Early Intervention Program for Infants and Toddlers With Disabilities

AGENCY:

Office of Special Education and Rehabilitative Services, Department of Education.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Secretary proposes to amend the regulations governing the Early Intervention Program for Infants and Toddlers With Disabilities under Part C of the Individuals with Disabilities Education Act (IDEA). These amendments are needed to provide clarification and guidance regarding the provision of early intervention services in “natural environments;” to revise the provisions on State financing of early intervention services (including adding provisions to address the use of public and private insurance by States); and to make other changes designed to improve the understanding and implementation of the regulations under this part.

DATES:

We must receive your comments on or before December 4, 2000.

ADDRESSES:

Address all comments about these proposed regulations to Thomas B. Irvin, Office of Special Education and Rehabilitative Services, U.S. Department of Education, Room 3090, Mary E. Switzer Building, 330 C Street, SW., Washington, DC 20202-2570.

If you prefer to send your comments through the Internet, use the following address: Comments@ed.gov

You must use the term “IDEA—Part C regulations” in the subject line of your electronic message.

FOR FURTHER INFORMATION CONTACT:

JoLeta Reynolds or Thomas B. Irvin (202) 205-5507. If you use a telecommunication device for the deaf (TDD), you may call the TDD number at (202) 205-5465.

Individuals with disabilities may obtain this document in an alternate format (e.g., Braille, large print, audiotape, or computer diskette) on request to Katie Mincey, Director of the Alternate Formats Center. Telephone: (202) 205-8113.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

We invite you to submit comments and recommendations regarding the specific provisions in this notice of proposed rulemaking (NPRM) to which we are proposing to make changes to the existing regulations for part 303, including proposed changes relating to:

(1) Natural environments (i.e., proposed § 303.341, and changes to §§ 303.12(b), 303.18, 303.167(c); and 303.344(d), and other changes identified in the discussion of changes on natural environments later in this preamble);

(2) State financing of early intervention services and the use of insurance (i.e., proposed § 303.519, and changes to §§ 303.520 and 303.521); and

(3) Other areas, including—

• The provisions on service coordination (i.e., §§ 303.12(d)(11), 303.23, and a new 303.302);
• The two-day timeline provision in the child find requirements (i.e., § 303.321(d)(2)(ii));
• Individualized family service plans (IFSPs), to—(1) include under proposed § 303.342(a)(2), a provision on special considerations (similar to the Part B requirement in 34 CFR 300.346(a)(2)); and (2) to further clarify (under 303.343(a)(2)) how evaluation results will be interpreted at an IFSP meeting if the person or persons conducting the evaluations and assessments is unable to be present at the meeting;
• The “pendency” provision under § 303.425, to clarify that the provision does not apply if a child is transitioning from Part C services to preschool or other services; and
• Transition to preschool or other appropriate services under §§ 303.148 and 303.344(h), to make clarifying changes regarding those provisions.

A description of each of these changes and other proposed substantive changes is included later in this preamble. In addition, “Attachment 1” to this NPRM includes a consolidated list, by subpart and section, of the proposed revisions to be made to the existing regulations, except for minor technical changes (e.g., correcting typos, making simple word changes, and other similar changes).

The majority of the requirements in part 303 (nearly two-thirds of all sections in the existing regulations) are not being revised by this NPRM, and would remain unchanged at the end of this rulemaking process. However, although we are proposing to amend a relatively small number of requirements in these regulations, we are sensitive to the difficulties readers face if the NPRM shows only the amended language and not the entire regulation. Thus, to accommodate readers in understanding these proposed changes, we have elected to publish the full text of the regulations, as it would be if amended, rather than simply publishing an amendatory document that shows only the proposed changes. While this approach increases the length of this NPRM, it provides a more meaningful way for parents, public agencies, service providers, and the general public to review the changes within the context of the existing regulations.

In providing this accommodation, however, we are asking that comments submitted on this NPRM be limited only to the provisions in the existing regulations to which we are proposing to make substantive changes, including the provisions identified earlier in this preamble.

To ensure that comments have the maximum effect in developing the final regulations, we encourage you to identify clearly the specific subpart, section, and paragraph of the proposed regulations that each comment addresses, and to arrange the comments in the same order that the proposed changes appear in the text of this NPRM.

We also invite you to assist us in complying with the specific requirements of Executive Order 12866 and its overall requirement of reducing regulatory burden that might result from these proposed regulatory changes. Please let us know of any further opportunities we should take to reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the program. Again, however, please limit your comments to the changes we have proposed to the existing regulations.

During and after the comment period, you may inspect all public comments about this proposed regulation in Room 3090, Mary E. Switzer Building, 330 C Street SW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m., Eastern time, Monday through Friday of each week except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking Record

On request, we will supply an appropriate aid, such as a reader or print magnifier, to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for this proposed regulation. If you want to schedule an appointment for this type of aid, you may call (202) 205-8113 or (202) 260-9895. If you use a TDD, you may call the Federal Information Relay Service at 1-800-877-8339.

Background

On April 14, 1998, the Secretary published in the Federal Register (63 FR 18290) final regulations governing “Part H” of the IDEA, the Early Intervention Program for Infants and Toddlers with Disabilities (34 CFR part 303). Those final regulations revised part 303 to incorporate the statutory amendments to Part H that were added by the IDEA Amendments of 1997, including new provisions relating to mediation, natural environments, payor of last resort, personnel standards, and State interagency coordinating councils. These regulations became effective on July 1, 1998, and at that time the Part H program was renamed “Part C,” consistent with the IDEA Amendments of 1997.

On March 12, 1999, with the publication of final regulations for Part B of IDEA (34 CFR part 300), the regulations under part 303 were further revised to make conforming amendments to the definition of “parent” in § 303.19, the State complaint procedures in §§ 303.510-303.512, and the use of proceeds from public or private insurance in § 303.520(d).

Except for those technical and conforming amendments made to part 303 in 1998 and 1999, these regulations have not been amended since 1993, when they were revised to implement the IDEA Amendments of 1991 (Pub. L. 102-119) and make certain other changes. Moreover, many provisions in part 303 have remained in effect since the initial regulations for the “Part H program” were published in 1989.

In many respects, the regulations for the Part C program have provided, over an extended period of time, an effective blueprint for States to follow in developing and maintaining a statewide system of early intervention services for infants and toddlers with disabilities and their families. However, based on the Department's experience in administering the Part C program, especially in recent years, it has become clear that changes are needed in certain key requirements in part 303, as described earlier in this preamble under the “Invitation to Comment.”

The need for making the proposed changes in this NPRM has become increasingly apparent in recent years, based on (1) the kinds of questions we have received from parents and public agency staff about problems they are facing with the Part C program; (2) the policy guidance we have provided to States; and (3) the findings we have made in monitoring State implementation of the Part C program.

In addition, as a follow-up to the Department's recognized need to amend selected provisions in the existing regulations for part 303, the Secretary published (in the same April 14, 1998 issue of the Federal Register (63 FR 18297) described earlier in this preamble) a notice soliciting advice and recommendations from the public as to whether additional revisions are needed to implement the requirements added by the IDEA Amendments of 1997, and on whether to develop new regulations in areas that were not affected by the statutory amendments. On August 14, 1998, the Secretary published another notice in the Federal Register, extending the period for submitting comments until the 30th day following publication of the final regulations for Part B of IDEA (i.e., April 12, 1999).

By the end of the comment period, 328 comments were received in response to the Federal Register notices, including letters from parents and grandparents, several State lead agencies and interagency coordinating councils, early intervention service providers, and parent-advocate and professional associations.

The comments addressed a wide range of provisions in the current regulations, but focused mainly on natural environments; finance issues, resources, and insurance; individualized family service plans (IFSPs); personnel standards; procedural safeguards; and transition to preschool programs.

The comments submitted in response to the two Federal Register notices were carefully reviewed and considered in developing this NPRM. We appreciate the thoughtful attention of the commenters in responding to these notices.

Taken as a whole, the comments validated the need for the Department to publish a notice of proposed rulemaking (NPRM) on selected provisions in the Part C regulations.

The following describes the proposed changes to the regulations on natural environments, followed by a description of other proposed regulatory changes by subpart and section, including proposed changes regarding the financing of early intervention services, described under §§ 303.519-303.521 of Subpart F.

Natural Environments

We are proposing to make clarifying changes to the provisions on “natural environments” in the existing regulations, in order to more accurately reflect the Department's long-standing policy interpretation regarding these provisions, and to provide more definitive guidance on their implementation than is included in the current regulations.

The provisions on natural environments are included in four sections of the current regulations, as follows: First, in the definition of early intervention services under § 303.12(b), which states that, to the maximum extent appropriate to the needs of the child, early intervention services must be provided in natural environments, including the home and community settings in which children without disabilities participate. Second, a definition of “natural environments” is included in § 303.18 (i.e., the term “means settings that are natural or normal for the child's age peers who have no disabilities”).

Third, the State application requirements on IFSPs in § 303.167 of the current regulations include, under paragraph (c) of that section, a statutory provision that requires policies and procedures on natural environments. Finally, the “Content of IFSP” requirements in § 303.344 require, under paragraph (d) of that section, that the IFSP include a statement of the specific early intervention services necessary to meet the unique needs of the child and the family, including— “(iii) The natural environments, as described in §§ 303.12(b) and 303.18, in which early intervention services will be provided, and a justification of the extent, if any, to which the services will not be provided in a natural environment.”

Based on the public comments we received about natural environments, as well as other concerns and questions raised with the Department in recent years, it is clear that there is some misunderstanding about the meaning of “natural environments,” and how those provisions are to be implemented.

The changes that we are proposing to make to the natural environment provisions do not impose major new substantive requirements. Instead, in contrast to the current regulations, they focus more fully on a basic theme inherent in the Part C program—the individualization of decisions, through the IFSP process, in determining—(1) what specific early intervention services a child needs, and (2) the setting or settings in which those services will be provided. Virtually all major changes on natural environments that are proposed in this NPRM are directed at giving greater emphasis to that theme than the current regulations reflect.

The concept of individualization through the IFSP process is consistent with the Part C regulatory history on natural environments. For example, the concept was addressed in the “Analysis of Comments and Changes” in the 1993 final Part H regulations, in which commenters had requested clarification and examples of when a child must be served in a natural environment. The response to those comments is included in the following paragraph:

Discussion: The Secretary believes that no further guidance is appropriate at this time. Decisions on the early intervention services to a child and his or her family, including decisions on the location of service delivery, are made in the development of the individualized family service plan described in §§ 303.340-303.346. The Secretary contemplates that the range of available options will be reviewed at the IFSP meeting described in § 303.342, in which the parents are full participants. With respect to the comment on center-based services, the Secretary emphasizes that decisions on the location of service delivery must be made on an individualized basis in accordance with the needs of the child and the family. See § 303.344(d). (58 FR 40982, July 30, 1993).

The basic thrust of the natural environments provisions in the statute and regulations is that, to the maximum extent appropriate, early intervention services are provided in the home of each eligible child, or in community settings in which children without disabilities participate. The basic principle underlying this requirement is that being in integrated settings with their nondisabled peers will enhance the development of eligible children under this part. It also prepares the child and family, if the child is “Part B—eligible,” for the experience of receiving services in the least restrictive environment. For a child who is not eligible for Part B services and may automatically be integrated in school and in life with nondisabled peers, the child and family would likewise be prepared. Thus, this provision ensures that eligible children under this part will be in community settings with their nondisabled peers—including receiving early intervention services in those settings—to the extent appropriate.

However, the IDEA Amendments of 1997 added the following new provisions, which make it clear that exceptions are anticipated, and that the provision of services in settings other than natural environments may be necessary under certain conditions:

• Section 635(a)(16)(B) requires each State to have policies and procedures to ensure that—“The provision of early intervention services for any infant or toddler occurs in a setting other than a natural environment only if early intervention cannot be achieved satisfactorily for the infant or toddler in a natural environment;” (Emphasis added).
• Section 635(d)(5) provides that the IFSP must include a statement of “The natural environments * * * in which early intervention services will be provided, and a justification of the extent, if any, to which the services will not be provided in a natural environment.” (Emphasis added)

Thus, while “natural environments” are the legally preferred settings for providing early intervention services, it would be appropriate, under Part C of the Act and these regulations, for a given child to receive one or more of the early intervention services in another setting, if the child's IFSP team, after reviewing the relevant information about the child, makes that determination.

Proposed Changes to Natural Environments Provisions

The following are changes that we are proposing to make to the natural environments provisions in the current regulations:

We are proposing to amend the definition of “natural environments” in § 303.18, by—(1) making technical changes, including designating the current definition as § 303.18(a), and (2) incorporating, as new § 303.18(b), the substance of the provision on natural environments from § 303.12(b) of the existing regulations. This proposed change would include, in one place, the full text of the definition of “natural environments” rather than having the provisions divided among two separate sections under Subpart A of the current regulations (i.e., §§ 303.12(b) and 303.18).

In addition, consistent with the Part C theme of individualized decisions by IFSP teams, we are proposing to amend the corresponding regulations on natural environments to include, under the IFSP requirements in Subpart D, all substantive provisions related to natural environments—first, by revising the definition of “IFSP” in proposed § 303.340(a), to affirmatively state that each child's IFSP is developed by the IFSP team; second, by placing all substantive “process” requirements regarding natural environments in a new § 303.341 (“Policies and procedures on natural environments”), including the State application requirements from § 303.167(c); and third, by revising the “Content of IFSP” requirements in § 303.344, to make clarifying and technical changes on natural environments.

The revised definition of “IFSP” in § 303.340(a) makes it clear that, among its various duties and responsibilities, the IFSP team is directly responsible for—(1) determining the specific early intervention services necessary to meet the unique needs of the child and the family, consistent with § 303.344(d)(1); and (2) implementing the provisions on natural environments in § 303.344(d)(3), including determining the specific locations or settings where each service will be provided.

Section 303.167(c) (which contains the State application requirement on natural environments from section 635(a)(16) of the Act) would be amended by—(1) moving the substance of that requirement to a new § 303.341(a); and (2) revising the language in § 303.167(c) to clarify that each application must include “Policies and procedures on natural environments that meet the requirements of §§ 303.341 and 303.344(d)(3).”

These proposed changes to the IFSP definition, together with the new provisions in proposed § 303.341, highlight the crucial role that the IFSP team (including the parents) plays in implementing the natural environments provisions, but does so without imposing any additional burden on IFSP teams. However, these changes would address a problem that the Department has found in monitoring States' implementation of the Part C program. In some States, the decisions as to the settings for providing services either (1) have been made without the benefit of the full IFSP team's involvement; or (2) have been dictated by external circumstances, such as funding sources or personnel, without regard to the needs of the particular child.

Proposed § 303.341(a) would incorporate the substance of § 303.167(c) (described earlier), and would be amended to clarify the role of the IFSP team. It is the IFSP team that determines whether early intervention can be achieved satisfactorily in a natural environment, based on the evaluation and assessment required in § 303.322 and the information required in § 303.344(a)-(c) (i.e., the child's present status, the family information, and the desired outcomes).

