What is meant by “generally accepted payment practices”?

Under the law, each State must have in place generally accepted payment practices that reflect payment practices of non-CCDF providers.  The law indicates that the goal of this provision is to provide stability of funding and encourage more child care providers to participate in the subsidy program.   Too often, subsidy payments are unpredictable and based on the attendance of individual children, meaning that providers can’t rely on stable program income.   When providers don’t have stable income, they can’t commit to hiring highly trained teachers, may send teachers home midday, or may not be able to invest in educational materials and curriculum.  All of these practices are contrary to the CCDF purposes of delivering high-quality, coordinated early childhood care and education services to maximize parents’ options and increasing the number and percentage of low-income children in high-quality child care settings.

 “Generally accepted payment practices” are practices that align with the private-paying child care market in order to encourage providers to accept children receiving CCDF child care assistance and enable  families to retain child care services.  Pending further guidance, States should identify the practices common in their State for private-pay families and then determine which are most important to meet the goals of ensuring that high quality providers will participate in the subsidy program, and States will be required to certify and describe these practices in the CCDF Plan.  Private practices commonly include: paying prospectively based on enrollment and paying for all days in which the provider is open in a given month.    A number of States have developed streamlined, provider-friendly payment policies and administrative processes, such as paying providers when a child is absent due to an illness or other reasons.

Other payment practices include:

• Giving prompt notice to child care providers of changes to a family’s eligibility status that may impact payment;
• Allowing providers to receive payment for registration fees and other fees charged to private-paying families;
• Paying providers prospectively rather than only on a reimbursement basis (which may be tied to required enrollment levels or other reporting on a regular basis);
• Establishing a dedicated phone line, web portal or other access point for providers to easily reach the subsidy agency for questions and assistance regarding payments;
• Ensuring timely appeal and resolution processes for payment disputes;
• Utilizing automated billing and payment mechanisms including direct deposit; and
• Providing materials on payment practices in multiple languages to promote participation of diverse child care providers.  

(Reference: Section 658E(c)(2)(S)(i))