Child Care Bureau: CCDF: Measuring Improper Payments in the Child Care Program

Second Error Rate Pilot Report

330 QUALIFYING CHILD
ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1)
Determine if child (ren) is eligible for services, including

ANALYSIS OF CASE RECORD (2)

Is the child
(1) younger than 13 years (Proof of Age Included – see FPSR-PI-PPA-04-08) or
(2) younger than 19 years and physically or mentally incapable of caring for himself or herself, or under court supervision (proof of age on file – see FPSR-PI-PPA-04-08; verification of physical or mental incapacity or court supervision is on file)

FINDINGS (3)

Results (4)

No Error
___ 0

Client Error
___ 1

Agency Error
____ 2

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Appendix A. Florida

A. Organizational Structure

In January 2005, legislation established the Office of Early Learning (OEL) within the Agency for Workforce Innovation (AWI). OEL administers the child care program in Florida’s 67 counties through grant awards with 31 local Early Learning Coalitions (ELC) and one statewide agency serving the unique population of migrant, seasonal, and Farm worker families. The ELCs are quasi-governmental community agencies incorporated as private, not-for-profit organizations. OEL is responsible for monitoring the grant awards. In FFY 2005, OEL through its grant awards provided childcare assistance to over 256,601 children in 170,497 families through 13,879 providers.

B. Overview of the Child Care Eligibility Process

The ELCs determine eligibility priorities based on unique populations within their communities. To be eligible for assistance, a family must have an income of less than 150 percent of the Federal Poverty Level (FPL), be a resident of the State, have children under the age of 13 (or age 19 for special care needs), and be employed, or in an approved education or training activity. Children may remain eligible provided income does not exceed 200 percent of FPL. Once eligible, parents may choose a certificate or a purchase of service subcontract. Families may use their home, licensed centers or family child care homes.

The child care payment is based on the hours of need determined by the eligibility process and attendance policy. Each family is assigned a co-payment determined by income, family size, and a sliding fee schedule that must be approved by OEL. Co-payments may be waived for protective services clients on a case by case basis. Benefits are determined prior to services being rendered. Reauthorization of eligibility is re-determined on an annual basis. However, as one payment accuracy strategy, Florida requires the ELCs to reauthorize a random selection of an additional 50 percent of their caseloads after six months. Reauthorizations include a re-verification of income, need for care, and all other eligibility requirements. All clients are responsible for reporting changes in their income within 10 days of the change.

C. Improper Payment Process

Florida currently defines an improper payment as the misapplication of funds resulting from error or intentional acts, or fraud. Categories of fraud applicable to the child care program include: 1) misrepresentation of material facts; 2) concealment of material facts; 3) conflicts of interest; 4) theft of money or property; and 5) statutory offenses. Recipients of improperly authorized payments may include program clients (families), program contractors (child care providers/vendors), and program employees.

Florida identifies improper payments through a variety of methods, including:

ELCs and their contractors are responsible for prevention, reduction, identification, reporting, and recuperation of improper overpayments. When suspected fraud has occurred, a Suspected Fraud Referral is completed and forwarded to the AWI Inspector General, OEL and the Florida Department of Law Enforcement. OEL tracks the disposition of fraud cases, restitution orders, and receipt of restitution payments.

OEL fulfills its local coalition monitoring responsibilities through several mechanisms. Each ELC must submit a plan for service delivery for approval by OEL. Subject to biannual review and revision, ELC plans must provide objectives, activities, and measurements for each statutory requirement in the Florida School Readiness Act, and the Voluntary Pre-kindergarten Education Program and applicable Federal requirements. There is also a plan amendment process for submitting and approving plan changes. Effective 2007-08, each ELC will complete an internal control questionnaire, reviewed annually with expanded on-site review procedures on a rotational basis.

OEL assigns a coalition analyst to monitor ELC grant award agreements and plan adherence, provide technical assistance, regularly attend Board meetings, and conduct site visits. In conjunction with the coalition analysts, OEL fiscal analysts process reimbursement requests on a monthly basis and conduct post audits of these requests on a sample basis. Starting in March 2007, OEL Services and Support staff will conduct eligibility reviews of client files in all 31 ELCs annually to examine the eligibility documentation, procedures used and the accuracy of child care service payments.

OEL’s Office of Program Effectiveness and Analysis will conduct a six month performance review for each ELC every three years that addresses the following areas:

Governance and Operations;
Grant Award and Contract Management;
Community Partnerships;
Educational Service Delivery;
Health & Developmental Screening; and
Child Care Resource & Referral.

AWI OEL has contracted with qualified CPA firms licensed to practice in the State of Florida to conduct annual financial compliance monitoring reviews for the ELCs and selected sub-recipients. AWI OEL has developed financial monitoring tools for the ELCs that include, but are not limited to, the following compliance categories (as applicable):

Financial;
Property;
Procurement;
Matching Requirements;
Prior Approval;
General Conditions; and
Merger Activity.

