10.2 Fraud Investigation, Payment Recovery, and Sanctions

Lead Agencies must have the necessary controls to identify fraud and other program violations to ensure program integrity. Program violations can include both intentional and unintentional client and/or provider violations, as defined by the Lead Agency. These violations and errors, identified through the error-rate review process and other review processes, may result in payment or nonpayment (administrative) errors and may or may not be the result of fraud, based on the Lead Agency definition. 10.2.1 Strategies used to identify and prevent program violations Check the activities the Lead Agency employs to ensure program integrity, and for each checked activity, identify what type of program violations the activity addresses, describe the activity and the results of these activities based on the most recent analysis. a. [x] Share/match data from other programs (e.g., TANF program, Child and Adult Care Food Program, Food and Nutrition Service (FNS), Medicaid) or other databases (e.g., State Directory of New Hires, Social Security Administration, Public Assistance Reporting Information System (PARIS)). i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: An intentional program violation (IPV) is a misrepresentation of fact by a parent or responsible adult or a provider to gain or have the effect of gaining payments or services or levels of services that would not be available if true facts were presented. The Lead Agency uses a combination of ad hoc reports to flag intentional program violations. Provider audits are also conducted when violations are reported, by random selection, and based on ad hoc report reviews. The Lead Agency utilizes the Program Integrity Unit to monitor intentional program violations by monthly assessing violations and by compiling data from contract agencies in order to recommend solutions to prevent future violations. Intentional program violations may result in repayments/recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. The identification of IPVs informs the Lead Agency of areas for policy changes, procedural improvements, and training needs. Ultimately, these activities will result in a reduction of similar violations, enforce policy, and ensure program integrity. The improper payment report for FY 23 included 3 intentional program violations accounting for .3% of all improper payments identified. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: An unintentional program violation is an unintended act or failure to report information by a parent, responsible adult or provider, which causes an improper payment or an unauthorized service at the initial certification or redetermination. The Lead Agency uses case reviews to reveal unintentional program violations. Caseworkers analyze the legitimacy of documents during initial certification and redeterminations. The Lead Agency utilizes the Program Integrity Unit to monitor unintentional program violations by monthly assessing violations and by compiling data from contract agencies in order to recommend solutions to prevent future violations. Unintentional program violations may result in repayments/recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. The results will also inform better practices by identifying areas for policy changes, procedural improvements, and training needs. Ultimately, revealing how to reduce similar violations moving forward and enforce policy. Unintentional program violations identified in FY23 were 993. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice:: Agency errors or administrative errors are the result of inaccuracies or oversights regarding improper authorization or payment for services. The Lead Agency and Child Care Management Agencies use case reviews and ad hoc reports to identify agency errors. Employees will also notify their immediate supervisor when they make an agency or administrative error. Supervisors are also responsible for reviewing a random selection of their team’s work. The Lead Agency utilizes the Program Integrity Unit to monitor unintentional program violations by monthly assessing agency errors and by compiling data from contract agencies in order to recommend solutions to prevent future errors. Knowledge of agency error will result in completion of a child care claim form for an administrative error. Then, a provider overpayment or underpayment will be adjusted to correct the agency error. Agency errors may also result in administrative hearings. This informs better practice by identifying needed training areas and providing verification caseworkers and financial support workers understand policy and do not exceed an error rate greater than 10%. b. [x] Run system reports that flag errors (include types). i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency uses a combination of ad hoc reports to flag intentional program violations. Provider audits are also conducted when violations are reported, by random selection, and based on ad hoc report reviews. Key ad hoc reports include attendance reports and chronic absenteeism reports. Attendance reports identifies parents who are not within the vicinity of the daycare when they check their children in and out. The chronic absenteeism reports identifies children who have exceeded 10 calendar days of unexcused nonattendance (not checking in) and prevent provider overpayment for children who may no longer need care. Intentional program violations may result in repayments, recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. The results will also inform better practices by identifying areas for policy changes, procedural improvements, and training needs. Ultimately, these activities will result in a reduction of similar violations, enforce policy, and ensure program integrity. The run system reports flag providers who may be in violation of subsidy policy and assists the Lead Agency in recovering funds for chronic absenteeism. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency uses case reviews and information obtained from clients and providers to flag unintentional program violations. Caseworkers analyzes the legitimacy of documents during initial certification and redeterminations. Unintentional program violations may result in repayments/recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. The results will also inform better practices by identifying areas for policy changes, procedural improvements, and training needs. Ultimately, these activities will result in a reduction of similar violations, enforce policy, and ensure program integrity. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency and Child Care Management Agencies uses case reviews and ad hoc reports to identify agency errors. Employees will also notify their immediate supervisor when they make an agency or administrative error. Supervisors are also responsible for reviewing a random selection of their team’s work. Knowledge of agency error will result in completion of a child care claim form for an administrative error. Then, a provider overpayment or underpayment will be adjusted to correct the agency error. Agency errors may also result in administrative hearings. This will inform better practice by identifying needed training areas and verification caseworkers and financial support workers understand policy and do not exceed an improper payment error rate greater than 10%. c. [x] Review enrollment documents and attendance or billing records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency utilizes its database system to review enrollment documents and attendance. Attendance reports identify parents who are not within the vicinity of the daycare when they check their children in and out. Sign in and out sheets can also be reviewed during investigations or provider audits. Prior to enrollment, caseworkers must analyze the legitimacy of documents. Intentional program violations may result in the unenrollment of children, repayments, recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency utilizes its database system to review enrollment documents and attendance. Attendance and chronic unexplained absenteeism reports are reviewed by financial support workers who creates an unenrollment list for children whose parents are in violation of the subsidy attendance policy. Unintentional program violations may result in the unenrollment of children, repayments, recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency conducts case reviews and review reports to prevent and identify agency errors that affect enrollment and attendance. The Lead Agency provides technical assistance and training as a mechanism to address areas of weakness and to prevent future agency errors. The result of the previous activities from previous fiscal years has helped in the lead agency's decision to purchase a new database management system to better account for agency errors prior to the yearly improper payment review. d. [x] Conduct supervisory staff reviews or quality assurance reviews. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency requires contract agencies to conduct case reviews on a monthly basis. The result of the eligibility case reviews is to demonstrate that caseworkers follow the policy as stated in the policy and procedures manual and to identify misapplication of the policy. Should results differ, the reviewer makes case recommendations to correct areas identified in error. The Lead Agency also reviews a random selection of cases from each contracting agency similarly. The results of these activities will ensure policy adherence and effectiveness. It will also inform the Lead Agency of the areas of training needed for each contract agency. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency requires contract agencies to conduct case reviews on a monthly basis. The result of the eligibility case reviews is to demonstrate that caseworkers follow the policy as stated in the policy and procedures manual and to identify misapplication of the policy. Should results differ, the reviewer makes case recommendations to correct areas identified in error. The Lead Agency also reviews a random selection of cases from each contracting agency similarly. The results of these activities will ensure policy adherence and effectiveness. It will also inform the Lead Agency of the areas of training needed for each contract agency. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency requires contract agencies to conduct case reviews on a monthly basis. The result of the eligibility case reviews is to demonstrate that caseworkers follow the policy as stated in the policy and procedures manual and to identify misapplication of the policy. Should results differ, the reviewer makes case recommendations to correct areas identified in error. The Lead Agency also reviews a random selection of cases from each contracting agency similarly. The results of these activities will ensure policy adherence and effectiveness. It will also inform the Lead Agency of the areas of training needed for each contract agency. e. [x] Audit provider records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Provider audits are conducted when violations are reported, by random selection, and based on ad hoc report reviews. The audits include review of attendance records, payments, and provider eligibility to participate in the child care subsidy program. An intentional program violation may result in the unenrollment of children, recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. The results from these activities will inform and determine needed modifications to program procedures and actions needed to reduce similar violations in the future. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Provider audits are conducted when violations are reported, by random selection, and based on ad hoc report reviews. The audits include review of attendance records, payments, and provider eligibility to participate in the child care subsidy program. An unintentional program violation may result in the unenrollment of children, recoupments, termination of services, noncompliance notices, administrative hearings, or even criminal prosecution. The results of these activities will inform and determine needed modifications to program procedures and actions needed to reduce similar violations in the future. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Provider audits are conducted when violations are reported, by random selection, and based on ad hoc report reviews. The audits include review of attendance records, payments, and provider eligibility to participate in the child care subsidy program. Then, a provider overpayment or underpayment will be adjusted to correct the agency error. The results of these activities will inform and determine needed modifications to program procedures and actions needed to reduce similar errors in the future. f. [x] Train staff on policy and/or audits. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency conducts policy training for all employees and contract agencies. The Lead Agency reviews the results of audits to determine future training needs. This will result in updates to training material and inform the Lead Agency how to reduce similar errors moving forward and improve the accuracy in the delivery of services. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency conducts policy training for all employees and contract agencies. The Lead Agency reviews the results of audits to determine future training needs. This will result in updates to training material and inform the Lead Agency how to reduce similar errors moving forward and improve the accuracy in the delivery of services. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency conducts policy training for all employees and contract agencies. The Lead Agency reviews the results of audits to determine future training needs. This will result in updates to training material and inform the Lead Agency how to reduce similar errors moving forward and improve the accuracy in the delivery of services. g. [ ] Other. Describe the activity(ies): i. [ ] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: ii. [ ] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: iii. [ ] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: 10.2.2 Identification and recovery of misspent funds Lead Agencies must identify and recover misspent funds that are a result of fraud, and they have the option to recover any misspent funds that are a result of unintentional program violations or agency errors. a. Identify which agency is responsible for pursuing fraud and overpayments (e.g., State Office of the Inspector General, State Attorney): The lead agency is responsible for pursing fraud and overpayments. b. Check and describe all activities, including the results of such activity, that the Lead Agency uses to investigate and recover improper payments due to fraud. Consider in your response potential fraud committed by providers, clients, staff, vendors, and contractors. Include in the description how each activity assists in the investigation and recovery of improper payment due to fraud or intentional program violations. Activities can include, but are not limited to, the following: i. [x] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: Violations identified during the improper payment review where the claim is at a minimum of $35.00, the claim will be documented, and the client or provider notified. Payment arrangements or recoupment plans are included so that the recovery can be initiated. Depending upon the activity being determined as intentional or unintentional program violations will determine the next steps of prosecution, termination from program participation, or documented instances of noncompliance with program requirements. The results of the most recent analysis are reflected in FY22 Improper Payment Review which no improper payment was cited that was a direct result of fraud. ii. [x] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: The Lead Agency's Division of Program Accountability is responsible for the investigations of all public welfare fraud. The Lead Agency makes referrals for investigations involving fraud and once substantiated, the Division on Program Accountability makes further referrals with the local police and district attorney in the county where the providers is located. The district attorney determines if the case should go through the process of prosecution. Regardless of the case results in criminal prosecution, the individual is required to repay any amount determined to be fraud. There were no instances in which the lead agency has made any referrals for further investigation in the previous plan cycle. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Payment arrangements or recoupment plans are completed so that the recovery can be initiated. Parents ae allowed to negotiate repayment terms and amounts up to 36 months. Parents may request longer repayment terms at the discretion of the lead agency. Failure to abide by the repayment agreement may result in termination from program participation. The results of these activities allow for repayment of funds as well as the families ability to continue to receive child care assistance. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Providers with repayment claims can have their balances recouped from future payments thereby reducing subsequent payments until the claim is repaid. Child Care Management Agency staff sets the agreed upon repayment amount in the payment system to debit the same amount for payment for a term up to 3 months for providers. Providers may request longer repayment terms at the discretion of the lead agency. The results of these activities allow for quick repayment of the funds. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [ ] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [ ] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: viii. [ ] Other. Describe the activities and the results of these activities: c. Does the Lead Agency investigate and recover improper payments due to unintentional program violations? [ ] No. [x] Yes. If yes, check and describe below any activities that the Lead Agency will use to investigate and recover improper payments due to unintentional program violations. Include in the description how each activity assists in the investigation and recovery of improper payments due to unintentional program violations. Include a description of the results of such activity. i. [x] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: Violations identified during the improper payment review where the claim is at a minimum of $35.00, the claim will be documented, and the client or provider notified. Payment arrangements or recoupment plans are included so that the recovery can be initiated. Depending upon the activity being determined as intentional or unintentional program violations will determine the next steps of prosecution, termination from program participation, or documented instances of noncompliance with program requirements. ii. [ ] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Payment arrangements or recoupment plans are completed so that the recovery can be initiated. Parents are allowed to negotiate repayment terms and amounts up to 36 months. Parents may request longer repayment terms at the discretion of the lead agency. Failure to abide by the repayment agreement may result in termination from program participation. The results of these activities allow for repayment of funds as well as the families ability to continue to receive childcare assistance. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Providers with repayment claims can have their balances recouped from future payments thereby reducing subsequent payments until the claim is repaid. Child Care Management Agency staff sets the agreed upon repayment amount in the payment system to debit the same amount for payment for a term up to 3 months for providers. Providers may request longer repayment terms at the discretion of the lead agency. The results of these activities allow for quick repayment of the funds. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [ ] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [ ] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: viii. [ ] Other. Describe the activities and the results of these activities: d. Does the Lead Agency investigate and recover improper payments due to agency errors? [ ] No. [x] Yes. If yes, check and describe all activities that the Lead Agency will use to investigate and recover improper payments due to agency errors. Include in the description how each activity assists in the investigation and recovery of improper payments due to administrative errors. Include a description of the results of such activity. i. [x] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: Program violations that result in improper payments are referred to the claims specialist to perform a claim review. If the claim is at least a minimum of $35.00, the claim will be documented, and the client or provider notified. Payment arrangements or recoupment plans are included so that the recovery can be initiated. ii. [ ] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Payment arrangements or recoupment plans are completed so that the recovery can be initiated. Parents are allowed to negotiate repayment terms and amounts up to 36 months. Parents may request longer repayment terms at the discretion of the lead agency. Failure to abide by the repayment agreement may result in termination from program participation. The results of these activities allow for repayment of funds as well as the families ability to continue to receive childcare assistance iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Providers with repayment claims can have their balances recouped from future payments thereby reducing subsequent payments until the claim is repaid. Child Care Management Agency staff sets the agreed upon repayment amount in the payment system to debit the same amount for payment for a term up to 3 months for providers. Providers may request longer repayment terms at the discretion of the lead agency. The results of these activities allow for quick repayment of the funds. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [ ]Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [ ] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: viii. [ ] Other. Describe the activities and the results of these activities: e. What type of sanction will the Lead Agency place on clients and providers to help reduce improper payments due to intentional program violations or fraud? Check and describe all that apply: i. [x] Disqualify the client. Describe this process, including a description of the appeal process for clients who are disqualified. Describe the activities and the results of these activities based on the most recent analysis: Parents who commit intentional program violations are sanctioned for one (1) month for the first offense, months (3) months for the second offense and one year for the third and any subsequent offenses. Sanctions means the parent or provider cannot participate in the program during the sanction period. Parents must first establish a pattern of non-compliance in which the parent is allowed three instances of non-compliance before sanctions are imposed. The results of the number of parents disqualified for intentional programs violations in FY23 were 22. Parents who are sanctioned for intentional program violations may appeal the sanction by requesting an Administrative Review and an Administrative Hearing. The Administrative Review is completed by the Child Care Management Agency's (CMA) eligibility supervisor within 30 days of the written request received by the parent. If the parent disagrees with the findings, the parent my then request an administrative hearing to the CMA which is then forwarded to the Lead Agency. The lead agency has an assigned program specialist to oversee the hearing. The hearing is scheduled within 30 days of the receipt of the request and decision is rendered within 30 days of the hearing. The number of parent administrative hearings and reviews respectively in FY23 were 3 and 9. ii. [x]Disqualify the provider. Describe this process, including a description of the appeal process for providers who are disqualified. Describe the activities and the results of these activities based on the most recent analysis: Providers who commit intentional program violations are sanctioned for one (1) month for the first offense, three (3) months for the second offense and one year for the third and any subsequent offenses. Sanctions means the provider cannot participate in the program during the sanction period. The results of the number of providers disqualified for intentional program violations in FY23 were 2. Providers may request an administrative hearing after an action to terminate participation in the child care subsidy program is made. Providers must submit their request in writing, within 60 days of the action, for a hearing to the Child Care Management Agency which is then forwarded to the Lead Agency. The lead agency submits a request to the lead agency's Office of Administrative Hearings at which time an Administrative Hearing Judge and an attorney is appointed to oversee the case. The case is set for a hearing within 30 days from the request being submitted to the Office of Administrative Hearings. The Administrative Law Judge must make a ruling within 30 days of the hearing. Results of the hearing is mailed to the provider by the Office of Administrative Hearings. There have been 2 hearings completed in FY23 which were both upheld. iii. [x] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: Cases of fraud that that exceed $2500.00 may be referred to the Program Accountability Director for investigation and referral to the District Attorney for criminal prosecution as deemed appropriate. No cases were referred to prosecution in FY23. iv. [ ] Other. Describe the activities and the results of these activities based on the most recent analysis: Appendix 1: Lead Agency Implementation Plan The Appendix will be available for Lead Agencies to use in CARS after the Plan approval letter is issued. For each non-compliance, Lead Agencies must describe the following: • Action Steps: List the action steps needed to correct the finding (e.g., update policy manual, legislative approval, IT system changes, etc.). For each action step list the: o Responsible Entity: Indicate the entity (e.g., agency, team, etc.) responsible for completing the action step. o Expected Completion Date: List the expected completion date for the action step. • Overall Target Date for Compliance: List date Lead Agency anticipates completing implementation, achieving full compliance with all aspects of the findings. (Note: Compliance will not be determined until the FFY 2025-2027 CCDF Plan is amended and approved). Appendix 1: Form [Plan question with non-compliance and associated provision will pre-populate based on preliminary notice of non-compliance] A. Action Steps for Implementation B. Responsible Entity(ies) C. Expected Completion Date Step 1: Step 2 (as necessary): [Additional steps added as necessary] Overall Target Date for Compliance: