Vocational Rehabilitation (VR) funding of job development and placement services: Implications for rural reach

3.1.1 Vendors

Depending on the agency, job development and placement services were provided by vendors, internal staff, or a combination of the two. Almost all agencies utilized vendors to a certain degree for job development and placement activities. Vendors were often differentiated between community rehabilitation programs (CRPs) and independent contractors. While definitions were not uniform across agencies, CRPs were generally described as larger, more established, providers that supplied job development and placement in addition to other services, such as supported employment, mental health, day-, or extended-services. Conversely, independent contractors were described as smaller operations offering a narrow range of services. Of the 40 agencies represented, 15 used CRPs exclusively for hired services, while another 23 used a range of providers, including independent contractors.

Agencies reported some common requirements for contracting with vendors, such as experience working with people with disabilities, education, insurance, and clean background checks. Seventeen agencies required Commission on Accreditation of Rehabilitation Facilities (CARF) accreditation (or similar accreditation), but depending on the role of the vendor and the need for services in a particular area, accreditation requirements were sometimes waived or delayed. For instance, three agencies required accreditation for CRPs but not for other providers, two agencies described waived requirements for limited use providers (earning less and 20K and 25K per year), and one agency described waived requirements in locations with limited providers.

Another three agencies used CARF accreditation as a preferred qualification, but not a required one. Two agencies had recently stopped requiring agencies to have CARF accreditation due to associated costs and completion time that had drastically reduced available vendors in their states. For instance, one informant estimated CARF accreditation cost vendors about $10,000 per year, and another estimated the process took two years to complete.

Sixteen agencies required specific training or credentials, but these varied substantially. Training topics included supported employment, job coaching, specialty training, such as serving clients with blind/low vision, person-centered planning, Association of Community Rehabilitation Educators (ACRE) training, Alan Anderson Employment Outcomes Professional Training, and Certified Vocational Evaluator (CVR) credentials. Finally, six agencies highlighted some quality assurance measures to make sure vendors were effectively serving clients. These included client surveys, monitoring visits, and a requirement for written policies ensuring consumer choice.

3.1.2 Vendor shortages

Several informants described vendor shortages and strategies to overcome them. For instance, ten agencies waived, and stopped requiring CARF accreditation requirements to increase vendor availability. Another agency got around CARF requirements by soliciting CARF-accredited programs to hire individuals in small communities, so they were still covered. Three informants told about “establishment grants” to increase the number of providers in underserved areas. These short term (1–3 year) start-up grants were meant to offset barriers to entry, and could cover salary and equipment to get a vendor started in a particular region of the state. Three agencies conducted outreach activities to secure new vendors for underserved areas, and two others highlighted work with other service systems, such as Mental Health and Developmental Disability waiver programs to secure additional providers for VR clients. Finally, two informants solicited counselor recommendations of limited-use providers or individuals who might be willing to take on cases in rural locations.

3.1.3 Vendor advantages and disadvantages

Informants described advantages and disadvantages of independent contractors and CRPs. Independent contractors were described as increasing VR capacity and consumer choice to serve consumers in rural communities. In particular, small vendors living in rural communities were described as having stronger and more established community and employer connections that opened up opportunities for VR clients. Conversely, three informants suggested that variability across independent contractors posed problems, and it was difficult to ensure quality. When vendors provided poor support to employers, they burned bridges and jeopardized future placements.

Informants described CRPs as offering a range of services to multiple agencies that introduced some complicated dynamics. For instance, four informants suggested that CRPs were distracted or less focused on VR clients, potentially due to lower payment rates than other disability programs they served such as clients services paid through Mental Health or Developmental Disability Waiver programs. Five informants from VR blind agencies said CRPs were disinclined to learn skills for effectively serving clients who were blind because they were such a small part of the CRPs business.