A new § 303.341(b) would be added to clarify that the policies and procedures described in paragraph (a) of this section must ensure that—(1) the IFSP team determines, for each service to be provided, whether the child's needs can be met in a natural environment; and (2) if the team determines that a specific service for the child must be provided in a different setting (for example, in a center-based program that serves children with disabilities, or another setting appropriate to the age and needs of the child), a justification is included in the child's IFSP.

Proposed § 303.341(b) also would not add any new burden. However, it would emphasize that the IFSP team's decisions on settings are separate for each service to be provided. While some services for a given child may be appropriately provided in the child's home, other services may be more appropriate in a group setting (e.g., if a service is designed to meet a socialization goal, the team may choose a child care, day care, or playgroup setting). In addition, this provision would emphasize that the order of decision-making is, first, to determine, for each service in the child's IFSP, if the needs of the child can be met in a natural environment; and, then, only if the team determines that, for a given service, the child's needs cannot be met in a natural environment would other settings be considered.

A provision requiring that the IFSP include a justification of the extent, if any, to which early intervention services will not be provided in a natural environment is set out in the “Content of IFSP” requirements in § 303.344; and the procedures that the IFSP team follows in implementing that provision are contained in § 303.341(c). These provisions are described in the following paragraphs.

The provisions on natural environments and location of services in existing § 303.344(d)(1) would be amended, first, by moving those provisions, in modified form, to a new § 303.344(d)(3), entitled “Natural environments—location of services,” and deleting existing paragraphs (d)(1)(ii) and (d)(1)(iii); and, second, by revising new § 303.344(d)(3) to—(1) add a reference to the “process” requirements on natural environments in § 303.341; and (2) clarify that the decision on natural environments, and any justification needed, is made separately for each service to be provided to the child.

Proposed § 303.341(c) would provide that the justification required in § 303.341(b) (and in § 303.344(d)(3)(ii)) must—(1) include a statement describing the basis of the IFSP team's decision to provide a specific early intervention service for the child in a setting other than a natural environment; (2) be based on the identified needs of the child, and the projected outcomes, as determined by the evaluation and assessment required in § 303.322 and the information required in § 303.344(a) through (c); and (3) if appropriate, be based on the nature of the service required to meet the unique needs of the child.

From the comments and questions we have received, it appears that “natural environments” is being interpreted by some to mean that, without exception, early intervention services must be provided only in the child's home, or in a community setting in which children without disabilities participate. Clearly, this limitation is not intended under either the statute or these regulations.

The statutory requirement that the IFSP include a justification of the extent, if any, to which a child will not receive services in a natural environment is a safeguard to ensure that the IFSP team, including the parent, has concluded—only after carefully reviewing all relevant information about the child—that one or more of the services in the child's IFSP must be provided in a setting other than a natural environment. The justification, itself, does not have to be long or burdensome; it could include a simple statement, based on the IFSP team's discussion and conclusions, that describes why the team determined that a particular service for the child needs to be provided in a different setting.

It is important, however, that the conclusions of the IFSP team, as well as the justification, be based on the needs of the child, and not for other reasons such as administrative convenience, or the State's fiscal or personnel limitations.

The provision in proposed § 303.341(c)(3) that concerns the “nature of the service” to meet the unique needs of the child to support a justification, is meant to address the unique types of services for certain types of disabilities that must be provided in a specialized setting to be effective. For example, some auditory services for deaf children need to be provided in a quiet, controlled setting without noise distractions; and services for medically fragile children may need to be provided in a sterile environment. However, it is expected that this justification would be used only in those extraordinary circumstances in which the child's unique needs and the unique nature of the service require the service to be provided in a specialized setting. Thus, as stated in the preceding paragraph, the use of this justification would not be acceptable for any of the reasons described earlier, such as administrative convenience, funding, or personnel limitations.

Some commenters expressed concern about losing the parent-to-parent interactions in early intervention centers. Parent networking, support, and training, however, are important family needs that should be addressed by the IFSP team as part of developing a child's IFSP. The identification of parent support, training, or counseling, as a needed early intervention service, may be provided directly through Part C, or by referral to an organization that offers these services (e.g., a Parent Training and Information Center, a Parent-to-Parent program, or other family support organizations). The settings in which these meetings or training sessions will take place should be part of the overall discussion in the development of the IFSP.

Many early intervention centers that once served only children with disabilities have expanded to serve nondisabled children. Thus, many opportunities exist for parents of children with disabilities to interact; and a parent's need for time with other parents of children with disabilities may be successfully accommodated in either the natural environments where the child receives services, or in other settings.

However, the parent's need cannot be used as a justification for not providing services to the child in a natural environment. With respect to requiring a justification of the extent, if any, to which the services will not be provided in a natural environment, the focus of that requirement is on the child. Thus, any justification for the child's services to take place in a setting other than a natural environment must relate to the child's individual needs.

In fact, the settings for parent support, training, and counseling are not affected by the natural environments provisions. This matter is addressed in proposed § 303.341(d), which would provide that the provisions on natural environments in this part do not apply to services in the IFSP that are intended to meet the needs of the parents or other family members and not the needs of the child (e.g., participation of a parent in a parent-support program). However, if a specific service listed in the IFSP is intended to help the parent to enhance the development of the child (e.g., to train the parent to work directly with the child in implementing an exercise recommended by a physical therapist), the service must be provided in a natural environment, to the maximum extent appropriate; and the natural environments provisions would apply.

The definition of “location” in § 303.344(d)(3) (and the separate provision on “[t]he location of the services,” previously described under § 303.344(d)(1)(iii)) would be deleted. These provisions are no longer needed, based on the evolution of the natural environment provisions since the original Part H regulations were published in 1989.

Other Proposed Regulatory Changes

As previously indicated, in addition to the provisions on natural environments and the proposed changes to the provisions on “Policies and Procedures Related to Financial Matters” (see description of proposed § 303.519, and proposed changes to §§ 303.520-303.521), we are proposing to make changes to certain other requirements in the existing regulations, including updating and clarifying those requirements, and to make other technical and organizational changes designed to improve the understanding and implementation of the regulations for the Part C program.

We also are proposing to address the disposition of some of the explanatory notes that follow selected sections of the current regulations, as follows:

First, in a few instances, we are proposing to incorporate into the text of the regulations the nonregulatory guidance contained in certain selected notes, including the substance of the notes following §§ 303.23 (Service coordination; redesignated as proposed § 303.302); 300.123 (Prohibition against commingling); 303.301 (Central directory); and 303.361 (Personnel standards).

Second, we are proposing to amend the note preceding § 303.6, to delete “location” from the list of terms defined in this part (described earlier in this preamble). We also are proposing to amend the note following § 303.12 (Early intervention services) to provide additional clarification regarding “qualified personnel” who provide early intervention services.

Third, we are proposing to delete Note 1 following § 303.420 (Due process procedures) because, with the proposed changes made to § 303.420 and other sections under subpart E of these regulations, the note would no longer be relevant. (An explanation of the proposed changes made to the notes in this NPRM is included later in this preamble under the discussion of each specific section.)

With respect to the remaining notes in the current regulations, we are planning to remove those notes from the final regulations, either by—(1) incorporating into the text of the regulations the substance of any note that should be a requirement; (2) adding, as part of the analysis of comments and changes, information from any note that provides clarifying information or useful guidance; or (3) deleting any note that is no longer relevant. Our proposed action with respect to the notes is consistent with the process followed in publishing the final Part B regulations.

We specifically invite public comment on which notes should be—(1) made regulatory; (2) included only as guidance in the preamble to the final regulations, or in the “Analysis of Comments and Changes” included in those regulations; or (3) deleted. In order to assist commenters in this effort, we have included, as “Attachment 2” to this NPRM, a list showing each section of the current regulations that contains a note.

This NPRM includes a number of technical, structural, and organizational changes that are proposed for the purpose of improving the readability and understanding of certain requirements in the regulations under this part. These technical, structural, and organizational changes, which are described in the following paragraphs (along with the proposed substantive revisions), are not intended in any way to change the substance of the requirements.

The following includes, by subpart, section, and paragraph, a description of the proposed changes to the current Part C regulations. (See also Attachment 1 to this NPRM—the “List of Proposed Changes in IDEA—Part C Regulations,” described earlier in this preamble.)

Subpart A—General

Section 303.3 (Activities that may be supported under this part) would be amended, first, by making technical changes (e.g., changing the title of the section to “Use of Part C Funds”), and restructuring the section, by redesignating the activities in § 303.3(a)-(e) of the existing regulations as paragraphs (a)(1)-(a)(5)).

Second, § 303.3 would be amended by adding a new paragraph (a)(6), to clarify that funds under this part may be used to assist families to—(1) understand the sources of financing early intervention services, including public and private insurance programs, and how to access those sources; and (2) be knowledgeable about any potential long-term costs involved in accessing those sources, and how to minimize those costs.

It is important that families know how to access funding for early intervention services and of the consequences of using public or private insurance, so that they can make informed decisions about the provision of services for their eligible children under this part. This proposed use of funds would not be mandatory for States.

One way that States may assist families with respect to understanding sources of funding under this provision would be through the service coordinator assigned to each child and the child's family. Therefore, we have proposed a corresponding change in the functions of service coordinators under new § 303.302.

Section 303.3 would be further revised by adding a new paragraph (b)(1), to clarify that “[f]unds under Part C of the Act may not be used to pay costs of a party related to an action or proceeding under section 639 of the Act and subpart E of this part.” This provision would prohibit the use of Part C funds for costs of a party in either due process hearings or any resulting court proceedings, and related matters, including costs for depositions, expert witnesses, settlements, and other related costs. For example, under this provision, the lead agency would not be able to use Part C funds to pay for its legal representation in a due process hearing or resulting court proceeding. It is important to include this prohibition, to ensure that the limited Federal resources under Part C are used to provide early intervention services for eligible children under this part and their families, and are not used to promote litigation of disputes.

A new § 303.3(b)(2) would be added to make it clear that the prohibition in paragraph (b)(1) does not preclude a lead agency from using Part C funds for conducting due process hearings under section 639 of the Act (for example, paying a hearing officer, providing a place for conducting a hearing, and paying the cost of providing the parent with a transcription of the hearing). The general rule under § 303.3(b)—that prohibits the use of Part C funds to pay expenses incurred by a party to an action or proceeding, but allows a lead agency, as administrator of the program, to use the funds to make due process hearings available—is consistent with the way it is expressed in the Part B regulations.

Section 303.5 (Applicable regulations) would be amended by updating paragraph (a)(1) of the section to include a reference to other parts of the Education Department General Administrative Regulations (EDGAR) that apply to part 303, including Part 97 (Protection of Human Subjects); Part 98 (Student Rights in Research, Experimental Programs and Testing); and Part 99 (Family Educational Rights and Privacy).

Section 303.5 would be further amended to clarify, in paragraph (a)(3), that the Part B due process hearing procedures in 34 CFR 300.506-300.512 apply to this part if a State lead agency, under § 303.420(a)(1), adopts those procedures. This change would make explicitly applicable the translations from Part B to Part C language in § 303.5(b). In addition, a technical change would be made to § 303.5(a)(3) to change the reference to applicable Part B regulations from §§ 303.580-303.303.585 to §§ 303.580-303.587.

The references in § 303.5(b)(4) would be removed because the provisions cited under that paragraph are not applicable. Paragraph (b)(5) of this section would be redesignated as (b)(4), and the citation would be corrected to read, as follows: “§ 300.127 (Confidentiality of personally identifiable information).”

Definitions

The note immediately preceding § 303.6 (which includes a list of the terms that are defined in specific subparts and sections of the regulations for part 303) would be amended by deleting the definition of “Location (§ 303.344(d)(3))” from the list (see discussion of natural environments earlier in this preamble).

Section 303.9 (Days) would be amended by changing the title to “Day; business day;” and by clarifying that “business day” would apply only with respect to hearing rights under 34 CFR 300.509, if a State adopts the Part B due process hearing procedures. As used in these proposed regulations and in Part B (34 CFR part 300), “business day” means Monday through Friday, except for Federal and State holidays.

With respect to States that implement the due process hearing procedures under §§ 303.421-303.425 (in lieu of adopting the Part B procedures), we invite comments on whether existing § 303.422(b)(3) (Parent rights in due process hearings) should be amended by replacing “days” with “business days” in the following provision:

(3) Prohibit the introduction of any evidence at the proceeding that has not been disclosed to the parent at least five days before the hearing.

The use of “business days” in this context would in no way reduce a parent's rights under this part, but, instead, would be beneficial because it would enable the parent to have more time in which to review the evidence.

Section 303.12 (Early intervention services) would be amended by—(1) changing the order of the paragraphs in the definition, including the order of specific provisions in paragraph (a), to conform more closely to the statutory definition; (2) moving the list of specific early intervention services from paragraph (d) to paragraph (b); and (3) clarifying, in proposed paragraph (a)(5), that the early intervention services listed in paragraph (b) are subject to the exclusions on health services in § 303.13(c).

Section 303.12(a) would be further amended by—(1) clarifying, in proposed paragraph (a)(6), that early intervention services are provided “in a timely manner” by the qualified personnel listed in paragraph (e) (proposed paragraph (c)); (2) specifying, in proposed paragraph (a)(8), that, to the maximum extent appropriate, the services are provided “in natural environments, as defined in § 303.18;” and (3) making other technical changes.

Finally, § 303.12 would be further revised by (1) moving the substance of paragraph (b) (on “natural environments”) to the definition of that term in § 303.18; and (2) making other technical changes.

Section 303.12(d)(1) (proposed § 303.12(b)(1)) (Assistive technology) would be amended by restructuring the introductory paragraph into new paragraph (b)(1)(i) (Assistive technology device) and paragraph (b)(1)(ii) (Assistive technology service). The definition of “assistive technology service” would be revised to clarify that the term means a service “that directly assists an eligible child or the child's parents in the selection, acquisition, or use of an assistive technology device for the child.” (Emphasis added)

Section 303.12(d)(2) (proposed § 303.12(b)(2))(audiology) would be amended by changing the title to “audiology services,” to conform to the statutory term; and by making other changes to conform more closely to the Part B definition (e.g., replacing “auditory impairment” with “hearing loss” each time it appears; deleting the term “at risk criteria and” in paragraph (d)(2)(i); and adding a new paragraph (d)(2)(vii) on “Counseling and guidance of children, parents, and teachers regarding hearing loss”).

In response to a suggestion from commenters, § 303.12(d)(3) (proposed § 303.12(b)(3))(Family training, counseling, and home visits) would be amended by adding “special educators” to the types of personnel who may appropriately provide these services. Although the phrase “and other qualified personnel” in the existing definition under § 303.12(d)(3) would encompass special educators as well as other types of early intervention and related services providers, special educators may not ordinarily be considered under this part as having a role in providing family training, counseling, and home visits.

Section 303.12(d)(6) (Nursing services) would be moved from the definition of early intervention services to the definition of “Health services” as a new § 303.13(b)(3), to clarify that nursing services are, in fact, an inherent part of “health services necessary to enable the infant or toddler to benefit from the other early intervention services.” (IDEA section 632(4)(E)(x)). Nursing services, like the other health services listed in § 303.13, may be provided through Part C during the time a child is receiving the other early intervention services described in § 303.12, to enable the child to benefit from those services. Because the placement of the definition of nursing services in the existing regulations has caused confusion, this change would clarify the meaning of nursing services under Part C. With the removal of “Nursing services” from the list of early intervention services under proposed § 303,12(b), the remaining services in that list would be renumbered accordingly.

