I. Introduction

The Ticket to Work and Self-Sufficiency program (TTW) was designed to both increase investment in return-to-work services, and improve the efficiency of that investment in meeting the needs of beneficiaries. The program offers beneficiaries more choice in obtaining services and gives employment-support service providers new financial incentives to serve beneficiaries effectively. It also modifies the rules for the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs in an attempt to give beneficiaries more incentive to participate.

To date, the Social Security Administration (SSA) has implemented the core elements of the TTW program across the country. In October 2004, SSA completed the mailing of Tickets to all of the approximately 11 million Ticket-eligible beneficiaries, and it continues to mail Tickets to beneficiaries who gain eligibility (between 45,000 and 75,000 per month). Altogether, SSA had mailed about 11 million Tickets by April 2007, and 10.3 million1 of those who had received Tickets during that period were still eligible to use them to obtain help in securing meaningful employment. SSA also implemented the new SSI and DI program rules that allow beneficiaries to attempt to work without fear that SSA will review their disability status and eliminate benefits while they are participants in the TTW program. Finally, SSA and its TTW Program Manager had enrolled all state vocational rehabilitation agencies (SVRAs) and more than 1,300 service providers, or employment networks (ENs), that offer beneficiaries new choices for providers and service mixes (Thornton et al. 2007).

While getting the core elements in place represents a major accomplishment, the market for disability employment services has experienced several serious problems. As of December 2005, the beneficiary participation rate in the first 13 states to implement TTW (the Phase 1 States) has risen only slightly since the early months of rollout and remains low, at about 1.8 percent. Participation rates in Phase 2 and 3 states continue to grow but are still below the rates in the Phase 1 states and are very low relative to the number of beneficiaries expressing interest in work (Thornton et al. 2007). The number of ENs participating in TTW appears to be leveling off, and the Program Manager reported that it is almost impossible to recruit new ENs. Signs indicate that all types of providers (ENs and SVRAs) are losing interest in the program. This loss of interest appears to reflect concern over several operational features of TTW, including (1) substantial financial risks for ENs, (2) administrative procedures viewed by ENs and SVRAs as excessively burdensome, and (3) a lack of incentives for beneficiaries who become gainfully employed to supply their service providers with earnings documentation that would enable providers to receive payments over extended periods of time. In 2003, SSA instituted an expedited payment process for ENs eligible for certain outcome payments and, although not many ENs had taken advantage of the new system, early evidence indicates that the process is reducing payment time for the ENs that use it (Thornton et al. 2007).

Early impact results suggest that TTW probably led to a small, relatively rapid increase in beneficiary enrollment in employment services during the first rollout year (2002), particularly among agencies other than SVRAs. But results for beneficiary earnings and benefit receipt are inconclusive. Impacts on beneficiary earnings and benefits in TTW’s first two years were too small to distinguish from historical variation. As a result, it is not possible to tell if TTW had an effect on these outcomes or if TTW was merely rolled out first in states that had systematically different trends in beneficiary earnings and benefit receipt. Based on trends observed during the first three years of TTW operation, it is possible that future impacts might be larger than those observed so far. Nevertheless, analyses of trends in TTW payment data suggest that the program will not generate the level of exits from the rolls envisioned by Congress unless there are major shifts in beneficiary behavior. In particular, TTW will not meet the hoped-for exits without both a substantial rise in participation and an increase in the share of participants earning enough to exit the rolls.

To help the program reach its full potential, SSA has tried to foster the required changes in beneficiary and provider behavior by revising the regulations that determine how the TTW market works. These efforts have been underway almost since the beginning of the program and were foreseen by the authorizing legislation that empowered the SSA Commissioner to assess the program as it rolled out, making changes that would help to achieve program goals more effectively (or recommending legislative changes). Some attempted solutions--such as producing information to help ENs find operating capital, funding a targeted marketing campaign in 10 large cities, and introducing a different payment process--appear to have had little overall positive impact. Recognizing the need for more sweeping revisions, SSA published a set of new final rules for TTW on May 20, 2008. The new regulations increase the financial incentives for ENs to participate in TTW.