Informants highlighted CRP negotiating power at the state that resulted in both positives and negatives for the VR agency. One respondent said CRPs were effective in reaching out to legislators which ultimately helped VR secure additional state funds. Two respondents discussed situations where CRPs lobbied for the status quo, which limited competition or made it hard to introduce new practices or ways of doing business. Another said that CRPs, relative to independent contractors, had high rates of turnover because they paid very low wages, and talented job developers quit and made more working for themselves.

Overall, vender relationships were described more favorably when they had close communications with counselors. When communication was absent, this prompted some agencies to build internal job delivery capacity, which we describe next.

3.1.4 VR agency staff

When job development services were delivered by internal staff, duties focused on building business relationships and internal job development. Eleven agencies had business relations staff specifically focused on building business relationships. These staff often worked as a single point of contact with business partners. Duties included identifying potential job openings including on-the-job training and work tryouts, performing direct placement, follow-up, and retention of job-ready clients, and providing training on the Americans with Disabilities Act (ADA) regulations and other disability related topics.

Twenty-one agencies described internal job developer or job specialist staff. In general, internal job developers worked more closely with individual consumers and were described as carrying a small caseload or collaborating closely with counselors on individual cases. These staff performed direct placement, and assisted with client accommodations and job search skills. Eleven of these also were described as responsible for building relationships with businesses including attending Chambers of Commerce and other community meetings and participating in job fairs. Four agencies reported having both business relations and internal job development staff and nine agencies did not have either one.

To varying degrees, counselors also performed job development activities in 22 of the 40 agencies interviewed. Some informants highlighted that counselors worked with clients who were more self-directed (n = 6) or in instances when there were no other providers available, including in more rural locations (n = 6). Overall, most agencies utilized a combination of internal staff and vendors to deliver job development services. Agencies that used both internal job developers and vendors (CRPs or independent contractors) described using internal staff for work-ready and rural clients and CRPs or contractors for more intensive cases.

3.1.5 VR agency staff advantages and disadvantages

Agencies that provided services with internal staff suggested that outcomes were better due to more quality control on case progress and increased opportunities for job developers and counselors to communicate about individual cases. Informants suggested that internal capacity also helped keep case costs under control. One informant explained that when internal staff were unavailable, CRPs and other independent contractors were in a stronger position for dictating rates. Conversely, internal delivery made some service delivery more complicated. For instance, one informant suggested that there were conflicts between internal providers and CRPs over who should receive credit for milestones in individual cases. Another informant said it was more difficult to purchase extended services because relationships with CRPs were less established.

3.1.6 Contract professionals

Four agencies described a hybrid model, where they hired contract professionals who were housed and supervised within the VR agency to provide job development services. In two of these, arrangements originated with staff shortages due to hiring freezes imposed by state funding gaps. In these cases, the VR agency was able to increase capacity without adding permanent staff. Another agency used contract professionals to increase capacity across the state. This informant explained that CRPs were reluctant to serve particular rural areas due to lower rates of referrals, but that this model reduced the risks of inconsistent funding since contract professionals were generally paid a wage.

Three of the four agencies paid contract professionals a base salary which flowed through the vendor agency. The other paid their contract professionals through service authorizations, similar to how they paid other vendors in the state. One noted advantage across programs was improved communication between job placement contractors and counselors and more internal control over contractor performance.

3.2.1 Fee-for-service (FFS)

Broadly, FFS payments included hourly, daily, and set-price payments. Most agencies paid hourly or daily rates with set rates. Hourly or daily rates were often allocated in bundles of hours for a particular activity. In these cases, counselors would authorize services in areas such as assessment, work adjustment, job coaching, job development, or job placement for a set number of hours, which served as a check-in point to assess case progress. For instance, in one agency, a consumer was eligible to receive up to 135 hours of job development and retention services, but authorizations for bundles of 20 hours were only authorized with increasing agency oversite. Counselors at another agency could authorize as many hours as needed, but were required to monitor case progress after every ten hours of billed services.

