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(2) The agency promptly informs the claimant in writing if assistance will be discontinued, based on the State agency's determination.

(b) Alternatively, the State may provide for continuing assistance in all


In cases in which a fair hearing is requested after expiration of the advance notice period, the State may provide for an additional period during which time the request for a hearing will result in reinstatement of assistance to be continued until the fair hearing decision.

(6) Information and referral services are provided to help claimants make use of any legal services available in the community that can provide legal representation at the hearing.

(7) The hearing will be conducted at a time, date and place convenient to the claimant, and adequate preliminary

written notice will be given.

(8) The hearings will be conducted by an impartial official (or officials) of the State agency. Under this requirement, the hearing official must not have been involved in any way with the action in question.

(9) When the hearing involves medical issues such as those concerning a diagnosis, or an examining physician's report, or the medical review team's decision, a medical assessment other than that of the person or persons involved in making the original decision will be obtained at agency expense from a source satisfactory to the claimant and made part of the record if the hearing officer or the appellant considers it necessary.

(10) The claimant, or his representative, will have adequate opportunity:

(i) To examine all documents and records used at the hearing at a reasonable time before the date of the hearing as well as during the hearing;

(ii) At his option, to present his case himself or with the aid of others including legal counsel;

(iii) To bring witnesses;

(iv) To establish all pertinent facts and circumstances;

(v) To advance any arguments without undue interference;

(vi) To question or refute any testimony or evidence, including opportunity to confront and cross-examine adverse witnesses.

(11) Prompt, definitive, and final administrative action will be taken within 60 days from the date of the request for

a fair hearing, except where the claimant requests a delay in the hearing.

(12) The claimant will be notified of the decision, in writing, in the name of the State agency and, to the extent it is available to him, of his right to judicial review.

(13) When the hearing decision is favorable to the claimant, or when the agency decides in favor of the claimant prior to the hearing, the agency will make corrective payments retroactively to the date the incorrect action was taken or such earlier date as is provided under State policy.

(14) Recommendations of the hearing officer or panel shall be based exclusively on evidence and other material introduced at the hearing. The verbatim transcript of testimony and exhibits, or an official report containing the substance of what transpired at the hearing, together with all papers and requests filed in the proceeding, and the recommendations of the hearing officer or panel will constitute the exclusive record for decision by the hearing authority and will be available to the claimant at a place accessible to him or his representative at any reasonable time.

(15) Decisions by the hearing authority, rendered in the name of the State agency, shall specify the reasons for the decision and identify the supporting evidence. They shall be binding on the State and local agency. Under this requirement:

(i) No person who participated in the local decision being appealed will participate in a final administrative decision on such a case;

(ii) The State agency is responsible for seeing that the decision is carried out promptly.

(16) The State agency will establish and maintain a method for informing, at least in summary form, all local agencies of all fair hearing decisions by the hearing authority and the decisions will be accessible to the public (subject to provisions of safeguarding public assistance information).

(17) In respect to title XIX, when the appeal has been taken on the basis of eligibility determination, the agency responsible for the determination of eligibility for medical assistance, if different from the single State agency administering the medical assistance plan, shall participate in the conduct of the fair hearing.

(b) Federal financial participation. Federal financial participation is available for the following items:

(1) Payments of assistance continued pending a hearing decision;

(2) Payments of assistance made to carry out hearing decisions, or to take corrective action after an appeal but prior to hearing, or to extend the benefit of a hearing decision or court order to others in the same situation as those directly affected by the decision or order. Such payments may be retroactive in accordance with applicable Federal policies on corrective payments.

(3) Payments of assistance within the scope of Federally aided public assistance programs made in accordance with a court order.

(4) Service costs incurred by the agency, at the applicable matching rates, for:

(i) Providing legal counsel to represent clients at hearings or in judicial review;

(ii) Providing transportation for the claimant, his representative and witnesses to and from the place of the hearing;

(iii) Meeting other expenditures incurred by the client in connection with the hearing.

