Ticket to Work Evaluation Report (February 2004)
The Ticket to Work and Work Incentives Improvement Act of 1999 (Ticket Act) established the Ticket to Work and Self Sufficiency program (TTW) to increase access to, and the quality of, rehabilitation and employment services available to Social Security disability beneficiaries and ultimately to increase the number of such beneficiaries who become economically self-sufficient. Very few beneficiaries now leave the rolls as a result of having found work, and TTW tries to help more beneficiaries do this by changing the way the Social Security Administration (SSA) pays for employment services. The Ticket Act also creates some new rules that let beneficiaries explore work opportunities without jeopardizing their benefit status.
Somewhat paradoxically, the goal of the TTW program is to promote work among a group of individuals judged to be incapable of working in any substantial way. People who receive disability benefits from either SSA’s Disability Insurance (DI) or Supplemental Security Income (SSI) programs have been judged to have a medically determinable impairment that is expected to last at least 12 months or result in death, and that renders them unable to engage in substantial gainful activity. The majority of these beneficiaries do not attempt to engage in any work once they are on the rolls. Only about 2.5 percent of any enrollment cohort will ultimately leave the rolls because of having found work, and less than 0.5 percent of all beneficiaries on the rolls at a point in time eventually leave because of work.
It has proven difficult to raise the low employment rates among disability beneficiaries. Nevertheless, many people with medical conditions that would make them eligible for disability benefits do in fact work, and advances in technology and rehabilitation techniques make it feasible for many people with very severe disabilities to obtain and hold jobs. This has generated a continuing interest in promoting employment among DI and SSI beneficiaries, which in turn has led to a consensus that no person with a disability should be denied the right to participate fully in society, including work, because of external barriers that can be removed with a reasonable effort.
The TTW program and other elements of the Ticket Act provide new means to help beneficiaries become employed and financially self-sufficient. In particular, it introduces a new financing system for providers and gives beneficiaries a choice in which provider to use. The new financing system adds two payment options to the traditional system that SSA has used to pay state vocational rehabilitation agencies (SVRAs) for rehabilitation services provided to beneficiaries. The traditional system reimburses an agency’s costs, up to a limit, if a beneficiary obtains earnings of at least the substantial gainful activity level (currently set at $810 per month for most beneficiaries) for nine months. Both of the new payment options give providers a substantially stronger performance incentive because they require a beneficiary to exit cash benefit status by reason of increased earnings for 60 months before the provider receives full payment. Of the two new systems, the first option, the "outcome payment" system, provides higher payments but only when a beneficiary leaves the rolls due to work or earnings. The other new option, the "milestone-outcome" system, provides smaller outcome payments, but can also provide up to four larger milestone payments while a beneficiary is still receiving benefits, if the beneficiary achieves specified earnings targets.
TTW increases the choices given to beneficiaries who voluntarily decide to pursue employment. It does so by greatly expanding the types of organizations that SSA will pay to assist beneficiaries’ work efforts. In addition to SVRA’s these organizations include a range of public and private providers, called employment networks (ENs), that have signed a contract with SSA. In addition, TTW gives service providers and beneficiaries considerable flexibility in choosing the services that will be provided. In fact, providers and beneficiaries must agree on an individualized work plan before a Ticket can be put into use. This plan could, in theory, include a wide array of services designed to help beneficiaries overcome barriers related to their knowledge of the service system and the labor market, their need for new or enhanced job skills, and even employer misperceptions of their abilities.
Service delivery in TTW is constrained, however, by providers’ desire to limit service expenditures to a level that fits within the payments they expect to receive and by their assessment of whether the services they can provide are likely to result in a beneficiary leaving the rolls. In fact, providers can refuse to serve beneficiaries whom they think have a low probability of leaving the rolls due to work (and therefore not triggering outcome payments). Beneficiaries who only want to work at an earnings level that would enable them to retain part or all of their benefits will generally not be attractive clients to providers.
TTW is being implemented in three phases. In Phase 1, which began in February 2002, the program was rolled out in 13 states across the country. Phase 2 began in November 2002 and extended the program to an additional 20 states plus the District of Columbia. Phase 3, which began in November 2003, will see TTW implemented in the remaining 17 states and U.S. territories.
