NHPF Background Paper November 14, 2003 Bridging Silos, Part II: DI, SSI, Medicare, and Medicaid Issues and Initiatives Karen Matherlee, Consultant OVERVIEW — The second of two papers on the general topic of public dis- ability and health benefits, this background paper lays out some key issues confronting the Social Security Disability Insurance, Supplemental Security Income, Medicare, and Medicaid programs. It also discusses major initiatives to address those issues, in light of growing administrative, fiscal, and other problems. (The first paper, “Bridging Silos, Part I,” addresses the linkages among the DI, SSI, Medicare, and Medicaid programs and the effects on the programs of the Ticket to Work and Work Incentives Improvement Act of 1999 and other legislation.) NHPF Background Paper November 14, 2003 Contents INTRODUCTION .............................................................................. 3 PROGRAM SOLVENCY: MAKING SURE THE MONEY IS THERE ............................................. 3 ADMINISTRATIVE CHALLENGES: MAKING THE DISABILITY PROGRAMS WORK ................................. 4 Disability Program Modernization ................................................. 5 Dramatically Increasing Workload ................................................. 5 Sluggish Claims and Appeals Processes ......................................... 6 Protection against Overpayments ................................................. 7 Piloting of Electronic Claims Process and Other Strategies ............. 8 EMPLOYMENT SUPPORT AND OUTREACH: TESTING THE CONCEPT .................................................................. 9 Recognition of Infrastructure Barriers ............................................ 9 Attempts to Overcome Employment Barriers .............................. 10 Research and Survey Initiatives .................................................... 10 GAO’s Assessment of Progress .................................................... 12 Tension in the Marketplace ......................................................... 13 MEDICARE AND MEDICAID: ALIGNING DISPARATE PROGRAMS ... 14 Program Differences ................................................................... 14 Pathways to Eligibility ................................................................. 14 Provision of Nonmedical Services: A Key Factor ........................... 15 Efforts to Improve Benefits and Coordinate Services ................... 15 National Health Policy Forum 2131 K Street NW, Suite 500 CONCLUSION ............................................................................... 16 Washington DC 20037 ENDNOTES ................................................................................... 16 202/872-1390 202/862-9837 [fax] nhpf@gwu.edu [e-mail] www.nhpf.org [web] Judith Miller Jones Director Judith D. Moore Co-Director Sally Coberly Deputy Director Michele Black Publications Director NHPF is a nonpartisan education and information exchange for federal health policymakers. 2 NHPF Background Paper November 14, 2003 Bridging Silos, Part II: DI, SSI, Medicare, and Medicaid Issues and Initiatives The interlinked Social Security Disability Insurance (DI), Supplemental Security Income (SSI), Medicare, and Medicaid programs raise numer- ous policy issues, among them the four programs’ current and future sol- vency, the administrative challenges of running the complex and intri- cate DI and SSI programs, the barriers to shifting disability beneficiaries from income support to the world of work, and the significant differ- ences between the Medicare and Medicaid (as well as among individual state Medicaid) programs. In striving to address these issues, the federal and state governments, while generally striving for coordination and cooperation, often have competing interests, particularly in terms of who, at times, foots the bill. Because of the uneven way in which the four programs were estab- lished and have evolved over time, administering them for growing numbers of beneficiaries is daunting for the public agencies who oper- ate them and frustrating for the recipients they serve. While various initiatives are in process to make the programs more effective—or to experiment with making them work better—the jury is still out on whether the efforts will be successful. PROGRAM SOLVENCY: MAKING SURE THE MONEY IS THERE Budget realities cast a shadow over federal and state initiatives for per- sons with disabilities who receive DI, SSI, Medicare, and/or Medicaid, although the shadow is longer for some than for others. In terms of the DI program, the Old-Age and Survivors Disability Insurance (OASDI) trust- ees say that, within the next 10 years, the OASI and DI trust funds will have adequate funding (that is, equity between assets and projected outgo for a given year). In the long term, however, the trustees expect the OASDI cost rate to exceed the income rate for the first time around 2018.1 In con- trast, the SSI program, dependent upon general revenues, is expected to show modest growth during the rest of this decade and the next two de- cades. Federal expenditures are projected to increase by about 1.1 percent per year through 2027.2 For Medicare, the 2003 combined trustees’ annual report of Medicare HI (Hospital Insurance) and SMI (Supplemental Medical Insurance) presents different projections, because HI (Part A) is based on a payroll tax and 3 NHPF Background Paper November 14, 2003 SMI (Part B) is dependent upon general revenues and beneficiary premi- DI and SSI are experienc- ums. The HI trustees indicate that HI meets the financial adequacy test in the short term. However, in the long term, they are pessimistic. ing significant adminis- The HI cost rate is projected to exceed the income rate by a rapidly grow- trative problems, both ing margin after 2012. By the end of the 75-year period, HI costs would individually and through be more than three times the level of scheduled tax revenues—a very substantial deficit by any standard.3 their linkages to Medi- The trustees expect SMI income and expenditures to increase at an aver- care and Medicaid. age annual rate of about 7 percent through 2012. In the long term, “an- nual SMI expenditures would grow from about 1 percent of gross domes- tic product (GDP) in 2002 to 2 percent of GDP within 25 years and to more than 4 percent” by the end of 75 years.4 Medicaid, funded