AWI has developed separate monitoring tools for the selected sub recipients (statewide contracts, universities, etc.). The CPA contractors will conduct an onsite visit to perform the specified financial monitoring procedures and will prepare a monitoring report for each ELC to identify the procedures performed and any findings noted. Financial Management Systems Assurance Section staff will review and approve these reports before release to the monitored entities.

Families applying for financial assistance are required to sign a Rights and Responsibilities form that notifies them of their responsibility for reporting changes in income or employment. When a family fails to report a change and the result is an overpayment, the eligibility worker prepares a Suspected Fraud Referral and forwards it to AWI’s Office of the Inspector General and the Florida Department of Law Enforcement.

ELCs conduct the following activities to monitor payment accuracy:

Complete post attendance monitoring monthly;
Audit sign-in and sign-out sheets and the companion attendance sheet;
Randomly select provider payments and compare them to attendance sheets and payment reports;
Match the names of divorced or separated parents with the Child Support database;
Conduct peer review of every completed eligibility file;
Conduct supervisory review of 10 percent of the completed cases; and
Conduct monthly review of payment overrides.

D. Case Review Process

In Florida, the Review Team consisted of two Managers, two Performance Analysts, and three Program Analysts. Florida made substantial modifications to the Record Review Worksheet template. The review process occurred centrally, with all records sent to Tallahassee. A second member of the team re-reviewed all records for inter-rater reliability.

Following completion of the review, Florida learned from a finding in a IV E Federal audit that only the State’s auditor general or DCF’s Family Safety Unit could access case information related to a protective services placement. The payment accuracy review had found six cases in error due to missing protective services documentation. Florida submitted amended review sheets on these six cases that changed the finding from ineligible to correct.

E. Automation

There are various automated systems used by OEL. The Child Care Enhanced Field System (EFS) generates payments, based on days attended and approved rate schedule. This system also has an eligibility determination module. The allowance of off-line eligibility calculations compromises the systems payment accuracy edits.

The EFS processes payments, manages waiting lists, and collects data for Federal reports and the market rate survey. Local child care staff have access to other State automated systems, particularly the TANF/Food Stamp system: One Stop Service Tracking (OSST) varies by local coalition. In many cases, it depends on co-location of services such as in a “One Stop” location.

The EFS system generates a selection of management reports to identify improper payments, including special reports available by request. The EFS system has an ad hoc report writing capability at the local level. The ELC network shares local report formats through a centralized e-mail Q & A system. Examples of existing exception batch reports include:

The CCMS Care Level Report identifies children whose age does not match the care level.
The Duplicate Parent, Child and Provider Report identifies:

Individuals with the same name but different numeric IDs;
Children enrolled, but not paid; and
Clients who have providers in another county.

The EFS has numerous edits and functions that prevent improper payments, including:

Setting and changing of care level based on child’s age;
Change from pre-school to school care level based on age;
Assignment of funding sources;
System Edits preventing changes to closed payment periods to preserve the integrity of the audit trail;
Automated Fee Assessment based on Coalition rules;
Edits to ensure rates do not exceed Coalition-defined maximums; and
Interface to local accounting systems to reduce data entry errors.

An area of concern for the EFS and the quality of its data is its decentralized structure. Each of the 31 local coalitions has an independent section and differing processes. The result is data that is inconsistent, incompatible, and centrally unavailable. The proposed enhanced system Early Learning Information System (ELIS) will address the weaknesses of this decentralized system.

F. Next Steps

After reviewing the improper payment data Florida implemented the following strategies to improve payment accuracy:

Developed a desk reference tool for eligibility procedures;
Initiated focused monitoring and training on eligibility procedures on an annual basis;
Provided each ELC with its individual results of the pilot review process along with recommendations for corrective action;
Created mechanisms to track the results of the eligibility monitoring and other contract monitoring audits;
Implemented an annual eligibility review process of all 31 ELCs;
Implemented a Data Quality Initiative to standardize data collection and to identify data anomalies throughout the State; and
Implemented procedures to conduct post audits on reimbursement requests.