Agencies varied in how they tracked hours. At one end of the continuum, one agency required providers to record services in up to 6 minute increments and reviewed reports of this time accounting. Another agency required accounting for every 15 minutes. One agency paid hourly rates differently based on outcomes. They authorized job placement services in 25 hour bundles or packages. If placement was achieved within the 25 hour allotment, the provider received a bonus and payment for all 25 hours, regardless of hours worked. If the provider did not achieve a placement, however, they were only paid for actual hours worked. Another agency highlighted that hourly rates were for direct service only and did not include any time spent doing paperwork, scheduling meetings, or drive time.

Rates often varied within agencies based on the types of services delivered, location of service delivery, provider expertise, and provider size. Two agencies paid more for services delivered in high-cost cities. Another agency used FFS with vendors located in urban areas, but offered monthly fixed rates in rural areas to account for the uneven flow of referrals. Providers that had special expertise, such as ASL, often negotiated for a higher rate. Informants described that agencies ended up paying this higher rate, even when the special service was not required or used. More typically, rate variations related to vendor size and negotiating power. In these cases, CRPs negotiated higher rates than smaller independents. One agency allowed vendors to negotiate higher rates based on experience in a community and positive outcomes. This created a situation, however, where it became harder to justify the costs of using these vendors, even though they often provided superior services with better outcomes.

Five agencies also paid for services using a set or component pricing menu. In general, set prices were used for single point-in-time activities, such as a rate per job shadow, job application, or vocational evaluation. One agency used set prices for provider work with employers to develop assessment, work evaluation, work interview, or on-the-job training sites.

3.2.1.1. Advantages and disadvantages of FFS

Sixteen agencies described disadvantages of FFS arrangements. Among these, two agencies no longer used this payment model. Criticisms fell in two primary areas. The first related to the level of oversight, negotiation, or “bean counting” required to make payments. Providers were burdened with preparing paperwork and counselors were burdened with reviewing and approving payments – time that would be better spent delivering services to consumers. The second criticism related to outcomes. When providers were paid hourly, they were dis-incentivized to move cases along. Providers were described as maximizing the amount they were paid by using entire bundles of hours or negotiating for additional hours rather than pushing for an employment outcome. Several respondents felt that providers overcharged for services under this model.

Conversely, a few respondents described advantages of FFS models which included flexibility in how services were delivered and improved counselor and consumer control. For instance, because counselors approved bundles of hours or specific services, they were more engaged in the process and could direct more targeted or tailored services. Additionally, FFS models allowed for more consumer autonomy. If consumers were unhappy with the provider or progress, they could change easily to another provider. This is in contrast to RBF systems where benchmarks were difficult to share across different providers due to the progressive nature of milestone payments.

Overall, 27 agencies paid for at least some of their job development services using FFS arrangements. Of these, only four used FFS exclusively. The other 23 agencies used FFS in combination with RBF.

3.2.2 Results-based funding (RBF)

RBF awards lump-sum payments for achieving specific milestones along a case continuum. Thirty-three agencies reported using some form of RBF, of which ten used it exclusively with vendors. The majority of agencies awarded three (n = 15) or four milestones (n = 7), but milestones ranged from 2 to 6 across agencies. The most common milestones were for intake, job placement, job stability (defined as 30–60 days on the job) and closure (defined as 90 days on the job). Agencies with more front-end milestones often added additional benchmarks for assessment, job seeking, and/or training activities. Supported-employment RBF had between 3 and 7 milestones. The additional milestones for these cases were often associated with job stabilization or job coach fade.

Twenty-four agency informants provided payment schedules. In general, milestone payments increased over the case, culminating in the largest final payment at 90-days on the job or closure. A few agencies veered from this norm and provided higher milestone payments at job placement, with additional smaller payments for continued placement and/or closure. Two agencies did not provide any incentives for case closure. In one case, the final payment was at 5 days on the job, after receiving benchmark payments for assessment, and plan development.