This report updates and extends the work presented in earlier evaluation reports to cover the first four years of the TTW program. The evaluation findings are organized into six sections that reflect the major components of the market for employment-support services that TTW tries to enhance. The first part (Chapter I) provides an overview of TTW and discusses how the program attempts to create a better marketplace in which beneficiaries can obtain employment assistance services. Part 2 (Chapters II through VII) focuses on beneficiaries’ demand for those services as reflected in their general characteristics, participation in TTW, the activities of those who assign Tickets, and the perspectives and characteristics of those who do not assign Tickets. Part 3 (Chapters VIII and IX) addresses the supply of employment services as indicated by provider involvement in the program and the financial incentives TTW offers to providers to recruit beneficiaries. Part 4 (Chapters X and XI) describes the efforts of SSA and the Program Manager to create a well-functioning market for employment assistance services. The last two sections offer a summative view of the program. Part 5 (Chapters XII through XIV) presents preliminary estimates of the effects of TTW on beneficiary service use, employment, and benefit receipt and data on payments to ENs and SVRAs that have served TTW beneficiaries. Part 6 (Chapter XV) offers overall conclusions about TTW at this stage of its development and its potential to achieve its intended goals.

The TTW program, together with other initiatives created by the Ticket to Work and Work Incentives Improvement Act (Ticket Act), represents a new approach to an old problem: while many people with disabilities work, relatively few who receive SSDI or SSI disability benefits ever leave the rolls as a result of working. The vast majority of beneficiaries do not attempt to secure a job once they are on the rolls. Historically, less than 3 percent of any SSDI or SSI enrollment cohort has ultimately left the rolls as a consequence of work, and less than 0.5 percent of all beneficiaries on the rolls at any juncture has left due to work (Newcomb et al. 2003; Berkowitz 2003).

The TTW program’s new approach addresses this problem by relying on the marketplace to increase the level and mix of employment-support services. Rather than setting up a single training program, TTW establishes payment mechanisms designed to induce employment-service providers to increase the supply of programs and the range of approaches. TTW also tries to increase beneficiary demand for employment-support services by modifying program rules to encourage work and by providing beneficiaries with more information to help them understand and navigate complex program rules. In this way, TTW relies on the creativity and knowledge of many service providers and beneficiaries to find the right mix of services to help beneficiaries find jobs that allow them to earn their way off the rolls and toward economic self-sufficiency.

TTW marks a substantial departure from earlier years when, for many disability beneficiaries, SVRAs were essentially the only option for obtaining employment-support services. From 1981 until 1996, SSI and SSDI beneficiaries who were deemed good candidates for rehabilitation—potentially capable of supporting themselves through work earnings—were referred exclusively to SVRAs. The Alternate Participant Program, created in 1996, was intended to give more options to beneficiaries, but, for various reasons, the initiative enrolled extremely few individuals. Alternate providers filed just over two dozen payment claims from 1999 to 2001.

The remainder of this section lays out the major aspects of the Ticket Act and the TTW program that stimulate beneficiary demand for services, increase the supply of employment-support service providers, and ensure the overall operation of the market.

1. Efforts to Stimulate Beneficiary Demand for Employment-Support Services

The Ticket Act was intended to increase demand for employment and employment-support services by changing several SSI and SSDI program features that could have discouraged work efforts.

1. Continuing Disability Review Protections.  While beneficiaries use their Ticket, they are not subject to any medical continuing disability reviews (CDRs), which are checks to determine whether they remain medically unable to work. As a result, beneficiaries will not have to worry about SSA reviewing their medical disability status while they are TTW participants. Furthermore, for long-term SSDI beneficiaries, employment will no longer trigger a medical disability review (even for those not participating in TTW).