Section 303.12(d)(8) (proposed § 303.12(b)(7)) (Occupational therapy) would be amended by adding language to clarify that the term “(i) Means services provided by a qualified occupational therapist.”

Section 303.12(d)(11) (“Service coordination services”) would be amended, first, by making technical changes (e.g., changing the title to “Service coordination,” and changing the citation to § 303.12(b)(10)); and, second, by deleting the phrase—”that are in addition to the functions and activities included under § 303.23;” and adding language to clarify that “service coordination” is actually comprised of those functions and activities. (See discussion that follows.)

In addition, because the definition of “Service coordination (case management)” in § 303.23 includes mainly long-standing substantive requirements, and is not simply a definition, we are proposing to move the substance of that definition, without change, to a new substantive section of the regulations (§ 303.302 under Subpart D), and to delete § 303.23. This proposed change, together with the proposed revision to § 303.12(d)(11), would—(1) resolve the confusion that has existed with two definitions of service coordination in the regulations (i.e., in §§ 303.12(d)(11) and 303.23), and (2) mean that the only definition of service coordination under this part would be the one in § 303.12(d)(11) (proposed § 303.12(b)(10)). As revised, proposed § 303.12(b)(10) would state that “[s]ervice coordination means assistance and services provided by a service coordinator to a child eligible under this part and the child's family, in accordance with § 303.302.” (Emphasis added)

Thus, “service coordination” would remain as a listed early intervention service in proposed § 303.12(b)(10). However, as clarified in proposed § 303.302(b)(2), IFSPs are not required to include service coordination as one of the child's early intervention services under § 303.344(d)(1), because service coordination—(1) is a basic entitlement of every eligible child under this part, and (2) is an on-going, coordinative process that is designed to facilitate and enhance the delivery of early intervention services. On the other hand, IFSPs must include the name of the service coordinator, as currently required in § 303.344(g) (proposed § 303.344(h)).

Because of the crucial role that service coordinators play in facilitating the evaluation of an eligible child under this part, and in the development and implementation of the child's IFSP, it is appropriate that the functions and activities of the service coordinator be moved to proposed § 303.302, so that they are closely linked to the child-centered requirements in Subpart D. A technical change would be made in the introduction to proposed new § 303.302 to make it clear that “service coordination (case management)” is a substantive requirement and not a definition.

Section 303.12(d)(13) (proposed § 303.12(b)(12)) (Special instruction) would be amended by deleting, in paragraph (d)(13)(i), the phrase “in a variety of developmental areas, including cognitive processes and social interaction,” and replacing it with “in the following developmental areas: cognitive; physical; communication; social or emotional; and adaptive.” This proposed change more closely tracks the developmental areas described in the statute and in §§ 303.16 and 303.300.

The definition of “special instruction” would be further amended by revising paragraph (d)(13)(ii) to read as follows:

Planning that lead to achieving the outcomes in the child's IFSP, including curriculum planning, the planned interaction of personnel, and planning with respect to the appropriate use of time, space, and materials.

This change would more accurately reflect “special instruction” as an early intervention service, and would improve the readability and understanding of the definition.

Section 303.12(d)(14) (proposed § 303.12(b)(13)) (Speech-language pathology) would be amended by—(1) adding “services” to the title, to conform to the statutory term; (2) replacing “oropharyngeal” with “swallowing” each place it appears, to more accurately and clearly describe the term used by speech-language pathologists; and (3) adding a new paragraph (b)(13)(iv), related to “Counseling and guidance of parents, children, and teachers regarding speech and language impairments,” to conform to the Part B definition.

The note following § 303.12 would be revised by adding language to clarify that “qualified personnel” who provide early intervention services also may include augmentative communication specialists, and technology specialists.

Section 303.13 (Health services) would be amended by revising paragraph (b), to clarify that the covered health services under that paragraph (e.g., clean intermittent catherization and other health services listed in paragraph (b)(1), and consultation by physicians, described in paragraph (b)(2)) are subject to the limitations included under paragraph (c) (related to surgical procedures and other medical-health services and devices that are not included under “health services”). Section 303.13(b) would be further revised by adding, as a new paragraph (b)(3), the definition of “nursing services” previously included under “early intervention services” (discussed earlier in this preamble under § 303.12(d)(6).)

In addition, § 303.13(c) would be amended by including additional examples of services and devices that are not covered under “health services,” as follows: (1) services that are surgical in nature (i.e., the installation of devices such as pacemakers, cochlear implants, or prostheses); and (2) devices necessary to control or treat a medical or other condition (e.g., pacemakers, cochlear implants, prostheses, or shunts).

Section 303.14 (IFSP) would be amended by—(1) changing the title to “IFSP; IFSP team;” (2) designating the existing definition as paragraph (a); and (3) adding a new paragraph (b) to specify that the term “IFSP team means the group of participants described in § 303.343 that is responsible for developing, reviewing, and, if appropriate, revising an IFSP for an eligible child under this part.” Although parents, public agencies, and service providers have traditionally used “IFSP team” when referring to the “Participants in IFSP meetings” in § 303.343, the term has never been included in the Part C regulations. We believe that using the term in the text of the regulations when describing the “IFSP team's” role in implementing specific Part C requirements improves the clarity and readability of the regulations.

Section 303.18 (definition of “natural environments”) would be revised by incorporating into that definition the substance of the provision on natural environments from § 303.12(b) of the existing regulation (discussed earlier in this preamble).

Section 303.19 (Parent) would be amended by making a technical and conforming change to the definition (i.e., by adding, after “A guardian” in paragraph (a)(2), the phrase “, but not the State if the child is a ward of the State.”). This phrase, which would conform the definition of “parent” to the Part B definition, was inadvertently omitted in the March 12, 1999 final regulations for Part C of IDEA (see 64 FR 12535).

Section 303.20 (Policies) would be amended by revising paragraph (b)(3), due to the proposed changes to the sections on State finance and systems of payments, to clarify that State policies include policies concerning the State's system of payments, if any, and the State's financing of early intervention services, in accordance with §§ 303.519-303.521.

Section 303.22 (Qualified) would be amended by changing the title of the section to read “Qualified personnel,” and amending the definition to conform to the definition of that term in the Part B regulations (34 CFR 300.23).

Section 303.23 (Service coordination (case management)) would be deleted, and the substance of the definition would be moved to a new § 303.302 (see earlier discussion under § 303.12(d)(13)). The remaining sections in Subpart A would be renumbered accordingly.

Subpart B—State Application for a Grant

General Requirements

Section 303.100 (Conditions of assistance) would be amended by (1) making technical changes designed to improve the readability of the section, including adding headings to each paragraph in the section; and (2) adding a new paragraph (a)(1)(ii)(B), to clarify that the information in a State's approved application that is on file with the Secretary must contain “Copies of all applicable State statutes, regulations, and other State documents that show the basis of that information.” This is consistent with the Part B requirements in § 300.110(b)(2) and with Part C policy.

Statement of Assurances

Section 303.123 (Prohibition against commingling) would be amended by deleting the note following that section, and incorporating the substance of the note into the text of the regulations. This change would strengthen and give more explicit meaning to the “non-commingling” requirement.

Section 303.124 would be revised by adding a new paragraph (c). This provision would codify existing Department policy interpreting the test in § 303.124(b) regarding the supplement-not-supplant provision. Under paragraph (b), a State must “budget,” for early intervention services, at least the same amount of State funds that it spent the previous year. This is part of an application requirement, and the Department examines, as part of its application review, whether the State plans to spend the same amount that it did the previous year, on early intervention services. Paragraph (c) would clarify that, if a State does not, in fact, spend the amount it had spent in the previous year, a violation of § 303.124 occurs, unless one of the exceptions in paragraph (b) applies.

We invite comment on whether the Department should broaden the existing exception to the nonsupplanting requirement in § 303.124(b)(2)(ii) concerning the uses of funds for which allowance may be made, in order to enable States to use funds to carry out other purposes in the Part C system beyond the construction or equipment currently covered.

General Requirements for a State Application

Section 303.140 (General) would be amended by deleting, in paragraph (a), the phrase “in this part,” and replacing it with “in § 303.160” (i.e., “The statewide system of early intervention services described in § 303.160 is in effect.”). This change would more explicitly describe what a State must do to meet the application requirements in Subpart B.

Section 303.148 (Transition to preschool programs) would be amended, first, by changing the title of the section to “Transition to preschool or other appropriate services,” and making other similar changes to clarify that some children who receive early intervention services under this part may not receive preschool services under Part B of the IDEA; and second, by restructuring the section for clarity, accuracy, and completeness, including adding, in proposed § 303.148(c), provisions from § 303.344(h) that require parental consent for the transfer of records for the purpose of a child's transition to preschool or other services.

These proposed changes to § 303.148 (as described in the following paragraphs) have consolidated in one section all process requirements regarding the transition of a child from the early intervention program under this part to preschool or other appropriate services. This restructuring of the requirements on transition should be helpful to parents and public agency staff in understanding the requirements, and should facilitate implementation of the provisions.

The introductory paragraph in the existing § 303.148 would be designated as paragraph (a) (General), and would be amended to clarify that the description of policies and procedures to be used to ensure a smooth transition must meet specified requirements in proposed paragraphs (b) through (f) of this section.

The substance of existing paragraphs (a) and (b)(1) would be incorporated, with minor clarifying changes, into a new paragraph (b), entitled “Family involvement; notification of local educational agency.” This new paragraph would require that a State's application describe (1) how the families of children served under this part will be included in transition plans for the children; and (2) how the lead agency will notify the LEA for the area in which an eligible child resides that the child will shortly reach the age of eligibility for preschool services under Part B of the Act, as determined in accordance with State law.

A proposed new paragraph (c) (Transmittal of records; parental consent) would be added, by (1) requiring that the State's application under this part include a description of the policies and procedures to be used for transmitting records about a child to an LEA, or any other agency, for the purposes of facilitating the child's transition to preschool or other services, and ensuring continuity of services for the child; and (2) incorporating, with certain clarifications, the provision from the IFSP requirements in § 344(h)(2)(iii) regarding the transmission of information about a child, with parental consent, to an LEA to support the child's transition.

A new § 303.182(c)(2) would be added to clarify that such consent is not required before submitting to an LEA directory information about a child (e.g., the child's name, address, telephone number, and age), if the information is provided for the specific purpose of assisting the LEA to implement the Part B child find requirements under 34 CFR 300.125. This reflects existing Department policy—that consent is not required if the transmittal is for child find purposes.

The requirement in § 303.148(a) and (c) for “a description” of the policies and procedures on transition to preschool or other programs would be satisfied by submitting the actual policies and procedures. (In any event, submission of the actual documents is required under proposed § 303.100((a)(1)(ii)(B).)

Proposed § 303.148(c)(1) and (c)(2)(i) use the term “records” in this requirement. However, proposed paragraph (c)(2)(ii) clarifies that the “records” required in this section include any personally identifiable information about the child, including evaluation and assessment information required in § 303.322, and copies of IFSPs that have been developed and implemented in accordance with §§ 303.340-303.346. It is important for this requirement to be as comprehensive as possible with respect to the transfer of information about a child from the lead agency to the LEA or other affected agencies, so that there is no misinterpretation of what must be transmitted, and where consent would be required.

The substance of existing paragraphs (b)(2)(i) and (ii) would be incorporated, essentially unchanged, under a new § 303.148(d), entitled “Conference to discuss services.”

Proposed paragraph (d)(1) would describe the procedures for the lead agency to follow to convene a conference for the purpose of planning for preschool services for a child eligible under this part, and paragraph (d)(2) would describe the steps to be followed for a child who may not be eligible for preschool services under Part B of the Act.

Existing § 303.148(b)(3) and (4) would be incorporated, essentially unchanged, under proposed paragraph (e), entitled “Program options; transition plan.”

Existing § 303.148(c) would be redesignated as new § 303.148(f) (“Interagency agreement”), and the substance of the provision would be incorporated, with clarifying changes, into the new paragraph. As in the existing regulations, this provision makes it clear that if the State educational agency (SEA) and the lead agency under this part are not the same, the policies and procedures required under § 303.148(a) must provide for the establishment of an interagency agreement between the lead agency and the SEA, to ensure appropriate coordination on transition matters.

Section 303.167 (Individualized family service plans) would be amended by—(1) moving the substance of paragraph (c) (on natural environments) to a new § 303.341(a), and (2) revising the language to clarify that each application must include “Policies and procedures on natural environments that meet the requirements of §§ 303.341 and 303.344(d)(3).” (See discussion on natural environments included earlier in this preamble.)

Section 303.173 (Policies and procedures related to financial matters) would be amended by clarifying, in paragraph (b), the kinds of information about funding resources required in § 303.522 that must be included in each application (i.e., (1) the name of each State agency that provides early intervention services, or funding, for children eligible under Part C, even if the agency does not receive Part C funds; (2) the specific funds used by the agency for early intervention services, such as State Medicaid or State special education funds; and (3) the intended use of those funds). These proposed changes are intended to strengthen the regulatory requirements on interagency cooperation (see discussion under § 303.523 in this preamble).

Subpart D—Program and Service Components of a Statewide System of Early Intervention Services

Section 303.300 (State eligibility criteria and procedures) would be amended, as follows: first, by making technical changes, e.g., (1) changing the title of the section to “Child eligibility—criteria and procedures;” (2) making other technical changes to improve the readability of the section, including adding paragraph headings (e.g., “General,” “State definition of developmental delay,” “Diagnosed condition,” and “Children who are at risk”); and (3) clarifying, in a new paragraph (a)(1)(ii), that the State's eligibility criteria must meet the requirements in paragraphs (b)-(d) of § 303.300.

Second, § 303.300 would be further revised by adding a new paragraph (a)(2) to clarify that the State's criteria and procedures related to child eligibility must be on file in the State, and be available for public review.

Section 303.301 (Central directory) would be amended by (1) adding, as a parenthetical statement in paragraph (a)(3), the substance of the note following the section (regarding examples of professional and other groups), and (2) deleting the note.

A new § 303.302, entitled “Service coordination” would be added that would incorporate the substance of the definition of “Service coordination (case management)” from § 303.23 (described earlier in this preamble under § 303.12(d)(11)). Although the title of current § 303.23 includes the parenthetical term “(case management),” we are proposing to omit that term from the title of proposed § 303.302 because it is no longer relevant under this part. The term “case management” was used in the original “Part H” statute and regulations. However, the term was replaced with “service coordination” by the IDEA Amendments of 1991 (Pub. L. 102-119). When the regulations implementing Pub. L. 102-119 were published in 1993, we included the parenthetical term “case management” as a transitional term, and to ensure that the change to “service coordination” would not affect services provided under Medicaid. However, at this point in implementing Part C, it is no longer necessary to make any reference to “case management.” The Senate Report on Pub. L. 102-119 stated that the term “service coordination” had been adopted in lieu of “case management,” and added—

The committee decided to change the references in other sections in the legislation because it agrees with parents that they are not cases and do not need to be managed. The intent of this provision is not to change the policy set out in the current definition of “case management” in the regulations and not to affect in any way the authority to seek reimbursement for services provided under Medicaid or any other legislation that makes reference to “case management” services. (S. Rep. No. 102-84, p. 19 (1991))

Proposed § 303.302 also would include, as a new § 303.302(a)(2), the substance of the note following § 303.23, to clarify that—(1) if a State has an existing service coordination system, the State may use or adapt that system, so long as it is consistent with the requirements of this part; and (2) a public agency's use of the term service coordination is not intended to affect the agency's authority to seek reimbursement for services provided under Medicaid or any other legislation that makes reference to case management services. (The note following § 303.23 would be deleted.)