by the states with federal matching dollars, seems par- ticularly vulnerable at a time of rising state and federal budget deficits. Although states received $20 billion “extra” in federal money—half of it slated for Medicaid—as a result of 2003 federal tax-cut legislation, the National Conference of Legislatures indicates that states face “a collec- tive $53.5 billion budget gap for FY 2004.”5 A state fiscal survey conducted by the National Governors Association and the National Association of State Budget Officers shows that 37 states reduced budgets they had al- ready enacted by nearly $14.5 billion in 2003, the largest spending cut in the 27-year-old survey’s history. Medicaid was singled out as exerting “severe strain on state budgets,” with 28 states anticipating “Medicaid shortfalls in the current fiscal year.” The organizations conclude that in- creasing costs for pharmaceuticals and rising enrollments in the program mean that states will have to cover fewer people.6 States have a strong stake in the outcome of current congressional efforts to enact a Medicare prescription drug benefit, in terms of the potential shift of pharmaceuti- cal costs from Medicaid to the Medicare program for “dual eligibles” (those who are eligible for both programs). ADMINISTRATIVE CHALLENGES: MAKING THE DISABILITY PROGRAMS WORK DI and SSI are experiencing significant administrative problems, both individually and through their linkages to Medicare and Medicaid, and strenuous efforts are under way to address them. In administering DI and SSI, the Social Security Administration (SSA) indicated early this year that it is committed “to identifying process and systems improvements, implementing needed changes, and increasing agency efficiency.”7 Its major initiatives include improving employment supports and outreach, making progress on claims processing and appeals, and reducing over- payments, all of which have some bearing on beneficiaries’ access to and use of Medicare and Medicaid benefits. The president’s 2004 budget proposal assumes that SSA will administer a $535 billion operation with administrative expenses at less than 2 percent 4 NHPF Background Paper November 14, 2003 of its total outlays. The budget reflects “an increase of 7.5 percent over the GAO indicates that the FY 2003 President’s budget.” SSA’s goal is to improve its productivity by at least 2 percent a year.8 Although DI and SSI benefits account for less statutory and regula- than 20 percent of SSA’s total benefit payments, the two programs con- tory design of SSA dis- sume nearly 55 percent of SSA’s annual administrative resources, so the ability programs is agency’s staff effort is considerable.9 outmoded. Disability Program Modernization The General Accounting Office (GAO) has done a series of reports on the administrative challenges SSA faces in addressing program com- plexities, responding to applicants and recipients in a more timely way, and improving service delivery, among other issues. GAO, in a compre- hensive report issued in January 2003, Major Management Challenges and Program Risks, comments on the rapid growth of both DI and SSI and adds modernizing the two programs to its 2003 high-risk list.10 (GAO has a performance and accountability series on federal departments, agencies, and the U.S. Postal Service that looks at their capacities and capabilities for transforming government operations and addressing fis- cal needs. Those at high risk are particularly vulnerable to fraud, abuse, waste, and mismanagement are are challenged relative to economics, efficiency, and effectiveness.) In GAO’s view, SSI “poses a special challenge for SSA because, unlike DI, it is a means-tested program” that requires the agency to “collect and verify information on income, resources, and recipient living arrange- ments” not only to determine initial eligibility but also to monitor con- tinuing eligibility for benefits.11 GAO is concerned about the SSI program’s living arrangement and in-kind support and maintenance policies, which it considers to be “complex, prone to error, and a major source of over- payments.”12 GAO also recognizes the challenge to SSA of balancing prompt decision-making with protection against fraud and abuse. GAO, in urging SSA to adopt several reforms to update its disability pro- grams, indicates that the statutory and regulatory design of the programs is outmoded and that the programs do not reflect current theories on the relationship between disability and the ability to work. Moreover, GAO sees SSA as struggling “to provide timely and consistent disability deci- sions to program applicants.” The agency has recommended that SSA update the criteria used to evaluate disability claims to reflect not only medical advances but also changes in the labor market relative to work skills and work settings.13 Dramatically Increasing Workload In the long term, service delivery looms as a special problem for SSA, as baby boomers, born between 1946 and 1964, enter their so-called disabil- ity-prone years. Even now, the agency seems to be overwhelmed by the sheer number of applicants. SSA estimates that, overall, the number of 5 NHPF Background Paper November 14, 2003 persons applying for disability benefits increased by 22 percent between 1999 and 2004 and will continue to rise dramatically due to the aging of the population. Even as SSA experiences a dramatically increased workload, it will incur significant turnover in its workforce. The agency is predicting that 37 percent of its employees will retire by 2010, with a higher percentage of retirees—more than 70 percent—at the supervisory or managerial levels. The turnover will be exacerbated by technological, cross-cultural compe- tency, and other demands on SSA staff.14 Former Rep. Hal Daub (R-NE), chairman of the Social Security Advisory Board, summarized SSA’s administrative challenges for the House Ways and Means Committee Social Security Subcommittee last year: In recent decades, disability policy has come to resemble a mosaic, pieced together in response to court decisions and other external pressures, rather than the result of a well-thought-out concept of how the programs should be operating. Compounding the problem, the disability administrative structure, now nearly a half century old, has been unable to keep pace with the increasing demands that have been imposed upon it. Policy