2. Expedited Reinstatement. The Ticket Act provided for an expedited reinstatement policy that allows beneficiaries who leave the disability rolls for employment to have their benefits (and any associated health insurance) reinstated without a new application should they return to cash assistance within five years.

3. Benefit Counseling. The Ticket Act required SSA to establish greater expertise in the SSA work incentive provisions, both within SSA and in the community. SSA established the Area Work Incentive Coordinator (AWIC) position within SSA as well as a network of community-based Benefits Planning, Assistance, and Outreach (BPAO) providers that would help beneficiaries develop a better understanding of SSDI and SSI work incentives.4 The act also established a network of protection and advocacy providers who could help beneficiaries successfully negotiate the system.

4. Extended Medicare Coverage. Medicare coverage for SSDI beneficiaries who return to work and leave the SSDI rolls was extended substantially, from 39 months under earlier rules to 93 months at present; when that period ends, beneficiaries will be able to purchase Medicare coverage.

5. Medicaid Buy-In Option. The Ticket Act made it easier for states to establish programs that allow working people with disabilities to purchase Medicaid coverage on a sliding-fee basis. In 1999, 8 states operated a Buy-In program; 33 states now operate such programs (Black and Ireys 2006).

In addition to removing some work disincentives, TTW greatly expanded the types of organizations that SSA will pay to support beneficiaries’ employment efforts. TTW allows virtually any type of entity to sign up as an EN. ENs can come from any of the three sectors of the economy: private for-profit, public nonprofit, and private nonprofit. Any private business—from a large corporation to a sole proprietorship—may be an EN. Likewise, any public agency—a municipal office, a school district, a regional council, a state bureau, etc.—may be an EN, whether or not its mission concerns vocational services or persons with disabilities. Virtually all private nonprofit organizations may become ENs, from faith-based groups to charitable foundations to private colleges to social service agencies. Furthermore, there are virtually no barriers to entry for interested entities. There are essentially no application costs, and the general eligibility requirements are apparently easy to meet. Entities signing up as ENs are not required to have experience in serving persons with disabilities. An organization that might some day hire even just one Ticket holder at a level that would take him or her off cash benefits may sign up as an EN.

In addition, TTW affords beneficiaries and the providers who serve them considerable flexibility to choose the services to be provided. Providers and beneficiaries must agree on an individual work plan (IWP) before a Ticket can be put into use, but SSA imposes almost no requirements for the services and arrangements to be covered by such plans. An IWP could, at least in theory, include a wide array of services such as job training or placement, information to help beneficiaries better understand relevant program rules, assistance in overcoming employer misperceptions, and technology or other services to support beneficiaries after placement. TTW could also provide beneficiaries with a wage subsidy by rebating some of the outcome payments to the former beneficiaries who generated those payments.

Finally, the TTW program is more consumer-driven than the old system. All eligible beneficiaries receive a Ticket and may decide what to do with it, and participation is completely voluntary. In addition, TTW eliminated the process under which the state and federal Disability Determination Services (DDS)—the entities responsible for determining whether an SSI or SSDI applicant is disabled—refer beneficiaries exclusively to SVRAs. It thereby tried to open up the market and allow all providers that wished to become an EN to serve beneficiaries. It also increased beneficiaries’ choices by allowing all eligible beneficiaries to decide whether and when to seek employment services.

2. Increasing the Supply of Employment -Support Service Providers

The employment-support system for beneficiaries that predated TTW was viewed as problematic (see Berkowitz 2003). Under that system, each state’s DDS determined which beneficiaries were good candidates for rehabilitation and then referred them to the SVRAs.6 SSA would reimburse the SVRAs for the cost of services that resulted in a beneficiary’s working at the level of “substantial gainful activity” (currently set at $900 per month for most individuals) for 9 months during a 12-month period. The system was viewed as problematic because (1) it limited beneficiaries’ choice of providers to SVRAs and (2) the reimbursement system paid for an intermediate outcome—9 months of substantial gainful activity (SGA)—rather than for the outcome of ultimate interest to SSA: movement into sustained employment and exit from the disability benefit rolls.

