuing disability review.
  Providers must satisfy certain criteria to be enrolled and
  eligible to receive payments from SSA. Providers must be eligible
  to conduct business in the State where they enroll by whatever
  criteria are used in that State. SSA will not certify, license or
  regulate organizations or businesses.
  Using the Ticket
  A beneficiary may activate a ticket at any time by giving it to an
  enrolled provider, who then registers it for 1 or 2 years, at the
  beneficiary' s discretion. The ticket can be transferred to
  another provider only if the original ticket holder agrees (except
  in situations where disputes between a beneficiary and a provider
  are resolved by withdrawing the ticket). The terms of transfer of
  the ticket from one approved provider to another, with the
  beneficiary 's consent, are entirely up to the respective parties.
  Providers receiving tickets from other providers must notify SSA
  of the change to be eligible for payment. At the end of the period
  of registration, if no provider is being paid under the expired
  ticket, the beneficiary may request a renewed ticket and that
  ticket may be registered for 1 or 2 years with the same or a
  different provider. Only one ticket will be issued to a
  beneficiary at a time and only one provider may hold a
  beneficiary's ticket at a time.
  Paying the Provider
  When SSDI benefits or an SSI beneficiary's federally administered
  benefits stop due to earnings, the provider is paid a portion of
  each monthly benefit not paid to the beneficiary during a
  specified continuous period.
  The provider payments begin with the first month that Social
  Security disability insurance benefits or Federally administered
  SSI payments are reduced to zero, due to earnings, after the
  ticket is registered.
  Administering the Ticket
  SSA will award a contract to an administrator to manage the
  enrollment of providers, the system of referrals, ticket
  registration, and to assist in paying providers. The administrator
  will also develop a data collection system incorporating
  information required for management reports, a beneficiary
  tracking system, and the evaluation of the impact of the "Ticket
  to Independence."
  Evaluation and Expansion
  The Commissioner of Social Security will report to the Congress on
  the operations of the "Ticket to Independence" Program. At the end
  of the 3rd, 5th, 7th, and 10th year of the pilot, the Commissioner
  will evaluate and report on the impact of the program and work
  activity of beneficiaries with disabilities. Based on the results
  of the evaluation, the Commissioner will determine whether to
  continue and expand to other States (if the ticket system has been
  sufficiently successful), to modify aspects of the models to gain
  better results (such as the payment formula or the length of the
  payment period), or to discontinue the project.
  Protection and Advocacy
  SSA will supplement the funding of the existing State Protection
  and Advocacy (P&A) system with funds specifically designated for
  assisting SSA beneficiaries when disputes with providers occur.
  The State P&A System is a long established federally mandated
  system operating in each State and territory that investigates,
  negotiates and mediates solutions to problems that certain persons
  with disabilities cannot resolve on their own.Conclusion
  The "Ticket to Independence" is a cost effective, results oriented
  innovation that can:
  - Create a public-private partnership between Social Security and
  public and private providers with the goal of supporting
  beneficiaries who want to work.
  - Offer potentially significant savings to the SSA trust funds by
  helping persons with disabilities to work.
  - Give beneficiaries the control and flexibility they need in
  securing services they want.
  - Minimize bureaucratic involvement.
  Mr. Chairman, let me reiterate. We want to work with you to design
  new programs that can result in jobs for persons with disabilities
  who would otherwise remain dependent upon disability benefits. We
  believe the President's "Ticket to Independence" begins a
  deliberate process to roll out a federal initiative to achieve
  that end. I thank you for your attention and would be happy to
  answer any questions.

                             PREPARED STATEMENT BY
                                  JIM RAMSTAD
                         SOCIAL SECURITY SUBCOMMITTEE
                           WEDNESDAY, JULY 23, 1997

  Mr. Chairman, I am here today to thank you and the Subcommittee
  for your important efforts on "return to work" issues for people
  with disabilities. I applaud you for calling this hearing to
  discuss those barriers which prevent eager, hard-working
  intelligent people with disabilities from working.
  When I came to Congress in 1991, I was surprised to find that
  among all the caucuses and task forces on the Hill, there was no
  group specifically focused on issues affecting people with
  disabilities. That's why I started the Republican Task Force on
  Under the purview of the task force, I held a field hearing in
  Minnesota on the work disincentives in those federal programs --
  particularly SSI and SSDI -- which are supposed to assist people
  with disabilities. I continue to work with my own Disabilities
  Advisory Committee back in Minnesota on these and many other
  issues facing people with disabilities.
  I have heard countless stories of frustrated individuals who
  desperately want to work and contribute to society but are
  literally prohibited from doing so because confusing federal
  programs and rules make working too difficult or expensive. Of
  course, we must take steps to prevent abuse of the system, but in
  doing so, we must make sure that our efforts do not prohibit
  Americans with disabilities from living up to their full
  Mr. Chairman, preventing people from working runs counter to the
  American spirit -- a spirit that thrives on individual
  achievements and societal contributions. In addition, discouraging
  people with disabilities from working, earning a regular paycheck,
  paying taxes and moving off public assistance results in reduced
  federal revenues.
  Creating work incentives for people with disabilities is not just
  humane public policy, it is sound fiscal policy. Eliminating the
  current barriers to work that 0 many. individuals face is not just
  the smart thing to do. it is the right thing to do.
  As you know, in 1993 I worked with our esteemed colleague on the
  Ways and Means Committee, Representative Stark, on legislation to
  address the disincentives people with disabilities face in federal
  programs. While we were not successful in the 103rd Congress to
  pass legislation to help people get back to work, I remain hopeful
  that we will get something done soon.
  Your leadership in this area deserves high praise. I followed with
  great interest the heatings this Subcommittee held last session on
  these issues and was very interested in the legislation you
  introduced last year. I realize that some of the elements of
  comprehensive reform in these areas fall outside .the jurisdiction
  of this Subcommittee, but I want to publicly and personally thank
  you for looking at those issues within your jurisdiction.
  Specifically, when I hear that in 1996, fewer than 6% of new
  disability recipients were referred to state vocational
  rehabilitation agencies for services and less than 1/2 of 1% of
  disabled recipients leave the rolls because of successful
  rehabilitation, I know something must be done to open up the
  vocational rehabilitation process.
  In my home state of Minnesota, the State Vocational Rehabilitation
  Program administrators do a good job in meeting the needs of many
  Minnesotans, but I am also aware of experienced, successful
  private groups in Minnesota that can also provide these services.
  Many private rehabilitation groups in Minnesota have been involved
  in SSA demonstration programs and can greatly contribute to the
  efforts of the state VR and help even more people get back to
  work. In addition, people with disabilities should have the
  ability to seek rehabilitation and choose the provider they feel
  will best help them achieve their goal of employment.
  Like everyone else, people with disabilities have to make
  decisions based on financial reality. Should they consider
  returning to work or even make it through vocational
  rehabilitation, the risk of losing vital federal health benefits
  often becomes too threatening to future financial stability. As a
  result, they are compelled not to work. Given the sorry state of
  present law, that's generally a reasonable and rational calculated
  I appreciate the attention in your legislation to Medicare
  coverage for those who work. It is my sincere hope that the
  Commerce Committee will also consider proposals to allow
  individuals with disabilities who return to work access to
  I am currently seeking Medicaid proposals from my state Department
  of Human Resources and others that will hopefully compliment any
  legislation you introduce this year so we can comprehensively
  knock down all the barriers preventing people from working.
  Mr. Chairman, thanks again for your leadership on these important
  issues and for letting me come before the Committee today. Your
  Subcommittee staff has been very gracious in allowing me and my
  staff to work with you on these important issues and I look
  forward to continuing to work with you on our shared goal of
  helping people with disabilities return to work.

                             PREPARED TESTIMONY OF
             ROBERT L. SNIDERMAN, PH.D., C.R.C., C.D.M.S., C.C.M.
                            THURSDAY, JULY 24, 1997

  This testimony is being submitted regarding the use of Functional
  Capacity Evaluations and their impact on successful return to work
  I submit this testimony as a practicing rehabilitation counselor
  in the private sector and vice president of operations for The
  Kalix Group, L.L.C., a company that provides vocational counseling
  and return to work services to disabled individuals in a wide
  range of settings. We provide services to individuals in
  conjunction with workers' compensation systems, long and short
  term disability programs, social security disability insurance
  evaluations, ADA compliance issues, and directly to employer in
  house return to work programs. In addition, as immediate past
  president of the California Association of Rehabilitation and
  Reemployment Professionals (CARRP) and as current California
  Representative to the National Association of Rehabilitation
  Professionals in the Private Sector (NARPPS) I submit this
  Functional Capacity Evaluation is a valuable tool in the objective
  and accurate evaluation of disabled individuals. The evaluation
  objectifies an individual's current physical and cognitive
  functioning to enable a more accurate assessment of the capability
  for successful return to work.
  Currently, medical examinations are typically used for this
  However, medical examinations will provide valuable information
  about an individuals impairment not the extent of their
  disability. Functional capacity evaluations will not only provide
  information about an individuals functioning in real time, it can
  also identify issues of reconditioning due to a lengthy term of
  inactivity. Services can then be provided to accurately design and
  implement a program of reconditioning. The goal being to gain the
  capacity to return to work in a well defined and structured time
  frame. This will also facilitate a decrease in employer reluctance
  to hire disabled individuals as work readiness information can be
  imparted through the use of functional capacity evaluation.
  I am not an expert at performing functional capacity evaluations
  (FCE) or related evaluation services. However, I have been
  providing rehabilitation counseling and return to work services to
  disabled individuals for over 20 years. I can attest to the
  benefits of utilizing FCE as a "gatekeeper", a basis for
  progressive return to work plans, therapy design and monitoring
  tool, and an evaluative tool that makes return to work services
  more efficient and cost effective.
  Functional Capacity Evaluation first and foremost is a tool that
  colleagues and I can utilize to help answer some very significant
  questions regarding an individual's ability to benefit or
  participate in a return to work program. Given the opportunity to
  design a return to work program for the Social Security
  Administration, FCE would be the gatekeeper for participating.
  There are key elements in rehabilitation and return to work that
  are well defined and can be evaluated during an evaluation. Being
  able to predict as accurately as possible and as quickly as
  possible an individuals ability to be successful in a return to
  work process is crucial. It is crucial from both cost effective
  and human factor perspectives. Return to work programs do not want
  to include individuals who will not be successful and also want to
  as much as possible exclude those who will have failure
  experiences. Failure experiences can be devastating to an
  individual who has struggled with issues of self-worth and
  capability. FCE can help identify for an individual and the
  professional working with that individual whether or not return to
  work services are appropriate to pursue at any given time.
  How can Functional Capacity Evaluations be used as a basis for
  progressive return to work? The information that is generated by a
  FCE can be used by many professional in many ways. The most common
  purpose from the perspective of doctors, lawyers and the Social
  Security Administration is for disability evaluation. The FCE
  allows what was an impairment evaluation to become a disability
  evaluation. For rehabilitation professionals, the FCE can also be
  used to design a progressive rehabilitation program that will help
  to move a disabled individual from being unable to participate in
  a return to work program to setting up some short term work
  hardening programs and work adjustment programs that will in a
  systematic and progressive fashion move the individual into a
  return to work program.
  If a disabled individual is unable to participate in a return to
  work program and is participating in therapy, the FCE can be used
  to help physical and occupational therapists design and monitor
  therapy programs. The FCE can be used at intervals during therapy
  to monitor progress. If progress is not being made it provides the
  professional and disabled individual with the ability to make
  decisions about continuing with therapy or pursuing other avenues.
  In conclusion, Functional Capacity Evaluation provides an
  accurate, objective assessment of an individual's ability to
  participate in a comprehensive return to work program. Using FCE
  in a "gate keeping role" will help rehabilitation professionals
  working with disabled individuals to make responsible, accurate,
  and cost effective decisions regarding rehabilitation and return
  to work services.
  I propose that the following be considered in drafting bill
  Functional Capacity Evaluation services be available through a
  cost reimbursement format separate from a return to work voucher
  We urge the inclusion of support and funding of functional
  capacity evaluations within the Social Security Reform effort.

                             PREPARED TESTIMONY OF
                               STEPHEN L. START
                            CHIEF EXECUTIVE OFFICER
                         S.L. START & ASSOCIATES, INC.
                         SOCIAL SECURITY SUBCOMMITTEE
                          AND PROJECTS WITH INDUSTRY
                            THURSDAY, JULY 24, 1997