and administrative capacity are dramatically out of alignment in the sense that new and binding rules of adjudication frequently cannot be imple- mented in a reasonable manner, particularly in view of the resources that are currently available.15 Sluggish Claims and Appeals Processes The DI and SSI disability claims and appeals processes draw numerous complaints from consumers and commentators alike, with SSA Commis- sioner Jo Anne Barnhart admitting that the agency has “a long way to go to provide the kind of service the American people expect.”16 Applicants whose claims are denied, whether at the initial level or for reconsidera- tion, have the right to appeal to an administrative law judge and to the SSA Appeals Council. According to Barnhart, SSA had 593,000 initial dis- ability claims pending at the end of 2002 and reduced them to 15,000 by July 2003; the agency took an average of 447 days in 2001 to get a decision on a hearing appeal, as opposed to 259 days by July 2003.17 Holdups tend to be due to backlogs, waits for additional evidence, and applicant de- lays.18 The Social Security Advisory Board has a series of graphs on dis- ability decision-making that includes percentages of beneficiaries’ suc- cessful appeals at each level.19 While SSA disability decisions draw considerable complaints about the “modernity” of the agency’s definition of disability for adults—objections that increased as a result of passage of the Americans with Disabilities Act of 1990—there are also criticisms regarding the decisions’ consistency and fairness. The state agencies that make the initial determinations vary significantly in the claims they allow. According to Daub, “in 2001, the percentage of disability applicants whose claims were allowed by a state 6 NHPF Background Paper November 14, 2003 agency ranged from a high of 66 percent in New Hampshire to a low of 27 percent in Tennessee.” The advisability of federalizing the disability determination process has been debated for years.20 The links between eligibility for the cash payment programs and eligibility for Medicare and/or Medicaid make the variance even more inequitable, according to some critics. While SSA has sought to address the complex, multilayered, and slow decision-making apparatus that characterizes the disability determina- tion and appeals process, it acknowledges that it needs to step up its ef- forts. According to GAO, “In some cases, the plans were too large and too complex to keep on track, and the results of many of the initiatives that were tested fell far short of expectations.” SSA currently is administering a demonstration program, known as Prototype, to test modifications in the disability determination process in 10 states. The agency made some midcourse corrections in the program after early data showed the pro- gram would not only boost the number of initially correct awards, but also increase the number of appeals on claims that were denied.21 Protection against Overpayments SSA has two ways of helping ensure that only eligible persons receive DI and SSI benefits and that the benefits are in the correct amounts. For both programs, as already indicated, SSA conducts continuing disability re- views, a check “that only those who continue to have disabilities con- tinue receiving benefits.” For SSI only, the agency conducts SSI nondisability redeterminations, a check on whether recipients continue “to meet the financial eligibility requirements” or have experienced a change of circumstances that would affect their monthly benefit amounts. For example, youth receiving SSI benefits must undergo redetermination at the age of 18 and qualify based on adult criteria, while adults may be reviewed any time between three months and six years after eligibility is determined. The process consists of written notification by the person’s local Social Security field office that redetermination is under way, an interview at the field office (with forms completed on the person’s dis- ability and functioning and permission sought to interview providers, teachers, and others familiar with individual cases), and review by the state Disability Determination Service of the severity of disability and ability to work.22 For every $1 spent on continuing disability reviews, the agency receives about $9 in savings; for every $1 spent on SSI redetermi- nations, it recoups approximately $7.23 The Foster Care Independence Act of 1999 gave SSA added authority to combat SSI overpayments. The legislation provided SSA with additional tools to obtain applicant income and resource information from financial institutions; impose[d] a period of ineligibility for applicants who transfer assets to qualify for SSI benefits; and authorize[d] the use of 7 NHPF Background Paper November 14, 2003 credit bureaus, private collection agencies, interest levies, and other means SSA’s largely paper- to recover overpayments. SSA also obtained separate legislative author- ity in 1998 to recover overpayments from former SSI recipients who cur- driven claims process rently receive OASI or DI benefits and has recently begun the process of will begin to move to recovering overpayments from Social Security benefits of individuals no longer on the SSI rolls.24 electronic processing In addition, SSA has undertaken some internal steps, such as using tax in January 2004. refund offsets to collect SSI overpayments; utilizing data maintained by the Office of Child Support Enforcement to check wage, hire, and unem- ployment insurance data; and matching data on SSI recipients in nursing homes and other institutions.25 SSA also is in the process of putting in place an SSI corrective action plan that involves preventing overpayments due to unreported wages and assets. For example, prior to starting pay- ments, the agency will review at least 50 percent of favorable SSI disabil- ity decisions. Piloting of Electronic Claims Process and Other Strategies SSA’s largely paper-driven claims process will begin to move to electronic processing in January 2004. SSA plans to start by implementing an elec- tronic claims intake pilot program in one of its regions. It aims to enhance claims processing at state disabilities determination service agencies and support hearing and appeals processing operations. Under the electronic system, SSA would like each applicant eventually to have an electronic folder that