4.4 Payment Practices to Providers

Lead Agencies must use subsidy payment practices that reflect practices that are generally accepted in the private pay child care market. The Lead Agency must ensure timeliness of payment to child care providers by paying in advance or at the beginning of delivery of child care services. Lead Agencies must also support the fixed cost of child care services based on paying by the child’s authorized enrollment, or if impracticable, an alternative approach that will not undermine the stability of child care programs as justified and approved through this Plan. Lead Agencies must also (1) pay providers based on established part-time or full-time rates rather than paying for hours of service or smaller increments of time, and (2) pay for reasonable, mandatory registration fees that the provider charges to private-paying parents. These policies apply to all provider types unless the Lead Agency can demonstrate that in limited circumstances the policies would not be considered generally-accepted payment practices. In addition, Lead Agencies must ensure that child care providers receive payment for any services in accordance with a payment agreement or an authorization for services, ensure that child care providers receive prompt notice of changes to a family’s eligibility status that could impact payment, and have timely appeal and resolution processes for any payment inaccuracies and disputes. 4.4.1 Prospective and enrollment-based payment practices Lead Agencies must use payment practices for all CCDF child care providers that reflect generally-accepted payment practices of providers serving private-pay families, including paying providers in advance or at the beginning of the delivery of child care services and paying based on a child’s authorized enrollment or an alternative approach for which the Lead Agency must demonstrate paying for a child’s authorized enrollment is not practicable and it will not undermine the stability of child care programs. Lead Agencies may only use alternate approaches for subsets of provider types if they can demonstrate that prospective payments and authorized enrollment-based payment are not generally-accepted for a type of child care setting. Describe the Lead Agency payment practices for all CCDF child care providers. a. Does the Lead Agency pay all provider types prospectively (i.e., in advance of or at the beginning of the delivery of child care services)? ☐ Yes. If yes, describe: Not applicable. ☐ X No, it is not a generally-accepted payment practice for each provider type. If no, describe the provider type not paid prospectively and the data demonstrating it is not a generally-accepted payment practice for that provider type, and describe the Lead Agency’s payment practice that ensures timely payment for that provider type: California has requested a transitional and legislative two-year waiver effective no longer than August 1, 2024 – August 1, 2026, to implement the practice of paying prospectively. California will initiate this during the 2025-26 legislative and budget processes. Currently our payment practices are authorized in Senate Bill 140 which added Welfare and Institution Code section 10277, requiring all of the following effective March 1, 2024: 1. For providers accepting subsidy vouchers, child care reimbursement shall be made within 21 calendar days of the submission of a complete monthly attendance record or invoice, and for providers participating in a family child care home education network, reimbursement shall be made within 21 calendar days of the submission of a daily sign-in and sign-out sheet; 2. A schedule for the payment of services that must be signed by the child care provider; 3. A provision requiring that if a provider submits attendance records or invoices for multiple children, and not all individual records or invoices within the submission include adequate information to provide a payment, payments will not be withheld for those records or invoices that do include adequate information to provide a payment; 4. Procedures that establish clear processes and timelines to resolve overpayment and underpayment issues, which must include provider written consent to recover any overpayment; 5. If a county or contractor is unable to make payment within 21 calendar days due to extenuating circumstances, the impacted provider will be notified within a reasonable timeframe of the county or contractor becoming aware of the circumstance causing the delay of reimbursement payment. b. Does the Lead Agency pay based on authorized enrollment for all provider types? ☐ X Yes. The Lead Agency pays all providers by authorized enrollment and payment is not altered based on a child’s attendance or the number of absences a child has. ☐ No, it is not a generally-accepted practice for each provider type. If no, describe the provider types not paid by authorized enrollment, including the data showing it is not a generally-accepted payment practice for that provider type, and describe how the payment policy accounts for fixed costs: Not applicable. ☐ No, it is impracticable. Describe provider type(s) for which it is impracticable, why it is impracticable, and the alternative approach the Lead Agency uses to delink provider payments from occasional absences, including evidence that the alternative approach will not undermine the stability of child care programs, and thereby accounts for fixed costs: Not applicable. 