  Summary of Testimony
  Mr. Start has participated in the delivery of return-to-work (RTW)
  services for people with disabilities and other barriers to
  employment for the past 25 years. He has been involved in numerous
  Research and Demonstration Projects (RDP) to develop improved RTW
  services. He is testifying on behalf of the Return-To-Work Group
  (RTWG), which is composed of a broad cross section of consumer
  'and provider organizations who have come together for the single
  purpose of promoting the improvement of RTW services available for
  SSA beneficiaries.
  This testimony outlines what has been learned over that past two
  decades about people with disabilities, employers, providers, and
  the Social Security Administration (SSA) in relation to returning
  people with disabilities to gainful employment. From the lessons
  learned, Mr. Start explores the implications for the development
  of a full-scale, national RTW effort. His testimony includes an
  overview on how such a program may be implemented and an analysis
  of the financial cost, the risks, and the benefit to the Trust
  Fund and the federal budget.
  The RTWG recommends that:
  1. An initial implementation of a national program begin
  immediately (see implementation plan).
  2. The formation of a bipartisan commission to oversee
  implementation, operation, and refinement.
  3. The testing of various work and employer incentive strategies
  be conducted in different parts of the country during the first
  five years of implementation, with national extension of the
  medical benefits with buy-in beginning at the onset of the
  4. Program management will be contracted out to a private firm or
  firms that will have a presence in each region of the country.
  5. To ensure full geographic coverage, a provider must assure that
  a network of services is available across a broad geographic area.
  Services available must include case coordination (case
  management), core services (assessment, counseling, training, plan
  development, placement, and support services), and specialized
  services (those designed to deal with unique barriers created by
  specific disabilities). Service access can be assured by several
  small organizations across a geographic service area coming
  together through contractual relationships to form their own
  6. To simplify administration, billing, accountability, and the
  provision of a seamless service to consumers, SSA (through its
  program manger) will contract with the network provider(s) who
  will be responsible for all subcontractors and held accountable
  for all outcomes.
  7. Network providers will have to submit an annual audit to the
  contract manager to ensure billings are appropriate, allowable,
  and accurate. The provider will bear the cost for such audits.
  8. Annual report cards for outcomes and customer satisfaction will
  be developed and made available to the public and all potential
  customers at program entry.
  9.   Periodic reviews of services and audits will be conducted by
  review teams contracted through the manger. Teams will consist of
  a consumer, an outside provider, and an SSA representative.
  10. Milestone payments will be made for outcomes, in combination
  with a five-year follow-up commission based on Trust Funds savings
  used to reimburse providers.
  11. All beneficiaries up for CDR be referred for mandatory RTW
  assessment. Those who participate in a RTW plan will receive an
  extension of benefits until completion and avoid disability
  Mr. Start's conclusion is that a national effort would be highly
  cost-effective to initiate, can balance risk across all the
  participants, and that the knowledge and professional resources
  are currently available to quickly start up such an effort. With
  outcomes demonstrated by previous research, computer modeling
  indicates that 134,552 people should be permanently off the rolls
  and working during the seven-year implementation, saving 12.3
  billion federal dollars. Computer modeling indicates the addition
  of work and employer incentives could realistically result in
  264,658 people going off the rolls, saving 23.9 billion federal
  dollars. Mandatory referral of CDR's computer simulations indicate
  over 400,000 coming off the rolls and 40 billion dollars in
  savings. He requests that Congress direct the Social Security
  Administration to move forward expeditiously in completing the
  design and implementation of a viable RTW program. The program
  will pay for itself in four years.Mr. Chairman and Members of the
  Thank you for providing me the opportunity to discuss with you
  today the development of a RTW program that will assist
  individuals on the social security disability rolls in returning
  to substantial gainful employment. I have been involved in the
  provision of vocational rehabilitation, employment placement, and
  supported residential living services for people with disabilities
  for the past 25 years. My company provides services in the states
  of Washington, Oregon, and Idaho. I have managed in excess of 350
  grants and contracts focused on developing and providing
  innovative approaches to assist individuals with significant
  barriers to employment and to maximize their ability to engage in
  employment activities that will provide a stable and desirable
  standard of living. I have also designed, developed, and operated
  numerous programs to assist disabled people to leave institutional
  settings and live independently in their communities. Services we
  have provided have been funded through a wide range of contract
  relationships with a broad array of government agencies. A small
  sample includes the Social Security Administration (SSA), the
  Rehabilitation Services Administration (RSA), the Department of
  Labor, and the Department of HEW at the federal level. Many of our
  contracts are with agencies of state and local governments. A
  project that 1 am especially proud of and from which we have
  learned many lessons about RTW practices is the Inland Empire's
  Projects With Industry (PWI). Our PWI is part of a national
  initiative funded under the RSA that has resulted in the
  development of a national network of projects that represent an
  activity partnership between rehabilitation, RTW organizations,
  and employers. For the past 20-plus years, PWIs across the country
  have provided the most cost-effective, outcome-based, RTW effort
  of any initiative in our nation that I am aware of which has been
  undertaken by the public sector. My firm participated very
  actively in the Research and Demonstration Project (RDP) funded by
  SSA. As a result of these activities, my company has worked with
  several thousand disabled individuals and hundreds of employers
  throughout the Pacific Northwest. Later in my testimony, I will
  share with you some important lessons that we have learned from
  PWI experience and participation in the RDP process.
  In testimony today, I want to focus on what we in the field of RTW
  have learned over the years about the four stakeholders in this
  process; namely, employers, people with disabilities, providers of
  service, and SSA. I will then focus on the implications of those
  lessons for policy and program development, and finally outline
  for you a cost-effective approach to a national RTW effort that
  draws on the lessons that we have learned from the stakeholders.
  About People with Disabilities in Relation to the Job Market:
  Many disabled individuals (even those with severe disability)
  sincerely want to return to work, take control of their own lives,
  and be productive, self-sufficient citizens. Various studies have
  indicated that from 15 percent to as high as 40.percent of those
  on the social security rolls would like to return to employment.
  - Consumers want to have a choice of providers, methods of
  returning to work, and the type of occupation they pursue.
  - They want to be able to exert real and meaningful control over
  their RTW effort and their lives.
  - A significant percentage of people on the rolls cannot return to
  full-time employment and desperately need income and medical
  support provided by SSDI and SI programs.
  Many are very fearful of losing their medical support. This fear
  transmits into placement counselors, mental health professionals,
  and social workers who interact with these individuals to such a
  degree that the service community will often help disabled people
  strategize ways to maximize their personal income while avoiding
  the loss of benefits. Counseling staff are placed in the untenable
  situation of asking someone to essentially risk their life to
  pursue employment that may turn out to be temporary under the
  current eligibility guidelines.
  Most individuals with disabilities lack the specific skills and
  knowledge necessary to adequately seek out and obtain employment
  in the competitive workplace. The behaviors and attitudes that are
  required for an individual to secure social security benefits are
  the exact opposite of the behaviors and attitudes required to
  convince an employer that the individual is the right person for a
  job. The current eligibility system requires a focus on
  disability, inability, and dependency to gain access to benefits.
  Employers are looking for independent, positive, and upbeat
  employees who focus on what they can do, not what they can't do.
  Without RTW assistance, the employment rate for people coming off
  the rolls will continue to be incredibly low. The onset of
  disability and the system to access benefits is often demoralizing
  and inadvertently takes away from the individual his sense of
  self-confidence and focus on goal-oriented, productive behavior
  that is essential to obtaining and retaining employment.
  Some individuals believe that, as a result of the Americans with
  Disabilities Act (ADA) and Affirmative Action, employers have an
  obligation to employ them and that fear of government intervention
  will motivate employers. It is our experience that using the ADA
  as a threat to gain access to employment for a specific individual
  virtually guarantees that an employer will not hire that person.
  Many people believe that in order to compensate for their
  disability they must have highly developed, specific vocational
  skills to compete effectively in the work force. Our experience
  indicates this is not necessarily true.
  Many people with disabilities tend to believe that employers
  basically do not like people with disabilities, are concerned only
  about the bottom line, and require significant financial incentive
  to motivate them to employ people with disabilities. While
  placement professionals know this is not true with the majority of
  employers, this fear serves as a barrier to return to work.
  The primary motive or objective of most employers is to get the
  job done: operate a healthy, positive work environment and produce
  a reasonable return on investment. While profit is an important
  consideration and essential to survival, many businesses
  (especially smaller businesses) were started because of the
  employer's personal attachment to the profession or interest in
  producing particular goods or services.
  Employers primarily want to hire employees who display a positive
  attitude, hove good. dependable work habits, have the ability to
  work as a team player, and display a willingness to learn.
  Individuals (whether disabled or not) who appear to be litigious
  in their approach are avoided at all cost. Some employers are
  willing to make significant levels of accommodation to facilitate
  the productivity problem encountered by a person with a
  disability, if the employee displays the work habits previously
  mentioned. Many employers take pride in their corporate
  citizenship and their ability to assist disabled people to become
  productive and gain independence from the tax dole.
  Many employers are highly intimidated by and afraid of large
  government agencies such as Employment Security, the Department of
  Labor, and Vocational Rehabilitation, etc. Employers feel such
  organizations do not understand, value, or appreciate the private
  sector and stand ready at a moment's notice to trigger legal
  action if something goes wrong with the employment of a disabled
  individual or other protected classes of employees. The various
  programs and laws we have created to help individuals with
  significant barriers to employment gain acceptance into employment
  have created what is perceived as an immense threat to business.
  This phenomenon may explain why, since the enactment of the ADA,
  there has been essentially no net gain in employment in our
  country for people with disabilities.
  Some policy makers and advocates believe that the key to
  employment is targeting large Fortune 500-style companies. The
  reality is that over 75 percent of the net job activity in the
  United States comes from small- and medium-sized employers.
  Employment experts have dubbed this the hidden job market. Eighty
  percent of those jobs are filled by informal word-of mouth and
  through personal relationships within a local community. Less than
  15 percent of the job openings available nationally are posted
  with public employment agencies. This, coupled with fear of
  government agencies, may, in part, explain why the public
  vocational rehabilitation systems have produced poor results.
  Employers provide more job training to more individuals than all
  the vocational-technical schools and universities in our nation
  Tax incentives and on-the-job training dollars are useful tools
  (especially with middle-sized and large employers) in helping
  individuals obtain employment. Most employers are focused more on
  getting a good employee, dependable follow-up, and an honest
  relationship with the RTW provider. Some will choose not to
  utilize such incentives because of their fear of government
  intervention in their daily affairs.
  Employers and disabled employees sometimes rely on the RTW
  provider as a mediator to help solve problems and decrease the
  chances of litigation. If, for example, a job simply doesn't work
  out for a person, a good provider will quickly facilitate
  transition into a new job somewhere else. The disabled employee
  avoids financial harm and the employer's chances of facing
  litigation are greatly decreased.
  There is a significant movement on the part of employers in this
  country to move away from well-funded benefit packages for full-
  time employees toward the use of part-time employees who receive
  little or no benefit package. While this tendency disturbs me on a
  personal level, it has created opportunities for people with
  disabilities to enter the job market and gain experience. This
  phenomenon could be especially useful if a working mechanism is in
  place to allow beneficiaries to sustain their benefits. Some of
  the most successful PWIs have aligned themselves with temporary
  employment agencies to capitalize on this opportunity.
  Organized labor has worked as a consistent supporter over the past
  20 years of the PWI employment initiative and, in many cases, has
  actually taken the lead in building the bridge between people with
  disabilities and the employer community.
  Many employers (especially large firms) have come to the
  realization that disability and its related unemployment are
  extremely expensive. Such employers are developing the internal
  capacity to do job station modification and other RTW
  interventions. These efforts, hopefully, will offset some of the
  growth in utilization of the SSDI system. Moreover, they provide a
  mechanism inside of industry to link a RTW program for those
  currently on the rolls.
  The vast majority of professionals employed in these fields
  entered their profession out of a sincere commitment to help
  people with disabilities maximize their ability to be self-
  sufficient in our society. Most counselors possess a sincere
  interest in the welfare of the disabled individual; and if placed
  in a situation where the welfare of the client is pitted directly
  against the potential for their company to secure profit, they
  will err on the side of the client.
  The provider community across the country has developed a highly
  refined set of skills to evaluate an individual's employability,
  to develop cost-effective RTW plans, and to use methods to re-
  engage people in competitive employment. Unfortunately, many state
  worker's compensation systems' efforts have focused vocational
  rehabilitation professionals on empirically determining on paper
  that disabled people are ready to return to employment. Outcomes
  have not focused on return to gainful employment. This phenomenon
  gets people off the state worker's compensation rolls but doesn't
  return people to work. It also results in the development of
  statistical surveys across our country that significantly
  understate the power of rehabilitation to actually return people
  to gainful employment.
  Providers are ready, willing, and able to participate in an
  effective RTW effort for SSDI beneficiaries. Unfortunately, the
  current alternate provider initiative by SSA to "level the playing
  field" with private providers and state vocational rehabilitation
  agencies is more artificial than real. It will not retain a
  significant number of providers in the RTW effort. The proposed
  alternate provider method of paying for rehabilitation costs only
  after placement ignores the substantial losses associated with
  those who fail in the rehabilitation process and will require
  substantial amounts of working capital. It attempts to place all
  the risk on the provider and fails to "level the playing field"
  because the state vocational rehabilitation agencies are still
  fully funded for all their efforts (both successful and
  unsuccessful) through RSA. The reimbursement that state agencies
  currently receive upon successful client termination from benefits
  is a bonus payment or pure profit for the state agency. If
  Congress were to truly create a "level playing field" and pay all
  expenses out of General Fund revenues for attempting to
  rehabilitate social security recipients and then pay social
  security Trust Fund dollars for successful outcomes, thousands of
  private providers would participate. Such an effort would be
  prohibitively expensive, however, and would not represent a
  balanced approach of sharing risk between the government, the
  provider, and the person with disability.
  Through the RDPs funded by SSA, we learned that returning
  beneficiaries to work is hard work, but doable. Successful
  projects would place 5 to 15 percent of those originally contacted
  at the Substantial Gainful Activity (SGA) level of employment as
  defined by SSA. Even with a 5 percent placement rate, private
  sector-based return to work is highly cost-effective and is more
  than a tenfold improvement over the current practice.
  Beneficiaries participating in the Continuing Disability Review
  (CDR) process seem to display a significantly higher employment
  rate than the general caseload or those in the application
  Providers across the country are willing to participate in
  milestone-based payment systems that focus on a combination of
  outcomes and savings to the Trust Fund. Literally thousands of RTW
  rehabilitation counseling firms, worker's compensation agencies,
  rehabilitation professionals, PWI operators, and rehabilitation
  facilities are in place and process the basic prerequisites to
  participate in a national RTW effort. Only a very small
  percentage, if any, can financially afford to participate in a
  system that does not pay any milestone payments but instead
  withholds all payment until Trust Fund savings are realized.
  SSA is currently reviewing another strategy that would pay
  providers a percentage of the savings to the Trust Fund after a
  person leaves the rolls. Such rear-end loaded strategies like the
  alternate provider program place impossible operating capital
  requirements on providers. Only very large providers could even
  consider participation.
  Many providers throughout the country (especially PWI operators
  and private worker's compensation firms) have very well
  established relationships with literally thousands of employers
  throughout our country. They provide immediate, readily available
  access to small, middle-sized, and large employers throughout the
  entire economy.
  The vast majority of employees we have worked with in SSA (both
  locally and at the national level) are hard-working, intelligent,
  and dedicated. They possess a sincere and heartfelt commitment for
  people with disabilities and shoulder a serious sense of
  responsibility towards the Trust Funds they administer. By design
  and practice, SSA and its staff know very little about the
  specifics of return to work, how it works, how to contract for
  effective services, or how to work with consumers in a RTW plan.
  Their corporate culture has been designed around the mission of
  protecting those who, as defined by the listings and regulations,
  are incapable of work.
  Knowledge gained from RTW Research and Demonstration Projects and
  Project Network experiences a very short memory cycle within the
  agency due to personnel moves and is not widely distributed or
  understood. The very nature of the experimental models drives up
  the cost of projects and substantially reduces the effectiveness
  of the projects. It seems clear, however, that the RDPs have shown
  that while SSDI recipients pose significant challenges, they can
  be returned to work in significant numbers by utilizing private
  organizations and networks within local communities.
  Providers have known how to effectively place people into
  employment since the 1970's. The well-intentioned tendency of the
  agency to prove unequivocally through scientific study the hows,
  whats, whens, and wheres of a successful RTW effort will never,
  given the nature of return to work itself, be truly successful.
  Continuing to research this issue, while putting on hold a
  national implementation of a private sector-based program, will
  result in literally tens of billions of dollars being lost through
  missed opportunity. Literally hundreds of thousands of individuals
  who could be returned to substantial, gainful activities will be
  left to sit in idleness and dependency while we engage in a never-
  ending effort to empirically prove what people in the RTW and
  placement field have known for years.
  Administration and Oversight:
  The Return-To-Work Group recommends that:
  1. An initial implementation of a national program begin
  immediately (see implementation plan).
  2. A bipartisan commission of 9 individuals (3 consumers, 3
  providers, 3 employers) be appointed to assist with rule making,
  oversee program implementation, review outcomes, recommend ongoing
  changes to improve incentives and remove program barriers, and
  report to Congress with SSA on the results of program
  implementation and recommendation for improvement.
  3. The testing and refinement of various incentive strategies will
  be tested in different parts of the country during the first five
  years of implementation.
  4. Program management will be contracted out to a private firm or
  firms that will have a presence in each region of the country. We
  believe having two firms each serving different parts of the
  country will provide a back-up in case one firm cannot perform to
  5.   To ensure full geographic coverage, providers must assure
  that a network of services is available across a broad geographic
  area. Services available must include case coordination (case
  management), core services (assessment, counseling, training, plan
  development, placement, and support services), and specialized
  services (those designed to deal with unique barriers created by
  specific disabilities). Service access can be assured by several
  small organizations across a geographic service area coming
  together through contractual relationships to form their own
  network.6. To simplify administration, billing, accountability,
  and the provision of a seamless service to consumers, SSA (through
  its program manger) will contract with the network provider(s) who
  will be responsible for all subcontractors and held accountable
  for all outcomes. This approach creates no new bureaucracy or
  layers, but simply utilizes existing providers and a private
  management firm.
  7. Network providers will have to submit an annual audit to the
  contract manager to ensure billings are appropriate, allowable,
  and accurate. The provider will bear the cost for such audits.
  8. Annual report cards for outcomes and customer satisfaction will
  be developed and made available to the public and all potential
  customers at program entry.
  9. Periodic reviews of services and audits will be conducted by
  review teams contracted through the manger. Teams will consist of
  a consumer, an outside provider, and an SSA representative.
  10. Milestone payments will be made for outcomes, in combination
  with a five-year follow-up commission based on Trust Funds savings
  used to reimburse providers.
  11. All beneficiaries up for CDR be referred for mandatory RTW
  assessment. Those who participate in a RTW plan will receive an
  extension of benefits until completion and avoid disability
  People with Disabilities:
  To assist those who have a sincere interest in returning to work,
  we must provide a safe and understandable protection of medical
  benefits. The program must encourage and develop individual
  consumer choice and control throughout all aspects of the RTW
  effort. The effort must be grounded in organizations that have
  existing relationships with small, medium, and large employers in
  every community of our country. Meeting with hundreds of providers
  across the country has taught us that milestone payments are
  essential to attracting and retaining these well-established,
  small- and medium-sized providers. Counseling and case
  coordination must focus on the ability to instill positive work
  habits and attitudes in guiding people back to employment.
  Programs must help individuals market themselves in a way that is
  desirable and non-threatening to the employment community. The
  system must provide incentives for providers to develop service
  plans and move individuals quickly and effectively toward return
  to work; and also provide long-term, ongoing support to assist
  individuals in retaining employment and developing a positive
  career ladder approach. Emphasis on simply finding individuals
  jobs will not result in a long-term, positive effect of keeping
  people off the rolls. Tying a significant percentage of the
  provider's fee to continued Trust Fund savings over five years, in
  combination with simple, clear, outcome-oriented milestone
  payments, will ensure a choice of providers for consumers,
  increase the access to more employers and jobs, enhance job
  retention, and, consequently, ensure greater long-term Trust Fund
  The model must be designed to ensure that people with disabilities
  are responsible for following through on their RTW plan and are
  enablers of their own success. Each individual must participate
  and have active control in the development and sign off on a RTW
  plan that contains specific employment goals, both long- and
  short-term, specific objectives necessary to reach those goals,
  and an individualized economic analysis of the individual's plan
  to demonstrate the ability of the plan to move the person toward
  financial self-sufficiency. The provider and the consumer are
  considered partners whereby the provider and the consumer will
  financially invest in training and other necessary support to
  obtain employment. The network provider, case coordinators, or
  case manager will assist consumers in taking full advantage of
  funding currently available through vocational rehabilitation,
  JTPA, student loan programs, etc.
  The initiative must include providers of service who have a
  direct, ongoing relationship with employers of all sizes
  throughout our economy. Employer incentives to offset the cost of
  training and job modification will enhance the total number
  employed and the number of employers who participate. Incentives
  are not essential for all employers or all types of disability.
  While all employers may not utilize these benefits, they serve to
  attract a large segment of marginally interested employers who
  will not otherwise participate. The RTW effort must be viewed as a
  method to assist employers in being good corporate citizens and
  not be used as a method to threaten and intimidate employers into
  employing people with disabilities. A negative approach will
  guarantee utter failure.
  The initiative should utilize reimbursement methods that place
  heavy emphasis on rewarding outcomes and provide some incremental
  payment for completion of outcome-based milestones. Our research
  and analysis recommends three milestone payments for specific
  1. The development of a mutually agreeable RTW plan - $300
  2. Obtain and retain employment for a reasonable period of time
  (60 days in our analysis) - $1,100
  3. Reaching SGA/coming off the rolls- $1,300
  A job retention follow-up fee of 25 percent of savings would also
  be paid. This reimbursement would be paid monthly and would be
  based on the percentage of the annual cost of maintaining the
  average beneficiary on the rolls for any given year. The fee would
  be adjusted annually.
  To ensure long-term savings, we recommend a follow-up fee for five
  years for keeping individuals off the rolls. Such a system should
  encourage providers to find initial jobs that provide stairsteps
  to more long-term, career-oriented employment and provide the
  incentive to encourage ongoing support of the individual to ensure
  the maintenance of employment. Approximately 80 percent of people
  who lose jobs in our economy do so because of poor work habits and
  "bad attitude." The payment system encourages providers to deal
  with these and ancillary issues that have a dramatic effect on
  long-term employability.
  The primary measure of program quality should be a job that is
  chosen by the consumer that provides a level of support both
  financially and intellectually and that is otherwise acceptable to
  the customer. Experience by providers with other outcome based
  payment systems overseen by government agencies has taught us that
  agency staff have little or no understanding of the labor market
  or the full cost of RTW. They seem compelled to "Help" the
  consumer attain higher quality outcomes by adjusting process
  requirements and outcome levels necessary for payment. Attempts to
  externally define quality by imposing processes, approaches, or
  minimum income levels for jobs will retard the individual's
  ability to return to work, limit their access to jobs that provide
  a platform for labor market reentry, diminish individual choice,
  and, in effect, say that people with disabilities are incapable of
  making their own informed decisions. The system recommended here
  will provide true choice for consumers. If a provider can't
  develop a plan and deliver acceptable services, the consumer will
  choose another provider. With the customer goes the funding.
  Quality assurance monitoring should be in place that ensures that
  funds are spent for allowable outcomes and that individuals are
  offered a full array of providers to develop their plans, have
  meaningful employment options, and exercise power and choice
  throughout the RTW effort. The initiative must encourage the
  development of local and regional provider networks that maximize
  access to the hidden job market and existing training and support
  services within local communities.
  Providers should have built-in quality improvement programs,
  submit to annual Certified Public Audits, have public report cards
  done on an annual basis, conduct standardized satisfaction surveys
  published in their report card, and be reviewed periodically by an
  external quality assurance team that includes consumer
  The following summary represents an overview of an implementation
  model for the development of a full-scale, national RTW effort
  staged over a seven-year period. The model attempts to establish a
  balance in dealing with the needs of all the stakeholders, balance
  risk across all partners, and is based on demonstrated outcomes
  from recent RDPs and Project Network. The model produces results
  that are highly cost-effective and incorporates the combined
  milestone and outcome payments previously cited. This payment
  method substantially limits the Trust Fund's financial exposure in
  developing this effort and essentially assures that SSA does not
  end up buying services instead of outcomes. It is also designed to
  ensure that even with very conservative or poor results, SSA would
  receive a positive cost benefit from their investment in the RTW
  effort. The payment milestones used have been vigorously
  negotiated. The milestones represented are below the cost of
  services historically experienced by providers. The state agency
  programs have been receiving over $10,000 on average to cover the
  cost of those coming off the rolls. The cumulative milestone
  reimbursement total for a person in our combined model is $2,600.
  Providers would have to keep people off the rolls for extended
  periods of time for profit to occur.
  This full national implementation scenario is presented in four
  phases that progressively increase the degree of sophistication
  and the volume of services provided. It looks at the provision of
  services to applicants, CDRs, and general caseloads. The computer
  simulation program used to generate these outcome numbers utilized
  different assumptions computing enrollment and success rates for
  each of these discrete populations. Cost/benefit savings are
  calculated over the ten-year-average life of a case as currently
  reported by SSA. The model does not include the cost of extended
  medical coverage that has been recommended. PWIs nationally find
  that approximately 50 percent of the people they place enroll in
  employer health insurance plans which will save considerable
  federal funding. This savings should more than offset the cost of
  extended benefit plans that incorporate a staggered buy-in
  provision. The outcome assumptions used to calculate program costs
  and savings over time are based on actual results obtained by SSA
  Research and Demonstration Projects, Project Network, and national
  PWI data. These results were achieved under current conditions.
  The work and employer incentives that have been recommended by
  various groups should significantly increase the participation,
  outcome rates, and projected savings. These increased savings
  would be partially offset by the cost of such incentives.
  (Note:  Attachments not transmittable)