can transmit data from one site to another.26 SSA is also seeking to reduce average case processing time and the back- log of cases that is waiting to be processed. Some of the short-term strat- egies adopted include “new formats and software to facilitate the issu- ance of favorable decisions, guidelines for the issuance of favorable bench decisions, and awarding of contracts to speed the assembly of hearing files.”27 Faced with a backlog of continuing disability reviews for benefi- ciaries already receiving disability benefits, the agency has opted instead to put more emphasis on initial applications.28 SSA has indicated that, in adopting an electronic claims process, it should become more efficient. In its FY 2004 budget overview, the agency says that it “will recommend and implement strategies during the next two years to significantly improve the disability claims process.” It also states that it is exploring “ways to improve the accuracy rate of hearing decisions.” How- ever, it expects the accuracy level to remain level for the time being.29 Prior to FY 2004, SSA was responsible for Medicare administrative law judge hearings for persons with disabilities. However, the Medicare Regu- latory and Contract Reform Act of 2001 transferred the responsibility to the Department of Health and Human Services (DHHS) effective no sooner than July 1, 2003, and no later than October 1, 2003. While this lightens the administrative load of SSA, it can involve coordination and commu- nication problems. 8 NHPF Background Paper November 14, 2003 EMPLOYMENT SUPPORT AND OUTREACH: SSA has a large stake TESTING THE CONCEPT in the eventual success There is little doubt that the federal government would like to reduce its of the TWWIIA provi- disability and health care rolls by providing incentives for persons with disabilities to work, and SSA has a large stake in the eventual success of sions that the agency the Ticket to Work and Work Incentives Improvement Act of 1999 is developing. (TWWIIA) provisions that the agency is developing. (See “Bridging Si- los, Part I,” for a description of TWWIIA.) Success depends, however, upon various factors, not the least of which is the marketplace’s receptiv- ity to and accommodation of persons with disabilities. Recognition of Infrastructure Barriers Under contract to DHHS, the Urban Institute in 2001 completed a report on persons with disabilities and employment. Entitled Barriers to and Sup- ports for Work among Adults with Disabilities: Results from the National Health Interview Survey—Disability, the report looked at how government pro- grams can better support the 11.3 million working-age adults with dis- abilities and what the differences are between the 37 percent of adults with disabilities who are working and those who are not. (Rather than following the SSA’s definition of ability to engage in substantial gainful activity, the survey relied on “self-reports of specific activity limitations, supplemented by difficulty seeing or hearing or mobility limitations.”) The report focused on job search, work accommodation, and access to and use of transportation. Its findings were, as follows: ■ Difficulties in looking for work are widespread, encountered by more than half of non-working adults with disabilities. ■ One-third of non-workers report needing some type of accommoda- tion to work. ■ While a greater proportion of non-workers need accommodations than workers, the types of accommodations most frequently needed are similar. ■ Overall, need for accommodations limits employment prospects among adults with disabilities. ■ Although public transportation and special transit systems are widely available, use among adults with disabilities is low. ■ Low use of transit systems is for the most part not because of health or disability-related reasons.30 TWWIIA, enacted before release of the Urban Institute study, contained provisions to establish infrastructure to support employment and return- to-work initiatives, so that states would be able to set up necessary systems to implement the law’s provisions. For example, the statute provided for a Medicaid infrastructure grant program, underwriting funds for states to build critical intergovernmental and public-private partnerships. The part- nerships, described in Part I, have been undertaken in 36 states to address problems such as those identified by the Urban Institute. 9 NHPF Background Paper November 14, 2003 Attempts to Overcome Employment Barriers To help DI and SSI recipients overcome barriers that may prevent them from working, SSA offers specific employment supports to recipients in both the DI and SSI programs, to recipients of DI only, and to recipients of SSI only. These supports appear in Table 1. Several of the programs in- cluded in Table 1 are demonstration programs being conducted by SSA. For example, the Disability Program Navigator, undertaken in conjunc- tion with the Department of Labor (DOL) for both DI and SSI recipients, is designed to facilitate workforce participation. Now winding down, the demonstration has provided resources to One-Stop Career Centers to help persons with disabilities gain access to services to facilitate their entry or reentry into the workforce. Services include transportation, housing, health care, and assistive technologies. Another program, conducted in cooperation with DOL, the Department of Education’s Rehabilitation Services Administration, and DHHS’ Center for Mental Health Services, is the State Partnership Initiative. The project, now entering the evaluation stage, has funded 12 states to develop innovative ways of helping persons with disabilities enter or reenter the workforce. For DI applicants, the Early Intervention Project is getting under way to offer various kinds of assistance, including cash and health benefits as well as employment supports. These are designed to help them return to work and thereby prevent their future dependence upon government programs. For DI recipients in danger of losing their entire benefit as a result of work earnings, there is a “two for one” sliding-scale benefit offset pro- gram that is intended to reduce, but not eliminate, the benefit according to an offset formula. The purpose of the demonstration, mandated by TWWIIA, is to see if DI recipients might accept a reduction in their ben- efits as an incentive to work, with the fluctuating benefit supplementing their perhaps unpredictable earnings. Finally, for youth who receive or are likely to receive SSI benefits, a Youth Transition Process Strategy demonstration involves aiding young people ages 14 to 25 to transition from SSI benefits to work. It also provides in- centives for youth under 18 who are likely to become eligible for SSI at 18 to pursue further education or gainful employment instead. Research and Survey Initiatives In addition, SSA is involved in several research and survey efforts: ■ The Disability Research Institute—A partnership between SSA and the University of Illinois at Urbana-Champaign, the institute is engaged in research, information exchange, training and education, and facilita- tion of data usage. It is primarily focusing on advancements in technol- ogy, work requirements, and the DI and SSI programs and persons with disabilities. 