The TTW program sought to increase provider interest in helping disability beneficiaries gain economic self-sufficiency by introducing two new payment options designed to give providers a stronger performance incentive. While the new options can provide some payments early in a beneficiary’s job tenure, they require a beneficiary to earn enough so that he or she no longer receives cash benefits for 60 months before the provider receives full payment. The first option, the outcome-only system, provides slightly higher payments than the second option, but only when the desired outcome is achieved—in other words, when a beneficiary leaves the rolls because of work. The second new option, the milestone-outcome system, provides smaller outcome payments but can provide up to four larger payments while a beneficiary is still receiving benefits if he or she achieves specified earnings targets, or “milestones.” ENs may not use the traditional payment system; they must elect to be paid under either of the new payment options. SVRAs may act as ENs by using the new payment systems, but they may also decide to serve some beneficiaries under the traditional system.

To make employment-support service providers familiar with TTW and its new options, SSA contracted with a Program Manager to recruit providers to become ENs. The Program Manager used mailings, conference presentations, and its call-in center to contact more than 50,000 potential providers as TTW was rolled out. SSA also disseminated information about the program through presentations by its regional and field office staff and its website. As of October 2005, the Program Manager’s responsibilities were divided into a Program Manager for Recruitment and Outreach and a Program Manager for Operations Support.

While the new payment system offers providers some new incentives to help beneficiaries earn their way off the rolls, it also includes some constraints. Unless they have other funding, providers must limit their expenditures on beneficiary services to a level that fits within the payments they expect to receive and their assessment of whether the services they can provide are likely to result in a beneficiary’s exit from the rolls. Providers may refuse to serve beneficiaries whom they think are not likely to leave the rolls and thus unlikely to trigger outcome payments. In particular, beneficiaries who want to work only at an earnings level that would enable them to retain part or all of their benefits will generally not be attractive to providers operating under the new TTW payment systems.

3. SSA’s Efforts to Enhance Market Functioning

SSA has the job of establishing the TTW program and helping it extend the market for employment-support services. After a planning period, SSA rolled out TTW in three phases. Phase 1, which began in February 2002, saw the program introduced in 13 states. Phase 2, which began in November 2002, extended TTW to 20 more states and the District of Columbia. Phase 3, which began in November 2003 and ended in September 2004, completed the rollout in the remaining 17 states and U.S. territories. At present, beneficiaries in all states receive a Ticket as they become newly eligible for the program. Appendix A presents a complete timeline for TTW and lists the states included in each implementation phase.

TTW leaves decisions about participation and service delivery to individual beneficiaries and providers but gives SSA several key roles in the market. In particular, SSA, along with the Program Manager for Operations Support, runs the TTW payment systems. Responsibilities involve both the processing of payment requests from providers and the ongoing SSDI and SSI operations that determine whether beneficiaries have left the rolls due to work. The latter determination is central to triggering outcome payments to ENs.

SSA also promoted beneficiary knowledge about TTW by mailing Tickets and conducting other outreach. It established the AWIC position and the BPAO program, now called Work Incentives Planning and Assistance, or WIPA, and provided additional funding to disability protection and advocacy providers.

Finally, SSA monitors overall TTW operations in order to determine whether changes in the program are warranted. It has done so since the program’s February 2002 inception. In May 2008, SSA issued final rules for the most sweeping program changes to date. The changes increase milestone payments dramatically and separate the traditional payment system for SVRAs from the new payment systems for ENs. The new regulations allow beneficiaries to use SVRA services to move into a job and then assign their Ticket to an EN that would help them maintain that job.