                             PREPARED TESTIMONY OF
                                FRED E. TENNEY
                            THURSDAY, JULY 24, 1997

  Chairman Bunning, members of the Subcommittee on Social Security,
  it is with a great deal of pleasure and optimism that I appear
  before this Subcommittee. I would like to commend the Chairman and
  the Ranking Minority Member for maintaining the momentum on this
  issue and in a bi-partisan manner. I would also be remiss if I
  didn't compliment the Subcommittee staff on their endeavors and
  for their similar commitment to this very important goal.
  My principal reason for testifying here today is to answer the
  question, "Can the private sector return SSDI recipients with
  disabilities to work?" I offer to you that not only can it be done
  ... but that it has been done. My experience in more than a half
  dozen research and demonstration projects dealing with SSI/SSDI
  recipients, including the often referenced Project Network,
  demonstrated beyond any doubt the success of using private sector
  rehabilitation providers. Here I must acknowledge the cooperation
  and professional approach of such people as Dr. Thomas Rush, Ms.
  Natalie Funk and others from SSA in creating a professional
  environment to implement these projects.
  The "case management" approach tested in Project Network was
  successful in rehabilitating SSA recipients and would be a valid
  approach on a larger scale. While some changes are necessary for
  full national implementation, I feel that this tested prescriptive
  approach not only works but maintains a sense of consistency, and
  more importantly avoids being another bureaucratic hand out.
  The advent of computerized technology and the ongoing medical and
  rehabilitation advancements have led many U.S. taxpayers to
  question the "deep pockets" of their federal and state
  governments. "Civilized individualism" has replaced the "cradle to
  grave" social contract that arose earlier in the Twentieth
  Century. Educational institutions, social and religious
  organizations, health care vendors, and their respective funding
  sources have been called upon to provide a system that allows all
  citizens to be full participants in the economic advancements
  occurring the world over.
  Critical components to any successful return to work program are:
  1) a case management component to provide ongoing continuity and
  coordination to the process of assisting people, 2) adequate
  reimbursement to providers of quality services, and 3)client
  empowerment in the whole decision making process. I would love to
  drone on for two hours and enthusiastically describe the process
  and our successes but I will refer you to an article to be
  published in an upcoming NARPPS placement journal which details
  the results of this approach. Instead I will touch on some areas
  of concern I have which have grown out of a year and a half of
  reviews of the recommendations of the Return-To-Work (RTW) Group,
  of which I am a member.
  The Commission as referenced in our proposal and the bill Chairman
  Bunning introduced last year would be effective, regardless of the
  well meaning criticism. This is not another layer of bureaucracy,
  rather an oversight commission compiled of all interests looking
  out for the welfare of everyone. It's a venue for all interests to
  give input outside the bureaucracy. This is a much needed and
  extremely valuable resource to all concerned.In addressing the
  state/federal voc rehabilitation system, the facts are
  indisputable, they have been less than responsive to this target
  population. It is recognized this is a rehabilitation program
  meeting the needs of many of the community. The sometimes heard
  concern that this will eliminate VR rings hollow when they
  currently serve less than one tenth of one percent of those SSA
  beneficiaries referred. Again as in the testimony I gave before
  this Subcommittee two years ago, I suggest keeping them in the
  system and encourage them to participate as any other vendor. But
  please keep the playing field level. VR can and will be our
  partners in this process. We look forward to our continued close
  There are those who are concerned that the Chairman's bill of last
  year would promote "creaming". You bet it will! The question that
  goes begging, "what's the definition of creaming?" The
  conventional definition has been, serving only the least disabled.
  Not so in my world!! "Creaming" to us in the private sector is
  serving those who want to go to work. The severity of the
  disability has little to do with our ability to get a person a
  job. In short, bring us someone who wants to go to work and we
  will almost without fail see that they are employed in the
  shortest amount of time.
  "Incentive" is a term that seems to be on everyone's lips. The
  only incentive we found to be essential is the ability to get
  medical insurance. I urge you to facilitate a system that allows
  access to health insurance as part of any bill you pass. Medical
  insurance has become critical to all Americans. There will be
  others who suggest tax credits for extra ordinary expenses
  associated with employment. I have no dispute with them but I
  can't testify to the critical need. Employer incentives is a term
  I hear discussed most often by people who are not in the actual
  job placement business. Let me comment on a couple of issues
  related to employer incentives. In the early 1950's this nation
  embarked on a "hire the handicapped" campaign. It must have
  worked. There is little resistance to hiring the handicapped and
  it's getting better daily. In short, businesses hire the
  handicapped because it's in their best interest and thankfully
  socially accepted, not because of incentives but because it is the
  right thing to do. Frankly there are more jobs than people to fill
  them. Demand exceeds supply. There are probably companies with
  noble usage of the incentives, we just haven't encountered them to
  any significant degree. That's not unusual because most of our
  placements are with small businesses who don't want to be bothered
  by "government red tape". Others see this as a civic
  I earlier mentioned Project Network. Let me share some salient
  16% of all beneficiaries who received a solicitation notice from
  SSA called to find out about the project.
  38% agreed to an interview with a case manager.
  66% of all referenced interviewees agreed to participate in the
  157 clients were placed during the project.
  100 clients remained working at projects end.It would be difficult
  to establish the exact cost effectiveness of the project until the
  9 month trial work period expires. However, a glimpse into the
  future will likely show $539 a month or $6,470 a year in benefits
  will be replaced by $881 pr month in wages. If only 100 clients
  remain working (without benefit of follow-up) $647,000 in benefit
  saving per year will be realized. Over a normal 20 year work span
  without any added inflationary factors the savings on this one
  little project in AZ will be in excess of $13 Million dollars.
  In summation I have asked myself why am I here today? Why have I
  worked so hard for these recommendations to become a reality? In
  all likelihood I'll be retired before it's implementation. My
  answer is simple. It's the same answer you give every day. Because
  it's right for the taxpayers, it's right for the consumers, it's
  right for our economy and finally it's just plain right for
  Mr. Chairman and members of the Subcommittee, thank you for
  allowing me to appear before you today.

                             PREPARED TESTIMONY OF
                        THORV A. HESSELLUND, ED.D., CRC
                        IN THE PRIVATE SECTOR (NARPPS)
                            THURSDAY, JULY 24, 1997

  Good afternoon, my name is Thorv Hessellund. Today, I am here as
  President of the National Association of Rehabilitation
  Professionals in the Private Sector (NARPPS) to provide our
  recommendations on how to reform Social Security. More
  specifically, I will cite how the private sector can enhance the
  current system and return those Social Security beneficiaries with
  disabilities to gainful employment.
  In addition to being President of NARPPS, I have a Doctorate in
  Rehabilitation Counseling, I am a certified Rehabilitation
  counselor, a certified Case Manager with 31 years experience in
  the field of vocational rehabilitation, and for the last 22 years
  I have been a California based private sector vocational case
  management business owner and practitioner. I am also a current
  Vice Chair of Washington, D.C.-based Mainstream, Inc. -- a
  national non-profit organization dedicated to improving
  competitive employment opportunities for individuals with
  disabilities -- and a Director of Vocational Programs for
  Paradigm, Inc. -- a company that provides national catastrophic
  injury case management services.
  NARPPS members, approximately 3200 strong, are located in every
  state in the country. The number of medical and vocational
  rehabilitation professionals that NARPPS actually reaches is much
  larger. Many organizations with multiple offices and employees
  often take on limited membership and distribute our Newsletter,
  Journals, and other communications internally once received. Our
  organization represents private sector members who may either be a
  solo practitioner, member of a regional or national company, or a
  business owner. Whether the emphasis of the company is medical or
  vocational case management or both, we all have one goal in mind
  which is to take every. referral to the maximum level or
  productive activity with the most preferable outcome being the
  return to suitable gainful employment.
  We are not alone in our dedication and proven results, NARPPS has
  engaged in many strategic alliances and partnerships with other
  organizations united in the cause of providing high-quality
  rehabilitation services to individuals with disabilities. Some of
  these prestigious organizations are:
  - National Association of Services Providers in Private
  Rehabilitation (NASPPR)
  - Vocational Evaluation and Work Adjustment Association (VEWAA)
  - Mainstream, Inc.
  - National Management Alliance (Headed by Cornell University)
  - The Return-To-Work Group Coalition
  - Case Management Association Coalition
  Educationally, we are likely to have master's degrees in
  rehabilitation counseling or a related field, a Bachelors degree
  or higher in nursing, or could be registered an occupational or
  physical therapist. Our national certifications include Certified
  Rehabilitation Counselor, Certified Case Manager, Certified
  Disability Management Specialist, RN, BsN, Certified Vocational
  Evaluator, OTR, RPT are the most common designations. In some
  states, we must be licensed. Our referrals commonly come from
  workers' compensation carriers, long term disability insurers,
  health insurance companies, managed care companies, employers,
  attorneys, and persons with disabilities. We serve several masters
  - our referral source, the payer, who is not always one in the
  same, as well as the beneficiary of services. These referral
  sources engage the services of private rehabilitation
  professionals in order to enhance the quality of life of the
  individual needing rehabilitation services, but also to minimize
  the costs and long-term expense and liability involved in settling
  a claim or caring for the long-term needs of individuals with
  disabilities, especially in workers' compensation cases.
  Private sector rehabilitation professionals have a proven history
  of providing savings to the insurance industry by enhancing the
  functional levels of the clients they serve. We adhere to the
  NARPPS professional code of conduct as well as those of our
  particular certification(s). We are subject to peer review and
  malpractice if we do not adhere to these codes of conduct. We
  remain employed and/or in business only if we achieve results. We
  are generally perceived only as good as most recent referral.
  Though we have generally been paid on a fee for service basis,
  fiat rate billing for pre-agreed services is becoming more common
  Our members have been following closely the dialogue on Social
  Security reform. Privatization of vocational rehabilitation
  services for Social Security beneficiary is a huge potential
  referral source. If properly structured, there is opportunity for
  creative and productive rehabilitation for those recipients who
  are able and desirous of benefiting from return-to-work services.
  In many, if not most states, our members are becoming increasingly
  handcuffed by regulations, such as workers' compensation; managed
  care, which limit achievable outcomes. We are looking for new
  markets to utilize our proven capabilities. With Social Security
  reform, there remains an opportunity to establish a results based
  system where the private sector works in sync with the public
  sector toward one common goal, to return Social Security
  beneficiaries to productive activity and thus taking them off the
  disability rolls. In this way, we can work to bring our experience
  in delivering cost-effective, outcome oriented services to Social
  Security beneficiaries with associated benefits of minimizing cost
  and long-term expense to the Trust Fund.The current system was
  established with good intention and public vocational
  rehabilitation professionals are some of the most dedicated. In
  fact, many of our members got their start with State VR agencies.
  However, due to the sheer scope and magnitude of the issue, the
  public sector cannot do it alone. The private sector has a long
  and proven history of providing cost effective and successful
  return-to-work outcomes within the insurance industry. In fact,
  the private sector continues to exist and prosper specifically
  because of its ability to return individuals with disabilities to
  gainful employment over a sustained period of time. We would now
  like the opportunity to apply this success rate to SSA
  1) Minimize the disincentives beneficiaries have that impede them
  from returning to gainful employment. First and foremost is to
  protect the beneficiaries' health insurance. In this regard, we
  are in support of the five year continuation of Medicare coverage
  following return to work as proposed in the Rehabilitation and
  Return to Work Act of 1996.
  2) Tie beneficiary and service provider incentives to benchmark
  3) Give the beneficiary an informed choice through an option to
  select their rehabilitation service provider from a number of pre-
  qualified private and public sector rehabilitation professionals.
  4) Establish benchmark/milestone payments for services rendered.
  We are in support of the milestone payment system as proposed by
  the Return-To-Work Group and as incorporated in concept in the
  Rehabilitation and Return to Work Act. Simply stated, our members
  will not become alternate providers under the current system where
  payment is not available until after the beneficiary has
  maintained suitable gainful activity for nine months. The nine
  months could be reached anywhere from one year to two or more
  years following referral, depending on the rehabilitation services
  provided, and only the largest of national providers would have
  the necessary cash flow to wait so long for compensation for their
  5) The first milestone should be at the point of determination of
  vocational feasibility. That is, a determination as to the
  likelihood of the beneficiary benefiting from vocational
  rehabilitation services now or in the future. This is to performed
  either by an independent screener(such as now exists with the
  Department of Labor FECA referrals) or by the long term service
  6) The higher service provider payments come at the points of
  completion of an individual employment plan and ultimately upon
  return to suitable gainful activity for the full nine
  For myself and on behalf of NARPPS, I want to thank you for the
  opportunity to provide this testimony. We remain available if
  needed to work further with the Subcommittee on legislation to
  return SSA beneficiaries to gainful employment.
  I would be happy to answer any questions the Subcommittee may have
  for me as a rehabilitation professional in the private sector.