This is the first major report from SSA’s TTW evaluation. Drawing on information collected during just the first five months of the study, it examines early implementation issues and sets the stage for the more comprehensive reports to follow. In particular, this report is based on the preliminary process analysis (Livermore et al. 2003) and our interviews with staff at SSA, the TTW Program Manager, and several ENs and SVRAs. We also present findings on enrollment and participation patterns from our early analysis of TTW administrative data.
Overall, we found that SSA has implemented all aspects of the TTW program. As of August 2003, Tickets have been mailed to more than 5 million beneficiaries, and more than 25,000 have assigned a Ticket to a provider. Furthermore, SSA has begun making payments to providers as some of the early participants meet milestones or leave the rolls. However, enrollment remains very low and is concentrated in SVRAs using the traditional payment system. In addition, several important operational issues should be addressed. In the Phase 1 states, where the rollout was completed in October 2002, only 0.74 percent of eligible beneficiaries were using their Tickets as of August 2003; participation in Phase 2 states appears to be on the same slow track. On the provider side, our interviews with eight experienced ENs found that they were all losing money on their TTW operations. Many expressed doubts about their continued participation, and some have already cut back their TTW operations. SSA has moved to assist providers by simplifying the payment process. This and other administrative actions could increase participation of providers and beneficiaries, and a strengthening of the economy is also likely to help. Nevertheless, if the attitudes of the eight experienced ENs interviewed for this report are indicative of most ENs, then SSA will have to move quickly to address operational and payment design issues in order to sustain the roll-out momentum and providers’ efforts to increase beneficiary employment.
Some of the key findings supporting these observations are as follows.
Beneficiary Participation Is Low. By August 2003, SSA had mailed out more than 5 million Tickets to eligible beneficiaries, and although participation rates continue to rise, less than 1 percent of recipients were using their Tickets. The participation rate varies by state and by beneficiary characteristics. In the Phase 1 states, the overall participation rate was 0.74 percent, compared with 0.27 in the Phase 2 states, reflecting a difference in the duration of Ticket availability. Among the Phase 1 states, participation rates ranged from 0.3 to 1.9 percent, reflecting differences in economic and service environments, including the aggressiveness of providers, especially SVRAs, in seeking out beneficiaries to serve or in encouraging ENs to do so. Beneficiary participation rates also decline steadily with age; in Phase 1 states, 2.0 percent of those age 18 to 24 were participating, compared with just 0.3 percent of those age 50 and over.
Most Ticket Assignments Have Been to SVRAs. As of August 2003, the vast majority of assigned Tickets nationwide (91 percent in Phase 1 states, 81 percent in Phase 2 states) were assigned to SVRAs. Thus, a relatively small fraction of disability beneficiaries are being served by new providers. Most Tickets also were assigned under the traditional payment system—87 percent in Phase 1 states and 75 percent in Phase 2 states. All SVRAs had to select one of the two new payment systems as an option, and although most are experimenting with the new systems, extensive use is the exception
EN Recruitment and Retention Is Difficult. EN recruitment has been a significant challenge. When last interviewed, the Program Manager reported aggressively marketing the program to over 50,000 organizations through thousands of informational mailings, over 90 EN recruitment conferences, over 200 informational presentations, and hundreds of telephone contacts. Just over 1,000 providers have signed up as ENs (including some from the Phase 3 states). Recruitment has not become easier over time; in fact, having viewed ENs’ early experiences with TTW, some organizations have apparently become even more reluctant to join the program. Like recruitment, EN retention also has become a challenge. More than 38 organizations have terminated their status as ENs, including one of the largest, most experienced ENs. It appears that many others have informally dropped out—by not accepting Tickets or by unassigning previously accepted Tickets.
The type of agencies serving as ENs varies widely. Many are "traditional" providers with extensive experience delivering employment services to SSA beneficiaries. The TTW program affords these agencies an opportunity to continue or expand existing services through a new source of funds. For other ENs, however, the TTW program represents their first effort to provide employment services to SSA beneficiaries or individuals with disabilities. To the extent that these ENs are successful, they will enhance beneficiary choice among providers and create a new set of service providers for SSA.