Proposed § 303.302(d)(8) would include a new function for service coordinators that involves assisting families in—(1) understanding the sources of financing early intervention services and how to access those sources, and (2) being knowledgeable about any potential long-term costs to families in accessing those sources. This provision, which is similar to the proposed provision under § 303.3(a)(6), is important because, as previously stated, families need to know how to access funding for early intervention services, and of the consequences of using public or private insurance, so that they can make informed decisions about the provision of services for their eligible children under this part. (Similar language is also included in current Note 3 following § 303.344.)

We have included language in proposed § 303.302(d)(8) to clarify that States have the discretion of deciding if this new service coordination function is one that must be carried out. We invite comments on whether this proposed function should be required or left to the discretion of each State.

Identification and Evaluation

Section 303.320 (Public awareness) would be amended by making technical changes to improve the clarity and readability of the section, and to more closely track the statutory language.

Section 303.321 (Comprehensive child find system) would be amended by revising paragraph (b), first, to rename the paragraph “Policies and procedures;” and, second, to clarify in paragraph (b)(1), that the requirement to ensure that all infants and toddlers who are eligible for services under this part are identified, located, and evaluated includes “(i) traditionally underserved groups, including minority, low-income, inner-city, and rural families; and (ii) highly mobile groups (such as migrant and homeless families).”

Section 303.321 would be further amended by deleting the “two-day” timeline in paragraph (d)(2)(ii), and revising the provision to read as follows: “Ensure that referrals are made as soon as reasonably possible after a child has been identified.” In administering the Part C program over an extended period of time, the Department has found that it is unreasonable and impractical for referral sources to be expected to make referrals in this short of a time. The timeline needs to be sufficiently flexible to allow for some variation, on a case-by-case basis, for making referrals.

The introduction of such a tight timeline in the 1989 regulations was included to convey the sense of urgency in which referral sources should act when they identify a child who is suspected of having a disability. The analysis of the comments to those regulations states that—

Because of the rapidly changing needs of infants and toddlers, the Secretary believes that it is important to establish very short timelines for referring a child for evaluation or services. (54 FR 26337, June 22, 1989).

Although the two-day timeline proved to be impracticable, the sense of urgency conveyed in the initial Part H regulations is still critical. Establishing any timeline (e.g., 5 days) may not provide a reasonable standard for a referral source to follow in making a timely referral; in some cases an earlier referral may be reasonable, and in other cases, a later one. Therefore, the concept of “as soon as reasonably possible” retains the necessary sense of urgency without imposing unrealistic and unreasonable timelines.

In monitoring implementation of this provision, the Department would look at a general pattern of referrals in the State. Referrals made within a range of two to five days or even somewhat longer would be acceptable. However, a referral pattern that is significantly longer would not meet the spirit of this requirement, nor would it be in the best interests of the children served.

We specifically invite comments on whether the proposed change to the referral timeline in this NPRM (i.e., “Ensure that referrals are made as soon as reasonably possible after a child has been identified”) is appropriate, or on what would be a reasonable timeline.

Section 303.322 (Evaluation and assessment) would be amended by revising paragraph (a)(1)(ii) to clarify that the family-directed identification of the needs of each child's family meets the “Family assessment” requirements in paragraph (d). In implementing § 303.322, it is important that lead agencies recognize that there is a direct link between the requirements in proposed paragraphs (a)(1)(ii) and (d).

Individualized Family Services Plans (IFSPs)

Section 303.340 (General) would be amended by changing the title of the section to “Definition of IFSP; lead agency responsibility,” and making other changes, as follows: First, the existing definition of IFSP in § 303.340(b) would be redesignated as proposed § 303.340(a) (“Definition of IFSP”), and would be revised to affirmatively state that each child's IFSP team is responsible for developing the child's IFSP, as well as determining the information that is included in the IFSP. Second, the provision on lead agency responsibility in current § 303.340(c) would be redesignated as proposed § 303.340(b), and would be revised by adding an introductory clause (“The lead agency in each State must ensure that—”). Finally, current § 303.340(a) (regarding policies and procedures on IFSPs) would be redesignated as proposed § 303.340(b)(1), and would be revised by replacing “includes” with “has in effect.”

A new § 303.341 (Policies and procedures on natural environments) would be added. (A description of that proposed provision, and the changes made to the definition of IFSP that affect the natural environment provisions, is included earlier in this preamble.)

Section 303.342 (Procedures for IFSP development, review, and evaluation) would be amended, first, by making technical changes (e.g., changing the title to “Development, review, and revision of IFSPs”, and adding titles to paragraphs (a), (a)(1), and (b)). We are proposing to replace the term “evaluation” with “revision” in the title of the section to more accurately reflect what may happen in both the periodic review meetings and the annual evaluations of the IFSP. For example, § 303.342(c) of the current regulation, which is unchanged in this NPRM, states that “A meeting must be conducted on at least an annual basis to evaluate the IFSP * * *. and, as appropriate, to revise its provisions.” (Emphasis added)

Second, § 303.342 would be further amended by adding a new substantive provision in paragraph (a)(2) (Consideration of special factors), as adapted from the Part B statute and regulations. Several commenters recommended that the special considerations provision from Part B (34 CFR 300.346(a)(2)), as adapted, be included in the regulations under this part. In developing each child's IFSP, it is important that the IFSP team consider all factors relating to the child's development and to the services that are required to meet the identified needs of the child. Although many IFSP teams may routinely make these considerations in developing a child's IFSP, this provision helps to ensure that these basic factors will be addressed, as appropriate, in all cases.

Because the special considerations provision under Part B is targeted on preschool and school-aged children, some of the items under that provision may not seem to be directly relevant to infants and toddlers with disabilities. However, each provision has been adapted, to the extent necessary, to apply to children eligible under Part C. For example, although Braille, as such, would not be taught to infants or toddlers who are blind or visually impaired, there are appropriate pre-literacy or readiness activities related to the use of Braille (e.g., the use of tactile stimulation and “raised” picture books) that could enhance the child's ability to learn, and to use, Braille at the appropriate time in his or her school years.

In all of the factors included under § 303.342(a)(2), the IFSP team, which includes the parents, would make individualized determinations, as appropriate, about the implications of any one, or more than one, of the factors with respect to the specific early intervention services that the child is to receive.

Section 303.343 (Participants in IFSP meetings and periodic reviews) would be amended, first, by changing the title to “IFSP team—meetings and periodic reviews.” (See earlier discussion under § 303.14 regarding the proposed use of “IFSP team” in these regulations.) Second, § 303.343 would be further amended by revising the provisions in paragraph (a)(2) on how the evaluation results would be appropriately addressed if the person or persons directly involved in conducting the evaluations and assessments is unable to attend the IFSP meeting. The existing regulations provide three options to ensure such a person's involvement: (1) Participation in a telephone conference call; (2) having a knowledgeable authorized representative attend the meeting; or (3) making pertinent records available at the meeting.

Although options 1 and 2 provide an effective means of addressing the contingency described in the preceding paragraph, the Department, in its monitoring of this provision, has found that option 3 does not, by itself, serve as an effective substitute, because there is no assurance that the members present at the IFSP meeting are sufficiently knowledgeable about the evaluation results to appropriately interpret those records at the meeting.

Thus, § 303.343(a)(2) would be amended by restructuring and revising the provision to distinguish between ensuring either—(1) the person's involvement through other means (e.g., through participating in a telephone conference call); or (2) that the results of the evaluations and assessments are appropriately interpreted at the meeting, by making pertinent records available at the meeting, and having a person attend the meeting who is qualified to interpret the evaluation results and their service implications. This provision is further revised to make it clear that the person who is qualified to interpret the results may be one of the participants described in § 303.343(a)(1)(i)-(a)(1)(vi).

These proposed changes would help to ensure that the evaluation records are appropriately interpreted, and, in most cases, without added burden. The proposed change in paragraph (a)(2)(ii) would permit, as in the Part B regulations (34 CFR 300.344(a)(5)), the person qualified to interpret the evaluation results to be someone who is already a member of the IFSP team. The operative term in the proposed requirement is a person who is “qualified to interpret” the evaluation results. Thus, it is possible that any of the members of the IFSP team, including the parents, could have the necessary training and experience to be able to perform this function.

In the event that none of the other members of the team is qualified to effectively interpret the evaluation results, it would be necessary to arrange for an appropriately qualified person to be present, at least for a portion of the meeting, or provide other ways to ensure that the team is appropriately informed of the results of the evaluations and their service implications, in order to enable the team to develop a meaningful IFSP.

Section 303.344 (Content of IFSP) would be amended by—(1) adding a new paragraph (b)(2) to specify that the statement on family information must be based on the family assessment required under § 303.322(d); and (2) revising paragraph (c) to clarify that the outcomes must be based on the evaluations and assessments conducted under § 303.322(c) and (d).

Although IFSPs for children eligible under this part are required to be based on the evaluations and assessments in § 303.322(c) and (d), experience has shown that this does not always occur. Thus, it would be appropriate to make this proposed change in the existing regulations, so that parents and public agencies will be aware of this requirement. It is important, however, to recognize that this new provision does not add an additional burden.

Section 303.344(d) (Content of IFSP-Early intervention services) would be amended, first, by restructuring the paragraph for clarity and to improve its readability, including adding headings to each redesignated paragraph within that provision (i.e., “Statement of services;” “Frequency, intensity, and method;” “Natural environments—location of services;” and “Payment arrangements”). Second, § 303.344(d) would be further revised by—(1) clarifying that the IFSP must specify, for each service, the frequency, intensity, and method of delivering the service; (2) replacing the substance of the provision on natural environments with more definitive clarifying language; (3) deleting the provision regarding the location of services in paragraph (d)(1)(iii), and the definition of “location” in paragraph (a)(3); and (4) making other technical changes. (A description of the changes on natural environments and location of services is included earlier in this preamble in the discussion on “natural environments.”)

With respect to including a statement of early intervention services in a child's IFSP, it is appropriate to describe any specific training to be provided to the parents to assist them in working with their child (§ 303.344(d)(1)). However, the training may not take the place of providing direct service to the child, if the IFSP team determines that direct services are needed. For example, a State could not have a practice of having an occupational therapist train the parents to work with their child as an alternative to providing direct services to the child, if direct services had been determined necessary by the IFSP team.

A new § 303.344(e) would be added to clarify that, except as provided in § 303.345, evaluations and assessments required under § 303.322 (including the functions relating to evaluations and assessments described in the individual early intervention services definitions under § 303.12(d) of the current regulations) must be completed prior to, and in preparation for, conducting an IFSP meeting for each eligible child under this part. In monitoring implementation of the IFSP requirements, the Department has identified instances, as a common practice, in which IFSP meetings were conducted before a child had been evaluated, and the IFSP would list the basic evaluations and assessments to be conducted as IFSP services.

Section 303.344(e), therefore, provides that evaluations and assessments must be conducted prior to the IFSP meeting, to assist the IFSP team in determining the outcomes and services for the child. There, of course, may be situations following the initial evaluation and assessment of a child in which the IFSP team determines that further evaluations or assessments will be necessary during the period in which the child's IFSP is in effect, in order for the team to make an informed decision about possible modifications in the services the child is receiving. In such situations, a statement to that effect would be included in the child's IFSP, and the additional evaluations or assessments would be documented by the IFSP team. In addition, proposed § 303.344(e) includes a reference to existing § 303.345, which permits early intervention services to be provided before the evaluations and assessments are completed, but sets very specific conditions for implementing that provision.

Section 303.344(h) (Transition from Part C services), would be redesignated as paragraph (i), and would be amended by moving the substance of § 303.344(h)(2)(iii) (regarding the transmission of information about the child to an LEA or other relevant agency to § 303.148 (described earlier in this preamble), but making a reference to that step and the conference step. Proposed § 303.344(i) would be further revised by adding a new paragraph (i)(2)(iv), to provide that the IFSP include “Other activities that the IFSP team determines are necessary to support the transition of the child.”

The changes that are proposed to the transition provisions in § 303.344(i) help to clarify that the steps required in the IFSP are activities for a child and the child's parents that are necessary to support the transition of the child, whereas the provisions in § 303.148 include the administrative functions and processes that a lead agency must carry out to ensure effective implementation of the transition requirements.

Personnel Training and Standards

Section 303.360 (Comprehensive system of personnel development (CSPD)) would be amended by making technical changes for improved clarity and readability, including restructuring the section and adding paragraph headings.

No other changes would be made to the CSPD requirements at this time. However, we specifically invite comments on the extent to which the CSPD requirements under this part should be the same as the CSPD requirements under Part B, especially with respect to ensuring an adequate supply of qualified personnel. There is a defined statutory link between the CSPD requirements in the Part B and Part C programs. However, the specific requirements under each part are different in both the statute and the implementing regulations.

Section 635(a)(8) of the IDEA provides that each statewide system of early intervention services must include a comprehensive system of personnel development that meets certain specified requirements and “that is consistent with the comprehensive system of personnel development [under Part B of the Act] described in section 612(a)(14) * * *”. A corresponding requirement on CSPD is included under the Part B requirements in section 612(a)(14) of the Act, which provides that—

The State has in effect, consistent with the purposes of this Act and with section 635(a)(8), a comprehensive system of personnel development that is designed to ensure an adequate supply of qualified special education and related services personnel that meets the requirements for a State improvement plan relating to personnel development in subsections (b)(2)(B) and (c)(3)(D) of section 653.

Thus, in submitting comments regarding whether changes are needed in the CSPD requirements under this part, some of the questions to be addressed would be:

• Is there a need to amend the CSPD requirements under these Part C regulations?
• Is there a shortage of qualified early intervention personnel that needs to be addressed through the CSPD requirements in this part?
• Should the Part C CSPD be amended to more specifically address the issue of ensuring an adequate supply of qualified early intervention services personnel? And, if yes, should the provisions in the Part B regulations (34 CFR 300.381) be adapted, or should separate provisions be added?
• Should other areas be addressed, similar to the improvement strategies in 34 CFR 300.382?

Attachment 3 to this NPRM includes the CSPD requirements under the Part B regulations, to assist commenters in responding to the questions listed in the preceding paragraphs.