                             PREPARED TESTIMONY OF
                                RICK CHRISTMAN
                              EXECUTIVE DIRECTOR
                               METRO INDUSTRIES
                            THURSDAY, JULY 24, 1997

  Thank you Mr. Chairman, and distinguished Members of the
  Subcommittee, for the opportunity to testify on the important
  issue of assisting beneficiaries of Social Security Disability
  Insurance (SSDI) and Supplemental Security Income (SSI) benefits
  to increase their self-sufficiency through employment.
  I am the Executive Director of Metro Industries, a private, not-
  for-profit community rehabilitation program in Lexington,
  Kentucky. Metro Industries provides employment, occupational
  skills training and job placement to persons with disabilities and
  other individuals with a variety of barriers to employment. Today,
  I am representing a group of similar organizations in Kentucky
  known as the Kentucky Association of Community Employment Services
  (KACES). Metro Industries is also a member of the American
  Rehabilitation Association.
  The state of affairs for persons with disabilities relative to
  employment is unsatisfactory. 1994 U.S. Census Bureau data
  indicates that 73.9% of persons with severe disabilities, age 21
  to 64, were not employed. It has been estimated that only about
  one out of every 1,000 beneficiaries is rehabilitated each year
  (GAO/HEHS-96-62). More people can and must be assisted to work or
  "return to work.." More that $57 billion in cash benefits was paid
  out to people with disabilities in 1995 through the Social
  Security Disability Insurance (DI) and Supplemental Security
  Income (SSI) programs. The United States General Accounting Office
  reports that if an additional 1% of the 6.6 million working-age
  SSI and SSDI beneficiaries were to "leave the rolls," by returning
  to work, lifetime cash benefits would be reduced by an estimated
  $3 billion (GAO/HEHS-97-46, March 17, 1997). Guaranteeing rights
  and public access has increased the ability of, and opportunity
  for, persons with disabilities to become employed. Now we must
  also focus on programmatic innovation and the elimination of work
  disincentives to increase employment.The current system for
  delivery of vocational rehabilitation services to SSDI/SSI
  beneficiaries has assisted people to become employed, but many
  more people with disabilities want to work and need access to the
  services which will enable them to do so. A key element in helping
  them move into employment, and off of benefits, is already in
  place, namely, the estimated 6,700 community rehabilitation
  programs throughout the country. These community based
  organizations provide directly, or facilitate the provision of,
  vocational rehabilitation services to individuals with
  disabilities. They work with countless businesses across the
  country. Through quality evaluation, training, placement and
  support, they assist people with disabilities to work to their
  highest potential. We must expand access to rehabilitation
  services and allow consumers to choose their providers from among
  the many public and private providers available. This will enable
  more people with disabilities to receive the services they need to
  participate in the workforce.
  A combined outcome-based, milestone payment system is a necessity.
  An outcome-based system will help ensure quality results, but
  milestone payments are also essential for quality. If milestone
  payments are not available, too many community rehabilitation
  providers will find it financially impossible to bear the risk of
  participating. The program must attract an adequate supply of
  diverse providers in small and large communities alike. Providers
  should receive milestones payments at completion of an employment
  plan, after 60 days of employment, and after nine months of
  employment. This essential for success of the program. Once a
  person with a disability is working and no longer eligible for
  benefits, the provider should receive a percentage of the monthly
  benefit until five years post employment, while the person
  continues to remain off of benefits.
  The Alternate Participant Program illustrates the problem posed by
  an inadequate payment system. This program is likely to be little
  utilized because it only reimburses for actual costs and payment
  is only made after a person has completed nine months of work at
  the "substantial gainful activity" level or higher. For non-blind
  individuals with disabilities this would be earnings of $500 a
  month or higher. There must be a sharing of risk, otherwise
  participation will be limited to only a few large providers who
  have the cash flow necessary to serve a substantial case load with
  only the possibility of future payment.
  Lack of access to adequate and affordable health care coverage is
  a significant barrier to employment for persons with disabilities,
  which we must address in any "return to work" effort. Over the
  course of my 20-year career in vocational rehabilitation and other
  disability-related positions, one of the prime fears I have
  encountered among persons with disabilities and their families is
  loss of health care coverage, so much so, that the risk of the
  potential loss of one's Medicaid or Medicare coverage is often the
  primary impediment to work. Persons receiving SSDI and/or SSI, who
  become employed, should be able to maintain their health care
  coverage. Eligibility for Medicare and Medicaid should be
  maintained up to a certain level of earnings at which point a
  person with a disability should be able to pay for continued
  coverage under these programs. The need for personal assistance
  and long-term supports must also be addressed and Medicaid is
  virtually the only source of reimbursement for long-term services
  and supports.We should also attempt to address the current
  economic disincentive to work which exists for SSDI beneficiaries.
  In the current system persons face a sudden lose of benefits after
  achieving a certain level of earnings over a period of time. This
  loss of support occurs before the individual is earning enough to
  support him or herself, and acts as a financial disincentive to
  Participation in the program should be voluntary, at least until
  the program is in place for a period of time. It should also be
  fairly simple for a provider to be "certified" to provide
  services. Quality assurance should be built into the program.
  Providers should provide information on their services and
  outcomes in order to facilitate consumer choice. At the same time,
  providers should not be ranked or graded, because this would
  involve comparisons which cannot be made fairly.
  A "ticket" approach presents many concerns for providers. It will
  make the payment system difficult and uncertain. If a consumer
  needs more than one provider at the same time, how will the
  funding represented by the ticket be disbursed? If a consumer
  decides to change providers, how will payment be made?
  To enhance the design and implementation of the program, a
  commission with representation by consumers, providers and
  employers should be appointed. Working with the Social Security
  Administration, such a commission will ensure the development of a
  program that, from the onset, has the input of all the parties
  most critical to its success.
  A system which provides for consumer choice, expands access to
  services, addresses disincentives to work, provides for an
  adequate payment system, assures quality, and includes key
  stakeholders in its design and implementation, will work. We need
  to create such a system. Many, many people with disabilities who
  seek greater independence and wish to more fully utilize their
  skills and abilities will benefit. The country as a whole will
  benefit as more of its citizens are able to more fully contribute
  to the community, lessening their dependence on government and
  contributing to the tax rolls. Metro Industries, along with
  community rehabilitation providers in Kentucky and throughout the
  country, stand ready to help create such a system and work within
  it to assist more people with disabilities to increase their
  independence and self-sufficiency through employment. Thank you
  Mr. Chairman, and members of the Subcommittee, for the opportunity
  to comment.

                             PREPARED TESTIMONY OF
                               LORRAINE SHEEHAN
                          THE ARC OF THE UNITED SATES
                       SUBJECT - BARRIERS TO EMPLOYMENT
                            THURSDAY, JULY 24, 1997

  Thank you, Mr. Chairman and Members of the Subcommittee, for this
  opportunity to testify on the barriers to employment for Social
  Security disability beneficiaries. The Arc of the United States
  has joined in the statement of the Consortium for Citizens with
  Disabilities. We appreciate the leadership of Chairman Bunning and
  Representative Kennelly in taking a serious and long overdue look
  at the work incentive and barrier issues in the Social Security
  disability programs. I will use this opportunity to highlight and
  discuss in further detail the issues and problems facing people
  with mental retardation.
  I am testifying in my capacity as Chairperson of the Governmental
  Affairs Committee of The Arc of the United States and also as
  mother of my son John. John is 31 years old, has mental
  retardation, works in groundskeeping at Sandy Point State Park
  during the summer, and has been receiving SSI benefits since 1984.
  During the school year, he works for the Marriott cafeteria at St.
  John's College in Annapolis. His work is known as supported
  employment because he has a job coach to assist with transitional
  and other job-related issues.
  Title II and People with Mental Retardation
  Before I make certain basic points about the experience of people
  with mental retardation in the Title II program, let me explain
  why Title II is important to people with mental retardation. Many
  people with mental retardation receive "Title II" Social Security
  benefits as adult dependents of their parents who have retired,
  become disabled, or died. To qualify in this way for benefits
  based upon a parent's work history, the adult "child" must have
  been disabled during childhood. This group of eligible adults
  disabled during childhood are often referred to as "DACs"
  (disabled adult child).
  In addition, a growing number of people with mental retardation
  receive Title II disability insurance benefits as a result of
  their own work history (quarters of coverage) and disability.
  Since the eligibility criteria and work incentive provisions of
  the disability insurance program are applied to all of these
  categories of adults, the term SSDI (Social Security Disability
  Insurance) is often used in references to encompass all of the
  Title II disability programs (even though it is technically
  incorrect for encompassing all). It is important that improvements
  in any of the work incentives be applied to all people who receive
  Title II benefits on the basis of disability, not just those who
  are technically in the SSDI program.
  The Lessons of Section 1619 and Title II Work Incentives
  I would now like to highlight a number of key issues regarding
  work incentives for people with mental retardation, based on the
  experiences of people with mental retardation as reported to us
  over the years by themselves, their parents, and service
  - People with mental retardation have a life-long disability.
  Although most can work, those who are severely disabled enough to
  qualify for SSDI or SSI benefits are likely to need life-long
  support of some sort even if they are working. That need for
  support will vary with the individual, depending on circumstances
  including age, health, skill development, and family and community
  support, to name a few.
  -   Success for many people with mental retardation must be
  measured in decreasing dependence (financial or otherwise) and
  increasing productivity and community participation; success
  should not be measured solely in terms of elimination of benefits.
      The fact that many people continue to use Section 1619 of the
  SSI program without "moving off" should not be viewed as failure.
  For the people with mental retardation involved, they have
  increased their own financial stability while reducing the amount
  of cash benefits paid out of the general treasury.
  -   In my son's situation, the SSI exclusions for impairment
  related work expenses make work pay. Transportation to and from
  work absorbs half of his earnings; the IRWE helps cover those
  expenses before SSI benefits are reduced on the basis of earnings.
  - Due to the nature of the disability and to the nature of job
  opportunities traditionally open to people with mental
  retardation, many will start as low-wage workers and will remain
  at lower levels of income most of their lives, often in jobs which
  do not provide health or other benefits. Many will be the last
  hired, lowest paid, and the first to be fired in any restructuring
  or downsizing. While my son has been working at St. John's College
  for 4 years, previous to that he had a series of 4 to 5 jobs which
  lasted from 1 to 5 months. Even with the additional support of the
  job coach, it was and can be very hard to find jobs which are an
  appropriate match for the individual with mental retardation and
  the employer. Sometimes, fitting in with untrained or uninterested
  managers or co-workers can be an insurmountable hurdle. In spite
  of the fact that my son clearly wants to work, as do others like
  him, and in spite of the Americans with Disabilities Act and the
  Rehabilitation Act, it can be difficult to find jobs which provide
  the right match for people with significant cognitive limitations.
  It is even more difficult to find those jobs which provide the
  long term stability and support needed by an individual with
  significant impairment over a lifetime. John's summer job does not
  provide health or retirement benefits; his school-year job is also
  considered part-time and does not cover benefits.
  - Therefore, the "cash cliff" in Title II (the loss of all cash
  benefits after reaching the substantial gainful activity (SGA)
  level of earnings for the 9 months of the trial work period (TwP))
  and the cost of continuing Medicare are very real barriers to
  work. In the SSI program, Sections 1619(a) and (b) allow for a
  gradual decline in cash benefits as earned income increases beyond
  the SGA level and for continued Medicaid coverage, even beyond the
  cash break-even point, for as long as the person needs continued
  Medicaid in order to continue working. The Social Security
  disability program does not have similar work incentives. There,
  people lose all cash after 9 months of trial work and Medicare is
  very expensive for lower income earners when the extended period
  of eligibility (EPE) is exhausted. It is important to note that,
  when the Section 1619 program was made   permanent in 1986, the
  TWP and EPE were eliminated in SSI; with the gradual cash offset
  and the availability of continued Medicaid, TWP and EPE were no
  longer necessary.
  -  In addition, there are very significant complications for
  people who move from SSI Section 1619 work incentives to the Title
  II-disability programs and for those who receive benefits from
  both Title II and SSI.
  - We strongly believe that a parallel program to Section 1619
  should be established in Title II, including elimination of the
  confusing TWP and EPE.
  - In our experience, there is a very typical scenario for people
  with mental retardation and their attempts to work despite severe,
  life-long disability. Of course, there are innumerable variations,
  but the basic scenario is repeated over and over again across the
  country in family after family.
  - First, the young person, often upon becoming 18 years old,
  becomes eligible for SSI based on disability and low income and
  resources. The individual is able to increase income to the best
  of his/her ability using the Section 1619 program. This is where
  my son fits into the scenario.
  - Then the individual's parent retires or becomes disabled. The
  individual becomes eligible to receive a benefit of 50 percent of
  the parent's benefit. This will happen to my son John soon. As you
  know, an SSI beneficiary must apply for and accept all other
  sources of income or benefits he/she is entitled to, because of
  the nature of the SSI program as supplemental income.
  - As a result of this increase in unearned income, the individual
  may lose SSI
  - completely OR may receive both SSI and SSDI simultaneously. It
  is at this step that it becomes clear that the Work incentives in
  SSI and SSDI are not at all coordinated.
  - The next major change comes when the parent dies. As parents,
  our greatest fear is not for our own futures, but for the future
  of our sons and daughters, particularly when they have significant
  limitations in their ability to anticipate and care for their own
  needs. At this point, the individual becomes eligible for a Title
  II benefit equal to 75 percent of what the parent's benefit was.
  Once again, the individual may lose SSI altogether and move
  completely into Title II, OR may continue to receive SSI and SSDI
  - Throughout all of this, the individual has not changed at all.
  There may have been no change in job status, no change in job or
  income, no promotion. Yet, the person, through no action of
  his/her own, may become ineligible for basic safety net support
  and is forced to choose between that critical support or work
  which cannot meet his/her needs.- The loss of SSI benefits and the
  loss of those work incentives which make it possible to improve
  financial stability, therefore, may also mean the loss of work and
  the loss of an important factor in quality of life. The individual
  with a significant impairment and the need for some level of life-
  long support simply cannot afford to Work at this point unless
  potential income is high enough to skip over the cliffs and
  canyons created by the loss of the Title II cash benefit and
  medical coverage. For the individual whose income is likely to
  start and remain low, including most people with mental
  retardation, the loss of work is likely.
  - For my son and others like him, loss of meaningful work also
  means loss of part of your identity. As for many of us, your work
  is who you are.
  - The movement between programs requires other trade-offs also. In
  SSI, the Sec. 1619 work incentives encourage work. However, a
  person cannot save meaningfully for the future because of the
  limits on resources. While in SSDI, the work incentives do not
  encourage work, so a person cannot earn. However, there are no
  restrictions on savings for the future. Both programs require that
  the individual give up one or the other of these essential
  components for future financial security, if not total financial
  independence. Families helping a person with significant cognitive
  impairment, like mental retardation, must be concerned for the
  future and the long-term.
  - In designing a series of changes for Title II and/or SSI,
  remember that, for people with mental retardation, work is often
  for the first time and may require different approaches than for
  people who are "returning" to work.
  - Finally, I would like to make a comment on SGA. The substantial
  gainful activity level needs an increase and should be indexed for
  inflation. Rep. Phil English has introduced a bill which is long
  overdue. We urge the Committee to address it as part of its work
  incentive improvement efforts. However, caution will be necessary
  to ensure that it works in the overall context of work incentives
  addressed here this week.
  The Arc would like to work with the Committee on all of these work
  incentive issues. Our goal is to make work incentives really work,
  to make them sensitive to the different needs of people with
  different strengths and limitations, and to have them incorporate
  the need to potentially support some people over a lifetime. We
  look forward to working with you.