10 NHPF Background Paper November 14, 2003 TABLE 1 Employment Supports for DI and SSI Recipients Both DI and SSI Recipients Impairment-related work expenses Unsuccessful work attempt—effort to Disability program navigators*—estab- (e.g., attendant care services and medi- do substantial work stopped or below lishment of navigators in one-stop career cal devices)—deductions of engaging in substantial gainful activity level after six centers in selected states to facilitate ac- substantial gainful activity. months or less due to impairment or re- cess to programs and services that affect Subsidy and special conditions—sup- moval of special conditions, with earn- workforce success, such as housing, trans- ports received on the job. ings not counted. portation, health care, and assistive tech- nologies. Unincurred business expenses for self- Continued payment under a voca- employed persons with disabilities— tional rehabilitation program (known as State partnership initiative*—coopera- contribution to self-employment effort Section 301)—even with medical im- tive agreements with 12 states to de- by someone else, deducted from earn- provement in disabling condition, con- velop innovative projects to assist per- ings when substantial gainful activity tinuation of benefits until vocational re- sons with disabilities to enter or reenter decision made. hab program ends. the workforce. + Recipients of DI Only Recipients of SSI Only Trial work period—test of encourage recipients to real- Earned income exclusion— 1619[a])—eligibility for SSI ability to work for at least nine ize full employment potential. most of earned income not cash payments, even if months. counted in figuring SSI benefit. earned income is at substan- Sliding scale benefit offset*— tial gainful activity level. Extended period of eligibil- test of a benefit offset under Student-earned income ex- ity—automatic start-up of which normal disability ben- clusion—for students under Special benefits for people benefits stopped because of efits would be reduced by a age 22 and not married or head eligible under Section 1619 (a) work at substantial gainful ac- certain amount for each of household, monthly exclu- or (b) who enter a medical tivity level. amount earned above a sion of $1,340 (up to $5,410 an- treatment facility—SSI cash threshold, such as the sub- nually). benefit for up to two months Continuation of Medicare stantial gainful employment while in a Medicaid facility or coverage—93 consecutive Blind work expenses (such amount. public medical or psychiatric months of Medicare Part A as service animal, transporta- facility. and B for people who work, tion to and from work)— even if cash benefits end. earned income to meet ex- Reinstatement of eligibility penses not counted in decid- without a new application— Medicare for people with ing SSI eligibility and payment start-up of SSI cash payments disabilities who work—option amount. and/or Medicaid coverage if to buy continued Medicare ineligible for SSI benefit for 12 coverage if premium-free cov- Plan for achieving self-sup- months or less for any reason erage ends. (Medicaid may port (PASS)—permission to other than medical recovery. pay premiums for some set aside income and/or re- people with low incomes and sources for a specified time for Youth transition demonstra- limited resources.) a work goal. tion*—design, implementa- tion, and evaluation of ap- Early intervention project* Property essential to self- proaches to improve the tran- —job training, placement, and support—some resources es- sition from school to work of referral demonstration in WI, sential to means of self-sup- youth ages 14–25 who receive NM, and VT and later in other port not counted toward SSI SSI benefits and of youth un- states providing one-year cash eligibility. der 18 who are likely to be- stipend, three years of Medi- Special SSI payments for come elibible for SSI benefits care benefits, and access to at age 18. people who work (Section state Medicaid buy-ins to *Demonstration project. Source: Social Security Administration, 2003 Red Book. 11 NHPF Background Paper November 14, 2003 ■ Mental Health Treatment Study—Given dramatic growth in the numbers of persons with mental illness on the DI and SSI rolls, a study is just getting under way to explore the effects of better access to treat- ment and rehabilitation services on medical recovery and functioning as well as employment and receipt of disability benefits. ■ National Survey of SSI Children and Families—This initiative in- volves the collection of data on children and young adults who cur- rently are or have been SSI recipients. It includes data on SSI experi- ence, disability and health status, use of health care resources, health insurance coverage, out-of-pocket health care expenditures, education and training, service utilization and costs, employment, income, assets, child care, housing, and transportation. Once the survey is completed, SSA would like to undertake a second survey of the same population. ■ Current Population Survey Supplement on Disability—A supple- ment to the current population survey sponsored by the Bureau of Labor Statistics since 1940, the disability survey is projected for 2004. It would focus on disability in the adult population, looking at preva- lence, type, and duration of disability and linking disability to employ- ment data. ■ Evaluation of the TWWIIA program—A five-year evaluation is under way, with annual reports projected on the TWWIIA process, program