Provider Service Models Vary Widely. ENs have taken a wide range of approaches to serving Ticket holders, demonstrating that the program does have the potential to foster an increasing variety of work-related services for disability beneficiaries. A few of the ENs act primarily as placement agencies, helping clients build job-search skills and directing them to potential employers. One Internet EN provides no training or job placement services whatsoever but attracts clients with a financial incentive; it promises to give them 75 percent of any Ticket payments it receives on their behalf. Another EN focuses on post-employment support through counseling and case management.
EN Ticket Assignments Are Concentrated Among a Few Providers. Ticket assignments among ENs have been highly concentrated, with a few ENs serving many beneficiaries and most ENs serving few or none. For example, as of late July 2003, among the 131 ENs that had accepted Tickets and were operating in Phase 1 states, one EN had over 300 assignments, and 6 had between 50 and 150, whereas 29 ENs had 10 or fewer Tickets.
Ticket Payments Have Begun. As of the end of August 2003, about 1,400 payment requests had been submitted by providers. Just over half (55 percent) had been paid, 14 percent were under review by the Program Manager, another 14 percent had been cleared by the Program Manager and were under review by SSA, and the remaining 17 percent had been returned to the providers because they failed to meet the standards for payment. As of mid-August 2003, only 67 ENs had received any payments; in total, they had received 630 payments on behalf of 211 Ticket holders. Reflecting the concentration of Ticket assignments mentioned above, most of these ENs had received relatively little money on behalf of just a few participants, while a handful of the ENs had collected substantially more. Twenty-seven ENs had received less than $1,000, 30 had received $1,000 to $5,000, while four ENs had received more than $10,000, including one with more than $30,000 in Ticket payment revenues. Among SVRAs, only three had received any milestone or outcome payments, and 93 percent of the total $29,000 in payments to SVRAs went to a single SVRA.
EN Financial Viability Is Still Uncertain. Twelve to 16 months after starting in the program, all eight of the experienced Phase 1 ENs we interviewed said they were losing money on their TTW operations. For most of them, the program was not looking financially viable. One of the ENs was planning to withdraw from the program, and another had nearly withdrawn but was persuaded by the Program Manager to continue operating in just one state after having started on a nationwide scale. Some of these ENs found that their clients were not earning enough to generate a consistent payment stream. The ENs also complained about the difficulty of obtaining adequate earnings documentation to support payment requests and about delays in receiving payments. SSA has recently simplified the documentation required to receive outcome payments, but the eight ENs we interviewed felt that still more changes would be needed.
Providers Complain About TTW Marketing. Besides financial problems, one of the more common concerns voiced by representatives from the experienced ENs has to do with marketing. They feel strongly that SSA and the Program Manager need to do a better job of both explaining TTW to beneficiaries and reaching out to encourage participation. They reported being burdened by inappropriate referrals and the continuing need to explain basic program features to large numbers of beneficiaries. Similar concerns were expressed in an EN Summit Conference held in 2003. SSA has recently issued a contract to develop a strategic marketing plan aimed at both improving beneficiary understanding of the program and promoting Ticket assignments. The effects of this effort, however, will not appear until 2004 or later, and will be examined in future evaluation reports.
TTW Success Is Mixed for Beneficiaries in the Four Adequacy of Incentives (AOI) Groups. The evaluation pays special attention to the extent that TTW is reaching beneficiaries in the four congressionally defined groups that were expected to find it difficult to obtain services under TTW—those who (1) need ongoing support and services, (2) need high-cost accommodations, (3) earn a subminimum wage, or (4) work and receive partial cash benefits. The financial problems noted at the eight experienced ENs suggest that provider incentives are weak overall and so are likely to provide little motivation for ENs to serve beneficiaries in general, let alone those beneficiary groups identified by Congress. This possibility has been confirmed by our conversations with providers, through which we found that while SVRAs have typically agreed to serve any interested beneficiary determined eligible for services, ENs have commonly screened out those they perceive as requiring substantial or long-term services because they are seen as unlikely to yield payments sufficient to offset service costs.