                             PREPARED TESTIMONY OF
                                 BRENDA CRABBS
                           THE ARTHRITIS FOUNDATION
                            THURSDAY, JULY 24,1997

  Good afternoon Mr. Chairman, ladies and gentleman.
  My name is Brenda Crabbs and I am here today on behalf of the
  Arthritis Foundation to speak about Social Security disability
  reforms and back to work incentives. I am the chair of the Public
  Policy and Advocacy Committee for the Maryland Chapter, a member
  of the Foundation's national Public Policy and Advocacy Committee
  and an SSDI beneficiary.
  Arthritis, one of the oldest diseases known to man, is a major
  factor in the economic and social fabric of the United States.
  Each year, 40 million Americans with arthritis and other
  musculoskeletal conditions make 315 million physician visits, have
  8 million hospital admissions and experience approximately 1.5
  billion days of restricted activity. Arthritis is the number 1
  cause of disability in America and the second leading cause of
  disability payments. Overall, the impact of arthritis and related
  diseases on the economy of the United States amounts to more than
  $149.8 billion, approximately 2.5% of GNP.
  The economic realities of the graying of the baby boomers and
  increased longevity of the American population cannot be ignored
  as you consider reforms to the SSI and SSDI programs. The size of
  the Social Security disability rolls will mushroom in the next two
  decades and serious changes need to be made to minimize the strain
  to the disability system. By the year 2020, the number of
  Americans with arthritis will jump to 60 million. When combined
  with other chronic diseases, the potential cost to the Social
  Security disability system is staggering.
  Of the 40 million Americans of all ages with some form of
  arthritis, nearly two-thirds of them are women. These diseases
  destroy joint tissue, damage internal organs, shorten life
  expectancy, weaken the spine, make bones brittle and in many
  cases, deprive individuals of physical and financial independence.
  Osteoarthritis and rheumatoid arthritis are leading causes of work
  limitation among women. Patients with rheumatoid arthritis have a
  one in three chance of becoming disabled and 50% of patients with
  rheumatoid arthritis stop working within 10 years of diagnosis,
  60% within 15 years.
  Some facts related to Social Security Disability Payments
  -   One in ten of all women under 65 receiving SSI payment is a
  woman disabled by musculoskeletal disease: the fourth largest
  category after mental disorders, retardation and diseases of the
  nervous system.
  -   Within the age group 60 to 64, the proportion rises to one in
  5, only slightly lower than the leading category.
  -   Women under the age of 65 with musculoskeletal diseases
  represent 7.3% of all SSDI beneficiaries.
  -   Lifetime costs of lost earnings because of rheumatoid
  arthritis are close to heart disease and stroke.
  I, unfortunately, am one of the 7.3% of women under 65 who has had
  to stop working because of rheumatoid arthritis. I was diagnosed
  34 years ago and stopped working 5 years ago. Because of excellent
  medical care, advances from research and a lot of determination, I
  beat the odds and was able to work longer than most, but I miss
  working. There is no expectation that I am going to experience a
  medical recovery. My ability to work is limited by significant
  loss of function in many joints, and multiple operations (three in
  last four years with more to come). So the question becomes who
  would want to employ me? And more importantly, who would want to
  insure me? I don't need referral to vocational rehabilitation
  because there is no expectation that I will ever get better. And
  yet, it would certainly be better for my mental and emotional
  health if I felt like I was able to be productive.
  Perhaps a tax credit should be considered for disabled persons who
  try to work despite their disabilities and, or a personal
  assistance tax credit to compensate working people for the help
  they need to work. These tax credits would provide an additional
  incentive for people to leave the Social Security disability rolls
  by compensating them for additional expenses such as
  transportation and health care costs incurred by returning to
  In addition, a tax credit for employers might make them more
  receptive to hiring persons with disabilities who want to return
  to work. The credit would make up for additional expenses that an
  employer would have to absorb for any changes in the workplace
  that would be required to accommodate a person with a disability.
  Because of my background, I occasionally have the opportunity to
  use my skills working from home at my own pace, but I am limited
  by the $500 cap or "substantial gainful activity" definition. If I
  exceed that amount, I not only lose my benefits, I lose my health
  insurance. The $500 figure does not fit with today's cost-of-
  living and needs to be adjusted to keep pace with economic growth.
  As a self-employed person who works on a contract basis, Social
  Security regulations subject me to an even higher standard of
  Substantial Gainful Activity. When determining SGA for me, SSA
  considers the value of my work to the business and evaluates
  whether I provide significant services to the business. The hours
  I can work each month are restricted. This higher standard
  combined with the current SGA level of $500 per month requires me
  to give away my skills. In addition, I constantly worry about
  inadvertently violating a regulation which would cause me to lose
  my benefits.
  Existing work incentives are extremely complex and hard to
  understand. Adequate and well-trained administrative resources to
  serve beneficiaries are essential. The booklets put out by the
  Social Security Administration are confusing. I went to my local
  Social Security office and met with a representative. His main
  advice was not to make more than $500. He never told me I could
  buy into the Medicare system. I was given a form to fill out and
  told to mail it in. The form is not available by mail and yet the
  Social Security Administration wants recipients to report earned
  income on a continuing basis. This is not a user friendly system
  and part of the disincentive to try working is the lack of faith
  in the predictability of the system's response.
  Once on Medicare, the fear of losing Medicare benefits is a major
  disincentive to work. Part-time employment does not provide health
  benefits and private health insurance is not available to those
  with difficult medical backgrounds. Current underwriting practices
  and limits on benefits are critical disincentives. Employers don't
  want a disabled person on their health plan because it pushes up
  their rates.
  After being disabled for 2 years, a person is offered Medicare and
  the information states that, if he doesn't take it then, he won't
  have another opportunity until age 65. Once a person signs on,
  Medicare becomes primary coverage and private insurance drops an
  individual even as a secondary insurer. The only secondary
  coverage available is a medigap policy. For people under 65 who
  are disabled, there are very few medigap insurance products
  available nationwide. None provide prescription coverage. So for
  the people who need coverage the most, there is the least
  As a divorced women, I have firsthand experience of the dilemma of
  choosing between Medicare or health coverage provided through my
  ex-husband as part of the divorce agreement. His plan provided
  excellent benefits and included prescription coverage but I chose
  to take Medicare because I simply couldn't afford to risk the loss
  of health benefits if something happened to his job. In choosing
  Medicare, I was forced to absorb the expense of prescription
  In order to be self supporting and get off of SSDI, a person has
  to be able to work on a regular basis a substantial amount of time
  for good wages. Currently, I believe the Medicare buy-in cost is
  $332 per month or $4000 per year for Part A. Part B premiums add
  another $500 per year. In addition, my prescription costs are
  approximately $300 per month or $3600 per year. A medigap policy
  premium is another $1200 per year. This is over $9000 in basic
  medical costs before a doctor is visited or a procedure is
  completed. Then there are the rest of living expenses -food,
  clothing, rent, transportation, etc. When you are disabled, it
  costs more to do everything from cleaning your house to pumping
  A simplified, well advertised and affordable Medicare buy-in
  should be established. Congresswoman Kennelly's Transition to Work
  bill brings the Medicare buy-in program into the real world and
  would enable me to work when I can without limits on the amount I
  can make, but still have the safety net when I need it. This would
  go a long way toward helping me maintain financial independence
  and would enhance the quality of my emotional and psychological
  well being.
  In conclusion, the system badly needs reform. There is sometimes
  an attitude in society that individuals on disability are derelict
  and simply do not want to work. Not only is that picture unfair,
  it is simply inaccurate. Many people on the Social Security
  disability rolls are educated and have skills that make them
  employable in spite of their disability. They need help simply
  because life has dealt them a different hand. They want to work.
  The potential loss of Medicare and complicated rules for returning
  to work serve as a deterrent for even attempting to leave the
  Social Security rolls.Help people work with their disabilities and
  remain productive members of society. One set of rules does not
  fit all circumstances, the system needs flexibility to deal with
  different types of disability. Some consideration should be given
  to differentiating between individuals who are likely recover from
  their illness and those who are chronically ill and have no chance
  of medical improvement.
  Thank you for this opportunity to appear before you. I would be
  happy to answer any questions you may have.

                             PREPARED TESTIMONY OF
                                  SUSAN WEBB
                              EXECUTIVE DIRECTOR
                               RETURNING TO WORK
                            THURSDAY, JULY 24, 1997

  Mr. Chairman, members of the subcommittee, thank you for your
  interest in disability-related issues. Thank you for inviting me
  to be with you today. My name is Susan Webb and I am the Executive
  Director of the Arizona Bridge to Independent Living (ABIL), a
  Board Member of the National Council on Independent Living (NCIL),
  and chair of NCIL's Social Security subcommittee.
  Representative Bunning, on the last day of the 104th Congress you
  delivered a statement from the House floor that included a
  deplorable statistic: 1 in 1,000 SSDI beneficiaries voluntarily
  leave the rolls to return to work. I am here today is as a
  representative of that statistic. I am the 1 in 1,000 who did so.
  Twenty three years ago I fell off a motorcycle while attending a
  company picnic. I woke up two days later with 60% of my body
  permanently and irreversibly paralyzed. After three years of
  physical and vocational rehabilitation I used the SSDI Trial Work
  Period to return to work. I have worked full-time without
  interruption for the last 20 years.
  As near as I can estimate, the American people provided me with
  approximately $29,000 in SSDI and Vocational Rehabilitation
  services (allowing 20% for administrative overhead). I am proud to
  say that in one year during the last twenty (admittedly a good
  year!) I paid back every cent of that $29,000 in taxes. As for the
  taxes I paid during the other 19 years, well, I figure that's an
  investment in the greatest country in the world. Clearly, my
  returning to work was far more cost-effective for our Nation than
  if I had not returned to work. And, of course, my lifestyle is far
  closer to the American Dream as a result.
  Now, you might be inclined to assume that if I did it, so can the
  millions of other SSDI recipients. Unfortunately, I am the
  exception rather than the rule because I was very, very lucky.
  Many components involved in my achieving this goal happened to
  fall perfectly into place for me. It obviously does not happen
  that way for the vast majority of SSDI beneficiaries. For example:
  I. My medical expenses were completely covered as I was dually
  insured by an employer-provided health care policy and as a
  dependent on my husband's policy. Although they did not cover all
  the costs of assistive technology (formerly called durable medical
  equipment), my employer had purchased short-term disability
  insurance which provided me with $100 per week for 26 weeks. I
  used this income to purchase the additional equipment I needed to
  achieve independence.
  2. The Social Security Administration didn't hassle me about
  eligibility for benefits. After the five-month waiting period I
  began receiving cash benefits without lengthy appeals. I received
  accurate information on options available to me including the Work
  Incentives. I received no threats or letters of "overpayments". In
  short, I was not afraid to leave the rolls as I had not had a
  threatening experience with the SSA to begin with. It never
  occurred to me to worry about what would happen if for some reason
  I found I did not have the endurance to work successfully. I
  assumed the safety net of the SSA would be there for me if I
  needed it.
  3. I owned an automobile that was fully paid for. Having
  transportation that enabled me to come and go whenever and
  wherever I needed allowed much greater opportunity to continue
  with outpatient therapy, attend college and ultimately return to
  4. State Vocational Rehabilitation was relatively new as the
  Rehabilitation Act of 1973 had just been adopted. My VR counselor
  was focused on counseling rather than the professionalized,
  process-oriented, bureaucratic system we have today. She was
  actually helpful in providing advice and guidance while I made my
  own decisions about the direction of my life.
  5. My family was supportive. I went to live with an aunt and uncle
  for six months. My uncle built a ramp and installed grab bars.
  They had two children living at home with disabilities. They knew
  I needed time to practice independent living skills to become
  completely independent and avoid institutionalization in expensive
  nursing homes. I have never been institutionalized due to the
  support available to me that enabled me to adjust while living and
  functioning in the community.
  6. My disability is not as severe as that of many others. I was
  young, healthy and strong when my accident occurred. I do not need
  personal assistance for bathing, dressing, toileting, meal
  preparation or housekeeping. 1 do not need personal assistance on
  the job such as job coaches, sign language interpreters, readers,
  etc. For those who need these services, working is only possible
  when such services are available, preferably on a co-pay or tax
  credit basis.
  7. When I started back to work, the economy was good, jobs were
  available. My employer, Michigan Bell, had just been selected by
  the President's Committee on Employment of the Handicapped (now
  the President's Committee on Employment of People with
  Disabilities) as "Handicapped Employer of the Year". I had
  marketable skills and training. I worked for the Bell System/AT&T
  for 12 years in two states. Accommodations, when I needed them,
  were made willingly. I was pan of the team and considered a
  valuable employee.
  My colleagues and I come to you today with a proposal developed by
  those of us who have "been there". On January 31 and February 1 of
  this year, 40 consumers with disabilities, most of whom have
  received SSI or SSDI, assembled in Houston, Texas to answer one
  fundamental question: What will it take so that SSI/SSDI
  beneficiaries can reduce our dependency on these systems by
  starting or returning to work? We believe that our comprehensive
  proposal, developed by those of us whose very lives depend on this
  system, demonstrates a cost-effective, reasonable answer to that
  As NCIL's representative at the Houston conference, I was one of
  the five steering committee members facilitating the position
  development. NCIL's Board of Directors formally adopted the
  position at our Board meeting in March, 1997. It is important to
  note, however, that this position is representative of people
  across the Nation representing a cross-disability, cross-country,
  multi-cultural perspective. It stands on its own merit as a
  comprehensive document that should be used as a jumping-on point
  to other stakeholders as partners in a cohesive, bipartisan
  movement toward successful (re)entering the workforce for millions
  of Americans with disabilities.
  The National Council on Disability plans to issue a report to you
  within a week that details all of the provisions of the position.
  For the sake of brevity, however, I offer you the following
  summary of our position:
  - Only 1 in 500 SSDI beneficiaries voluntarily leave the rolls.1
  - Few beneficiaries know of or use the current work incentives.
  - Linkage between benefits perpetuates "all-or-nothing" focus
  (e.g. beneficiaries lose health care coverage if they leave the
  - State VR system is the only option for SSA referrals for return-
  to-work services. VR serves only a small percentage of these
  - SGA earnings cliff discourages work.
  - Lengthy eligibility determination, lack of consistent
  information by SSA, and lack of confidence in SSA disincents work
  - System change must include incentives for all stakeholders:
  beneficiaries, employers, insurers, public and private vocational
  providers, taxpayers, SSA.
  - SSI and DI programs need to be simplified/consolidated.
  - Changes must be comprehensive. Piecemeal solutions have never
  - Focus must be on reduction of dependency on the system rather
  than whether an individual fully leaves the rolls.
  - Proposed solutions must be revenue neutral or demonstrate
  savings to the trust fund and/or general fund.
  - Systems must focus on the relationship between beneficiaries and
  employers. SSA should not be gatekeeper or be in the business of
  vocational services. Beneficiaries must control and be primarily
  responsible for the own return-to-work plan.
  Increase Choice in Employment Services and Providers
  - Consumers/beneficiaries take responsibility for choosing among
  providers of return-to-work employment services, both public and
  - Providers of employment services are reimbursed upon attainment
  of milestone outcomes, e.g., after completing training, after job
  placement, after a period of time on the job.
  Streamline SSI/SSDI Work Incentives
  - SSI and SSDI benefits should be reduced $1 for every $2 earned
  above $500 in earned income. Reductions should be made in $50 and
  $100 increments. This would allow low wage earners or those only
  able to work part time to work as much or as little as their
  disability allows but would still reduce dependency on the system.
  The incremental offsets would reduce the accounting burden and the
  historical inaccuracy of determining benefit reductions monthly.
  - Eliminate existing complexities: e.g., Trial Work Period (TWP)
  and Extended Period of Eligibility (EPE). The offsets described
  above would achieve the safety net needed to encourage return-to-
  work attempts but would do so in a manner more consistent with
  transitioning rather than reaching an "earnings cliff" associated
  with the existing TWP and EPE.
  - Eliminate Substantial Gainful Activity (SGA) except as it
  relates to initial SSDI eligibility. We understand that an
  earnings benchmark is needed to identify when an individual is
  considered "employed" by the very nature of SSDI being an income
  replacement program when loss due to disability occurs. However,
  beyond initial eligibility, it serves as an earnings cliff and
  bears no relevance on ability or inability to work, especially if
  the 2:1 offset proposed above is adopted.
  - Retain the Plan to Achieve Self-Support (PASS) Program and apply
  it to SSI and SSDI beneficiaries. The PASS Program has been
  criticized recently for being underutilized, poorly managed by the
  SSA and used by beneficiaries with little successful outcome. We
  believe the PASS program represents a viable means for
  beneficiaries to ease back into the workforce by setting aside
  earned income for pre-employment expenses, such as specialized
  transportation, job coaching, sign language interpreters, personal
  assistance services, assistive technology and specialized
  transportation. We believe that the lack of usage and questionable
  success of the PASS Program is directly related to the fact that
  other barriers described in this proposal have not been addressed
  simultaneously. We believe the PASS Program would be immensely
  successful if implemented as pan of a comprehensive public policy
  around (re)entering the workforce.
  - Improve SSA accountability by establishing an independent,
  federally-funded oversight body that includes all stakeholders (5
  1% consumers) who approve employment-related regulations and
  monitor their implementation. As evidenced in recent history by
  such progressive endeavors as the Americans with Disabilities Act,
  public policy should be shaped by the Americans whose lives are
  affected. Personal accountability and responsibility can only be
  achieved when those expected to be accountable and responsible
  have the major voice in the programs imposing the expectation. A
  consumer-controlled oversight entity will achieve this goal.
  Remove Financial Disincentives to Work
  - Establish an Impairment Related Work Expense Tax Credit for
  SSI/SSDI beneficiaries who work to cover 75% of the cost of
  impairment related expenses up to a maximum of $15,000 per year.
  Phase out at an income level of $50,000 and end at $75,000.
  Individuals with the most severe disabilities (e.g. needing
  attendant services, sign language interpreters, job coaches) are
  the most difficult to employ because these expenses are rarely
  considered a "reasonable" accommodation for an employer to
  provide. Further, expenses for assistive devices such as motorized
  wheelchairs, lift-equipped vans, prosthetic limbs, etc. that make
  some individuals more employable are expensive and often not
  considered "medically necessary" such that health insurance would
  pay for these items. A tax credit would offset these expenses only
  when the individual is employed, thereby providing an incentive to
  actually go to work. Tax credits also apply only to actual
  disability-related expenses rather than "one-size fits all" cash
  benefits that offer no incentive to work.
  - Current IRWE tax deductions should be extended to include
  expenses related to preparation for and traveling to and from
  work. The need for in-home personal assistance services and
  specialized transportation are a major barrier to employment. Tax
  deductions for these expenses would help offset these costs.
  Enhance Employer Incentives
  - Implement a FICA exemption (50% first year, 75% second year and
  100% third year). This incentive would be attractive to small and
  medium sized businesses whose fear of hiring persons with
  disabilities might be willing to give it a try in order to reap
  the FICA savings. The proposal assumes that after the third year,
  the employee will have become an indispensable part of the team.
  - Implement a tax credit for true expenses such as increased
  workers' compensation costs, health care insurance, worksite
  modifications, sign language interpreters, print materials in
  alternative formats, on-the-job personal assistance, job coaches,
  Although numerous studies conducted over the years by corporations
  such as McDonald's and Dupont demonstrate that the cost of
  accommodations is minimal, many employers still fear that one-in-
  a-million case where the costs are extraordinary. This provision
  is to allay that fear but still provide a safety net for the rare
  circumstance where an employer is extraordinarily burdened.
  - Establish an insurance fund that would cover employers'
  extraordinary expenses. Premiums could be taken as a tax credit.
  This would be an added benefit to allay employer fears.
  Extend Medical Services
  - Establish a Medicaid buy-in to allow consumers to buy Medicaid
  on a sliding scale according to adjusted gross income after
  deductions for Impairment Related Work Expenses.
  - Establish a Medicare buy-in after current coverage ends. Premium
  should be 10% of adjusted gross income in excess of $15,000.
  Current Medicare premiums are typically considered too expensive
  by most beneficiaries, especially those unable to work full time.
  - Encourage states to provide personal assistance services to
  workers with disabilities on a co-pay or premium basis similar to
  the Medicare buy-in.
  - Include a wrap-around provision in Medicare and Medicaid to fill
  gaps in employer-provided health insurance.
  - Encourage states to provide equal access to psychiatric services
  including co-pays.
  We realize that at first blush these recommendations might lead
  you to ask: "After all these benefits, what would be leftover from
  earnings to add to the tax base? Isn't this a little excessive?
  How will this possibly save the trust fund and/or general fund?"
  We are in the process of developing a means to cost-out this
  proposal. However, it is important to recognize these proposal
  provisions in the context of a large consumer base. No one
  consumer or employer would use all of them. The proposal is
  designed to offer the widest latitude to pick and choose those
  provisions that will incent a particular individual or employer.
  Our goal was to develop a proposal that would include all the
  flexibility needed to anticipate the characteristics of a broad
  base of consumers and employers. For example, the 2:1 offset would
  be attractive to a consumer who is only able to work part time or
  sporadically. For a consumer who begins work at a high wage,
  he/she will not be eligible for the offset. For those consumers
  whose accommodation needs are minimal, the employer would absorb
  the cost as a reasonable accommodation and, therefore, the
  consumer would not claim a tax credit.
  By having the courage to make the comprehensive changes envisioned
  here people with disabilities will gain a significant foothold on
  realizing the full promise of the Americans with Disabilities Act
  of 1990 by finally achieving equality with our non-disabled peers
  in achieving full economic independence and inclusion in the
  mainstream of American life. Not only will we the people with
  disabilities benefit but so, too, will those who provide
  employment services to us, those who employ us, those who insure
  us, and most importantly, the taxpayers who unwillingly
  financially support us.
  We recognize this is a massive undertaking. We applaud this
  committee's leadership in bringing this issue to the forefront. We
  ask for your continued leadership in shaping an effort that will
  go beyond the jurisdiction of this committee to encompass both
  sides of the aisle and both houses of Congress. Anything less than
  a complete solution will only be a Band-Aid that WILL NOT WORK.
  If, however, we wage a massive systems change, millions of
  Americans with disabilities, hopelessly living in poverty today,
  will be successful, contributing members of Workforce 2000.
  Respectfully submitted:
  Susan Webb, M.B.A., PHR
  Arizona Bridge to Independent Living 1229 E. Washington
  Phoenix, Arizona 85034
  (602) 256-2245 (V/TTY)
  (602) 254-6407 (FAX)
  jj webb @worldnet. att. net
  1 According to a General Accounting Office report submitted to the
  Ways and Means Subcommittee on Social Security Disability in 1996.
  Representative Bunning's statement flora the House floor used a I
  in 1,000 statistic.