B. The Ticket to Work Evaluation

Given TTW’s size, complexity, and significance, Congress mandated SSA to conduct a comprehensive evaluation to provide both short-term feedback that could help improve program implementation and a long-term assessment of the program’s effects. The current evaluation began in mid-2003 and will continue for five years. By the time it is complete, the evaluation will have addressed seven major questions:

1. Did TTW significantly reduce dependence on SSA benefits through increased beneficiary employment and earnings?

2. What was the impact of TTW on earnings, employment duration, SSA benefits, and beneficiary income?

3. Did TTW produce net SSA program costs or savings? How much? What were the costs and benefits of the TTW program to SSA?

4. Did TTW produce net social costs or benefits? What were the social costs and benefits of the TTW program?

5. Who did and did not participate in TTW?

6. What groups were adequately served under the TTW program and what groups were underserved?

7. What aspects of the program improved or reduced program success?

The evaluation will address these questions in five annual reports. The initial evaluation report (Thornton et al. 2004) and the second evaluation report (Thornton et al. 2006) focused on program operational issues, primarily program rollout and the participation by beneficiaries and providers (questions 5, 6, and 7). The third report (Thornton et al. 2007) addressed the same issues but added information on the impacts of TTW on beneficiaries (questions 1 and 2). This report updates implementation issues and impacts. The final report, scheduled for 2008, will cover all these issues and will examine the TTW costs and benefits (questions 3 and 4).

C. Data Sources for This Report

This report is based on the data sources listed below. Together, they provide a qualitative and quantitative perspective on TTW operations and effects.

• SSA Administrative Records. We developed several analysis files—collectively referred to as the Ticket Research File (TRF)—from extracts obtained from SSA administrative databases. The TRF contains longitudinal data on the more than 18 million disability beneficiaries who received benefits between January 1996 and September 2005 (the data cover the slightly longer period of January 1994 through December 2005). We used the TRF to analyze trends in SSI and SSDI participation, Ticket assignments, payments to ENs and SVRAs, and the impacts of TTW on beneficiary service use, employment, earnings, and benefit receipt.

• National Beneficiary Survey (NBS). We used data provided by the nearly 8,000 beneficiaries who responded to the cross-sectional component of the 2005 NBS to examine their knowledge of TTW, work expectations, functioning, health, participation in TTW, employment, and other issues. In an effort to ensure that the survey represented the full range of beneficiary perspectives, we fielded it from February through September 2005 and used procedures that accommodate the needs of respondents with all kinds of disabilities. Responses from approximately 3,100 beneficiaries who assigned or used their Ticket in 2004 enabled us to examine their participation in and satisfaction with TTW. Appendix B summarizes the survey methodology and provides supplemental tabulations. The 2005 NBS tabulations included in this report have been weighted to correct for non-response.

• Rehabilitation Services Administration (RSA) Data.We used public-use files from the Rehabilitation Services Administration (RSA) to analyze trends in beneficiary participation in vocational rehabilitation. We also used individual-level data on SVRA case closures provided by RSA and linked to SSA administrative data to analyze the extent to which TTW affected the use of employment services.

• Vocational Rehabilitation Reimbursement Management System. The Vocational Rehabilitation Reimbursement Management System (VRRMS) is an automated management information system used by SSA to track reimbursements made to vocational rehabilitation agencies and alternate providers before the advent of TTW. It includes data on the number of reimbursement claims allowed, the total reimbursement amount, and the state agency that received the reimbursement.

• Interviews with Providers, the Program Manager, SSA, and Other Federal Agencies. Information on program implementation and provider operations came from interviews conducted by the evaluation team in early spring 2007. The interviews supplemented dozens of similar interviews conducted for earlier evaluation reports (Thornton et al. 2004, 2006, 2007) and the preliminary process analysis (Livermore et al. 2003). The most recent round of interviews included discussions with officials from the TTW Program Manager for Operations Support, the TTW Program Manager for Recruitment and Outreach, and SSA staff in the central office.

Exhibit I.1 presents the populations and number of individuals included in, and the time periods covered by, each data source.