Section 303.361 (Personnel standards) would be amended by making changes necessary to ensure that the personnel standards requirements under this part fully conform to those requirements in the Part B regulations (34 CFR 300.136). Several commenters in responding to the 1998 notices recommended that these changes be made, and the Department believes that it is appropriate for these requirements to be the same under both parts. Therefore, the following changes would be made:

• Paragraph headings would be added to parallel the paragraph titles under Part B, and for improved readability.
• The substance of the note following § 303.361 would be added to the text of the regulations as policies and procedures under a new paragraph (b)(2) and (b)(3). Proposed paragraph (b)(2) would provide that each State may determine the specific occupational categories required for early intervention services, and revise or expand those categories as needed.
• Proposed paragraph (b)(3) would state—“Nothing in this part requires a State to establish a specified training standard (e.g., a masters degree) for personnel who provide early intervention services under Part C of the Act.”
• A provision from the policies and procedures in the Part B regulations (34 CFR 300.136(b)(4)) would be incorporated, without change, as a new paragraph (b)(4) under the policies and procedures for this part. That provision clarifies that—

(4) A State with only one entry-level academic degree for employment of personnel in a specific profession or discipline may modify that standard, as necessary, to ensure the provision of early intervention services without violating the requirements of this section.

Section 303.361(g) (Policy to address shortage of personnel) would be amended by adding, as a new paragraph (g)(2), provisions from Part B regulations (34 CFR 300.136(g)(2) and (3)).

Because of the interest in having a seamless system of services from birth through the early childhood years, and the close link between the types of personnel under both the Part B and Part C programs, having the same personnel standards requirements under both programs would increase the likelihood of having a more effective and efficient mechanism to help ensure that personnel necessary to carry out the purposes of each part are appropriately and adequately prepared and trained.

Subpart E—Procedural Safeguards

Section 303.401(a) (Definition of consent) would be amended by adding a new paragraph (a)(3)(ii) to provide that if a parent revokes consent, that revocation is not retroactive (i.e., it does not negate an action that has occurred after the consent was given and before the consent was revoked).

This provision was adopted from the definition of consent in the Part B final regulations (34 CFR 300.500). If parental consent is required for a service or activity, it would be impractical to allow a parent to retroactively revoke that consent. Thus, once the parents of a child consent to a decision (e.g., for an evaluation or provision of services), any revocation of their consent once the action to which they consented has been carried out will not affect the validity of the action. The analysis of comments to the final Part B regulations state that “Since the non-retroactivity of a parent's revocation is based on the Department's interpretation of the statute, and is important to make clear to all parties, it should be set forth in the regulation itself.” (64 FR 12606, March 12, 1999).

Section 303.420 (Due process procedures) would be amended, first, by redesignating existing paragraph (a) (adopting the Part B due process procedures) and paragraph (b) (developing specific Part C due process procedures for this part) as paragraphs (a)(1) and (2); and, second, by adding a new paragraph (b) (on mediation), which provides that if a parent initiates a hearing under paragraph (a)(1) or (a)(2), the lead agency must inform the parent of the availability of mediation.

This proposed provision on mediation would be added to conform to a corresponding provision on mediation in § 300.507(a)(2) of the Part B regulations. The preamble to the 1997 Part B NPRM stated that “the Secretary would interpret the requirement of section 615(e)(1) that mediation be available whenever a hearing is requested, as requiring that parents be notified of the availability of mediation whenever a due process hearing is initiated.” (62 FR 55045, October 22, 1997). Consistent with section 639(a)(8) of the Act (which provides that the procedural safeguards under Part C must include “the right of parents to use mediation in accordance with section 615(e) * * *”), the Part B provision in § 300.507(a)(2) should be added to the Part C regulations.

This proposed provision on mediation simply expands on the language in § 303.419(a)(1), which provides that mediation “at a minimum, must be available whenever a hearing is requested under § 303.420.” Therefore, proposed § 303.420(b) does not add an additional burden, but simply makes clear, within the context of the required “due process procedures” in § 303.420, that the lead agency has a responsibility to inform parents about the availability of mediation at the time the parents request a hearing.

Section 303.420 would be further amended by replacing the term “complaint” (or “individual child complaints”) with “due process hearing or hearings” throughout this section. Similar changes would be made in § 303.402, and in §§ 303.421-303.425, as reflected in the descriptions included later in this preamble.

It is important to make this change because the use of the single word “complaint” to refer to two different types of administrative proceedings under this part has often created confusion for both parents and public agencies. We believes that it would be helpful in resolving this confusion if the term “complaint” would be used only with respect to the State complaint procedures required under §§ 303.510-303.512, and that the term “due process hearing” would be used for parents who are requesting a hearing under §§ 303.420-303.425.

The prior notice provisions under § 303.403(b) require that when a public agency gives written notice to the parents of any action it is proposing or refusing to take, the agency must inform the parents about both—(1) the due process hearing procedures in §§ 303.420-303.425, and (2) the State complaint procedures under §§ 303.510-303.512. The parents would then be able to determine which method or methods of redress they might pursue if there is a dispute about any of the matters in § 303.403(a) (regarding the identification, evaluation, or placement of an eligible child, or the provision of appropriate early intervention services to the child and the child's family).

The note following § 303.420, which describes the differences between two types of administrative complaints, would be removed because it would no longer be relevant.

Section 303.421 (Appointment of an impartial person) would be amended by—(1) changing the title to “Impartial hearing officer;” (2) replacing “complaint” with “dispute” in paragraph (a)(2); and (3) replacing, in paragraph (b)(1), “the person appointed to implement the complaint resolution process” with “a person who serves as a hearing officer in accordance with this section.”

Section 303.422 (Parent rights in administrative proceedings) would be amended by changing the title to “Parent rights in due process hearings;” and by replacing “administrative proceedings” with “due process hearings” in the text.

Section 303.423 (Convenience of proceedings; timelines) would be amended by replacing “proceedings” with “hearings” in the title; and replacing “complaint or “complaint resolution process” with “due process hearing.”

Section 303.424 (Civil action) would be amended to make it clear that the section only applies if a party is aggrieved by the findings and decision in a due process hearing.

Section 303.425 (Status of child during proceedings) would be amended by—(1) replacing, in paragraph (a), “complaint under this subpart” with “administrative or judicial proceeding involving a request for a due process hearing under 303.420;” (2) replacing “complaint” with “proceeding” in paragraph (b); and (3) adding a new paragraph (c) to provide, consistent with existing Department policy, that the pendency provisions of this section do not apply if a child is transitioning from early intervention services under Part C to preschool services under Part B.

Subpart F—State Administration

General

Section 303.501 (Supervision and monitoring of programs) would be amended by changing the title of paragraph (b) from “Methods of administering programs” to “Methods of ensuring compliance,” and by making a similar change in the text.

Policies and Procedures Related to Financial Matters

These regulations would add a new § 303.519, containing much of previous § 303.520 (Policies related to payment for services). Proposed § 303.520 would address States that have a system of payments, and proposed § 303.521 would address the use of public or private insurance in financing early intervention services.

In proposed § 303.519, the introduction from current § 303.520(a) is incorporated as new § 303.519(a); new paragraphs (a)(1)(i) and (a)(1)(ii) would reference the applicable provisions for States' policies on payment for services, depending on whether or not the State has a system of payments. Section 303.519(a)(1)(ii) would also require that a State without a system of payments have a policy stating that all services are at no cost to parents. Proposed paragraph (a)(1) contains the provision regarding interagency agreements from current § 303.520(a)(2).

IDEA section 632(4)(B) provides that services must be “provided at no cost, except where Federal or State law provides for a system of payments by families, including a schedule of sliding fees.” Thus, if there is a payment system under either State law or Federal law, services need not be “at no cost.” Under proposed §§ 303.519 and 303.520, the State must affirmatively designate in its policies whether it is including, in its “system of payments,” various existing payment systems that families may be subject to. This will provide more clarity for families, policy-makers, and Federal monitors, as to which fees, if any, families must pay under the State's early intervention system.

Under this proposed regulation, current paragraphs (c) and (d) of § 303.520 become paragraphs (b) and (c) of § 303.519. The only change to current paragraph (c) is a technical one, deleting the reference to a State's fifth year of participation. New § 303.519(c)(2) provides that, although income generated from fees under a system of payments, such as fees from a sliding fee scale, do constitute program income under 34 CFR 80.25, States are authorized to add such income to their grant, rather than being required to deduct such program income from the allowable costs of the grant. States are encouraged to use the fee income to augment their Part C grant.

Current § 303.520(d)(2) would be revised, in proposed § 303.519(c)(3), to clarify that, in addition to reimbursements from Federal funds, if a State receives and spends payments from private insurance plans, those funds are not considered “State and local funds” for purposes of the nonsupplanting requirements in § 303.124. Although not reflected in the parallel Part B regulation (§ 300.142(h)(2)), this policy applies equally to insurance payments received by a State under both Parts B and C.

If a State, however, uses State funds from a State public insurance source, such as the State share of Medicaid costs, for early intervention services, those State funds are treated the same as all other State funding sources for purposes of the supplanting test, i.e., they must be counted as part of total State and local spending for early intervention. Income from family fees, on the other hand, would not be part of State and local spending for purposes of § 303.124.

Finally, this proposed regulation adds § 303.519(d), governing the use of Part B funds for infants and toddlers. This proposed paragraph would require a State policy in order to use Part B funds to serve infants and toddlers. Currently several States do use Part B funds, in addition to their Part C funds, to serve infants and toddlers. Without a policy, however, as to which children will be served with Part B funds, it is impossible for the Department to monitor (or for the State to monitor at the local level) whether infants and toddlers for whom Part B section 611 funds are spent in fact are receiving everything they are entitled to under both Part B (including a free appropriate public education) and Part C, as required.

In proposed § 303.519(d), the State policy would need to—(1) assure that infants and toddlers receiving services paid for with Part B funds receive a free appropriate public education in accordance with all Part B requirements; and (2) specify what category, age group, or other segment of all eligible infants and toddlers will be served with Part B funds and therefore receive FAPE. Under this second requirement (in proposed § 303.519(d)(2)), it would not be acceptable, for example, for a State to submit a number indicating how many children would be served, based on the amount of Part B section 611 funds available; States must designate a specific identifiable subgroup of eligible children (e.g., all two-year-olds, or all two-year-olds with deaf-blindness). In the case of section 619 funds, the State would identify whether all two-year-olds who turn three during the school year will be served, or which group will be served if it is to be fewer than all.

Proposed § 303.519(d)(1)(ii) and (iii) reflect statutory requirements and longstanding Department policy. First, whenever funds received under IDEA section 611 are used for infants and toddlers, requirements of both Parts B and C apply with respect to serving those children. While Part B applies because of the use of Part B funds, Part C applies for all States that apply for and receive Part C funds, because all eligible infants and toddlers are covered by Part C, regardless of the funding sources used for a particular child, except if IDEA section 619 funds are used. Second, if funds under section 619 are used, which is permissible under the statute for two-year-olds who will turn three during the school year, the statute requires that only Part B applies, and not Part C (IDEA section 619(h)).

A related provision regarding the use of Part B funds is added in proposed § 303.520(c)(3). (See discussion later in this preamble).

Proposed § 303.519(e) adopts the “construction” phrase from the Part B regulations, 34 CFR 300.142(i).

System of Payments Provisions

Proposed § 303.520 describes a system of family payments used by a State to finance early intervention services, and the requirements of the corresponding State policy. A system of payments is a written State policy that—(1) meets the requirements of proposed § 303.520, and (2) describes the fees or costs that will be borne by families who receive services under the State's early intervention system.

A system of payments may not include payments by an insurance plan, whether public or private, as opposed to payments by a family to access the benefits of the plan. Parties in some States have argued that a State can include, as part of a system of payments, actual benefits paid by an insurance plan (and require families to assign benefits to the State). The statute, however, specifies a “system of payments by families,” which does not include an insurance plan payment to a State.

Thus, in a State with a system of payments, e.g., a sliding fee scale, while parents can meet their State fee obligation in any way they choose, including using their insurance to pay the fee, a State could not, under this proposed regulation, require parents to access their insurance plan (i.e., require parents to assign benefits to the State or provider) as part of its “system of payments.” Although insurance benefits paid by a plan can not be considered part of a system of payments, they are an important source of funding for early intervention services, as recognized by this proposed regulation.

Proposed § 303.520(a)(2) states that it is the lead agency's duty to ensure compliance with the State system of payments. Under Part C, unlike Part B, the lead agency is the grantee as well as the program administrator; there are no subgrants. Although the lead agency may enter into contracts or make other arrangements for providing services, it retains all of its responsibilities as grantee (see §§ 303.500 and 303.501). Thus the responsibility for oversight of fees, whether local or State-imposed, rests with the lead agency.

Under proposed § 303.520(b), a system of payments may contain one or both of the two types of applicable fees—(1) fees established under State law specifically for early intervention services, such as sliding fee scales; and (2) cost participation fees (e.g., co-pay or deductible amounts) required under existing State or Federal law to access State or Federal insurance programs in which the family is enrolled.

The first type of fee is one established for the early intervention system, as opposed to fees that are broader in scope, such as Medicaid fees. This first type of fee includes the sliding fee scales based on family income that are currently in use in many States. Although a sliding fee is more equitable than a flat fee (which penalizes lower-income families more heavily), States have discretion, under this proposed regulation, as to the type of fee they implement.

The statute, however, specifically states that a system of payments is to be established under “Federal or State law * * *” To be established under “State law,” the system must be codified in State statute or otherwise have the force of law; a policy that is included with a State's Part C application but not codified does not qualify. The actual dollar amounts need not be codified, as that can change, but the basic payment system must be authorized or enacted by State law. Thus, a State may already have in existence a sliding fee scale for early intervention services; if part of State law, that fee scale would fall under the description in § 303.520(b)(1), and be part of a State's system of payments. The State would need to ensure, however, that its written policies include the information required in proposed § 303.520(c) and (d).

Under “Federal law,” some public insurance programs such as Medicaid, CHIP, and TRICARE, may include various forms of family cost participation, such as co-payments or deductible amounts. Under § 303.520(b)(2), if a State wants to access the benefits of public insurance programs for covered families needing early intervention services under Part C, and wants families to pay the applicable co-pay or deductible amounts, the State could designate, as part of its system of payments, those required fees as part of its system of payments.

As proposed § 303.520(c)(2) makes clear, however, such fees, even though included by a State in its system of payments, can not be applied to a family that is unable to pay the fee (current § 303.521(b)(3)(ii), proposed § 303.520(c)(2)), or for a service that must be at no cost, such as service coordination (current § 303.520(b), proposed § 303.520(c)(1)).

In addition, under this proposed regulation, it is entirely optional for a State to include public insurance access fees in its system of payments; under proposed § 303.521(e), States may choose to use Part C funds to pay such co-pay or deductible amounts for families, as an incentive for families to agree to access their insurance for early intervention purposes. Such use of Part C funds does not violate the “payor of last resort” requirement under Part C of IDEA.

Proposed § 303.520(b)(2) applies not only to Federal public insurance programs (such as Medicaid), but to State-funded, non-Federal insurance plans as well, as long as the payments are required by State law. Again, while there is no requirement that the exact dollar amount be specified in a State or Federal statute, proposed § 303.520(b)(2) covers programs for which State or Federal law authorizes or requires family payments.