                             PREPARED STATEMENT OF
                                  TONY YOUNG
                         SOCIAL SECURITY SUBCOMMITTEE
                            THURSDAY, JULY 24, 1997

  These Signatory Organizations Support This Statement in Principle
  Alliance for Rehabilitation Counseling (NRCA/ARCA)
  American Network of Community Options and Resources American
  Rehabilitation Association
  American Association on Mental Retardation
  Bazelon Center for Mental Health Law
  Goodwill Industries International
  International Association of Psycho-Social Rehabilitation Services
  Inter-National Association of Business, Industry, and Labor
  National Association of Developmental Disabilities Councils
  National Association of Protection and Advocacy Systems Paralyzed
  Veterans of America
  The Arc of the United States
  United Cerebral Palsy Associations, Inc.
  Thank you, Mr. Chairman and distinguished Members of the
  Subcommittee, for this opportunity to testify on Barriers
  Preventing Social Security Disability Recipients From Returning to
  Work. I am Tony Young, a Public Policy Associate with the United
  Cerebral Palsy Associations, Inc., and a former SSDI beneficiary.
  Today I appear before you representing the Consortium Citizens
  with Disabilities Vocational Working Group. Reflecting the complex
  interrelations between Social Security and employment, the
  Vocational Working Group consists of expert members from the CCD
  Task Force on Social Security and the CCD Task Force on Employment
  and Training. CCD is a coalition of almost 100 national disability
  organizations working together to advocate for national public
  policy that ensures the self-determination, independence,
  empowerment, integration and inclusion of children and adults with
  disabilities into all aspects of society. The CCD Social Security
  Task Force monitors federal policy that impacts upon SSDI
  beneficiaries and SSI recipients. The Employment and Training Task
  Force monitors federal policy that effect employment of people
  with disabilities.
  Recent reports from sources as varied as the General Accounting
  Office\1 (GAO), the National Academy of Social Insurance\2 (NASI),
  the National Council on Disability\3 (NCD), the Consortium for
  Citizens with Disabilities\4 (CCD), the Employment Support
  Institute at the Virginia Commonwealth University\5 (ESI) and the
  Return To Work Group\6 (RTW) all demonstrate that there are five
  principal barriers to the employment of individuals with
  significant disabilities who are SSDI beneficiaries and SSI
  recipients (SSDI/SSI beneficiaries).
  The barriers are:
  1. The loss of health benefits;
  2. The complexities of current work incentives;
  3. Financial penalties of working;
  4. Lack of choice in employment services and providers; and,
  5. Inadequate work opportunities.
  The solutions are:
  1. Extend Health Benefits;
  2. Streamline Work Incentives;
  3. Make Work Pay;
  4. Enhance Consumer Choice of Services and Providers; and,
  5. Help Employers to Employ Individuals with Significant
  It is generally agreed that all of these barriers must be solved
  in order to empower individuals with significant disabilities to
  go to work\7. We recognize that some of these solutions lie beyond
  the jurisdiction of the Subcommittee On Social Security, and even
  beyond that of the Committee on Ways and Means. Nonetheless, while
  we will focus our testimony on issues under the Subcommittees'
  jurisdiction, we chose to discuss the full range of these
  solutions with this Subcommittee for three important reasons:1.
  All of these barriers must be resolved in order to empower
  individuals with significant disabilities to go to work. The major
  studies of the disincentives to work done by the General
  Accounting Office, the National Academy of Social Insurance, and
  the Employment Support Institute all agree that to truly solve
  this problem, a comprehensive solution is required.
  2. It is important to note that these solutions address issues
  faced by not only people with disabilities. There are five
  stakeholder groups with a direct interest in this issue:
  individuals with disabilities; providers of employment services;
  employers; policymaker, especially the US Congress, and,
  taxpayers. Each of these stakeholders holds a portion of the
  answer to the puzzle of employment for SSDI/SSI beneficiaries.
  Without the willing participation of each stakeholder to implement
  the solutions, there is no hope of achieving the desired outcome
  of reducing cash assistance payments for SSDI/SSI beneficiaries
  through work.
  3. The Subcommittee, especially through its Chairman and Ranking
  Member, has demonstrated leadership and strong interest in
  crafting solutions to barriers to employment for SSDI/SSI
  beneficiaries. We strongly encourage the Subcommittee to carry on
  in its leadership role on this issue in the areas under its
  jurisdiction, and continue to work in a bipartisan, cooperative
  mode with other Committees and Subcommittees, and the
  Administration, as appropriate, to enact a comprehensive solution
  to these barriers. Our goal is to work with the Subcommittee on
  Social Security, along with other partners, to create an effective
  system that both supports employment for those who can work and
  early retirement for those who, due to the severity of their
  disabilities, cannot work.
  Scope of the Barriers
  The solutions outlined above reflect the desire of many
  individuals with significant disabilities to change the way SSDI
  responds to the needs of persons with work disabilities. In the
  beginning SSDI was designed as an early retirement program to
  provide income support for injured or ill workers who could no
  longer perform Substantial Gainful Activity in a post World War II
  Industrial economy. In the four decades that have elapsed since
  the inception of SSDI, the economy has changed substantially,
  perceptions of individuals with significant disabilities have
  changed substantially, and even the nature of work has changed
  substantially. SSDI has only experienced technical modifications
  that have left it struggling to cope with a new generation of
  workers with disabilities trying to obtain employment in a booming
  Information Economy.
  In essence, individuals with significant disabilities want to
  benefit from taxpayer dollars spent on assisting our efforts to
  seek opportunity, employment, productivity, and freedom rather
  than for dependence on cash assistance. We want to work to the
  maximum of our physical and mental capacities, fully understanding
  that even if we do so, some of us will not earn enough income to
  be economically self sufficient, and some of us who are terminally
  iii or similarly substantially impaired will be unable to work at
  all. Nevertheless, we want to engage in work -- the most essential
  of all societal activities -- to the greatest extent possible.In
  some instances we will attain economic self sufficiency and
  require only opportunity and accommodations from society. In other
  instances we will be capable of earning a substantial portion of
  our support but will require ongoing in-kind support (e.g.,
  primarily health care, personal assistance, and housing subsidies)
  from society to help with the extraordinary expense of living and
  working with disabilities. In some instances, even our maximum
  work effort will still require both some cash assistance and in-
  kind support from society. In all instances, we want to be active
  members of society, contributing what we can and taking only that
  which we need to survive and prosper. In all of these instances,
  the real opportunity exists to reduce the dependence of SSDI/SSI
  beneficiaries on cash assistance and to minimize direct public
  expenditures on in-kind support.
  However, the current all-or-nothing design of the SSDI program
  prevents most beneficiaries from attempting to go to work. Unlike
  the SSI program, where recipients who attempt work lose only $1 in
  cash assistance for every $2 in earned income and can continue
  receiving Medicaid acute medical care, personal assistance, and
  prescription medication coverage (up to State limits), SSDI
  beneficiaries lose all cash assistance after earnings reach $500
  per month (assuming in this example that the Trial Work Period has
  expired). Further exasperating the situation, SSDI beneficiaries
  receive free Medicare (which, because it does not cover personal
  assistance and prescription medications is a lesser benefit than
  Medicaid) for only 36 months. After then, they pay the full Part A
  premium, currently $330 monthly, to continue coverage.
  The result is that the vast majority of DI beneficiaries find that
  working to their maximum capacity under the current SSDI work
  incentives rules is so costly that they financially cannot afford
  to work. They feel that they are financially and medically
  rewarded for remaining on benefits and punished for attempting
  An analysis of these "work incentives" by the Employment Support
  Institute is enlightening. They have designed a software program
  that can demonstrate the impact on the net income of an individual
  receiving SSDI, SSI, or both when they attempt to work. Under
  current rules, an SSDI beneficiary receiving the average amount
  ($704 per month DI check in 1997) who attempts work falls off a
  net "income cliff" after earning $600 per month ($7,200 per year)
  and does not recover the same net income level until earnings
  reach $2,000 per month ($24,000 annually)\8. An SSI recipient in a
  similar circumstance can continue earning more income and take
  home more net pay after passing $600 per month because of the Sec.
  1619 two for one offset of cash assistance they have available to
  them. SSI recipients do not experience the "income cliff" until
  they reach their State Medicaid threshold and attempt to purchase
  medical coverage.
  These are only two examples of the unfortunate situations (visit
  the ESI Web page at to review other
  scenarios, all of which are significant barriers to employment for
  SSDI/SSI beneficiaries) that are an unintended result of Federal
  and State social policies that were developed without a
  coordinated purpose. The result is a conflicting maze of work
  incentives that all too often rewards SSDI/SSI beneficiaries who
  try to work with the receipt of an over payment letter from SSA
  rather than income security. No wonder less than one-half of 1% of
  SSDI beneficiaries leave the rolls to work.If a work incentive
  similar to the SSI Sec. 1619 program were instituted for SSDI
  beneficiaries, and combined with extended health coverage, tax
  incentives, and choice in providers, DI beneficiaries could work
  to the maximum extent that their disabilities and other personal
  circumstances allowed. This would result in savings to the SSDI
  Trust Fund as beneficiaries entered the workforce and began to
  forego all or some of their DI cash assistance. These cash savings
  would grow over time as SSDI beneficiaries gained skills and
  confidence. The following section discusses a comprehensive
  package of changes required to implement these solutions.
  Barriers and Solutions
  Barriers:  Health Benefits. Access to private health insurance is
  increasingly cited as the key obstacle to employment, particularly
  in light of the increase in part-time work, which rarely brings
  access to health insurance. With underwriting practices and limits
  on benefits acting as critical disincentives, many people with
  disabilities must seek Social Security benefits in order to gain
  access to public health insurance.9
  Solution 1: Extend Health Benefits. An individual who is an
  allowed SSDI/Medicare or SSI/Medicaid beneficiary who returns to
  work, should remain in a continuing disability status unless
  medical recovery is determined. Health coverage should be
  maintained for SSDI/SSI beneficiaries going to work in three ways:
  1) Continue Medicare free until $15,000 of earned income, then
  with a buy-in at 10% of earned income capped at the full Part A
  Medicare premium amount: 2) Establish a Medicare-only buy-in
  similar to number one above for individuals with disabilities who
  would be DI eligible except for earning above SGA, capped at the
  full Part A Medicare premium amount; and, 3) Create an optional
  state Medicaid buy for working SSDI/SSI beneficiaries.
  Barrier 2: Complexity of Work Incentives. The SSDI and SSI
  programs both have work incentives that are designed to assist
  beneficiaries and recipients to leave the rolls by going to work.
  These work incentives have the potential to be effective but they
  complex and incomplete and therefore are underutilized. In
  addition, they are not coordinated for people who receive both
  SSDI and SSI. Despite intense efforts by SSA and advocacy groups
  to publicize and educate SSDI/SSI beneficiaries about these
  benefits, they are used by only a small fraction of those
  eligible. 10 They also are very expensive to administer and too
  often result in benefit overpayments that must be returned by the
  payees. 11
  Solution 2. Streamline Work Incentives. The "work incentives" in
  current law must be renamed and simplified so that SSDI/SSI
  beneficiaries can understand and utilize them, and so there is a
  decrease in the expense of their administration. The goal should
  be to modify them into easily understood and usable work
  facilitators that encourage the transition from sole reliance on
  public benefits to economic security primarily through employment.
  Barrier 3: Financial Penalties. Enabling individuals who have been
  unable to afford to enter or re-enter the workforce due to the
  economic disincentives inherent in the current system requires the
  redesign of the program. This should be done in a way that
  facilitates former SSDI/SSI beneficiaries to earn an income that
  enables them to survive. The current SSDI structure punishes
  rather than rewards people with disabilities who attempt to leave
  entitlement programs to work. The SSDI system eliminates
  eligibility for both cash assistance and in-kind support (e.g.,
  health care) before the individual can earn a living wage. While
  the SSI program has Sec. 1619, SSDI has no similar work
  incentives. This sudden loss of support is known as the "income
  cliff" and represents a significant disincentive to work.12
  Solution 3. Make Work Pay. A combination of declining cash
  assistance similar to the SSI Sec. 1619 program, disability
  expense related tax credits, and tax deductions will enable
  individuals with significant disabilities to work. We also
  recommend a change in the asset limitations for SSI recipients who
  work to facilitate savings and investment. This recognizes that
  some individuals with the most significant disabilities will need
  ongoing support due to their limited earning capacities.
  Declining cash assistance. An allowed SSDI/Medicare beneficiary
  who goes to work should have their DI cash assistance reduced by
  $50 for every $100 earned beginning at $500 of monthly earned
  income. The $50/$100 sliding scale offset would replace
  Substantial Gainful Activity (SGA) measures only for allowed SSDI
  beneficiaries who attempt to work. SGA, defined as earnings from
  wages or salaries that equal or surpass $500 monthly (for non
  blind disabled beneficiaries) would remain a principal criteria
  for establishing a work disability at initial eligibility.
  CCD recognizes that this provision has been analyzed by CBO and
  determined to have high costs. We respectfully disagree with the
  assumptions underlying these results. We urge the Congress to work
  with CCD and the Employment Support Institute at VCU in developing
  state-of-the-art computer models for anticipating work efforts.
  The financial barriers to work for SSDI/SSI beneficiaries are
  real. As a nation we must afford these individuals every
  opportunity to work; we certainly cannot afford to trap them in a
  lifetime of poverty on government cash assistance payments.
  Disability Expense Tax Credits. The vast majority of working
  Americans have their wages supported by tax breaks, either through
  personal exemption; standard or itemized deductions; or tax
  credits. Individuals with disabilities should be rewarded for
  working through the alleviation of their extraordinary expenses of
  living and working with a disability. A tax credit of one-half of
  all disability related expenses, including personal assistance
  services, of up to $15,000, should be provided for SSDI/SSI
  beneficiaries who are working. Costs for disability related work
  expenses beyond those applied to the Disability Expense Tax Credit
  should be deductible as Impairment Related Work Expenses.
  Personal assistance is defined as one or more persons or devices
  assisting a person with a disability with tasks which that
  individual would typically do if they did not have a disability.
  This includes assistance with dressing, bathing, getting in and
  out of bed or one's wheelchair, toileting (including bowel,
  bladder and catheter assistance), eating (including feeding),
  cooking, cleaning house, and on-the-job support. It also includes