(5) Administrative costs incurred by the agency in carrying out the hearing procedures, including expenses of obtaining an additional medical assessment. [36 F.R. 3034, Feb. 13, 1971]

§ 205.20 Methods for determination of eligibility.

Under the Social Security Act, State plans for public assistance must provide such methods of administration as are found by the Secretary to be necessary for the proper and efficient operation of the plan. In determinations and redeterminations of eligibility for assistance, and for the amount of assistance, this requires methods directed to the following objectives: Payment of assistance to all individuals who are eligible and denial of assistance to all individuals who are not eligible; procedures which are simple, efficient and economical, allowing the most effective use of limited personnel; and full respect for the rights and dignity of applicants for, and recipients of assistance. The regulations in this section are directed to these purposes.

(a) Requirements for State plans. A

State plan for OAA, AFDC, AB, APTD, AABD, and MA must provide that:

(1) Effective no later than July 1, 1969, a simplified method for the determination of eligibility must be used on a test basis in selected local units encompassing a significant percentage of the caseload, representative of the existing State public assistance programs from the standpoint of staff, applicants and recipients, and other significant characteristics which will assure an adequate demonstration of the method. At least one of the local units will be an urban area.

(2) Effective July 1, 1970, with respect to OAA, AB, APTD, and AABD:

(i) The simplified method for determination of eligibility will be used for applications for and redeterminations of assistance.

(ii) The State will use the simplified method on a progressive basis and will increase the number of areas in the State using the system on a planned schedule which will achieve State-wide operation no later than July 1, 1971.

(iii) The State will develop a plan to be carried out over a period ending July 1, 1973, which shall be directed to:

(a) Simplification of eligibility and procedural requirements.

(b) Simplification of forms.

(c) Modernization of the payment mechanism.

(d) Appropriate training and utilization of staff.

(e) Use of the State Technical Consultation Panel.

A regulation will be issued, with prospective effective date, regarding Statewide use of the simplified method in AFDC and MA, when the Secretary determines that the results from the test in those programs support the overall effectiveness of the method on & permanent basis.

(3) When under the simplified method, statements of the applicant or recipient are incomplete, unclear, or inconsistent, or where other circumstances in the particular case indicate to a prudent person that further inquiry should be made, and the individual cannot clarify the situation, the State agency will be required to obtain additional substantiation or verification. In such instances, verification is obtained from the individual or the agency's records or from the public records, or with the individual's knowledge and consent, from an

other source. The simplified method does not apply to eligibility factors for which Federal law or policies require procedures beyond obtaining a client's statement, such as requirements for a professional examination to determine whether an individual is blind, for a professional determination regarding permanent and total disability, for a determination of whether training or employment was refused for "good cause." The simplified method does not exclude the use of data exchange for information about receipt of social security with the Social Security Administration.

(4) Procedures are adopted which are designed to assure that recipients make timely and accurate reports of any change in circumstances which affect their eligibility for assistance or its amount.

(5) When there is evidence that fraud has been practiced in order to obtain assistance, the case must be referred to the appropriate law enforcement official, in accordance with Federal requirements. The agency's method of investigating instances of suspected fraud must respect the legal rights of individuals.

(6) An initial progress report shall be submitted to the Department of Health, Education, and Welfare at the end of the first quarter. This report shall provide information as requested on the progress of the demonstration or implementation of the method including findings on eligibility, ineligibility and extent of entitlement. (For continuing reports, see definitions, paragraph (c) (5) (ii) of this section.)

(b) Evaluation. The Secretary of Health, Education, and Welfare shall appoint a National Evaluation Committee composed of prominent citizens representing industry, education, labor, welfare recipients, and other groups who shall review, periodically, results of the operation of the system and recommend to the Secretary any changes considered necessary to improve the method and to assure proper and efficient administration.