Proposed § 303.520(c) requires (through § 303.520(d)(1) and § 303.173) a State with a system of payments to submit an assurance that no fees will be charged in three different situations. This paragraph contains provisions taken from current §§ 303.520, 303.521(b), and 303.521(c), collecting in one place the circumstances under which States may not charge any fees for services. It would also clarify that those situations overrule the existence of a system of payments. For example, in a State with a system of payments, if a family is unable to pay the fee, or if a service must be at no cost to parents, such as service coordination, the State may not apply its fees in that situation.

Proposed § 303.520(c)(1) contains the exact language as current § 303.521(b), with the title “Functions not subject to fees” changed to “Functions at public expense.” This provision lists the State functions that, under longstanding Part C regulations, must always be at no cost to the family: Child find, evaluation and assessment, service coordination, IFSP development, and implementation of the statewide system, including procedural safeguards.

Proposed § 303.520(c)(2) contains the rule from current § 303.520(b)(3)(ii) concerning a family's inability to pay. Proposed § 303.520(c)(3) is derived from current 303.521(c), and clarifies it. Under this provision, “birth-mandate States” may not charge fees, unless the fees are for services that are not part of FAPE. For example, if a State has a law guaranteeing FAPE from birth, and a particular child's IFSP contains additional, non-FAPE services such as respite care, the family could be charged under a sliding fee scale only for those non-FAPE early intervention services.

The use of Part B funds is also addressed in proposed § 303.520(c)(3), in response to many commenters' requests to address the use of Part B funds for early intervention services. These commenters requested that States be permitted to establish sliding fee scales, even though the State uses Part B funds to pay for some early intervention services. Proposed § 303.520(c)(3) therefore applies to a State that uses Part B section 611 funds for infants and toddlers in accordance with proposed § 303.519(d) (State policy regarding use of Part B funds). A State may still establish a State system of payments, even if it uses Part B section 611 funds to pay for some services for infants and toddlers. However, the State may not charge fees for any service that is part of a child's free appropriate public education, which is required whenever Part B funds are used. All of the requirements of Part B, including “at no cost,” apply whenever Part B funds are used. A State, therefore, would need to distinguish between those services that are part of a child's FAPE, to which the fee scale would not apply, and other services. If a State uses funds under section 619 for two-year-olds who will turn three during the school year, no fees are permitted because only Part B, and not Part C applies.

Proposed § 303.520(d) contains the requirements for State policies in States that have a system of payments. States have always been required to submit, with their applications, policies regarding funding of services, including any fee system (§§ 303.173 and 303.520). Proposed § 303.520(d), however, would add clarity and detail to those required policies, for those States that do not include this detail currently, to ensure that the public is fully aware of and understands the State's system of payments by families.

Several of the requirements in proposed paragraph (d) are in existing § 303.520. Proposed paragraph (d)(4) adds a requirement that the State include in its policies its criteria for judging “inability to pay.” Although the basis for that determination is left to the States, this provision would require that the State take into consideration applicable family expenses, using the best available data. We expect that “applicable” expenses would include, at a minimum, the family's documented and unreimbursed expenses related to the eligible child's disability. In other words, family income would be discounted by the family's expenses for the child, that are due to the disability.

States are free, however, to use criteria that deduct more expenses from income. For example, for reasons of convenience, a State may choose to use families' Federal income tax returns and judge all families by “taxable income,” from which medical expenses have already been deducted. States may also use other methods of judging income, such as using families' existing documentation from other aid programs. As a general rule, the same standard should be used for all families throughout the State, although a State may choose to take into consideration extraordinary circumstances (for example, a family whose house just burned down may not have the “ability to pay” that appears on paper).

After analyzing the family's finances, the State may apply a threshold amount, for example, 150% of the poverty level, below which families are deemed “unable to pay.” We invite comments on how States would implement this proposed regulatory requirement in a practicable way, and how it compares to current practice in States with fee scales. We also invite comment on whether the scope of this provision is appropriate, or whether it should be more limited in the scope of family expenses that are taken into account (for example, whether expenses should be limited to those that result from the eligible child's disability).

Proposed § 303.520(d)(5) applies to States that have a fee scale specifically for early intervention services (as described in proposed § 303.520(b)(1)). Proposed § 303.520(d)(5)(ii)(A) states that a fee scale established by a State for early intervention services can not take into account whether or not a family has insurance. Apparently some States with sliding fee scales have been placing families on the top of the fee scale if they have private insurance, without regard to family income. This practice penalizes the family for having insurance, while the family may not in fact have the resources to pay such a high fee, or may not wish to use their insurance because of the associated long-term costs. To enable the family to have an actual choice between a State fee and using their insurance (see proposed § 303.521(b)), States must set their fees without regard to what a family's insurance might pay.

In proposed § 303.520(d)(5)(ii)(B), the same requirement of taking into account family expenses as in proposed § 303.520(d)(4) (“inability to pay”) would apply to the determination of a family's position on a sliding fee scale.

Proposed § 303.520(e) discusses procedural safeguards regarding payments by families. States with a system of payments must give families written notice of their applicable policies on the matters covered in § 303.520, which includes the services that must be at no cost, the types of fees in the State's system, and the State's guidelines for “inability to pay,” so that families are aware of their rights.

The notice required by proposed § 303.520(e) may be incorporated into the notice given to the families under § 303.403, or the State may create a separate notice for this purpose. The notice must be given, however, before services begin, and cannot delay the provision of services.

Proposed § 303.520(e)(3) clarifies a family's options for contesting a fee imposed, or contesting a State's determination of the family's ability to pay. Families have the right in these circumstances to file for a due process hearing, agree to mediation, or file a State complaint.

Some States have offered parents an additional option, designed by the State, in order to resolve more quickly these financial issues. Because the State-designed options are often less formal, less time-consuming, and less expensive than the existing options under this part, States are encouraged to offer their own process. However, State remedies may not delay or deny a parent's procedural rights under Part C and its implementing regulations. Thus, a State could not require parents to use its own process as a precondition before filing a State complaint or requesting a due process hearing. The State must include these redress rights in its notice to parents.

Section 303.521 (Fees) would be amended by deleting the section in its entirety, and replacing it with a proposed new § 303.521, entitled, “Use of insurance,” as described in the following paragraphs:

Use of Insurance

Proposed new § 303.521 addresses a State's use of families' public and private insurance in funding Part C services. Under this proposed regulation, States would have the following options:

(1) Having no system of payments and providing services at no cost to parents. States would need parental consent for use of private insurance or for use of public insurance where there is a cost to the family.

(2) Having a system of payments and, if it includes a sliding fee scale, giving parents the option of paying the applicable fee or fees or using their private insurance.

The Department had proposed provisions on the use of private insurance in its October 22, 1997, Notice of Proposed Rulemaking (NPRM) (see 62 FR 55026-55123, 34 CFR 303.520(d)). In that NPRM, the Department requested comments on the proposed provision and on the related issue of public insurance proceeds. The final regulations published on March 12, 1999 did not contain the insurance provision. Instead, the preamble noted that “the policy will not be finalized until more thorough examination of the issues can be done through the process initiated by the April 14 and August 14, 1998 solicitations for comments, and in light of the specific Part C statutory language and framework.” (64 FR 12655, March 12, 1999).

During that review process, many groups and individuals submitted comments regarding the use of insurance by States' early intervention programs. In addition, in the Department's administration and monitoring of Part C, it has found confusion and inconsistency surrounding issues of State financing of early intervention services, particularly regarding the use of sliding fee scales and use of families' insurance. There is a great need for guidelines and clarity as to the legal limits in this area. The provisions in proposed § 303.521, therefore, are the result of examining the recommendations of commenters; of weighing the costs and benefits to families and to States of the various possible interpretations of the statute; and of determining the most sound policy consistent with the language and purposes of the Part C statute.

The Department's past policy with regard to States' use of insurance is reflected in several Part C policy letters as well as in the October 22, 1997 NPRM provision. Under that policy, States were not permitted to access a family's private insurance without consent if such use would entail costs to the family.

As pointed out by many of the commenters, the statutory language for Part C is different from Part B's “at no cost” requirement. Under Part C, services must be “provided at no cost, except where Federal or State law provides for a system of payments by families, including a schedule of sliding fees.” IDEA section 632(4)(B).

The statute also makes clear that Part C funds are to be “payor of last resort;” all other available funds from public or private sources are to be used first. See IDEA section 640(a). Many commenters pointed out what they perceive to be a conflict between the “payor of last resort” requirement and the “no cost” requirement. In States where there is no system of payments, for example, and the use of a family's private insurance would entail costs for the family, then to require use of that insurance would violate the “no cost” requirement, while to use Part C funds and not the insurance would appear to violate the “payor of last resort” requirement. (Under Departmental policy, however, a State does not violate “payor of last resort” if it uses Part C funds after making all reasonable attempts to secure other funding, including when parents decline to use insurance.)

The history and purpose of Part C (then Part H) provides support for the Department's attempt to balance these two policies; while the statute provides for a system of payments, the legislative history shows that Congress was also concerned that parents be protected from costs. See Sen. Rep. 99-315 at 11 (99th Cong. 2nd Sess. (1986)).

Clearly, Congress intended that the funding of early intervention services through private and public insurance would continue when it enacted Part C. What apparently was not envisioned, however, was the type of catastrophic financial losses that some families have suffered through use of private insurance for early intervention services, such as reaching lifetime caps when a child is still young, with no further insurance coverage available for the child.

The goal of these proposed regulations, therefore, is to assist States in their responsibility to maximize various financial resources, using Federal Part C dollars only as a last resort, while protecting parents from overly burdensome costs that can make early intervention services prohibitive for families.

Proposed § 303.521(a) contains the same prohibition as in Part B against forcing families to enroll in a public insurance program, such as Medicaid, as a condition of receiving services. The Department received comments both supporting and opposing this policy for Part C. Although it is true, as stated by several commenters, that if States are prevented from requiring families to enroll in Medicaid, they lose a potential funding source, that source was not a preexisting one for that family, and some families have reasons (cultural, privacy etc.) for not wanting to enroll in such public insurance programs. Moreover, if a child, otherwise deemed eligible for Part C services by the State, were denied services because the State wanted the parents to enroll in Medicaid and the parents refused, this would effectively add an additional eligibility test for the child that is not justified by the statute. For families already enrolled, however, or who voluntarily enroll in public insurance programs, States may access that insurance to finance early intervention services, as provided in proposed § 303.521(b).

Proposed § 303.521(b) addresses a State's use of a family's public insurance. Many commenters suggested that, in States that ensure services at no cost to families (or without a system of payments), States be prohibited from requiring parents to use public or private insurance. This policy does not permit States, however, to optimize resources and use Part C funds as “payor of last resort” where there is no cost to the family, as may be the case with public insurance. As many other commenters noted, if deprived of the ability to access these insurance resources, States could find it difficult financially to continue in the Part C program.

Proposed § 303.521(b) applies in States with or without a system of family payments. It provides that States can require that families access their public insurance, whether it be Federal or State, as long as there is no cost to the family.

Under proposed § 303.521(b)(1)(ii), a State that wishes to access a family's public insurance proceeds may require the parents to incur out-of-pocket costs such as co-payments and deductibles under those public insurance programs, only if such costs are included in a system of payments under § 303.520(b)(2). Even in those States in which such payments are included, however, parents are still protected from such costs if they are unable to pay (which may be likely for many Medicaid families), or under any of the other circumstances listed in § 303.520(c).

The State may also choose to use Part C funds to pay the co-pay or deductible amounts, as provided in proposed § 303.521(e), as an incentive for families to agree to access their insurance for early intervention purposes. For parents choosing the option of using their private insurance (proposed § 303.521(c)), and for parents with private insurance in a State with no system of payments, this may help the State in obtaining parent consent to use the insurance.

In proposed § 303.521(b)(1)(iii), the Department proposes the same criteria for a “cost” to families as in the Part B provision on public insurance (34 CFR 300.142(e)(2)(iii)). We particularly invite comment on whether these criteria are equally applicable to families with infants and toddlers.

In the majority of cases, use of Federal, State, or local public insurance programs by a State to provide or pay for a service to a child will not result in a current or foreseeable future cost to the family or child. For example, under the Early Periodic Screening, Diagnosis and Treatment (EPSDT) program of Medicaid, potentially available benefits are only limited based on what the Medicaid agency determines to be medically necessary for the child and are not otherwise limited or capped. Many infants and toddlers with disabilities who are eligible for public insurance programs are eligible for services under the EPSDT program. Where there is no cost to the family or the child, States are encouraged to use the public insurance benefits to the extent possible.

The language in proposed § 303.521(b)(1)(iii)(D) has been changed from the corresponding Part B provision, to read “risk loss of eligibility for, or decrease in benefits under, home and community-based waivers * * *” to more accurately reflect the common problem for families of children who are covered under such waivers, that was intended to be addressed by the Part B language.

Proposed § 303.521(b)(2) further provides that, if any of the listed costs apply, the State may still access the family's public insurance if it first obtains written consent under the provisions in § 303.401.

Proposed § 303.521(b)(3) addresses the relatively small number of families who are covered by both public and private insurance. Under this provision, in States without a system of payments, in order to access the family's private insurance the State must follow the consent requirements in proposed § 303.521(d). Thus, if a Medicaid-enrolled child also is covered by private insurance, the State without a system of payments must choose one of two options—either obtain the parent's consent to use the private insurance, or not use Medicaid to provide the service. One way the State might be able to obtain that consent would be to offer to cover the costs that would normally, under Medicaid, be assessed against the private insurer. Part C funds can be used for this purpose. (See proposed § 303.521(e)).

Proposed § 303.52l(b)(4) provides that, for States with fee scales, the State cannot bill a family's public insurance for more than the cost of the service, and can not bill for any amounts for which the parents are responsible under the fee scale. Thus, if a State's fee system charges a family a fee equal to one-third the cost of the service, the State can only bill the Medicaid or other public insurance for the remaining two-thirds.

For private insurance, many commenters suggested, as a way to balance the competing interests of the State's “payor of last resort” responsibility and the “at no cost” provision of the statute, that in States with a system of payments, States should first determine what the family has to pay, then let the parents decide whether to use their private insurance or pay the fee. This policy of parental choice, which is consistent with the Department's past Part C policy on private insurance, has been adopted and proposed as § 303.521(c) for those States that have, under State law, fees specifically for early intervention services, as described in proposed § 303.520(b)(1).

For such States, proposed § 303.521(c) would govern their treatment of all families who have private insurance. Under this provision, the State gives the family the option of accessing the insurance or paying the applicable fee directly. Some families with private insurance, want to avoid long-term negative consequences of using that with private insurance, such as exceeding a lifetime cap or risking cancellation of insurance; these families may prefer to pay the applicable fee without using their insurance. Other families may not have such extreme risks from using insurance, or are able to negotiate with their insurance company and determine an amount the company will pay that will avoid these risks. The State can assist families with this process, either by giving the duty to service coordinators, under proposed § 303.302(d)(8), or by otherwise providing for such assistance under the proposed revision to § 303.3 (“Use of Funds”).

If a family opts to pay the fee, the State cannot then also access the family's insurance to cover the remaining cost of the service, unless the family gives consent. Similarly, if a family opts to use its insurance but the insurance does not cover the entire cost of a service, the State could only require the family to pay the uncovered portion up to but not exceeding the amount of the State fee. Families with no insurance would be required to pay the exact amount of the applicable fee (subject to the “ability to pay” requirement), and States could not apply a different standard or different fee scale for families with insurance.

