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services regarding the possibility of making substantial modifications to the monitoring and sanctions system. The purpose of this memorandum is to let you know that the negotiations between the parties have been terminated and that no results have been achieved. This action has been taken by the Department of Human Resources with the concurrence of this Association and the Social Services Directors' Association. Let me assure you that this action was not taken lightly nor was it taken in haste. Many hours of diligent work have gone into development of proposed alternatives by the staff of the Department of Human Resources, the Office of the Attorney General, by your staff~ the Social Services Directors'and b~'~egal Services as well. However, it has become apparent that what Legal Serv!des is demanding in exchange for relief could be just as costly in terms of money and even more costly in terms of principle as the current monitoring and sanction plan. Bg~korocnd While there are numerous areas of difference between the state and Legal Services, the primary difference which appears unrasolvable is the treatment of Medicaid disability applications. Most of these cases must be forwarded by the county to the state disability determination section of DHR in Raleigh to determine whether the applicant ia in fact disabled. This can be a time- consuming process, because it requires documentation by attending physicians, or consultative physical examinations by the state in cases where there may be no attending physician. These cases are typically very complex because most applicants have b~en employed and have assets and other resources which must be verified. Some of the individuals are also seeking determination of eligibility for Supplemental Security Income in addition to Medicaid, which means they are seeking a dual determination of eligibility. L~ga! Services' Position Legal Services agreed to allow the state and counties to increase the case processiDg time from the current 60 days to 90 days (an increase which is already allowable under federal regulations) and to allow the counties ~o be deemed in compliance for monitoring purposes if 80% of the cases taken in the county.were processed within the 90 day time standard. The B0% threshold would be allowed for one year only; in ~992 the compliance threshold would be 90%. In exchange we would have to eliminate 'good cause", a provision in federal regulations which allows a case to pend longer than usual if the applicant or another third party (such as a physician) fails to provide information necessary to make a determination of