(c) Definitions. The simplified method means an organized method by which the agency accepts the statements of the applicant for, or recipient of assistance, about facts that are within his knowledge and competence (all facts except those specified in paragraph (a)(3) of this section) as a basis for decisions regarding his eligibility and extent of entitlement. The method includes:

(1) Use of a simplified form for application and redetermination which:

(i) Will provide for the information necessary for the determination of eligibility and extent of entitlement under the State plan;

(ii) Will contain appropriate and conspicuous notice to applicants and recipients, informing them of the penalties for fraud;

(iii) Will be reviewed and approved as specified by the Department of Health, Education, and Welfare after the pretest and at the time of any significant revision;

(2) A testing of the simplified form for initial and redetermination of eligibility prior to full implemetation. The testing includes an item-by-item review designed to discover and correct ambiguous language, to ensure that the information requested is relevant, and to ensure that the form has logical sequence. The pretest should show whether applicants and recipients understand what information is being sought and why.

(3) Validation which relates to the procedures adopted in the initial testing of the correctness of the eligibility decisions. The validation process consists of a full field review of samples of local agency case actions made under the simplified method, to determine how reliable the entire method is in actual operation.

(4) Establishment of a State Technical Consultation Panel consisting of interested individuals, including persons from business, labor, universities and assistance recipients. The Panel will carry out a continuous and periodic evaluation of the method, to assure that the method is consistent with proper and efficient administration and contributes to achievement of the objectives of the program.

(5) A method of continuing review on a sampling basis (Quality Control) designed to operate as an effective measurement of the accuracy of decisions on eligibility and extent of entitlement. The sampling design in the simplified method required by the Department of Health, Education, and Welfare will:

(i) Be of sufficient size to identify weaknesses which need correction and to obtain reliable statistical measures of incorrect eligibility decisions in total State caseloads as well as in the caseloads of large urban agencies within the State. To facilitate these objectives, the field investigation in the sample cases is

pursued to the point where findings related to eligibility or ineligibility are definitively concluded by independent verification. Each factor of eligibility is substantiated by documentary or other appropriate evidence as correct.

(ii) Provide for reporting controls in which rate of incorrect eligibility decisions and extent of entitlement are reported to the Federal agency at quarterly intervals. Alternate quarterly reports will also include an analysis of the findings of the previous six (6) month period together with appropriate corrective action taken or to be taken.

(iii) Provide for a 3 percent tolerance level on incorrect eligibility decisions. When it is determined that the rate of incorrect eligibility decisions exceeds a 3 percent tolerance level, the State and or large urban agency must conduct a 100 percent verification on those specific factors of eligibility identified as causing the unacceptable incorrect decision rate. This more intensive investigation on specific factors of eligibility will be continued until the Federal agency and the State assess the situation and work out a solution. The system contemplates periodic review and monitoring of operations by the Department of Health, Education, and Welfare.

[34 F.R. 1145, Jan. 24, 1969, as amended at 35 F.R. 8366, May 28, 1970]

§ 205.30 Methods of administration.

State plan requirements: A State plan under title I, IV-A, X, XIV, XVI, or XIX of the Social Security Act must provide for such methods of administration as are found by the Secretary to be necessary for the proper and efficient operation of the plan.

[36 F.R. 3860, Feb. 27, 1971]

§ 205.40 Quality control system.

State plan requirements: A State plan under title I, IV-A, X, XIV, XVI, or XIX of the Social Security Act must provide for a system of quality control in accordance with Federal specifications. Under this requirement:

(a) The State agency's system of quality control must be implemented through:

(1) Application of one of the sampling methods prescribed by the Social and Rehabilitation Service;

(2) Use of federally prescribed schedules and instructions, or schedules which

provide for identical information as a minimum;

(3) Field

investigations, including

a personal interview in all cases which fall within the sample of the active caseload and, as necessary, with persons who have been denied assistance or whose assistance has been terminated;

(4) Use of qualified staff under appropriate direction;

(5) Reporting to the Federal Government as prescribed.

(b) The State agency must submit to the Social and Rehabilitation Service, in accordance with Federal instructions:

(1) A brief description of the State's sampling plan including the system of selecting the sample;

(2) The State's plan for use of staff; and

(3) The plan for analysis of and action on findings.

