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Phase II Findings: Error Rate Methodology Pilot

Executive Summary, I. Introduction, II. Methodology, III. Measuring Improper Payments in Nine States, IV. Findings and Next Steps, V. Recommendations, Appendices: Appendix A: Arkansas, Appendix B: Colorado, Appendix C: Illinois, Appendix D: Ohio, Appendix E: Record Review Worksheet, Appendix F: Data Entry Form, Appendix G: Telephone Discussion Guide, Appendix H: Arizona, Appendix I: California, Appendix J: Kansas, Appendix K: Nebraska, Appendix L: New Hampshire

Section III: Measuring Improper Payments in Nine States

The study team visited four pilot States—Arkansas, Colorado, Illinois, and Ohio. The study team also conducted telephone discussions with five additional States—Arizona, California, Kansas, Nebraska, and New Hampshire—to gather information about the States’ policies and practices regarding child care improper payments. This chapter presents a summary of the findings from the site visits and telephone discussions. A more detailed discussion of each State is presented in the appendices.

Exhibit 3, at the end of this chapter, provides a summary table of the structure of the States selected for this study as well as their improper payments process and current level of automation for the child care program.

IMPROPER PAYMENTS PROCESS

States identify improper payments in four primary ways:

  • Providers or the public notify the child care agency of suspected fraud;

  • Exception reports, produced on a regular basis from the State’s automated child care tracking system, identify areas of potential improper payments;

  • Regular audits or reviews identify improper payments; and

  • Ad hoc studies or reviews identify improper payments.

    An investigation typically begins after the State identifies potential problems. However, the dollar threshold that determines whether the States will investigate varies greatly among the States. For example, in Arizona, overpayments of $2,000 or less go to the Office of Accounts Receivables and Collections. Overpayments exceeding $2,000 go to the Office of Special Investigations to determine if prosecution is warranted. If warranted, the case goes to the Attorney General for prosecution; if not, the case returns to the Office of Accounts Receivables and Collections for collection. In Arkansas, the same system applies; however, the dollar threshold is $500.

    Most States follow similar processes to identify and recover funds for overpayments. The process proceeds in one of the following ways, listed in order from least to most intensive action:

  • The State sends the person responsible for the overpayment a demand or similar notice informing them of the overpayment;

  • The State establishes a repayment schedule, if possible;

  • The State initiates judgments, liens, and garnishments if the participant does not voluntarily repay; and

  • The State will also initiate tax or lottery intercepts. This is a process where the State will intercept any tax refund or lottery winnings that would normally be paid to an individual and apply those monies to the overpayment amount.

    • << Conducting Record Reviews | Table of Contents | Measuring Improper Payments in Nine States (continued) >>