  assistive technology devices and services, assistance with
  cognitive tasks like handling money and planning one's day, and
  fostering communication access through interpreting and reading
  Impairment Related Work Expense Tax Deductions. A modification of
  the existing Impairment Related Work Expense tax deduction
  available to workers who itemize deductions on their tax returns
  would enhance long term employment for individuals with
  significant disabilities. This modification would allow former
  SSDI/SSI beneficiaries to deduct costs of disability related work
  expenses beyond those covered by the proposed disability expense
  tax credit.
  Facilitate Savings and Investment. SSDI/SSI beneficiaries who work
  should have their unrestricted asset limitation raised to $5,000
  (indexed to inflation). "Super IRA's," "qualified plans" and
  medical savings accounts should be exempted from this resource
  limitation. These plans allow savings for education, medical
  emergencies or retirement.
  Barrier 4: Consumer Choice of Services and Providers. People with
  disabilities who are SSDI beneficiaries or SSI recipients have no
  choice in the providers of their services. Consumers are assigned
  to a service provider, which by law must be a state vocational
  rehabilitation agency, usually by type of disability rather than
  type of services required. Consumers who determine that they are
  not receiving appropriate or high quality services generally have
  no recourse other than to purchase services themselves from
  private vendors. Given the cost of private services and the state
  of most consumer's finances, this is an option very few can
  afford. 13
  Solution 4. Enhance Consumer Choice of Services and Providers.
  Active participation in the rehabilitation process is a proven
  method for increasing the chances of a successful outcome.
  Enabling consumers to choose their services and providers gives
  the individual a feeling of ownership in the process. This choice
  of services and providers treats the beneficiary as an adult,
  capable of making significant life choices, thereby enhancing the
  individuals self-esteem and confidence. Choice eliminates the
  conflicting signals currently sent by the referral system, which
  tells beneficiaries they are capable enough to work, but they are
  not capable to select by themselves where to go for employment and
  related vocational services. Choice is also important for those
  individuals with cognitive impairments who may need assistance in
  exercising choice.
  Consumers must be able to choose from among the many thousands of
  public and private rehabilitation, employment service, and related
  providers in the nation. Limiting the choice of SSDI/SSI
  beneficiaries who want to work to only the network of State
  Vocational Rehabilitation Agencies (SVRA's) will quickly overwhelm
  a system that is already struggling to serve some of the
  individuals with disabilities who request their assistance to
  prepare for and enter the work force. In addition, the sheer
  magnitude of SSDI/SSI beneficiaries who may want to access
  services to prepare for and go to work demands that we focus the
  full capacity of the nation's employment and training resources on
  assisting them to work.
  Consumer choice will only work if there are a wide range of high
  quality, effective public and private providers available. This
  means that an infrastructure that enables providers to
  contact,recruit, serve. and to receive timely payment for having
  served consumers must be designed from the ground up to be
  effective in this outcome-based system.
  Since 1981, Congress has required the only authorized provider of
  employment services to SSDI/SSI beneficiaries -- SVRA's -- to
  share the risk of assisting them to work by reimbursing relevant
  service costs only after the attainment of a measurable outcome:
  returning to work at or above the SGA level. This strategy has
  reduced expenditures from the SSDI Trust Fund without
  significantly reducing the numbers of those who reach SGA. It is
  time to modernize this risk based payment system so that all
  public and private employment service providers have an incentive
  to assist SSDI/SSI beneficiaries to work.
  The updated payment system should encourage work by all SSDI/SSI
  beneficiaries, regardless of their ultimate work capacity. Instead
  of rewarding providers only for removing people from the rolls, it
  should reward providers for assisting people to minimize their
  dependancy on cash assistance programs. Paying providers a portion
  of the savings realized by the Federal Government will enable many
  more people to work to their full capacity and result in greater
  savings than only paying for those attaining SGA.
  Payment should be made through a milestone approach. Providers
  should receive partial payments at three points: When a consumer
  and provider agree on an employment plan; 60 days after the
  consumer begins employment; and when the consumer completes 9
  months of employment. Subsequently, providers should receive
  quarterly payments equal to a portion of the savings the
  Government realizes due to the reduction of the cash assistance
  paid to the consumer for five years. Milestone amounts should be
  limited so that no more than one-third of the total payment made
  to providers are received before the consumer achieves the third
  Designing and implementing this program will be a significant
  challenge to SSA. CCD recommends that a Commission with equal
  representation from consumers and their self-selected
  representatives, providers, and employers be appointed and charged
  with responsibility to assist SSA in this endeavor. The Commission
  should have broad authority to research, model, test, and
  recommend the final structure of the program to SSA and the
  Congress by a date certain. It is imperative that the missteps
  that occurred during implementation of the Alternate Participant
  program be avoided.
  In any system involving negotiations between parties there will be
  disagreements. Therefore, funding for advocacy services
  specifically designated to assist SSA's beneficiaries to resolve
  disputes with providers should be made available. It should
  protect their legal and human rights, and assist and advocate for
  such individuals in their relationship with public and private
  providers through alternative dispute resolution means as
  Finally, the management of the new program should be contracted to
  a private sector firm on a competitive bid similar to the
  arrangement in the current Alternate Participant program. This
  will minimize the administrative burden of the program on
  SSA.Barrier 5.' Inadequate Work Opportunities. Individuals with
  significant disabilities face competition from many directions in
  their efforts to work. Individuals who are leaving welfare, those
  who are graduating from schools and colleges, and those who are
  dislocated due to corporate down-sizing and economic restructuring
  all are competing for a limited pool of jobs.
  Solution 5: Help Employers to Employ Individuals with Significant
  Disabilities. The Committee should study the impact of an
  expansion of the Work Opportunity Tax Credit to employers for
  hiring and retaining former SSDI/SSI beneficiaries. It should also
  study other ADA and disability related employment incentives
  already available to employers.
  Work in the Information Age
  The new definitions generally accepted for work in the Information
  Age recognize that the creative application of technology can
  enhance the inherent skills, abilities, and talents of all
  workers. A work disability now exists as a point in time when an
  individual acquires a physical or mental incapacity and can no
  longer perform SGA, rather than a lifelong incapacity to do any
  work. However, only the application of new techniques in medical
  rehabilitation, assistive technology, and employment training,
  when combined with the employment supports that we discussed today
  which accommodate the lifelong physical or mental disability, can
  open this unprecedented array of employment opportunities to
  individuals with significant disabilities.
  Most of us languish behind a wall of barriers made up of all the
  best intentions of the policy makers who have gone before us. Only
  those most fortunate among us have been able to use our unique
  personal circumstances to go to work. My rehabilitation and work
  experience is an example of this serendipity.
  I became a C-4 quadriplegic in 1970 as a result of a body surfing
  accident. I was 18 years old, and just graduated from high school.
  My work skills and experience included mowing lawns, raking
  leaves, washing cars and dishes, and three summers as a life
  guard, swimming instructor and swim team coach. These jobs are not
  exactly what you need to prepare for working in an economy of high
  skill, high wage jobs, especially with a disability as severe as
  mine. After medical rehabilitation, I was evaluated by the
  Virginia Department of Rehabilitative Services in 197 l,
  determined to have no work potential, and sent home to live with
  my parents.
  In 1975, I was again connected with the Virginia Department of
  Rehabilitative Services and evaluated for work potential. In the
  few years between 1971 and 1975, the expectations of the potential
  of severely disabled persons changed substantially, mainly due to
  the emergence of the Independent Living Movement. I was determined
  to have work potential under these new expectations. I wanted to
  earn a college degree, and agreed to a program of study to become
  a computer programmer. After one year of study, during which I
  demonstrated a complete and utter lack of talent or aptitude for
  programming computers, I realized that I could be successful not
  by accomplishing tasks directly, but by managing human and other
  resources to accomplish tasks, so I changed my major to Business
  Administration and completed my degree program.I initially went to
  work at the US Department of Agriculture as a Budget Analyst under
  a Schedule A appointment which paid a salary but did not provide
  health coverage. The only reasons why I was able to accept this
  opening was the fact that I was covered under my Mother's employer
  sponsored health insurance, and that as a GS-7, I was, at that
  time, able to pay for some or' my personal assistance services.
  Without a personal assistant to help me shower, get dressed, and
  prepare for work, I would have been unable to even consider
  working. I relied on family' and friends for the balance of my
  needs, such as grocery shopping, doing laundry and house keeping.
  taking medications, going to the doctor, and other routine
  activities of life.
  My next job was as the Executive Director of a Center for
  Independent Living. As the boss, I could decide who to cover under
  our health plan and chose to cover my entire staff as a group.
  Mixing employees with and without disabilities under a small group
  plan was difficult even 15 years ago, but that coverage and my
  ability to pay for more of my personal assistance expenses made it
  possible for me to continue to work.
  A few years later I experienced some significant health problems
  that forced me to retire from the active workforce for a time and
  left me with a secondary disability and a propensity for decubitus
  ulcers (pressure sores or bed sores). When I recovered, I worked
  part-time as a consultant in public policy for persons with
  disabilities. I worked part-time because I could no longer sit in
  my wheelchair for the full amount of time required for a full time
  job due to the decubitus ulcer problem. I worked as much as I
  could, relying once again on my Mother's family health coverage,
  along with Medicare, SSDI, and volunteer personal assistance. I
  was reviewed by a Continuing Disability Review once during this
  period and determined not to be performing SGA. This was a
  difficult and extremely trying time for me and my family.
  In 1990, technology, workplace theory and civil rights for
  individuals with disabilities began to catch up with my
  disability. The introduction of the personal computer and
  telecommuting, along with the passage of the Americans with
  Disabilities Act, enabled me to accept a full-time position with
  the American Rehabilitation Association at an excellent salary and
  with health and retirement benefits. The state-of-the-art working
  environment at American Rehab, including jobrelated personal
  assistance at work, flexible working schedule, telecommuting, and
  accessible personal computers, enabled me to significantly advance
  my career. The knowledge and experience I obtained there led me
  directly to the position I currently hold at UCPA.
  I have been able to build some personal financial stability. This
  "personal safety net," as I call it, consists of personal savings,
  retirement savings, and an investment plan for building my
  personal wealth. This means that I have the personal resources to
  weather a financial setback without needing to immediately return
  to public support, and to look forward to retirement without the
  prospect of relying solely on Social Security retirement checks.
  Federal policy should encourage everyone to build this type
  of"personal safety net" as soon as possible. We recommend a change
  in the asset limitations for SSI recipients who work to facilitate
  savings and investment.
  None of this would have been possible without a series of
  fortunate circumstances. My Mother was working, and I was covered
  under family health insurance that allowed me to ignore the number
  one barrier to work: fear of losing health coverage. I lived in my
  parents' home (after accessibility adaptations) rent free, which
  allowed me to afford to pay for the extraordinary expenses of
  living and working with a disability, thus avoiding barriers two
  and three: the complex work incentives and the earnings cliff. I
  was not able to choose my rehabilitation provider. which meant
  that I had to wait until the changing attitudes of the work
  capacity of individuals with significant disabilities permeated my
  sole mandated service provider before I could receive services; I
  might have been working years earlier had I been able to choose
  other provider options. Finally, my first employer had an internal
  incentive to hire me: as a Schedule A appointment, I did not count
  against the Branch's FTE limit, thus boosting the productivity of
  the unit substantially.
  It is not in the best interests of society, either from a fiscal
  standpoint or from a humanistic view, to force SSDI/SSI
  beneficiaries to rely on luck as a means to opportunity,
  employment, productivity, and freedom. It is certainly not in the
  best interests of SSDI/SSI beneficiaries, as analysis clearly
  shows. These barriers that were inadvertently built into the
  system must be removed; the physical, mental, and financial health
  of SSDI/SSI beneficiaries depends upon the timely enactment and
  full implementation of effective, comprehensive solutions. The
  financial health of the nation demands the full participation of
  all of its citizens to the maximum extent of their capabilities.
  The Congress has an historic opportunity to use the full range of
  tools at its disposal to meet the converging needs of SSDI/SSI
  beneficiaries, providers of rehabilitation services, employers,
  and taxpayers. We are ready, willing, and able to assist the 105th
  Congress to achieve this important goal.
  1. SSA Disability Program Redesign Necessary to Encourage Return
  to Work, GAO/HEHS 9662, April. 1995.
  2. Findings and Recommendations of the Disability Policy Panel,
  National Academy of Social Insurance. January. 1996
  3. Achieving Independence. National Council on Disability, July,
  4. Testimony before the House Subcommittee on Social Security,
  Consortium for Citizens with Disabilities, August 3, 1995.
  5. Draft Recommendations to the Work Incentive Redesign Task
  Force, Ruth, D and M. Hill, Virginia Commonwealth University
  Employment Support Institute, June, 1996.
  6. Developing Choices For People On The Disability Rolls to Rerum-
  To-Work and Self-Sufficiency. The Return To Work Group, June,
  7. SSA Disability Program Redesign Necessary to Encourage Return
  to Work, GAO, April, 1996, pg 58.
  8. Scrutinizing Policy Options II The NCD Recommendations:
  Consequences for Individuals, Ruth, David, Mark Hill, Simone
  Jones, Robert Carlson and Alice Watts, Virginia Commonwealth
  University Employment Support Institute, May, 1997.
  9. SSA Disability Program Redesign Necessary to Encourage Return
  to Work, GAO, April, 1996, pp 44-45.
  10. SSA Disability Program Redesign Necessary to Encourage Return
  to Work, GAO, April, 1996, pp 45-46.
  11. Unpublished research by O'Day, B. Personal communication,
  12. SSA Disability Program Redesign Necessary to Encourage Return
  to Work, GAO, April, 1996, pp 42-44.
  13. SSA Disability Program Redesign Necessary to Encourage Return
  to Work, GAO, April, 1996, pp 48-56.
  14. SSA Disability Program Redesign Necessary to Encourage Return
  to Work, GAO, April, 1996, pg 31.

