Disability Employment: Providers Cited Challenges with State Coordination of Federal Funds

A GAO review of Georgia, Pennsylvania, and Washington found that Vocational Rehabilitation and Medicaid home- and community-based services programs, the two main federal funding streams for helping people with intellectual or developmental disabilities find jobs, rarely coordinate well. Providers said navigating two separate state agencies created administrative burdens and, in at least one Pennsylvania case, confusion over a required closure letter left individuals stuck in service gaps.

Payment models carry their own tradeoffs: fee-for-service compensation gives providers no incentive to scale back help as a client gains skills, while milestone-based pay may not cover a provider's actual costs. Federal agencies issued joint guidance in 2022 recommending strategies like sequencing and braiding funds, but states mostly stuck to sequential funding rather than the more complex braided approach.

An estimated 2 million American adults have intellectual or developmental disabilities, and many who want to work face lower employment rates than people without disabilities.

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