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Selecting a Payment System Under the Ticket to Work

Originally published: 8/2002

Executive Summary (Download the entire white paper in MS Word)

Provisions under the Ticket to Work program allow public VR agencies a number of options for payment. VR agencies will have the choice of serving as an employment network or choosing the traditional reimbursement system that they have traditionally received under SSA rules. This choice can be made on a case-by-case basis at the time the vocational plan is signed by the consumer and counselor. If the VR agency chooses to function as an employment network for a consumer, they will be paid under one of two outcome-based systems: outcome payments or outcome-milestone payments.

A VR agency's choice of payment systems will be an important one, with significant financial implications. Due to the large numbers of SSI/SSDI beneficiaries served by public VR agencies, it may not be possible to make decisions on Ticket acceptance on an individualized basis. Rather, an easily administered classification system is needed to allow VR agencies to choose the most appropriate payment system.

Objectives:

• Develop a classification system, using cost modeling, that will allow VR agencies to choose the type of payment system under the Ticket to Work that will be most beneficial to the agency.
• Assess the feasibility of implementation of a classification system for payment options at both the New England and national level.
• Develop Dissemination Strategies: A plan to disseminate to VR agencies, and to refine the classification system, should be developed.

Data Sources:

All New England provided some level of data for the analysis. All six states were able to provide data on past reimbursements from SSA, and all states except Massachusetts provided demographic data from their RSA 911. Only three of the states, Vermont, Maine and Connecticut were able to provide quarterly earnings data. Vermont provided a complete data set, including information on cases who were closed successfully, but for whom the VR agency did not receive reimbursement (referred to as non-reimbursed cases).

General Findings:

• Average per capita reimbursement has a direct influence on the potential value of outcome payments. The lower the per capita reimbursement, the more likely the agency would be to benefit from the choice of outcome payments.
• Generally, the most consistent predictor of outcome payments generating more income than reimbursements was SSDI status. Individuals on SSDI had a higher percentage of instances where outcomes exceeded reimbursements.
• It is important to note that the data analysis from Vermont, Maine and Connecticut did not show consistent patterns. In addition to reimbursement levels states will vary in a variety of outcome and economic variables including the income level that individuals achieve at closure, the state labor market, and the number of individuals the state is successful in receiving reimbursement for.
• Non-reimbursed cases represent a significant potential source of revenue. States need to consider two factors here. First, a significant number of non-reimbursed cases may have been eligible for reimbursement given more assertive management practices. Despite this, though, many cases that would not qualify for reimbursement would generate some revenue through outcome payments.
• States can and should establish common sense decision rules that are applied at the time an Individual Plan for Employment is developed. Plans that include high costs such as postsecondary education expenses and adaptive equipment can be submitted for reimbursement.
• The data suggest that it is unlikely that SSI recipients are good candidates for the outcome payment system. Even when including non-reimbursed cases the revenue from outcome payments was only marginally higher than the revenue from traditional reimbursement at eight years.

State-Specific Findings:

Vermont:

• The use of outcome payments for individuals on SSDI would be fiscally advantageous for the Vermont VR agency.
• When data on non-reimbursed cases was included in the model, outcome payments had the potential of generating substantially more income than using reimbursement alone. SSDI remains the single most relevant predictor.

Maine:

• Initial examination of Maine's data shows no advantage of using outcome payments over the standard reimbursement method.
• Maine should attempt to gather data on non-reimbursed cases to see if this initial examination holds true.

Connecticut:

• Initial examination of Connecticut's data shows a slight advantage of using outcome payments over the standard reimbursement method for individuals on SSDI only.
• Connecticut should attempt to gather data on non-reimbursed cases to see if this initial examination holds true.

Implications

This analysis, though limited in some ways, shows that it is important for VR agencies to pay attention to the new alternate methods of receiving reimbursement from SSA. There is a potential for higher levels of reimbursement from specific closures. Because of the nature of the data the best states to compare are Maine and Vermont. From the data it was evident that there are differences among states. What was a good predictor of higher revenue under the Ticket outcome payment method in Vermont did not consistently work in Connecticut or Maine. Using this type of analysis to examine a given states' data is the best way to make any statement as to the benefit of using the ticket.

One consistent predictor was SSA status. SSDI closures, especially when controlling for other factors, did show good outcome ticket revenue potential. SSI closures do not appear to generate sufficient revenue from ticket outcome payments to be worth using the ticket over the traditional method of reimbursement. Any state considering using the outcome ticket payment system should pay closest attention to people who receive SSDI. This finding also has a clear policy implication. The low level of reimbursement received from providing services to an SSI recipient would have an impact on any employment network's decision to provide services to an individual.

A key source of variation across states was the actual reimbursement level the state has historically received from SSA. Vermont's reimbursement level from SSA is quite low compared with Maine and Connecticut. This is one key predictor as to why Vermont seems to clearly be able to benefit from the ticket, in particular for SSDI recipients. The message for other states here is to pay attention to their reimbursement levels. If a states' average reimbursement is close to what Vermont's is, as in Massachusetts, it is very important to examine using the ticket outcome payment method of reimbursement to increase potential revenue for certain closures. Clearly any given state's economy and the type of jobs people are getting also have a large impact on the use of the ticket outcome method of reimbursement. The obvious message here is that better paying jobs with longer hours are the type that will lead to better ticket outcome revenue. With the new work incentives available under the Ticket to Work legislation, these jobs are more accessible than in the past.

These data suggest that states should consider the following factors as they review their payment strategy:

• Consider the level of reimbursement that the state has historically received from SSA. If the level of reimbursement is relatively low, as in Vermont, then participation in outcome payments may represent a significant revenue opportunity.
• States need to apply the variables identified in this model to their own circumstances. In addition to reimbursement levels states will vary in a variety of outcome and economic variables including the income level that individuals achieve at closure, the state labor market, and the number of individuals the state is successful in receiving reimbursement for.
• Non-reimbursed cases represent a significant potential source of revenue. States need to consider two factors here. First, a significant number of non-reimbursed cases may have been eligible for reimbursement given more assertive management practices. Despite this, though, many cases that would not qualify for reimbursement would generate some revenue through outcome payments.
• State's can and should establish common sense decision rules that are applied at the time an Individual Plan of Employment is developed. Plans that include high costs such as postsecondary education expenses and adaptive equipment can be submitted for reimbursement.
• States need to consider the cost of managing the Ticket program, while recognizing that these investments may also assist the state in increasing reimbursements under the traditional system and in improving overall data management within the agency.
• The data suggest that it is unlikely that SSI recipients are good candidates for the outcome payment system. Even when including non-reimbursed cases the revenue from outcome payments was only marginally higher than the revenue from traditional reimbursement at eight years.

Download the entire white paper in MS Word

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