                             PREPARED TESTIMONY OF
                                 JOHN HALLIDAY
                         OF VOCATIONAL REHABILITATION
                            THURSDAY, JULY 24, 1997

  Chairman Bunning and distinguished members of the Subcommittee, it
  is a privilege to have the opportunity to provide testimony on
  behalf of the Council of State Administrators of Vocational
  Rehabilitation (CSAVR) regarding the barriers facing Social
  Security Disability recipients in their efforts to return to and
  maintain employment.
  The CSAVR is composed of 81 state officials who administer the
  Public Vocational Rehabilitation Program in the 50 states, the
  District of Columbia and the territories. This program has a
  history of providing Vocational Rehabilitation Services to
  recipients under the various Social Security Disability Programs
  since the inception of the SSDI and SSI programs. Our goal today
  is to share with you our understanding of the factors that impact
  individuals receiving Social Security Disability Benefits as they
  consider active participation in our national economy.
  We are proud of the history and the achievement of the Public
  Vocational Rehabilitation Program in assisting annually thousands
  of recipients of Social Security Disability to prepare for, enter,
  and maintain employment. Of the 1.2 million people served annually
  by the Public Vocational Rehabilitation Program, 40 percent are
  conservatively estimated to receive SSI and SSDI when they enter
  or participate in the Vocational Rehabilitation system. Over
  200,000 individuals enter work annually through their efforts with
  the Public Vocational Rehabilitation Program. Approximately 45,000
  of these individuals are also SSI and SSDI recipients. The level
  of partnership with consumers, families, and other public and
  private rehabilitation programs exhibited in the delivery of
  services through the Public Vocational Rehabilitation Program is
  exemplary and this partnership has brought about the success of
  the Program. It is through the continued growth and development of
  such partnerships that our efforts to assist increased numbers of
  individuals with SSI and SSDI need to be based.
  The mandate of the Public Vocational Rehabilitation Program is to
  assist eligible individuals with disabilities to enter and
  maintain competitive employment in the full range of economic
  activities that our society offers.
  The barriers to social security recipients entering and
  maintaining employment fall into three categories that are 1)
  disincentives, 2) structural issues, and 3) resource issues.
  In the area of disincentives, the issues surrounding the
  availability of continued Medicare and Medicaid eligibility to
  cover the costs of treatment, medicine and other necessary
  services that in fact, enable people with significant impairments
  to enter and maintain employment. They are well documented and
  widely agreed to. The other major disincentive is the loss of
  income both perceived and in some cases real, resulting in
  individuals finding themselves in severe economic crisis. There is
  broad agreement and we need to continue to work on various
  modifications to the Medicare and Medicaid structures in order to
  enable persons with disabilities to continue to have access
  necessary to medical and rehabilitation treatments.
  One of the greatest attempts to Return-to-Work is the lack of
  understandable information on what will happen to both cash
  benefits and medical coverage. I refer to this as the twilight
  zone, in that one feels lost in a fog of confusion with
  contradictory messages often being received. Beneficiaries are
  frequently told to just go ahead and take a job, so that they
  then, and only after that, will they be informed as to what will
  happen to their benefits. The system must be simplified to
  encourage persons to return to work. The redesign of this system
  should be focused on a customer service orientation which would
  result in people having confidence and decreasing the great
  unknown that we ask people to leap into when we ask them to
  consider return to work.
  In the area of structural barriers, it is clear that the timing of
  outreach to encourage beneficiaries to return to work is poor. It
  is poor because it occurs at a time when persons with disabilities
  are either trying to prove they cannot work or when they have just
  been allowed. Also, complicating the matter is that there is no
  joint method between the Public Vocational Rehabilitation Program
  and the Social Security Administration to determine who is
  receiving benefits.
  It gets worse when you look at the reimbursement process where
  bureaucracy in terms of paper are extremely time consuming to the
  Public Vocational Rehabilitation Agency. Then, as if this
  frustrating process is not enough, there is the unpredictability
  of response and reimbursement of funds in a timely fashion.
  The impact of these two structural areas can be seen clearly in
  that if the Public Vocational Rehabilitation Agency tries to set
  up a process to check with Social Security on the social security
  status of applicants or eligible individuals. There is no easy and
  consistent way we can do this nationally. Thus leaves states in
  the situation of having to try to get the information directly
  from consumers who are often receiving services from numerous
  programs and clearly somewhat confused as exactly what they are
  receiving and why. In addition, at the time of placement into
  employment there is no easy way to identify whether or not an
  individual who has been placed and employed was and still is
  receiving Social Security Benefits. This clearly impacts on the
  reported effectiveness of the Public Vocational Rehabilitation
  Program. An example in Connecticut: For a short period of time we
  were able to access information and as a result, identified an
  increase in a three month period of 30 percent of the cases we
  could identify who were in employment above the Substantial
  Gainful Activity level who are on SSI and SSDI and therefore would
  qualify under the Reimbursement Program. If this is any indication
  of what really is the impact on the Public Vocational
  Rehabilitation Program in terms of employment outcomes for
  beneficiaries, clearly improvements in identifying through Social
  Security, who is receiving disability benefits, would show that in
  fact the Public Vocational Rehabilitation Program is even more
  effective than the present data shows.
  Due to the lack of predictability around the timeliness of
  reimbursements, State Vocational Rehabilitation Agencies find
  themselves unable to determine funding levels and thus unable to
  commit more funds to the delivery of services to SSI and SSDI
  recipients. Clearly the structure of administration of the Return-
  to-Work Program which under the present situation costs the Social
  Security Administration no money since the full up front costs for
  services administration collection is borne by the Public
  Vocational Rehabilitation Program. Even under these conditions,
  Social Security apparently has been unable to design an effective,
  efficient and timely structure. One must therefore raise the
  question of what will happen with a wider more complex system of
  reimbursement that is proposed in many of these proposals.
  A third barrier is the area of resources. It is interesting that
  one of the general assumptions behind many of the Return-to-Work
  Proposals is the idea that access to services through the Public
  Vocational Rehabilitation Program and other rehabilitation
  agencies is problematic for individuals on SSI/SSDI. I must say I
  have never heard this as a complaint from consumers. We may have
  heard of individuals that did not get a particular service, but we
  have never heard that they can not get into an agency, make
  application, or their eligibility determined, develop plans, etc.
  If there are limitations on services, a waiting list, it is due to
  the lack of actual funding available to the agencies rather than
  lack of access or openness to serving SSI and SSDI recipients. In
  fact, the priority set, Rehabilitation Act as amended in 1992,
  match perfectly with the priority of returning individuals on SSI
  and SSDI to employment.
  The Rehabilitation Act ensures that the Public Vocational
  Rehabilitation Program funding and the reimbursements received
  through the social security reimbursement program go back into
  vocational rehabilitation services and thus the resources are
  available to serve more individuals. Proposals we have reviewed to
  this point seem to have no assurances that the funds reimbursed or
  payed out through various schemes would in fact add any new
  capacity to provide vocational rehabilitation services at the
  community level. In fact, many of the proposals suggest that there
  might be considerable pitfalls to these proposals, such as the
  shifting of costs to Public Programs by creating potential
  windfalls in private for-profit programs. This would be
  accomplished since most of the proposals would allow for profit
  programs to serve only those individuals who are already involved
  with them due to their agreements under insurance and other
  programs. In these situations there would be no new capacity
  created and no incentive to expand funds to serve more individuals
  than those already receiving services. Furthermore, these
  proposals lack any appeal process or fair heating for individuals
  who would receive services.
  I have made some references to private disability programs having
  higher percentages of success in terms of Return-to-Work figures.
  It would be interesting to do some real demographic studies on who
  the populations served are by private disability programs. In
  general, one could assume that they would probably be individuals
  already in much higher levels of education job training income who
  have the resources and perceive the risk to protect their present
  income levels. If such individuals require disability, they
  clearly bring, because of their previous employment and education
  background and social economic status, numerous options to
  employment that the full range of individuals served by Social
  Security would not bring. So one might ask is this really a fair
  comparison or are we looking at a very specific population with
  specific characteristics that are served by private disability
  I would like to discuss for a moment some of the main
  recommendations that the CSAVR has made regarding the Social
  Security Program. We are presenting to you today a Paper which we
  have developed outlining our concerns and recommendations.
  First we must eliminate what we call the "leap of faith" or the
  "all or nothing approach," whereby recipients must be either on or
  off benefits with no sliding scale, etc. We recommend for SSDI
  consideration be given to utilizing some type of sliding scale
  benefit rather than the "trial work period" approach. There must
  be continued eligibility for Medicare coverage and the type of
  community health services provided under Medicare. We realize that
  in both of these areas there are cost concerns which must be
  projected and considered for possible financial impact.
  We recommend the simplification of the Work Incentives Program,
  including employment related work, expenses, 1619 A&B provisions,
  past programs, etc. We recommend the Committee consider that these
  programs be administered by the Public Vocational Rehabilitation
  Program rather than by the present system of trying to deal with
  the Social Security Administration structure. The Social Security
  Administration does many functions extremely well, particularly
  the issuing of checks and determining of financial disability
  eligibility. However, it does not have the expertise nor the
  structure to administer incentive programs which help people deal
  with planning beyond just the Social Security Programs.
  Consideration must also be given to the various other Federal,
  State, Local resources and programs available in order to complete
  and implement a successful Return-to-Work effort.
  We strongly urge the continued joint effort based on the Agreement
  which now exists between the Social Security Administration, the
  Rehabilitation Services Administration, and the CSAVR. In terms of
  identifying effective and specific plans for outreach, it is
  important to provide education and information to Social Security
  recipients regarding Return-To-Work opportunities. Secondly, we
  must work to simplify the reimbursement program so that it can be
  done quickly with the minimum of paperwork.
  The cooperation of the RSA, the SSA, and the CSAVR will help us
  begin to chip away at the mixed message we give our citizens and
  our communities regarding disability. On the one hand, under
  Social Security, we identify people as totally disabled, unable to
  be involved in any economic activity in their community, and in
  fact, so disabled that their impairment may result in death. On
  the other hand, under Title I of the Rehabilitation Act and the
  Americans with Disabilities Act, we assume that persons with
  disabilities, regardless of their impairment, have the capacity to
  work, and should have that opportunity. We cannot underestimate
  the impact of having to implement these paradoxical messages. For
  example, we ask treating physicians and other health professionals
  to, on the one hand, describe the significant level of impact and
  impairment such that it prevents the person from doing any work in
  the community for at least a year in order for them to be eligible
  for social security, then, within a very short period of time we
  turn around and ask those same people to describe what functional
  strengths the person has and potential they have to enter
  employment. It is not just the impact on the individual with the
  disability but all those who interact with him and her and the
  community at large that creates this sense of confusion in lack of
  clear understanding of what potential disability has and what our
  public policy is toward disability.
  In order to address larger public policy issues, we suggest a long
  term consideration of a temporary disability program for some
  groups, for example, individuals who Acquire a disability at a
  young age where a fixed time of financial eligibility, combined
  with ongoing availability of medical coverage together with the
  requirement of Vocational Rehabilitation in order to continue
  their education and development of vocational skills to enter the
  workforce. This would be one way of addressing these. The other
  would be the consideration of a temporary, partial disability
  program which would help addresses the needs of individuals who
  require disability after they have developed job skills and have
  been in the labor market and would allow them to continue their
  involvement there rather than having to make the decision to
  describe themselves as totally unable to work or able to work with
  nothing in between.
  In conclusion, we believe that the Public Vocational
  Rehabilitation Program is an effective program in providing
  Vocational Rehabilitation Services to SSI and SSDI recipients.
  Thousands of these individuals enter employment each year. We have
  streamlined the Public Program and have reached out to the Social
  Security Administration. The Public Vocational Rehabilitation
  Program has greatly increased flexibility. We are working in
  partnership with the Social Security Administration and other
  public and private agencies, particularly in researching ways to
  effectively simplify incentives to "Return-to-Work."
  This partnership must continue.
  A question we must ask is do we want to take our precious and
  limited resources and invest them in competing publicly
  administrated structures which do nothing to increase the
  resources available?
  Is it our goal to create more levels of public programs and
  greater confusion on the part of recipients and providers in the
  community as to who is doing what?
  Does it make sense to set up public and private agencies as
  competitors and risk damaging the good collaborative efforts which
  currently exist within the Vocational Rehabilitation Community?
  Our answers to these questions must be "NO" if we believe those
  with disabilities must be offered the same choices to fully
  participate in their community economic activity.
  I wish to thank you on behalf of CSAVK, and we stand ready to
  actively participate in the development and continued evolution of
  an effective coordinated employment program for Social Security
  Disability recipients.

                             PREPARED STATEMENT OF
                                 BONNIE O' DAY
                            MEMBER AND CHAIRPERSON
                        NATIONAL COUNCIL ON DISABILITY
                         SOCIAL SECURITY SUBCOMMITTEE
                          RETURN-TO-WORK SUBCOMMITTEE
                            THURSDAY, JULY 24, 1997

  Thank you Mr. Chairman and distinguished Members of the
  Subcommittee, for this opportunity to testify on barriers
  preventing Social Security disability recipients from returning to
  work. I am Bonnie O'Day, a member of the National Council on
  Disability (NCD), a fifteen member Council appointed by the
  President and confirmed by the U.S. Senate to advise Congress and
  the President on matters affecting people with disabilities. As an
  independent federal agency, our purpose here today is to reflect
  the voices of hundreds of consumers around the country who wish to
  work. They want to fully reap the gains made during the last
  several years resulting from the Americans with Disabilities Act
  by contributing their talents to the economy and paying taxes, but
  they face tremendous financial barriers to realizing this goal.
  NCD's Action Proposals are the culmination of an intensive
  campaign to hear from beneficiaries, advocates and grassroots
  leaders. We began in 1996 with a summit of approximately 300
  people with disabilities, which generated Achieving Independence,
  a policy roadmap for the 21st Century. The employment
  recommendations from this report served as the springboard for a 2
  '/2 day working conference of 40 consumer/advocates, most of whom
  had direct experience with SSI DI, and all of whom are very
  knowledgeable about disability employment issues. The group
  generated a series of proposals for overcoming those barriers. NCD
  subsequently took those proposals to the community through a
  nationwide series of 13 public hearings, and received oral and
  written testimony from people with disabilities, their advocates
  and service providers.
  The primary finding of the hearings is that, for many people, it
  doesn't pay to work. The barriers to work are extremely complex,
  and a holistic, system-wide approach is needed to eradicate these
  barriers. While we realize that many of our proposed solutions lie
  outside the jurisdiction of this committee, we request that you
  play a leadership role in assuring that healthcare coverage, SSI
  work incentives, tax credits for personal disability-related
  expenses, and employer tax credits, are addressed by your
  colleagues. Those recommendations, along with those within your
  purview, are detailed in a soon to be released report which the
  Council would like to submit for the record. Today, I will address
  those recommendations within the purview of this Subcommittee.
  SSDI Work Incentives:
  Existing SSDI work incentives themselves are a major employment
  barrier, especially for part-time workers who can't earn enough to
  make up for loss of their entire benefit package. People with
  disabilities who earn $500 per month face a sudden loss of
  benefits: a cliff. According to Maynard Bostrom from Minnesota,
  "Now, you either stay under $500 or get a position that pays high
  enough to make it work it,"--over $24,000 per year, according to
  the Employment Support Institute at Virginia Commonwealth
  University. NCD recommends that the current level of Substantial
  Gainful Activity (SGA) be indexed to inflation, and that SSDI cash
  benefits be reduced $50 for every $100 of earnings above the SGA
  level to provide a "ramp" rather than the current "cliff' off the
  benefit rolls. Individuals eligible for the $1,000 Blind SGA
  amount could choose either to remain under current rules or switch
  to the $500 SGA and $50/$100 reduction. This recommendation would
  eliminate the need for the nine month Trial Work Period, which is
  confusing to beneficiaries, complex to administer, and generally
  results in SSDI overpayments. Preliminary estimates show that a
  mere five percent of DI beneficiaries must return to work, earning
  more than $500 per month, for this proposal to be cost neutral We
  further recommend that Congress ensure continued eligibility for
  both SSI and DI as long as the individual remains disabled.
  Beneficiaries would receive cash benefits only when their income
  was low enough to qualify This would allow people whose
  disabilities permit only intermittent employment, such as people
  with MS or psychiatric disabilities, to work to their capacity,
  without the need to reapply for benefits during periods of symptom
  exacerbation. The process of Continuing Disability Review (CDR)
  should be based upon SSA's established schedule, rather than
  precipitated by the individual's attempts to work.
  Choice in Rehabilitation Provider:
  A substantial portion of SSDI beneficiaries could work if they had
  informed choices and access to training programs, employment
  counseling, adaptive equipment and transportation, or resources
  needed to start their own businesses We support the "Ticket to
  Independence" proposal, but suggest that providers be reimbursed
  based upon milestones, e.g., after a consumer has completed
  training, after job placement, and after a period of employment.
  To ensure success of the ticket proposal, Congress should
  designate a certain percentage of the Trust Fund for a competitive
  grant program for information dissemination about return-to work
  options and incentives. Independent evaluations of rehabilitation
  providers should be funded, to give potential workers consumer-
  based information to aid in their decision making. The funding
  should also provide for advocates to assist in resolving disputes
  between consumers and providers.
  Congressman Bunning, thank you for the leadership that you and
  your colleagues on the Subcommittee on Social Security have shown
  in helping people with disabilities return to work.Your leadership
  on this issue will allow thousands of citizens with disabilities
  to become taxpayers, and realize the ADA's promise of independence
  and full productivity. We look forward to submitting our Barriers
  to Work: Action Proposals for the 105th Congress report into the

End of Document

TNET Mail to News Gateway
For information about this gateway, email
Dimenet Network Page Generation Copyright (c) 2004-2005 DIMENET and TNET Services, Inc.
Module: archive.php - Version: 2.50 - Build: August 11 2013 01:08:58 MST
Valid HTML 4.01!   Valid CSS!