When giving parents the option described in proposed § 303.521(c), the protections in § 303.520(c) apply. Thus a family that has private insurance may be “unable to pay,” under the State's definition of that term, and the option would not apply to that family. Services would then be at no cost to the family and the State would need consent to access the family's private insurance (under proposed § 303.521(d)).

Proposed § 303.521(c) would require States to give parents this option for “each service” for which the State charges fees, rather than for each incidence of a service. Thus, when the IFSP is first written, and thereafter for any change in the frequency or type of service, the State would need to give the parents this option. If the parent's insurance does not cover a particular IFSP service, the family pays the applicable fee for that service.

The policy that families cannot be forced to use their private insurance, in States with no system of payments, has been adopted in proposed § 303.521(d). This provision also applies in States with a system of payments, for situations covered under § 303.520(c) (when fees may not be charged), and in States whose system of payments includes only public insurance co-pays or deductibles (fees described in § 303.520(b)(2)). This provision therefore applies in all circumstances except that of a State with a system of payments that includes fees described in § 303.521(b)(1), such as a sliding fee scale.

Under this provision, if a State has no system of payments (and in the other applicable circumstances), the State is prohibited from using a family's private insurance without the parent's consent. The provisions governing this consent are the same as the parallel provision in Part B, § 300.142(f). The Part B provision requires parental consent for any use of private insurance, because all services must be at no cost to the family, and use of private insurance entails costs. Similarly, for Part C in a State without a system of payments, services are at no cost and the State must obtain consent to use private insurance.

Under proposed § 303.521(d), a State needs parental consent for using the family's private insurance for each separate service in a child's IFSP. For example, if at an IFSP meeting the State wants to access the family's insurance for only the child's physical therapy, which is to be provided twice a week, the State obtains parental consent for that use. If, at a subsequent IFSP review, the physical therapy service is changed to three times per week, the State must obtain new written consent from the parents; they need not obtain consent for every session of each service. This policy is consistent with the intended meaning of the corresponding Part B provision, § 300.142(f)(2), but because its wording (“Each time the public agency proposes to access * * *”) has caused confusion, we propose more detailed language in this Part C provision.

This proposed treatment of private insurance should not lead to a burdensome change in existing practice among the States. The Department's past policy required, for all States, consent when there is a cost to the family (and in practice there appears to be virtually always some cost). Under the proposed rule, only States without fees such as sliding fees would be required to obtain consent; States with a system of payments that includes sliding fees would give families the option described in proposed § 303.521(b).

States are encouraged, however, to access all available sources of funding, using Part C funds as a last resort. To this end, some States have worked to increase the amount of funding by public and private insurers, by taking steps such as negotiating for changes in their State's Medicaid plan, passing State legislation governing private insurers, and working with families to negotiate with, or clarify the limitations of, private insurance coverage.

This regulation would make clear, in proposed § 303.521(e), “Use of Part C funds,” that a State is able to use Part C funds to pay the cost that would otherwise be covered by a third party payer, in order to access the family's insurance. Proposed § 303.521(e) contains language taken from the Part B regulations at § 300.142(g). If the State fails to obtain parental consent for use of private insurance (or public insurance where costs are involved), the State may use Part C funds for the service. In such a situation the State does not violate the “payor of last resort” provision because it has first taken all reasonable steps to secure alternate funding sources. This provision also would provide, as in Part B, that to make it easier for parents to consent to private insurance use (or to choose to use public insurance), a State may use Part C funds to pay co-pay or deductible amounts. This practice can also assist States in situations in which services must be at no cost to the family, due to any of the circumstances described in proposed § 303.520(c); by using Part C funds to pay the family's required co-pay or deductible amount, the State avoids a cost to the family.

Other Changes to Subpart F

Section 303.523 (Interagency agreements) would be amended in several ways. First, the language in § 303.523(a) would be clarified to require the lead agency to enter into an interagency agreement with any other State-level agency involved in the State's early intervention program, whether that involvement is through provision of services or through funding to entities that use those funds for early intervention purposes.

Second, the substance of the note following § 303.523 would be added to the text of the regulations as proposed new § 303.523(c)(2), and the note would be deleted. The substance of the note clarifies that, with respect to resolving intra-agency and interagency disputes, a State may meet the requirement in any way permitted under State law, including (1) providing for a third party (e.g., an administrative law judge) to review the dispute and render a decision; (2) assignment of the responsibility by the Governor to the lead agency or Council; or (3) having the final decision made by the Governor. This change would strengthen the provision regarding dispute resolution in paragraph (c)).

Finally, paragraph (d) of § 303.523, regarding additional components of agreements, would be revised to reference three specific topics that should be addressed if appropriate and relevant to the two agencies: transition, policies on payment for services, and child find. Regarding transition, current § 303.148(c) (proposed § 303.148(f)) requires a lead agency that is not the State educational agency (SEA) to have an interagency agreement with the SEA that ensures coordination on the transition of eligible children to Part B services; proposed § 303.523(d) should reference that requirement.

Similarly, proposed § 303.523(d)(2) would reference the requirement in current § 303.520 (proposed § 303.519(a)(2)) that policies related to payment for services must be reflected in the appropriate interagency agreements. This includes both policies on family payments, and payments by other agencies, as specified in §§ 303.173 and 303.522. Thus, if a State adopts a system of payments that involves Medicaid co-payments, that policy must be in the interagency agreement with the State Medicaid agency. The use of funds or the provision of services would be relevant topics for an interagency agreement between the lead agency and any other State agency that provides either funding or services for early intervention purposes (e.g., a Health or developmental disabilities agency, or a State Department of Education providing Part B funds).

The third topic, child find, is proposed as optional for the lead agency to include in its interagency agreements, although States are encouraged to do so. Child find may be an appropriate issue to include in agreements between the lead agency and most other relevant State agencies.

The proposed changes to §§ 303.173 and 303.523 are intended to strengthen the regulatory requirements on interagency cooperation. The Secretary has found, through monitoring, that many States' early intervention systems suffer from a lack of interagency cooperation, to the detriment of infants and toddlers with disabilities and their families. The interagency requirements of Part C are crucial to implementing an actual statewide system that pulls together the various existing efforts in the State.

The Secretary has found, in some States, that political or “turf-war” differences keep agencies from working together or even communicating; in others, it is only the lead agency's lack of effort that keeps agencies from coordinating. Although the Department is aware that the existence of a written agreement between agencies does not ensure that it will be implemented, the fact that specific elements would be required in the agreement should cause the necessary discussions to take place, greatly increasing the chances of actual cooperation.

Subpart G—State Interagency Coordinating Council

Section 303.653 (Transitional services) would be amended by making technical changes to improve the clarity and readability of the section, including—(1) changing the title of the section to “Transition services;” (2) replacing “toddlers with disabilities” with “eligible children under this part;” and (3) adding “preschool” before “services under Part B.”

Executive Order 12866

1. Potential cost and benefits

Under Executive Order 12866, we have assessed the potential costs and benefits of this regulatory action.

The potential costs associated with the proposed regulations are those resulting from statutory requirements and those we have determined as necessary for administering this program effectively and efficiently.

In assessing the potential costs and benefits—both quantitative and qualitative—of this regulatory action, we have determined that the benefits would justify the costs.

We have also determined that this regulatory action would not unduly interfere with State, local, private, and tribal governments in the exercise of their governmental functions.

Summary of Potential Costs and Benefits

These regulations have been reviewed in accordance with Executive Order 12866. Under the terms of the order, the Secretary has assessed the potential costs and benefits of this regulatory action.

Benefits and Costs of Statutory Changes

Following is an analysis of the costs and benefits of the most significant changes in the regulations for the Grants for Infants and Families program (Part C). In conducting this analysis, the Department examined the extent to which changes made by these proposed regulations add to or reduce the costs for State lead agencies and others as compared to the costs of implementing Part C under the previously published regulations. Variation in practice from State to State makes it hard to predict the effect of these changes. However, based on this analysis, the Secretary has concluded that the changes included in these regulations will not, on net, impose significant costs in any one year. An analysis of specific provisions follows:

Section 303.341—Policies and Procedures on Natural Environments

Section 303.341 of the proposed regulations clarifies that decisions on natural environments, and any justifications needed, are made by the IFSP team and are made separately for each service to be provided to the child. It also clarifies that services may be provided in a setting other than a natural environment, such as a center-based program or other setting appropriate to the age and needs of the child, if appropriately justified based on the child's needs. Over 200 of the 328 comments received by the Department on the Part C regulations expressed concern about the provisions related to natural environments. Questions raised by many of these commenters indicated that there is confusion as to what is required and that the provisions were being misinterpreted to mean that services could only be provided in the home of an eligible child or in community settings in which children without disabilities participate. No cost impact is assigned to this clarification since the provisions do not represent a change in policy or impose new substantive requirements. However, the proposed clarification should benefit both families and providers by making it clear that services may be provided in settings other than the natural environment if the IFSP team determines that this is necessary to meet the needs of the child.

Section 303.519(a)—Policies Related to Payment for Services

Section 303.519(a) clarifies that a State without a system of payments must have a policy stating that all services are at no cost to parents. Office of Special Education Programs (OSEP) monitoring activities indicate that some States, local agencies, and local programs are charging for services, even though the State has not adopted a system of payments. Current IDEA section 632(4)(B), which is the same as prior section 672(2)(B), provides that services must be “provided at no cost, except where Federal or State law provides for a system of payments by families, including a schedule of sliding fees.” Because this change in the regulations is a clarification of, rather than a change in the law, no cost impact is assigned to this requirement.

Section 303.519(c)—Nonsupplanting Requirement

Under proposed § 303.519(c)(3), the provisions of current § 303.520(d)(2) would be revised to clarify that, in addition to reimbursements from Federal funds, if a State receives and spends payments from private insurance plan, those funds are not considered “State and local funds” for purposes of the nonsupplanting requirements in § 303.124. This provision provides a benefit to States by alleviating them of the requirement to align State funding with reimbursements for services rendered from private insurance that will fluctuate from year to year depending on factors such as the number of parents who have private insurance, whether the particular services provided are eligible for reimbursement, and variation in reimbursement rates. Those factors are not under the control of the State agency and are not budgeted items.

Section 303.519(d)—Use of Part B Funds

Section 303.519(d) would require States proposing to use funds under Part B to serve infants and toddlers to have a written policy regarding the use of Part B funds that identifies the age range or other characteristics of the groups to be served. A written policy is necessary in order for OSEP to monitor the States and the States to monitor at the local level to ensure that children for whom Part B funds are spent are receiving everything they are entitled to under both Part C and Part B, including a free appropriate public education. Since States have the discretion to decide whether to use Part B funds for this purpose, this provision will not result in increased program costs. The provision may impose a short-term administrative burden on States that choose to use Part B funds for infants and toddlers with disabilities and do not currently have a written policy on the use of these funds for this purpose. However, we believe that most States would develop a written policy for administrative reasons, regardless of the existence of this requirement. In addition, the short-term burden of developing a written policy is offset by the long-term positive benefit derived from having a written policy. A clear policy will help reduce confusion among State and local education agencies as to which children will be served with Part B funds, and reduces the potential for costly audit findings regarding the proper use of Part B funds. States, at their discretion, may also use Part B Preschool Grants program funds to provide a free appropriate public education to two-year-olds who will turn 3 during the school year. IDEA, section 619(h) provides that, if a State uses Part B Preschool Grants funds for two-year-olds in this instance, only Part B applies. According to a May, 1999 “section 619 Profile” study by the National Early Childhood Technical Assistance System (NECTAS), as of fiscal year 1999, approximately 22 States had developed or were developing policies on the use of Preschool Grant funds for these children.

Section 303.520(b)—Establishment of a System of Payments in State Law or Regulation

Proposed § 303.520(b) specifies that a system of payments may contain either fees established specifically for early intervention or participation fees required to access State or Federal insurance programs. This proposed paragraph further provides that the system of payments must be established under State law and the participation fees authorized or enacted by State or Federal law. This provision is being added to the regulations to ensure that States are aware of and have fully considered policies that will have cost implications for State agencies and consumers, reduce the potential for arbitrary changes in policy, and improve the ability of the Federal Government to monitor compliance. It will also provide more clarity for families, and policy makers as to which fees, if any, families must pay under the State's early intervention system and reduces potential confusion over which policies must be authorized by State statute or regulations versus those that can be issued administratively. To date, a total of 49 of the 56 Part C lead agencies reported information for fiscal year 2000 on the status of their systems of payment. This data indicates that 18 of these States have policies related to systems of payment. Of these States, 16 had policies established under State law or regulations. Currently it appears that only two States would be affected by this change. We believe that the benefits described above will offset any burden associated with establishing these policies in State law or regulations that may be experienced by these two States or other States deciding to adopt systems of payment in the future. The requirement also will result in consistent practice among all the States.

Section 303.520(c)(3)—States That Provide FAPE to Infants and Toddlers With Disabilities

Currently, eleven of the 56 States and Outlying Areas have legislation requiring that FAPE be provided to some or all children with disabilities beginning at birth, and an additional State requires that FAPE be provided to children with disabilities beginning at age 2. Section 303.521(c) of the current regulations provides that States with mandates to serve children from birth may not charge parents for any service required under that law that are provided to children under Part C. New § 303.520(c)(3) replaces § 303.521(c) and modifies that provision to clarify that the State may establish a system of payments for other services that are not a part of FAPE. Similarly, this new provision also specifies that, if a State uses Part B section 611 funds to pay for some services for infants and toddlers, the State may still establish a system of payments for services that are not part of a child's free appropriate public education. These changes clarify a State's ability to charge for services that are not required to be provided free of charge under the FAPE requirements. Because most Part C services would also be FAPE services, these changes should result in very little shifting of costs between State agencies and families.

Section 303.520(d)(4)—Criteria for Judging Inability To Pay

The current regulations at § 303.520(a)(3)(ii) specify that, “The inability of the parents of an eligible child to pay for services will not result in the denial of services to the child or the child's family.” Proposed § 303.520(d)(4) adds a requirement that States with a system of payments must include their criteria for judging “inability to pay” in their policies submitted to OSEP. Most of the approximately 18 States that have systems of payment do not currently include their guidelines for judging “inability to pay” in their policies submitted to OSEP. We believe these criteria should be part of the official, public policies of the States to ensure that the criteria are administered uniformly, parents know what criteria are being used to determine their ability to pay, and the requirement is efficiently administered and monitored. The resultant burden to the State in developing or submitting criteria for judging inability to pay is minimal compared to the anticipated benefit of having clear guidelines for families and providers affected by this provision.

Sections 303.520(d)(4) and 303.520(d)(5)(ii)(B)—Consideration of Applicable Family Expenses

Proposed § 303.520(d)(4) on judging ability to pay, and § 303.520(d)(5)(ii)(B) on sliding fee scales would require that States take into consideration applicable family expenses, using the best available data. The cost to States of this change is indeterminate because States will have flexibility to determine how they will address this requirement, including the extent to which expenses would be considered in determining the family's ability to pay. While we expect that there may be some cost to States, the Department believes that there is a direct offsetting benefit to society by ensuring that families are not unduly burdened or that children with disabilities are not denied services because extraordinary expenses were not considered in the calculation of whether the family has the ability to pay. We further believe that this benefit to families outweighs any potential administrative burden or cost to the State derived from the incorporation of this provision.