participation, effects and outcomes for participants, beneficiary satisfac- tion, and adequacy of provider incentives under the program. GAO’s Assessment of Progress Because SSA faces numerous barriers in seeking to implement the TWWIIA program, it is no surprise that GAO, in an initial assessment, was nega- tive about its progress: The ADA supports the premise that people with disabilities can work and have the right to work, and [TWWIIA]...increased beneficiaries’ ac- cess to vocational services. Indeed, many beneficiaries with disabilities indicate that they want to work, and many may be able to work in today’s labor market if they receive needed support. In 1996, we recommended that SSA place a greater priority on helping disabled beneficiaries work, and the agency has taken a number of actions to improve its return-to- work practices. But even with these actions, SSA has achieved poor re- sults in this arena and few DI and SSI beneficiaries leave the disability rolls to work.31 Two programmatic reasons for the poor results, GAO points out, are eli- gibility determination wait times and “an either-or disability decision- making process that characterizes individuals as either unable to work or having the capacity to work.”32 The latter reflects members of the disabil- ity community’s continued frustrations with programs based on an ei- ther-or situation: either a person cannot work and therefore is eligible to receive benefits or the person can work and loses or is at risk of losing 12 NHPF Background Paper November 14, 2003 benefits. The need for personal care services seems to be at the heart of While TWWIIA strives to the frustrations. While TWWIIA strives to address consumer dissatisfac- tion, achieving an appropriate array of employment supports and other address consumer dis- benefits is a tremendous challenge. satisfaction, providing At about the same time, GAO reported on the results of a study—required appropriate employ- by the TWWIIA legislation—on employer incentives to hire workers with ment supports is a tre- disabilities. Specifically, GAO examined use of a work opportunity tax credit and a disabled access tax credit. GAO concluded, on the basis of mendous challenge. Internal Revenue Service data, that few employers used the tax credits to hire, retain, or accommodate workers with disabilities.33 Tension in the Marketplace In a U.S. economy characterized by relatively high unemployment—re- gardless of job-seekers’ disability status—making inroads is a daunting task. Important, too, is the diversity of those with disabilities: whether they are seeking employment for the first time, whether they are reenter- ing the job market after a period of disability, or whether they have in- curred disability while employed. An example of the challenge in the private marketplace is reflected by a recent survey of employer attitudes to persons who incur disability while on the job. (The results of the survey were widely criticized in the busi- ness community.) The survey, conducted by Mercer Human Resource Consulting, involved 723 companies and was featured in the Wall Street Journal in July. It indicated that 27 percent of the companies “dismiss employees as soon as they go on long-term disability and that 24 percent dismiss them at a set time thereafter, usually six to 12 months.” Only 15 percent of the companies retained (with benefits) employees with dis- abilities until the employees reached age 65.34 An example of the challenge in the public marketplace is reflected in the potential effects of the Bush administration’s competitive sourcing initia- tive on federal employees with disabilities. In 2000, according to the Office of Personnel Management, more than 120,000 persons with disabilities— over 7 percent of the workforce—were employees of the federal govern- ment. The initiative targets 434,820 jobs, of which 103,412 are under evalu- ation for possible outsourcing. In one case, scullery workers—all with mental retardation—at the National Naval Medical Center in Bethesda, Maryland, are at risk of losing their jobs unless it is proved—in competing in-house and outsourced bids—that they can do them more effectively and more cheaply than a private contractor. They got the jobs on a provisional basis and became permanent employees after two years of satisfactory perfor- mance. The parent of one employee commented to the Washington Post: “Even a White House focused on the bottom line should realize there is little to be gained by contracting out the work. Displaced employees would turn to government entitlement programs, including federal disability pay- ments, Medicaid, and food stamps.”35 This anecdote illustrates the tension 13 NHPF Background Paper November 14, 2003 the federal government faces in implementing employment policies with The differences in Medi- different goals: on one hand, privatization of jobs, and, on the other, em- ployment of persons with disabilities. care’s and Medicaid‘s Virginia Commonwealth University’s Rehabilitation Research and Train- eligibility requirements ing Center maintains an ongoing review of initiatives regarding employer and benefit packages attitudes towards hiring, retaining, and promoting people with disabili- have great bearing for ties. Its work is contained in the “E-Newsletter: RRTC on Workplace Sup- ports,” which can be accessed online.36 persons with disabilities. MEDICARE AND MEDICAID: ALIGNING DISPARATE PROGRAMS Program Differences Medicare and Medicaid not only have different eligibility requirements but they also have different benefit packages, variations that have great bearing for persons with disabilities. Medicare, as a federal insurance program for eligible persons 65 and older and for younger persons with disabilities who generally have completed a two-year waiting period to qualify for benefits,37 is oriented to inpatient and ambulatory care, but not long-term services and supports. Moreover, it lacks an outpatient pre- scription drug benefit, although provision of a benefit is now the subject of a House-Senate conference committee. Medicaid, as a federal-state program for certain persons and families with low incomes and resources,38 is obliged to provide medical assistance for certain basic services to most categorically eligible populations. Like Medicare, Medicaid provides inpatient and outpatient services; however, unlike