[36 F.R. 3860, Feb. 27, 1971]

§ 205.50 Safeguarding information.

(a) State plan requirements. A State plan under title I, IV-A, X, XIV, XVI, or XIX of the Social Security Act, except as provided in paragraph (b) of this section, must provide that:

(1) Pursuant to State statute which imposes legal sanctions:

(i) The use or disclosure of information concerning applicants and recipients will be limited to purposes directly connected with the administration of the program. Such purposes include establishing eligibility, determining amount of assistance, and providing services for applicants and recipients.

(ii) The State agency has authority to implement and enforce the provisions for safeguarding information about applicants and recipients;

(iii) Publication of lists or names of applicants and recipients will be prohibited.

(2) The agency will have clearly defined criteria which govern the types of information that are safeguarded and the conditions under which such information may be released or used. Under this requirement:

(i) Types of information to be safeguarded include but are not limited to:

(a) The names and addresses of applicants and recipients and amounts of assistance provided (unless excepted under paragraph (b) of this section);

(b) Information related to the social

and economic conditions or circumstances of a particular individual;

(c) Agency evaluation of information about a particular individual;

(d) Medical data, including diagnosis and past history of disease or disability, concerning a particular individual.

(ii) The release or use of information concerning individuals applying for or receiving financial or medical assistance is restricted to persons or agency representatives who are subject to standards of confidentiality which are comparable to those of the agency administering the financial and medical assistance programs.

(iii) The family or individual is informed whenever possble of a request for information from an outside source, and permission is obtained to meet the request. In an emergency situation when the individual's consent for the release of information cannot be obtained, he will be notified immediately thereafter.

(iv) In the event of the issuance of a subpoena for the case record or for any agency representative to testify concerning an applicant or recipient, the court's attention is called, through proper channels to the statutory provisions and the policies or rules and regulations against disclosure of information.

(v) The same policies are applied to requests for information from a governmental authority, the courts, or a law enforcement official as from any other outside source.

(3) The agency will publicize provisions governing the confidential nature of information about applicants and recipients, including the legal sanctions imposed for improper disclosure and use, and will make such provisions available to applicants and recipients and to other persons and agencies to whom information is disclosed.

(4) All materials sent or distributed to applicants, recipients, or medical vendors, including material enclosed in envelopes containing checks, will be limited to those which are directly related to the administration of the program and will not have political implications. Under this requirement:

(i) Specifically excluded from mailing or distribution are materials such as "holiday" greetings, general public announcements, voting information, alien registration notices;

(ii) Not prohibited from such mailing or distribution are materials in the im

mediate interest of the health and welfare of applicants and recipients, such as announcements of free medical examinations, availability of surplus food, and consumer protection information;

(iii) Only the names of persons directly connected with the administration of the program are contained in material sent or distributed to applicants, recipients, and vendors, and such persons are identified only in their official capacity with the State or local agency.

(b) Exception. In respect to a State plan under title I, IV-A, X, XIV, or XVI of the Social Security Act, exception to the requirements of paragraph (a) of this section may be made by reason of the enactment or enforcement of State legislation, prescribing any conditions under which public access may be had to records of the disbursement of funds or payments under such titles within the State, if such legislation prohibits the use of any list or names obtained through such access to such records for commercial or political purposes. [36 F.R. 3860, Feb. 27, 1971]

§ 205.60 Reports and maintenance of records.

State plan requirements: A State plan under title I, IV-A, X, XIV, XVI, or XIX of the Social Security Act must provide that:

(a) The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial or medical assistance or social services, and administrative cost; and statistical, fiscal and other records necessary for reporting and accountability required by the Secretary; and will retain such records for such periods as are prescribeď by the Secretary. Under this requirement, individual records are kept which contain pertinent facts about each applicant and recipient and include information as to the date of application and date and basis of its disposition; facts essential to determination of initial and continuing eligibility, need for, and provision of financial or medical assistance or social services, and basis for discontinuing assistance or services.

(b) The State agency will make such reports in such form and containing such information, as the Secretary may from time to time require, and comply with

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