Milestone payment totals varied drastically across agencies, from a low of $1000 per case to a high of $8000. Agencies that had specific milestones for supported employment cases (n = 13) paid between 1.2 and 4.6 times more in total payments. There did not seem to be any systematic factor that contributed to payment variations across agencies. For instance, rate differentials were not associated with varied economic conditions, CARF accreditation requirements, internal job development staff (who may have taken on easier to serve cases), or combined payment models (where FFS payments might have been used to offset lower milestone reimbursement rates).

Seven agencies provided additional payments or tiers for harder to serve cases, but these also did not appear to be associated with rate differentials across states. In general, tiers were awarded to offset the time and effort required to find and maintain employment for individuals with more significant disabilities. One consequence of the tiered system was required negotiation between the counselor and vendor about clients who required steeper payments. One informant highlighted that vendors tended to push for higher payments regardless of case complexity, and counselors were inconsistent in how they awarded different tiers.

3.2.2.1. Milestones.

Informants provided additional background about their milestones. For instance, additional milestone payments prior to job placement were described as a strategy to increase income stability or cash flow for providers. Front-end milestones helped offset some of the risk associated with serving difficult cases. This was particularly important for providers serving a smaller volume of cases, such as rural service providers. One informant suggested that front loading payments, however, could lower the chances of retention, since providers weren’t motivated to reach closure if they could generate income on assessment, job development, and placement milestones along the way. Another provider suggested that they paid more for job development services than surrounding states because they had more front-end milestones. Their overall milestone payments per case were on par with other programs, but they presumably had fewer cases reaching closure.

Nine informants described how their agencies handled milestones that were repeated, such as when the client was placed in a job, retained the job for a period less than 90-days, and required another placement. Three informants described very strict procedures, where a provider could only receive a milestone payment once. In these situations, it was incumbent upon the provider to repeat the milestone (such as placement) to remain eligible for later milestone payments (such as 45 days and 90-days on the job). Two of these informants suggested, however, that milestone payments could be re-achieved if the client left VR and opened a new case after a significant waiting period (1 or 2 years). Two other informants said that benchmarks could be repeated if the job loss was outside a consumer’s control, such as a business closure or downsizing. Three others suggested that milestones could be repeated at the discretion of the counselor. In one case, backtracking was covered by FFS payments until the consumer was back on the milestone track.

3.2.2.2. Agency oversight.

Informants described requirements for vendor check-ins about case progress and milestone achievement. These reports varied from frequent (weekly or bi-weekly) to less frequent (monthly or quarterly) reports, or reports for achieving each milestone. Some informants described monitoring difficulties, where meetings between the counselor and vendor did not occur or verifications of placements and other outcomes were hard to obtain.

Communication between the provider and counselor were perceived as important to ensure that job quality and fit were achieved. One agency required the counselor to approve the job placement site prior to the provider getting paid, which helped alleviate situations when the provider found placements that were not tailored to the client. Another informant said their agency introduced some unpaid milestones that required face-to-face meetings between the counselor and provider at 30-days and 60-days on the job to ensure ongoing communication prior to closure.

3.2.2.3. Advantages and disadvantages of RBF.

Reported advantages and disadvantages of RBF focused on quality and reach. In general, RBF procedures were described as easier for agencies and vendors to understand and implement because goals and payments were clearly defined and required less paperwork and nitpicking over case services and costs. In order to maximize revenue, providers were incentivized to move clients quickly to job placement and closure. Because clients were less likely to languish in services, this helped reduce waiting lists for services and reduced case costs.

Informants also highlighted that RBF increased the overall quality of the provider pool. More effective providers pulled in more revenue and were more likely to stay in business and grow. In part, this was fueled by consumer choice and VR referrals for providers with better job placement and retention outcomes. Additionally, RBF incentivized providers to develop business connections beyond specific cases so they were able to make placements more quickly once they took on a new client.

On the negative side, concentrated focus on outcomes undermined overall placement quality because providers pushed clients towards placement as fast as possible, without fully considering client needs for job exploration, job fit, and career advancement. One informant suggested that because providers did not get paid after 90 days on the job, they were less likely to provide long-term supports, which also threatened placements over the longer term.