Medicare, Medicaid provides long-term services (in institutional, community, and home settings). A state Medicaid plan may also offer various optional services, chosen from 34 defined by federal statute (with an outpatient prescription drug benefit being a prominent example). Whether the benefits are mandated or optional, states can receive federal matching funds for providing them to beneficiaries. Pathways to Eligibility While most persons with disabilities who are on Medicaid have quali- fied because they are SSI recipients, there are other pathways to eligibil- ity, including Medicaid buy-in. Children with disabilities (as well as those without disabilities), for instance, may receive Medicaid if they are otherwise eligible and in foster care or have special needs and have been adopted (and meet other criteria). In an online publication called “Medicaid Eligibility,” the Kaiser Commission on Medicaid and the Un- insured has laid out the various pathways for both children and adults with disabilities to gain eligibility in the program.39 14 NHPF Background Paper November 14, 2003 Medicaid beneficiaries with disabilities are a diverse group ranging in Many persons with dis- age from very young children to older adults. ...About 50 percent of Med- icaid disabled adults have some type of physical impairment or limita- abilities indicate that tion, a quarter have some type of functional limitation on activities of personal assistance ser- daily living (instrumental or non-instrumental), and almost 40 percent have severe mental symptoms or disorders. (These groupings of disabil- vices are vital to their ity are not mutually exclusive.)40 well-being. As discussed in Part I in “The Dual-Eligible Medicare-Medicaid Link- age,” the different benefit and eligibility structures have resulted in some persons with disabilities who are Medicare-eligible having full Medicaid benefits, others having supplemental Medicaid benefits, and still others, of course, having no Medicaid benefits because they do not meet state income and asset tests. Through state Medicare access programs, those who qualify for supplemental Medicaid benefits are served through pro- grams targeted at qualified Medicare beneficiaries, or QMBs; specified low-income Medicare beneficiaries, or SLMBs; qualifying individuals, or QIs; and qualified disabled and working individuals, or QDWIs; as well as by separate buy-in programs. Provision of Nonmedical Services: A Key Factor Many persons with disabilities indicate that personal assistance services are vital to their well-being, whether in basic functioning, living indepen- dently, and/or being employed. DOL defines such services in this way: People or devices that assist a person with a physical, sensory, mental, or cognitive disability with tasks that the person would perform for himself or herself if he or she did not have a disability. In general, these may include assistance with dressing, bathing, eating, toileting, and cognitive tasks such as handling money or facilitating communications access with a reader or an interpreter.41 Twenty-five states offer personal assistance services through Medicaid state plan options and virtually all of them provide personal assistance services or something very close to such services through home- and com- munity-based waivers. Three states recently enhanced their personal as- sistance services benefit to target it to employment.42 Efforts to Improve Benefits and Coordinate Services There seems to be growing recognition of the complexities in the DI, SSI, Medicare, and Medicaid programs and in the linkages among the programs. As new provisions are added to any of the programs, the complexities become even more difficult, as enactment of TWWIIA amply demonstrates. If, for example, a Medicare outpatient prescription drug benefit is en- acted, it will affect not only Medicare beneficiaries (including those in the DI program) but also dual eligibles in receipt of Medicaid (including those 15 NHPF Background Paper November 14, 2003 in the SSI program). Depending upon the final shape of the benefit, full Medicaid and supplemental Medicaid dual eligibles could see their phar- maceutical costs shift to Medicare, reducing the burden on state Medic- aid programs.43 Various demonstrations are under way at the Centers for Medicare and Medicaid Services to better coordinate services to meet the needs of Medi- care and Medicaid beneficiaries, including those with chronic illnesses and disabilities. For example, Evercare Choice provides case management services to dually eligible persons in nursing homes in an effort to im- prove and monitor quality of care and health outcomes. For another ex- ample, a “cash and counseling” demonstration in three states (Arkansas, Florida, and New Jersey) provides consumer direction to Medicaid ben- eficiaries with disabilities by giving them monthly allowances and coun- seling help on how to plan their purchases.44 Jointly funded by the Robert Wood Johnson Foundation and DHHS, the demonstration program has shown positive results in an initial evaluation of Arkansas’s IndependentChoices.45 For a final example, Independence Plus offers states templates for Section 1115 waivers or Section 1915(c) waivers for indi- vidual or family services so that persons with disabilities and their fami- lies can exert greater control over the personal and community services they receive. CONCLUSION In bridging the DI, SSI, Medicare, and Medicaid silos, the federal and state governments are seeking to coordinate income support and health benefit programs and, at times, to venture into new types of services. With the passage of the ADA and subsequent linking of disability and health benefits to employment supports, the frustrations of persons with disabilities have led to demands for more effective, better-coordinated programs. While the track record of the federal and state governments, as documented by GAO and other investigators, has not been smooth, the shift in social policy propels the agencies forward, ideally in the inter- est of the persons with disabilities whom they serve. ENDNOTES 1. Board of Trustees of the Federal Old Age and Survivors Insurance and Disability Insur- ance Trust Funds, “Projections of Future Financial Status,” 2003 OASDI Trustees Report, March 17, 2003; accessed May 4, 2003, at http://www.ssa.gov/OACT/TR/TR03/ II_project.html#wp105057. 