Florida Site Visit Participants

Gladys Wilson – Deputy Director, OEL
Sooni Raymaker – Interim Executive Administrator of Operations, OEL
Anne Cahn – Program Services Manager, OEL
Tim Elwell - Program Effectiveness & Analysis Manager, OEL
Cheryl Blanton - Performance Analyst, OEL
Betty Wallace - Performance Analyst, OEL
Courtnie Wheeless – Performance Analyst, OEL
Ed Hachenberger - Performance Analyst, OEL
John Hughes – Research and Analysis Supervisor, OEL
Maxine McConnell – Fiscal Support Unit Manager, OEL
Anne Mulbach – Government Analyst, OEL
Stephanie Gehres – Senior Management Analyst, OEL
Tom Imholt – Coalition Services & Support Manager, OEL
Marlin Seay – Fiscal/Grant Analyst Lead, OEL
Stephanie Savestanan – Program Analyst Lead, OEL
Doreen Moskowitz - Program Analyst, OEL
Sam Sweazy - Program Analyst, OEL
Greg Allerellie - Program Analyst, OEL
Barbara Griffin – Assistant Director, AWI
Phillip Wilcox – Investigations Manager, Office of the Inspector General
Diane Parcel – UC Program Manager, Office of Benefit Payment Control
Bob Pope – Director, Saber Corp
Abdel Gonzalez – Senior Manager, Saber Corp

Exhibit A-1. Florida Record Review Worksheet

Child Study ID# _________ ELC: _________

Child Name/ID# _________ County: _________

Reviewer ___________ Date Reviewed: ______ / ___ / _____

SECTION I. STATE CHILD CARE PROGRAM FORMS

100 APPLICATION FORMS ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) Determine presence, date, and completeness of required eligibility forms, may include:	ANALYSIS OF CASE RECORD (2)
	Yes	No		Comments
(1) Signed and dated application
(2) Parental choice form is signed, dated and current
(3) Rights and responsibilities form is signed, dated and current
(4) If applicable, notice of re-determination/termination form is complete and current
(5) Referral Form (if applicable)
Is form complete and current? (including applicable authorized service period)
Referring entity and worker are authorized to submit referrals
Reason for referral is valid (purpose for care) and documented (Acceptable Documentation is listed below) For at-risk/protective service/foster care/relative placement cases: INFORMATION IS CONFIDENTIAL REFERRAL IS SUFFICIENT or; For Relative Caregiver (RCG) cases: Florida system “IQCH” screen documents that relative is in receipt of the RCG payment. Ensure that payment is RCG (usually in the amount of $242 per child) and not regular cash assistance payment amount or; For cash assistance families that are subject to work participation requirements: FLORIDA system “IQAA” screen shows cash assistance case is open and “IQEL” screen show individuals are eligible and documentation of activity is present or; For transitional child care (TCC) cases: FLORIDA system “IQCH” screen shows recent closure of cash assistance and case was closed due to earned income, or other qualifying factor or; All paperwork is valid and present for “diversion” cases. Diversion forms are signed and appropriately signed by designated workforce individual.
(6) If any of the above conditions lead to ineligibility please specify conditions of the dollar error, including
(1) form expired
(2) No application form
(3) Referral not valid
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2

SECTION II. PRIORITY GROUP PLACEMENT

200 PRIORITY GROUP PLACEMENT ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) Determine if client meets criteria of State-designated priority groups, e.g., (Florida has determined that placement based on priority group does not result in an improper payment.) NOT APPLICABLE	ANALYSIS OF CASE RECORD (2)
	Yes	No		Comments
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2

SECTION III. General Program Requirements

300 QUALIFYING HEAD OF HOUSEHOLD ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) Determine if client meets parent definition (parent means a parent by blood, marriage or adoption and also means a legal guardian, or other person standing in loco parentis), e.g., (Note: Identification has been classified as a best practice or good internal control)	ANALYSIS OF CASE RECORD (2)
	Yes	No		Comments
Does the client meet the definition of parent as defined by Section 98.20, CFR?
(1) parent (identification provided)
(2) step-parent (identification provided)
(3) legal guardian (identification provided)
(4) relative caretaker (identification provided)
(5) spouse of same (identification provided)
(6) Other person standing in loco parentis (identification provided) (Note: Defined in Rule 60BB-4.100 as temporary guardian of child)
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2


310 RESIDENCY ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) Determine if client is a resident of the State and if client is a resident of the county.	ANALYSIS OF CASE RECORD (2)
	Yes	No		Comments
(1) Is the Client is a resident of the State? (a client statement indicating residency and intent to stay is sufficient for non TANF clients) (Section 414.095(2)(a)2, FS requirement for TCA clients – clients are not eligible for TCC unless previously served under TCA)
(2) Is child a US citizen or a qualified eligible alien? (Section 414.095(2)(a)1, FS requirement for TCA clients – clients are not eligible for TCC unless previously served under TCA)
(3) Child care authorized by county in which the parent resides? (School readiness funding and services are provided based on the county where the parent resides)
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2