A slightly different picture comes from our preliminary analysis of administrative data, which we used to develop a rough approximation of the first two AOI groups (those requiring ongoing support or high-cost accommodations) based only on information about beneficiaries’ primary impairments. These approximations, which were developed in the evaluation’s design report (Stapleton and Livermore 2002), suggest that beneficiaries in these two AOI groups constitute a substantial majority of eligible beneficiaries. Furthermore, we found that beneficiaries in these two groups have higher participation rates than all other beneficiaries and that they account for 71 percent of all Ticket users. These results primarily illustrate the fact that even among beneficiaries who appear to require substantial services in order to sustain employment, many have been able to find a provider (typically a SVRA) that will accept their Ticket. It appears that ENs commonly refer candidates that they perceive will require extensive services to SVRAs, where they are more likely to be served under the traditional reimbursement mechanism. Further, some non–SVRA ENs are actually focusing on serving beneficiaries in AOI groups by using Ticket revenues as a supplement to their traditional funding resources.
We will continue to examine this issue, focusing on developing more refined definitions of the groups and on the characteristics of beneficiaries who have the lowest participation rates.
The Consequences of SVRA Dominance in TTW Are Still Emerging. So far, SVRAs account for the great majority of Ticket assignments. This reflects their large scale and long-standing participation in SSA’s traditional program for assisting beneficiaries to become employed. It also reflects their advantages in the TTW program—particularly their ability to finance their services with funds from Title 1 of the Rehabilitation Act and the fact that they can choose to use either the traditional payment system or their new EN payment system.
The consequences of this dominance are still emerging, but several concerns have already arisen. First, both SVRAs and ENs have expressed concern regarding SSA’s guidance to SVRAs allowing them to accept assignment of a Ticket when a beneficiary has signed an agency’s Individual Plan for Employment, but not the SSA Form 1365 typically required to assign a Ticket. As a result of this policy, a SVRA could accept a beneficiary’s Ticket even though the beneficiary did not fully understand his/her full options. Some SVRAs have indicated that this policy seems to conflict with the consumer choice provisions of the Rehabilitation Act. Also, many non-SVRA ENs feel that the policy gives SVRAs an unfair advantage, severely restricting ENs’ ability to recruit and serve beneficiaries.
Second, the nature of SVRA participation varies widely, thus contributing to the variation in participation rates across states. Such variation means that beneficiaries in some states will have different opportunities than those in other states.
Finally, SVRA dominance may reduce beneficiaries’ choice of providers and thus work against one of the key goals of the program. Choice could be expanded if the SVRAs helped to develop the EN market. Most, but not all, SVRAs have developed standardized agreements with ENs in their state that would enable beneficiaries to be served jointly by ENs and SVRAs. In the absence of such an agreement, most SVRAs are refusing to accept clients who have already assigned their Ticket to an EN on the grounds that this would violate the "comparable benefits" provision of the Rehabilitation Act. But many of the agreements have financial terms that favor the SVRA over the ENs, often requiring that the EN assume a very large share of the risk even though the SVRA can use funds allocated under the Rehabilitation Act (Title 1) to minimize its own risk. Some ENs interviewed indicated that the terms of the SVRA/EN agreement actually make it less likely that the EN would refer a beneficiary to the SVRA for services. Such terms seem particularly likely to discourage entities that provide services to SVRAs from becoming ENs.
SSA faced a daunting challenge in designing and implementing this large new program literally from scratch—especially considering that no dedicated funds were appropriated for the task. While the original concept of the program sounded simple, many complexities arose as SSA worked out all the details of how TTW would relate to the many rules and systems associated with the SSI and DI programs. Further, SSA had to address the interests of a wide variety of stakeholders in developing all the rules, regulations, procedures, and systems needed to make TTW operational.
At present, however, most of the important evaluation questions cannot be answered; the program has just begun to roll out in the remaining Phase 3 states, and the evaluation has just begun. Still, even at this early point, some emerging issues merit careful consideration and monitoring as time goes on, as they have the potential for seriously undermining the program’s success.