Section 303.520(d)(5)(ii)(A)—Family Insurance and the Calculation of Position on the State Fee Scale

Section 303.520(d)(5)(ii)(A) provides that, for States with fees for early intervention services that have implemented a fee scale, the calculation of a family's position on the scale may not take into account the existence of a family's insurance. Inclusion of the family's insurance in the calculation can result in these families being placed at the top of the fee scale, even if those families intend to cover the fees themselves. Most of the States with a system of payments have implemented fee scales. Since the National Early Intervention Longitudinal Study (NEILS) indicates that approximately 57 percent of the families participating in Part C have some form of private insurance, this provision could result in a shift of costs from families to the States to the extent that States are currently taking insurance into account in determining a family's ability to pay. While we anticipate that there will be no net change in the cost to society, we particularly invite comments on the impact of this provision.

Section 303.520(e)(3)—Procedural Safeguards

Proposed § 303.520(e)(3) sets out the procedures for redress if a parent wishes to contest the imposition of a fee. Families have always had the right to seek mediation, file for a due process hearing, and file a State complaint. However, the Department is concerned that some Part C families may not be aware that these rights apply to the imposition of a fee or a State's determination of a family's ability to pay. This section clarifies that these rights apply to this situation. Since the procedural safeguards under Subpart E (or the Part B hearing procedures if the State has adopted them) already apply, we are not ascribing a cost impact to this provision.

Section 303.521—Prohibition Against Mandatory Enrollment in Public Insurance Programs

Proposed § 303.521(a) provides that no State may require parents to sign up for or enroll in a public insurance program in order for their child to receive early intervention services. OSEP is aware that a small number of States have required families to apply for third-party resources such as Medicaid. The increased cost to States that may result from the proposed change is outweighed by the benefits of protecting the privacy and autonomy of the family. A family's decision to enroll in public insurance programs may be affected by religious concerns, the perceived stigma of public insurance, and considerations related to family finances. However, nothing in this provision precludes a State from providing information on and promoting public insurance programs, assisting families with application forms, or using combined enrollment forms. We believe that most families will want to enroll in these programs to obtain medical coverage for the entire family. However, we do not have data on the number or percentage of eligible families participating in this program that refuse to enroll in public insurance programs. We invite commenters to provide this information, if it is available on the State or local level.

Section 303.521(b)(1)(iii)—State Access to Public Insurance Benefits

The NEILS indicates that approximately 44 percent of the families participating in the Part C program participate in a government-assisted health insurance program such as Medicaid or the SCHIP. For families already enrolled or who voluntarily enroll in public insurance programs, State agencies are currently accessing that insurance to finance early intervention services. Proposed § 303.521(b)(1)(iii) provides that a State may not use a child's benefits under a public insurance program without obtaining parental consent if that use would result in a negative outcome for the family such as a decrease in available lifetime coverage or any other insured benefit, the family paying for services that would otherwise be covered by the insurance program, an increase in premiums, or the discontinuation of insurance. The proposed regulations adopts the same criteria regarding parental consent as in the Part B regulations (see § 300.142(e)). We expect this to have a limited effect. In most cases, use of Federal, State, or local public insurance programs by a State to provide or pay for a service will not result in a current or foreseeable future cost to the family or child, and States will not be required to get consent. In the limited number of cases where a State might need to obtain consent, the burden to States is outweighed by the benefit to families of having this protection.

Section 303.521(c)—Parental Payment Option

According to preliminary data obtained from the NEILS, approximately 95 percent of children participating in Part C are covered by some form of insurance. For States with a fee scale for early intervention services, proposed section 303.521(c) gives parents the option of using their public or private insurance or paying the applicable fee for each service. This provision will provide a direct benefit to some families. While it clearly places the locus of responsibility for payments with the family, it provides the family with options as to how it will fulfill that responsibility. For example, a family may choose to pay the fee rather than jeopardize future benefits or eligibility under a private insurance policy. This provision may diminish State access to insurance if more parents in States with systems of payments, when given a clear choice, opt to pay the applicable fees. However, any loss of access is offset by the benefits to families of increasing parental choice and may increase the likelihood that children with disabilities will get the services they need.

Section 303.521(d)—Parental Permission To Access Private Insurance Benefits

Section 303.521(d) provides that, in States with no system of payments, the State needs parental consent for using a family's private insurance. This is a slight variation on past practice, which required consent when there is a cost to the family. As there is virtually always some cost, this provision does not represent a change in practice and should not result in increased costs for States with no system of payments. For States that do have a system of payments, the provision described at § 303.521(c) precludes the need for formal consent.

Section 303.521(e)—Use of Part C Funds

Under proposed § 303.521(e), States may choose to use Part C funds to pay co-pay or deductible amounts for families in order to access public or private insurance that would otherwise not be available. States may be unable to obtain parental consent to use a family's insurance if the parents would be required to pay co-pay or deductible amounts. This section may help States to access additional funds. In States with a system of payments, the State could pay the co-pay amount as an incentive for parents to choose the insurance option, thus benefiting both the State and the family. We foresee no negative consequence for the family.

2. Clarity of the Regulations

Executive Order 12866 and the President's Memorandum of June 1, 1998 on “Plain Language in Government Writing” require each agency to write regulations that are easy to understand. We invite comments on how to make these proposed regulations easier to understand, including answers to questions such as the following:

• Are the requirements in the proposed regulations clearly stated?
• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?
• Does the format of the proposed regulations (use of headings, paragraphing, etc.) aid or reduce their clarity?
• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§” and a numbered heading; for example, § 303.1 Purpose of the early intervention program for infants and toddlers with disabilities.
• Could the description of the proposed regulations in the SUPPLEMENTARY INFORMATION section of this preamble be more helpful in making the proposed regulation easier to understand? If so, how?
• What else could we do to make the proposed regulations easier to understand?

Send any comments that concern how the Department could make this proposed regulation easier to understand to the person listed in the ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

The Secretary certifies that this regulatory document will not have a significant economic impact on a substantial number of small entities. These regulations govern States in their implementation of the IDEA Part C program. States are not small entities under the Regulatory Flexibility Act. Part C does not authorize subgrants, and thus there are no small entities directly affected by these regulations. The small entities that would be indirectly affected are local entities that enter into contracts with the State to provide Part C services. However, the regulations would not have a significant economic impact on these small entities because the regulations would not impose excessive regulatory burdens or require unnecessary Federal supervision. The regulations would impose minimal requirements, concerning the issue of providing services in natural environments, and the issue of use of insurance, to ensure the proper expenditure of program funds.

Paperwork Reduction Act of 1995

Sections 303.100, 303.121, 303.122, 303.123, 303.124, 303.125, 303.126, 303.127, 303.128, 303.141, 303.142, 303.143, 303.144, 303.145, 303.146, 303.148, 303.160, 303.161, 303.162, 303.164, 303.165, 303.166, 303.167, 303.168, 303.169, 303.170, 303.171, 303.172, 303.173, 303.174, 303.175, 303.176, 303.180, 303.300, 303.301, 303.320, 303.321, 303.322, 303.323, 303.340, 303.341, 303.342, 303.343, 303.344, 303.345, 303.346, 303.360, 303.361, 303.420, 303.421, 303.422, 303.423, 303.424, 303.425, 303.460, 303.500, 303.501, 303.519, 303.520, 303.522, 303.523, 303.524, 303.525, 303.526, 303.527, 303.528, 303.540, 303.600, 303.601, 303.602, 303.603, 303.604, 303.650, 303.651, 303.652, 303.653, and 303.654 contain information collection requirements. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the Department of Education has submitted a copy of these sections to the Office of Management and Budget (OMB) for its review.

For purposes of addressing the Paperwork Reduction Act requirements, we have divided the sections listed in the preceding paragraph into three categories, as follows:

The first category includes three sections that contain, for the first time, information collection requirements that have been added by this NPRM, including §§ 303.100, 303.341, and 303.519. However, in large part, these provisions do not add new paperwork burden, as described in the following paragraphs:

First, we have included § 303.100 in the list of new information collection requirements to clarify, within the general application requirements in subpart B of this part, that the information contained in a State's application must include “copies of all applicable State statutes, regulations, and other State documents that show the basis of that information.” This proposed change, which conforms to the final Part B regulations (34 CFR 300.110(b)(2)), does not add a new burden, but merely clarifies and gives added emphasis to existing State application requirements in the Part C regulations. (The Department and the States have appropriately interpreted the existing definition of “policies” in § 303.20 to ensure that if a State policy is found in a State statute or regulation, the Part C application must include that document.)

Second, although we have included § 303.341 in the list of new information requirements, States have traditionally been required to submit policies and procedures on natural environments. New section 303.341 includes, in modified form, the requirements for policies and procedures on natural environments that are currently included in 303.167(c) of the existing regulations. Current § 303.167(c) would be amended by this NPRM, by removing the substance on natural environments to new § 303.341(a), and further revising the language in § 303.167(c) to clarify that each application must include “Policies and procedures on natural environments that meet the requirements of §§ 303.341 and 303.344.”

Finally, new § 303.519 has been included under category 1, even though many of the information collection requirements in that section were moved from current § 303.520, as part of an effort to improve the readability and clarity of those provisions. (See description of the proposed changes to State financing of early intervention services, included earlier in this preamble).

The second category includes sections that are currently approved by OMB, but are being revised by this NPRM. This category includes §§ 303.124, 303.128, 303.148, 303.165, 303.167, 303.169, 303.173, 303.174, 303.321, 303.340, 303.344, 303.361, and 300.523.

The third category contains sections currently approved by OMB that either are not affected by the NPRM or do not contain any new information collection requirements. This category includes §§ 303.122, 303.123, 303.125, 303.126, 303.127, 303.141, 303.142, 303.143, 303.144, 303.145, 303.146, 303.160, 303.161, 303.162, 303.165, 303.166, 303.168, 303.170, 303.171, 303.172, 303.174, 303.175, 303.176, 303.180, 303.301, 303.302, 303.322, 303.323, 303.342, 303.343, 303.345, 303.346, 303.360, 303.420, 303.421, 303.422, 303.423, 303.424, 303.425, 303.460, 303.500, 303.501, 303.522, 303.524, 303.525, 303.526, 303.527, 303.528, 303.540, 303.600, 303.601, 303.602, 303.603, 303.604, 303.650, 303.651, 303.652, 303.653, and 303.654.

The new or revised sections with paperwork requirements that are described under categories 1 and 2 in the preceding paragraphs contain information collection provisions that affect a State's application for a grant under this part, including the sections with specific application requirements in subpart B of this NPRM, and the substantive sections to which they refer in subparts D and F. A description of this information collection is included in the following paragraphs.

Collection of Information: Early Intervention Program for Infants and Toddlers With Disabilities

State Application for a Grant, §§ 303.100, 303.124, 303.128, 303.148, 303.165, 303.167, 303.169, 303.173, 303.174, 303.321, 303.340, 303.341, 303.344, 303.361, 303.519, 303.523. In order to receive funds under this part for any fiscal year, a State must have on file with the Secretary a statement of assurances and an approved application that meets specified requirements under subpart B of these regulations. All States have approved applications on file with the Secretary that meet the requirements under the current regulations.

In all of the sections listed in the preceding paragraph, States are not required to submit any information that is currently on file with the Secretary, but are only required to submit new information that would be added by this NPRM. Consistent with changes made by the IDEA Amendments of 1997 (Pub. L. 105-17), the new or revised State policies and procedures required by this NPRM must be submitted only one time to the Secretary, and remain in effect unless amended. Therefore, States will have a one-time paperwork burden in complying with these proposed changes, and not an annual burden.

The one-time burden for meeting the application requirements described in the preceding paragraphs is estimated to average 8 hours for 56 respondents, including reviewing instructions, searching existing data sources, gathering and maintaining the data needed and completing and reviewing the collection of information. Thus, the total burden for this one-time collection is estimated to be 448 hours.

Organizations and individuals desiring to submit comments on the information collection requirements should direct them to the Office of Information and Regulatory Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 20503; Attention: Desk Officer for U.S. Department of Education.

The Department considers comments by the public on these proposed collections of information in—

• Evaluating whether the proposed collections of information are necessary for the proper performance of the functions of the Department, including whether the information will have practical utility;
• Evaluating the accuracy of the Department's estimate of the burden of the proposed collections of information, including the validity of the methodology and assumptions used;
• Enhancing the quality, usefulness, and clarity of the information to be collected; and
• Minimizing the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses.

OMB is required to make a decision concerning the collections of information contained in these proposed regulations between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment to the Department on the proposed regulations.

Intergovernmental Review

This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides early notification of our specific plans and actions for this program.

Assessment of Educational Impact

The Secretary particularly requests comments on whether these proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.

Federalism

Executive Order 13132 requires us to ensure meaningful and timely input by State and local elected officials in the development of regulatory policies that have federalism implications. “Federalism implications” means substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Among other requirements, the Executive order requires us to consult with State and local elected officials respecting any regulations that have federalism implications and either preempt State law or impose substantial direct compliance costs on State and local governments, and are not required by statute, unless the Federal government provides the funds for those costs.

Although we do not believe that these proposed regulations have federalism implications as defined in Executive Order 13132, we encourage State and local elected officials to review them and to comment specifically on whether they may impose substantial direct compliance costs on State and local governments without reimbursement of those costs by the Federal government. Also, though we do not intend to preempt State law, we are asking for comments as to whether these proposed regulations would result in any unintended preemption of State law.

Electronic Access to this Document

You may view this document, as well as all other Department of Education documents published in the Federal Register, in text or Adobe Portable Document Format (PDF) on the Internet at either of the following sites:

http://ocfo.ed.gov/fedreg.htm

http://www.ed.gov/news.html

To use the PDF you must have Adobe Acrobat Reader, which is available free at either of the previous sites. If you have questions about using the PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-800-293-6498; or in the Washington, D.C. area, at (202) 512-1530.

Note:

The official version of a document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available on GPO Access at: http://www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance Number: 84-181 Early Intervention Program for Infants and Toddlers with Disabilities)

List of Subjects in 34 CFR Part 303

• Education of individuals with disabilities
• Grant programs—education
• Infants and toddlers
• Reporting and recordkeeping requirements

For the reasons discussed in the preamble, the Secretary proposes to amend title 34 of the Code of Federal Regulations by revising part 303 to read as follows:

PART 303—EARLY INTERVENTION PROGRAM FOR INFANTS AND TODDLERS WITH DISABILITIES

Authority: 20 U.S.C. 1431-1445, unless otherwise noted.

Subpart A—General

Purpose, Eligibility, and Other General Provisions

Subpart B—State Application for a Grant

General Requirements

Subpart C—Procedures for Making Grants to States

Subpart D—Program and Service Components of a Statewide System of Early Intervention Services

General

Subpart E—Procedural Safeguards

General

Subpart F—State Administration

General

Subpart G—State Interagency Coordinating Council

General