RBF was often associated with declining provider reach in terms of clients served, regions covered, or services provided. Informants highlighted situations of case creaming, where vendors turned back clients who took longer to place, and in particular, clients who were blind or severely disabled. Financial risk was highlighted for states on order of selection, who were serving clients with most significant disability. Essentially, RBF rates were calculated based on a book of business spanning all categories, not the subset of harder to place clients. This resulted in lost capacity in at least one state, where providers could not shoulder the lower rates of referrals or decreased revenue, and went out of business.

Financial risk was also highlighted for serving rural clients. One informant described a situation where providers turned away clients from rural communities because rates did not adequately offset the risk of serving locations with low probabilities of job placement. Another suggested that rates did not sufficiently cover the extra travel time and costs for reaching isolated areas. Additionally, because small rural providers received a smaller volume of referrals, they have more difficulty maintaining adequate cash flow. Over time, these types of situations reduced provider reach to rural areas. Finally, RBF resulted in lost services such as transportation planning, long-term supports, or self-employment since these were not compensated within typical milestones.

3.2.2.4. Incentives.

Several agencies offered incentives to offset some of the financial risks described. Aside from tiered payments for more challenging cases (n = 7), informants described extra funding for providers who served clients who were deafblind (n = 2), deaf/hard of hearing (n = 4), blind (n = 2), HIV positive (n = 1); or had autism (n = 2), traumatic brain injury (n = 1), borderline personality disability (n = 1), a criminal history (n = 3) or history of institutionalization (n = 1). Additionally, in states with both blind and general agencies using RBF, blind agencies generally paid higher rates to attract providers.

Informants also described bonuses associated with higher quality jobs. These included bonuses for wages (such as above regional average or above Substantial Gainful Activity - SGA earnings; n = 9), jobs with benefits (n = 4), fulltime jobs or 30+ hours per week (n = 3), on-the-job retention beyond 90 days (n = 1), and rapid placements (n = 1). Finally, informants described additional payments for mileage (n = 7), drive time (n = 3), travel subsidies (n = 1), and a rural development bonus (n = 1) for enticing providers to serve rural communities.

At the core of these recommendations are choice points for agency decision making. The first and most evident is balancing quality with quantity. Efforts to expand provider pools through lowered accreditation or training standards can result in wide variation in service quality across providers. Likewise, shifts to FFS, front-end milestone payments, or guaranteed referrals to help offset financial risk, may undermine incentive towards job placement and closure. While these outcomes are not guaranteed, efforts to address or consider them, must be incorporated into agency decision making.

Another consideration is internal versus external capacity. In an era of tight budgets and cost containment, agencies can be reluctant or prohibited from growing a cadre of internal staff. Particularly in order of selection situations, a large internal staff contributes to budget crisis. Informants highlighted, however, that client outcomes were generally better if agency and provider staff worked together to support clients and develop jobs, and that internal staff were necessary for maintaining rural service delivery in some instances. Funding mechanisms that shift risk from the agency to the provider can be positive for the bottom line, but less attractive for individualized client services. The pros and cons of internal staff development must be weighed in this context.

Finally, is the balance between agency mission and GPRA performance indicators. Agencies are tasked with serving those with most significant disability, particularly in times of budget shortfalls. Performance indicators, however, focus more broadly on the entire VR caseload. As a result, there is an inherent disincentive to serve harder cases with tiered payments, incentives, or travel support that increase case costs in the context of lower probabilities of employment. In fact, agencies might be accepting of service gaps if, overall, greater numbers of clients are served and achieve employment. Unfortunately, this choice point may result in ongoing service gaps for rural and underserved groups.

Assuming that VR agencies serve a similar mix of cases, one of the most surprising findings in the study, was the fact that RFB payments varied so dramatically across agencies, regardless of factors that may have explained differentials, such as shared FFS and RBF payment models, state economic conditions, or mix and quantity of providers. This, in particular, deserves additional exploration in light of the decision points highlighted above.