320 HOUSEHOLD MEMBERS ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) To receive services a child's parent or parents must be working or attending a job training or educational program.	ANALYSIS OF CASE RECORD (2)
	Yes	No		Comments [Comments should include billing group and eligibility code reimbursement was made under]
(1)Does the client meet one of the following criteria?
Employment (working a minimum of 20 hours per week. Purpose of Care established)
Attending a job training or educational program. (Minimum of 20 hours per week. Purpose of Care established)
Seeking employment (documentation supported and time limited)
Child only under the age of 16 (TANF) “family of one” – adult must meet purpose for care
Disability: An individual who receives benefits under the SSI or the SSDI program.
Protective Services Case (supporting documentation is present)
TANF Respite Child Care
Child within Natural Disaster Area, and is in need of protection to ensure child’s safety
Other: State GR Funded Only _____________________________
(2)Is the child classified in the correct billing group and eligibility code? (See chart for applicable billing group and eligibility codes. Note: this will not result in an improper payment unless the billing group should have been one that is funding by State GR Only)
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2


350 QUALIFYING PROVIDER ARRANGEMENT ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) Determine if services are provided within a legally operating provider type. (Provider of child care services must be licensed, license exempt, or registered under applicable State of local law)	ANALYSIS OF CASE RECORD (2)
	Yes	No
Is the Provider a legally operating provider type? (Types allowable under Section 98, CFR listed below, Karate Schools and Ballet Schools would be examples of unallowable providers)
(1) Center-based child care provider
(2) family child care provider
(3) in-home child care provider
(4) informal provider
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1	Agency Error ____ 2


360 PROVIDER REQUIREMENTS ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1)	ANALYSIS OF CASE RECORD (2)
	Yes	No		Comments
(1)Determine if regulatory requirements are met. Regulatory requirements means requirements necessary for a provider to legally provide child care services in a State or locality, including registration requirements established under State, local, or tribal law. (Each Coalition should document in file that the provider meets the regulatory requirements; an example would be DCF Form 6920)
(2)Verify if the provider license is current? (Review CCIS for applicable dates)
(3)Determine if the provider is a gold seal provider? (Review CCIS)
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2

SECTION IV. INCOME AND PAYMENTS

100 APPLICATION FORMS	ANALYSIS OF CASE RECORD (2)
100 APPLICATION FORMS	Yes	No		Comments
400 INCOME ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) Describe income documentation verification for each member of the household. Calculation of income is to be based on six weeks of gross income for period prior to application/redetermination: Collect the following data:
(1) Head of household employment income and/or spouse employment income (Per 60BB-4.208 shall include, at a minimum, documentation by hours of employment and rate of pay based on: Six weekly, three biweekly, or two monthly pay stubs that are current and consecutive, or a signed statement by the employer, or a signed contract for employment.)
(2) Self employment (Per 60BB-4.208 provides that documentation be sufficient to determine hours worked and income, such as business account ledgers, written documentation from customers, contractors, or federal tax returns)
(3) any changes in income reported (clients are required to report changes in income)
(4) income during job training for parent/caregiver
(5) child support received/alimony received
(6) loss of income during eligibility period.
(7) Cash assistance benefits (TANF)
(8) Other countable income documented (SSI, TANF, Spousal Support, gifts, etc.) Income is defined as “family income,” and means the combined gross income, from all sources, of all members of the family unit who are eighteen (18) years of age or older, including earned and unearned income, and excluding the following: Food stamp benefits; Documented child support payments paid to an individual outside of the home; Documented alimony payments being paid to an individual outside the home; and Housing assistance payments from HUD issued directly to a landlord and associated utilities expenses. As foster parents, shelter parents, and court ordered relative and non-relative caregivers are not considered a part of the child’s family unit, their income is not considered for purposes of eligibility. Any exceptions or variations should be documented and explained in the case notes section.
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2


420 PAYMENTS, GENERAL ELEMENTS OF ELIGIBILITY & PAYMENT DETERMINATION (1) Determine if payments were made. Parent fees are established on a sliding fee scale based on income and the size of the family and may be based on other factors as appropriate.	ANALYSIS OF CASE RECORD (2)
	Yes	No		Comments
(1) Calculate amount of parent fee based on household income, family size and the ELC’s sliding fee scale. Does this agree with amount included in reimbursement records? (Each coalition’s sliding fee scale provided)
(2) Determine provider payment rate based on provider type, age of child, care schedule and the ELC’s approved provider rate schedule. Is the provider rate less than or equal to the approved reimbursement rate and the private pay rate? (Each Coalition’s Reimbursement Rates provided, review file for private pay rate; the private pay rate may need to be requested from the Coalition or CCRR)
(3) Does the Final Provider Reimbursement Report agree with the Provider’s Attendance Sheet? (Note: if there are any holidays confirm with coalition's approved schedule)
(4) Is the Providers Attendance Sheet signed?
FINDINGS (3)
Results (4)	No Error ___ 0		Client Error ___ 1		Agency Error ____ 2


Data Summary
State	Florida
County
Child ID
Study Period Month
One or more eligibility errors during pilot period 0= no errors, 1= one or more errors
Total amount of improper payment during review month
Total Payment Amount during review month (shown in Client Payment Information screen)

Appendix B. Kansas >>

June, 2007