2. Social Security Administration. “Highlights,” 2003 Annual Report of the SSI Program, 3–4; accessed July 27, 2003, at http://www.ssa.gov/OACT/SSIR/SSI03/Highlights.html. 3. Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medi- cal Insurance Trust Funds, “Financial Status of the HI Trust Fund,” 2003 Annual Report, March 17, 2003, 1; accessed July 7, 2003, at http://cms.hhs.gov/publications/trusteesreport/ 2003/secif.asp. 16 NHPF Background Paper November 14, 2003 4. Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medi- cal Insurance Trust Funds, “Financial Status of the SMI Trust Fund,” 2003 Annual Report, March 17, 2003, 1; accessed July 7, 2003, at http://cms.hhs.gov/publications/trusteesreport/ 2003/secig.asp. 5. National Conference of State Legislatures, “State Lawmakers Applaud Economic Re- covery Compromise,” NCSL News, May 23, 2003, 1; accessed July 15, 2003 at http://www. ncsl.org/programs/press/2003/pr030523.htm. 6. National Governors Association, “Tough Economic Times Remain for States,” press release, June 26, 2003, 1–3; accessed July 28, 2003, at http://www.nga.org/nga/newsRoom/ 1,1169,C_PRESS_RELEASE^D_5631,00.html. 7. Social Security Administration (SSA), “Limitation on Administrative Expenses,” The Fiscal Year 2004 Budget Press Release, February 3, 2003; accessed June 17, 2003, at http:// www.ssa.gov/budget/print2004.html#LAE. 8. SSA, “Limitation,” 11–15. 9. U.S. General Accounting Office (GAO), Major Management Challenges and Program Risks: Social Security Administration, GAO-03-117, Washington, DC, January 2003, 13; accessed June 10, 2003, at http://www.gao.gov/pas/2003/d03117.pdf. 10. General Accounting Office. Major Management Challenges and Program Risks, 3. 11. GAO, Major Management Challenges, 4. 12. GAO, Major Management Challenges, 5–6. 13. GAO, Major Management Challenges, 8. 14. GAO, Major Management Challenges, 18. 15. Hal Daub, “Reforming the Disability Insurance and Supplemental Security Income Disability Programs,” statement before the House Ways and Means Committee, June 11, 2002, 1; accessed May 4, 2003, at http://www.ssab.gov/DaubJune11.pdf. 16. Jo Anne Barnhart, Social Security Administration, “Testimony before the Subcommittee on Social Security of the House Committee on Ways and Means,” September 25, 2003; ac- cessed October 31, 2003, at http://waysandmeans.house.gov/hearings.asp?formmode= view&id=761. 17. Barnhart, “Testimony.” 18. Office of Management and Budget (OMB), “Social Security Administration,” Budget of the United States Government, Fiscal Year 2004, Executive Office of the President, Washing- ton, DC, 291–293; accessed June 10, 2003, at http://www.whitehouse.gov/omb/budget/ fy2004/pdf/budget/ssa.pdf. 19. Social Security Advisory Board, “Allowance Rates/Awards,” Disability Decision Mak- ing: Data and Materials, Part 1A, January 2001; accessed June 19, 2003, at http://www.ssab. gov/chartbookA.pdf. 20. Daub, “Reforming,” 2. 21. GAO, Major Management Challenges, 13–14. 22. WorkSupport.com, “Supplemental Security Income and Age 18 Redetermination,” Key Facts, I, no. 2 (February 2003); accessed October 9, 2003, at http://www.worksupport.com/ Archives/age18Redetermination.asp. 23. OMB, “Social Security,” 295. 24. GAO, Major Management Challenges, 4–5. 25. GAO, Major Management Challenges, 5. 26. GAO, Major Management Challenges, 16. 27. GAO, Major Management Challenges, 15. 17 NHPF Background Paper November 14, 2003 28. U.S. General Accounting Office, Social Security Disability: Reviews of Beneficiaries’ Dis- ability Status Required Continued Attention to Achieve Timeliness and Cost Effectiveness, June 2003, 8, 10; accessed October 10, 2003, at http://www.gao.gov/. 29. OMB, “Social Security,” 293. 30. Pamela Loprest and Elaine Maag, “Executive Summary,” Barriers to and Supports for Work among Adults with Disabilities—Results from the NHIS-D, U.S. Department of Health and Human Services; accessed October 9, 2003, at http://aspe.hhs.gov/daltcp/reports/ barrses.htm. 31. GAO, Major Management Challenges, 10. 32. GAO, Major Management Challenges, 10. 33. U.S. General Accounting Office, Business Tax Incentives: Incentives to Employ Workers with Disabilities Receive Limited Use and Have an Uncertain Impact, GAO-03-39, Washington, DC, December 2002; accessed October 13, 2003, at http://www.gao.gov/atext/d0339.txt. 34. Joseph Pereira, “To Save on Health-Care Costs, Firms Fire Disabled Workers,” Wall Street Journal, July 14, 2003, 1. 35. Christopher Lee, “In Bethesda, Hiring Policy, ‘Competitive Sourcing’ Clash,” Washing- ton Post, October 14, 2003, A21. 36. Rehabilitation Research and Training Center, “E-Newsletter: RRTC on Workplace Sup- ports,” Virginia Commonwealth University; accessed October 28, 2003, at http:// www.vcu.edu/rrtcweb/cyberu/enewsletter.html. 37. Persons with end-stage renal disease and Lou Gehrig’s disease are eligible for Medi- care sooner. 38. For a chart showing states’ asset limits, see Corporation for Enterprise Development, “Asset Limits for Public Assistance”; accessed November 6, 2003, at http://sadrc.cfed.org/. 39. Andy Schneider, Risa Elias, and Rachel Garfield, “Medicaid Eligibility,” The Medicaid Resource Book, Kaiser Commission on Medicaid and the Uninsured, Washington, DC, Janu- ary 16, 2003; accessed October 9, 2003, at http://www.kff.org/content/2003/2236/ 2236chapter1.pdf. 40. Schneider, Elias, and Garfield, “Medicaid Eligibility,” 18. 41. Office of Disability Employment Policy,“Personal Assistance Services in the Workplace,” U.S. Department of Labor, Washington, DC; accessed October 9, 2003, at http://www.dol. gov/odep/pubs/ek97/personal.htm. 42. Michael Cheek, Lewin Group, e-mail communication with author, October 26, 2003. 43. See Jennifer Ryan and Nora Super, “Dually Eligible for Medicare and Medicaid: Two for One or Double Jeopardy?” Table 1, Issue Brief 794, National Health Policy Forum, Wash- ington, DC, September 30, 2003, 20; available at http://www.nhpf.org. 44. Mathematica Policy Research, Inc., “Evaluation of the Cash and Counseling Demon- stration,” Princeton, NJ; accessed October 11, 2003, at http://www.mathematica-mpr.com/ 3rdLevel/cashcounseling.htm. 45. Leslie Foster, Randall Brown, Barbara Phillips, Jennifer Schore, and Barbara Lepidus Carlson. “Improving the Quality of Medicaid Personal Assistance through Consumer Di- rection,” Health Affairs Web Exclusives, January–June 2003, W3-162–W3-175. 18