Ticket participation rates remain low, although they are increasing. Even though the program was never envisioned as a way to move a large percentage of disability beneficiaries into self-sufficiency, Ticket use is lower than many had hoped for at this stage. Several factors may be contributing to this finding. First, despite efforts by SSA, the Program Manager, and individual ENs to explain TTW to beneficiaries, many people appear not to understand the basics of how the program operates, what it means for their benefits, and the opportunities it offers. Second, beneficiaries who are not ready to move quickly into full-time employment may have a hard time finding an EN that will accept their Ticket. Discussions with ENs suggest that many are focusing on beneficiaries whom they expect can quickly obtain sufficient earnings to move off the disability rolls and therefore generate outcome payments to the EN. This seems particularly true for those ENs that rely solely on TTW payments.
A related, but separate, issue of concern is that some beneficiaries may have difficulty finding an EN that is accepting any Tickets at all. Fewer ENs than hoped for have joined the program, and relatively few of them have accepted Tickets. The vast majority of Tickets are assigned to SVRAs, raising questions about whether TTW is succeeding in increasing the diversity of providers and services available to beneficiaries. New ENs appear to be taking a very tentative, wait-and-see approach to the program, hanging back until the early operational difficulties are worked out. They may also see the program—especially under the current payment systems—as posing too great a financial risk. This perception is certainly understandable, given the financial problems that the most active, experienced ENs have already encountered.
Yet another issue of concern is that few of the Tickets assigned have resulted in payments to ENs. It seems likely that the economy is a contributing factor insofar as the economic downturn has reduced the number of job openings and increased competition for the vacancies that do exist. The experienced ENs we interviewed said that it had been difficult to find jobs for their clients. Other factors, though, are also in play. In some cases, ENs have found that beneficiaries do not stick with the service plan or try to find suitable employment. In other cases, beneficiaries have not remained in jobs long enough to generate much of a payment stream for the EN. DI program rules allow beneficiaries to remain on the rolls during a 9-month trail work period, regardless of the level of earnings, which delays the start of an outcome payment stream. SSI recipients can prolong the receipt of benefits indefinitely if their earnings are sufficiently low.
The potential implications of the problem of low EN revenues are clear and seem to pose the most serious threat to program success. If ENs cannot cover their costs, they will not be able to operate. Without them, some beneficiaries may find it virtually impossible to use their Tickets, and the TTW program may become little more than a minor revision to the traditional SVRA payment system.
SSA has recognized the issues discussed above and is trying, within the limits of its discretion, to address them. Most important, SSA has taken steps to simplify the process for documenting beneficiary earnings required to trigger milestone and monthly outcome payments. More rapid payments that require simpler documentation should increase ENs’ net revenues and reduce their costs. SSA is also trying to help ENs find additional revenue sources for financing their start-up expenses, which must be paid before they can realize substantial revenue streams from monthly outcome payments. SSA has also started to develop a national marketing campaign intended to improve beneficiary awareness and understanding of the TTW program and related return-to-work initiatives. It will take some time before the effectiveness of these changes and efforts can be assessed.
SSA is already considering more fundamental changes to the TTW program. The most obvious change is to increase the payment amounts. Another possible change is to restructure the payment system so that ENs are paid sooner in the process—that is, they would get a higher proportion of their payments closer to when the beneficiary goes off the rolls (potentially even before that point) rather than receiving payments spread evenly over 60 months after a beneficiary leaves the rolls. There are also suggestions that SSA, perhaps in collaboration with Rehabilitation Services Administration, take steps to encourage SVRAs to use the new payment systems and/or make a positive contribution to the development of the EN market in the SVRA’s state. Toward this end, changes could involve the traditional payment system as well as regulations and incentives that would encourage more balanced SVRA-EN agreements. As the TTW program proceeds, SSA may even wish to modify the work incentive rules governing when SSI and DI beneficiaries lose their cash benefits to make the rules more consistent with the concepts underlying TTW and with each other.
In any event, changes should be made quickly in order to preserve the TTW program’s current momentum. Participation rates were still rising through August 2003, the last month for which we have data, but ENs are continuing to drop out of the program. As a result, beneficiaries may face reduced choices and program enrollments may stagnate. The loss of momentum is not the end of TTW, but may make it harder to SSA to provide the choices and opportunities that TTW promises to beneficiaries.