4.4.2 Other payment practices Lead Agencies must (1) pay providers based on established part-time or full-time rates rather than paying for hours of service or smaller increments of time, and (2) pay for reasonable, mandatory registration fees that the provider charges to private-paying parents, unless the Lead Agency provides evidence that such practices are not generally-accepted for providers caring for children not participating in CCDF in its State or Territory. a. Does the Lead Agency pay all providers on a part-time or full-time basis (rather than paying for hours of service or smaller increments of time)? ☐ Yes. ☐ X No. If no, describe the policies or procedures that are different than paying on a part- time or full-time basis and the Lead Agency’s rationale for not paying on a part- time or full-time basis: The CDSS advances funds to contractors who operate direct- service and voucher-based contracts. For direct-service contracts, providers are paid on a part-time or full-time basis. Providers accepting subsidy vouchers can be reimbursed under an hourly rate category (in addition to daily, part-time/full-time weekly or monthly rate categories). The use of hourly rates for providers who accept subsidy vouchers is justified because it reflects generally accepted payment practices of providers serving private-pay families. Alternative payment programs currently use the regional market rates to ensure providers are reimbursed to the category that most aligns with what they charge private families. Please refer to 4.4.3, payment practices and parent choice. For alternative payment programs, reimbursement is based on the most applicable reimbursement ceiling established based on the market rate survey, including hourly, daily, part-time weekly, full-time-weekly, part-time monthly, and fulltime-monthly. As part of the systems changes that California is undertaking through rate reform, the state intends to create alignment between direct contract and voucher-based payment programs and with the part-time/full-time model. b. Does the Lead Agency pay for reasonable mandatory registration fees that the provider charges to private-paying parents? X Yes. If yes, identify the fees the Lead Agency pays for: Pursuant to California Code of Regulations, Title 5, (5CCR) Section 18076.1, subgrantees (i.e., Alternative Payment Programs) must reimburse fees charged by all providers, such as registration, material, and insurance, either in a single payment or prorated over a 12-month period, as long as the provider documents the contractual terms used for services to unsubsidized families require payment for such fee; and the fees or prorated portion, plus the providers normal customary rate, do not exceed the regional market rate ceiling. No. If no, identify the data and how data were collected to show that paying for fees is not a generally accepted payment practice: Not applicable. c. Describe how the Lead Agency ensures that providers are paid in accordance with a written payment agreement or an authorization for services that includes, at a minimum, information regarding provider payment policies, including rates, schedules, any fees charged to providers, and the dispute-resolution process: As part of the monitoring review process, CDSS ensures that the requirements regarding timely payment, provider policies, including rates, schedules and dispute-resolution process set forth in 5CCR sections 18221-18224 and 5 CCR Section 18226 are being met. d. Describe how the Lead Agency provides prompt notice to providers regarding any changes to the family’s eligibility status that could impact payments, and such a notice is sent no later than the day that the Lead Agency becomes aware that such a change will occur: The Welfare and Institutions Code 10276 requires Child Care Development Fund-funded programs to provide same-day notice to a child care provider of a change in reimbursement amounts for childcare services, a change in the hours of care, rates, or schedules, an increase or decrease in parent fees, a termination of services, including, but not limited to, a family’s change in provider, or any changes to the family’s eligibility status that may impact payment. e. Describe the Lead Agency’s timely appeal and resolution process for payment inaccuracies and disputes: Currently, contractors are required to set timely payment policies (5 CCR Section 18226). Additionally, contractors must set conflict resolution policies and provide to each parent. As part of this process, parents must be provided with information regarding the Uniform Complaint Procedure, which requires complaints received by CDSS to be investigated and resolved within 30 days. (5 CCR 4663-4670). f. Other. Describe any other payment practices established by the Lead Agency: Not applicable. 4.4.3 Payment practices and parent choice How do the Lead Agency’s payment practices facilitate provider participation in all categories of care? Vouchers or certificates are issued based on the family’s certified need for care. Payment practices include payment to the provider based on enrollment (vs. attendance). This practice supports both providers and families in ensuring equal and greater access to care. Other payment practices described in 4.4 ensure that providers are paid in a timely manner, which also leads to greater and more equitable access for families. Providers have reported that such payment practices ensure they are able to continue to care for children and feel confident enrolling subsidized children in their care as they are ensured payment within a reasonable timeframe. Payment practices also include programs paying on a basis of part-time or full-time ranging from full-time plus (10.5 hours or over) to half-time (under 4 hours). For alternative payment programs, reimbursement is based on the most applicable reimbursement ceiling established based on the market rate survey, including hourly, daily, part-time weekly, full-time weekly, part-time monthly, and full-time monthly.