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: The Department of Human Services (DHS) is not compliant by 10/01/24 for Strategies Used To Identify and Prevent Program Violations (section 98.68(b)(1). Preliminary Notice of Possible Non-Compliance Rev date: 01/2023. DHS will need additional time and technical assistance from the Office of Child Care to fully implement the requirement. The Department of Human Services does not have a system in place for identifying provider fraud or other program violations, although there is a system is in place for identifying client fraud. The Department of Human Services relationship is primarily with the parent. The Department of Human Services Child Care Subsidy workers have the ability to access the TANF or SNAP household information including income summary, household size and are able to crosscheck the information provided by the Child Care Subsidy client/applicant. Through this process, the Child Care Subsidy workers can identify and validate any intentional program violations. Shared reports from the SNAP program will identify address changes. When families apply for SNAP benefits in other states, the eligibility worker will contact the Hawaii Department of Human Services through an established interstate verification process. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Department of Human Services Child Care Subsidy workers have the ability to access the TANF or SNAP household information including income summary, household size and are able to crosscheck the information provided by the Child Care Subsidy client/applicant. Through this process, the Child Care Subsidy workers can identify and validate any discrepancies which could be an unintentional program violation. iii. [ ] Agency errors. Describe the activities, the results of these activities, and how they inform better practice:: b. [x] Run system reports that flag errors (include types). 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. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Department of Human Services receives monthly system reports to identify possible discrepancies requiring further evaluation by the program staff which may lead to additional follow-up by the line staff. Additionally, the monthly system reports may indicate trends based on the frequency of the occurrences. Thereby, necessitating the development of policy clarifications or possible rule amendments by the program staff. Monthly system reports include Health and Safety Deficiencies, Returned Child Benefit Payments, Background Clearances, Inactive and Closed Child Care Provider Services, and Unauthorized Child Care Benefits. c. [ ] Review enrollment documents and attendance or billing records. 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: d. [x] Conduct supervisory staff reviews or quality assurance reviews. 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. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Department of Human Services Research Office runs a monthly extract to identify a list of cases to be reviewed by the Unit Supervisor or designated Quality Assurance (QA) staff. The Unit Supervisor or QA staff ensures that appropriate and complete documentation is on file as well as verifying the administrative rules were applied when determining child care eligibility. If any errors are found, they make corrective action recommendations and provide staff a deadline to resolve the error. e. [ ] Audit provider records. 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: f. [x] Train staff on policy and/or audits. 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. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Department of Human Services Staff Development Office trains staff on child care subsidy and licensing policies, procedures, and the information and technology data system. Standardized training allows for consistent application of child care policies and procedures which applies to both new staff and refresher training for existing staff. 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 Department of Human Services Investigations Office; Office of the Attorney General, upon referral. The Child Care Subsidy Program Office will pursue overpayments from the family. 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: The Department of Human Services (DHS) is not compliant by 10/01/24 for Program Integrity - Lead Agency is required to identify and recover misspent funds as a result of fraud, and it has the option to recover any misspent funds as a result of errors (section 98.68(b)(2). Preliminary Notice of Non-Compliance Rev date: 01/2023. DHS will need additional time and technical assistance from the Office of Child Care to fully implement the requirement. DHS currently has no process in place for investigating, recovering funds from, or sanctioning providers. Currently the Investigations Office will investigate fraud by parents that are Supplemental Nutrition Assistance Program (SNAP) or Temporary Assistance for Needy Families (TANF) program recipients, based on Hawaii Administrative Rules. DHS will need to amend the Administrative Rules. There is currently a process in place for recouping payments from parents for errors, although not identified as fraud. Any overpayment made to the caretaker shall be recovered through repayment in cash or by a reduction of not less than 10% in the amount payable to the caretaker in subsequent months until the entire amount of overpayment is recovered. The minimum dollar amount is $1. The result is the department shall work with the families to recover any misspent funds. 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: By order of the court through a criminal conviction, monthly restitution payments may be established. Court restitution payments will be processed by the Department of Human Services Investigations Office as a result of unsuccessful attempts to work with the families to recover misspent funds. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Any overpayment made to the caretaker shall be recovered through repayment in cash or monthly reductions from an active child care subsidy case. The caretaker must acknowledge the repayment plan and agree to the monthly deductions until the entire overpayment is recovered or their case closes and subsequent repayments will be turned over to the Department of Human Services fiscal office to bill the caretaker directly. The result is the Department of Human Services shall work with the families to recover any misspent 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. [x] 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: Refer to the Department of Human Services Investigations Office within the Department’s Benefit, Employment and Support Services Division comprising of investigators to review, investigate, and pursue TANF, SNAP, and CCDF intentional improper violations and fraud. Cases may then be referred to the Department of the Attorney General by the Department’s Investigations Office for criminal charges being filed in a court of law. The referral is a result of unsuccessful attempts to work with the families to recover misspent funds. 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: Any overpayment made to the caretaker shall be recovered through repayment in cash or by a reduction of not less than 10% in the amount payable to the caretaker in subsequent months until the entire amount of overpayment is recovered. The minimum dollar amount is $1. The result is the Department of Human Services (DHS) shall work with the families to recover any misspent funds. DHS FY21 Improper Payment percentage was reduced to .065%, compared to the prior IPR cycle which reported 4.39%. The most common errors discovered in the FY21 IPR cycle were: Incorrect child care cost was entered, which resulted in the incorrect calculation of the benefit; Incorrect reason for care selected which resulted in the incorrect calculation of household's monthly gross income and family co-payment rate; Expired Child Care Certificate and Provider Confirmation Forms (DHS 918), which resulted in benefits begin authorized prior to the renewal of the DHS 918. Review of these common errors assisted in reviewing and revising the new worker training and refresher training modules to cover policies and procedures. In the 2024 calendar year, DHS received 375 direct repayments from child care providers totaling $420,922 as a result of the overpayments. Of the 375, DHS processed 157 repayments to date and continue to work with the child care subsidy families, child care providers and the department's fiscal office. DHS specific error rate estimates have been successful in identifying issues that impact future statewide estimates and reducing the instance of error. DHS has implemented the improper payment review process for FY25 and is currently meeting as a team weekly to review files, identify administrative errors that will assist in identifying issues and estimating/reducing errors. 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: By order of the court through a criminal conviction, monthly restitution payments may be established. Court restitution payments will be processed by the Department of Human Services Investigation Office as a result of unsuccessful attempts to work with the families to recover misspent funds. In 2024, all repayments have been handled at the division level by eligibility staff, the program office and the fiscal office. There are zero court restitution payments being handled by the department's investigation office. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Any overpayment made to the caretaker shall be recovered through repayment in cash or monthly reductions from an active child care subsidy case. The caretaker must acknowledge the repayment plan and agree to the monthly deductions until the entire overpayment is recovered or their case closes and subsequent repayments will be turned over to the Department of Human Services fiscal office to bill the caretaker directly. The result is the Department of Human Services shall work with the families to recover any misspent funds. The department's payment system and the fiscal billing system are two separate systems. An ad-hoc report would need to be requested to review any outstanding claims. The program office would be responsible for requesting the report to review the statewide count to analyze how many claims should be turned over to the fiscal office. This process would also identify if any closed cases still have outstanding claims which would then be turned over immediately to the fiscal office to follow up. 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. [x] 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: Refer to the Department of Human Services Investigations Office within the Department’s Benefit, Employment and Support Services Division comprising of investigators to review, investigate and pursue TANF, SNAP, and CCDF intentional improper violations and fraud. Cases may then be referred to the Department of the Attorney General by the Division’s Investigations Office for criminal charges being filed in a court of law. The referral is a result of unsuccessful attempts to work with the families to recover misspent funds. 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: Any overpayment made to the caretaker shall be recovered through repayment in cash or by a reduction of not less than 10% in the amount payable to the caretaker in subsequent months until the entire amount of overpayment is recovered. The minimum dollar amount is $1. The result is the department shall work with the families to recover any misspent funds. DHS is considering reinstating the work verification plan audit for families receiving child care payments as a supportive service while participating with the TANF work program. Previously five (5) child care cases were randomly selected per month. There was a significant drop in the FY21 IPR admin error rate from 31.88% previous IPR cycle to 4.71% (FY21 cycle). FY21 IPR data: 4.71% cases revealed an error (Prior IPR cycle: 31.88%) 3.62% admin errors (Prior IPR cycle: 19.92%) 1.09% are improper payments (Prior IPR cycle: 11.96%) 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: By order of the court through a criminal conviction, monthly restitution payments may be established. Court restitution payments will be processed by the Department of Human Services Investigations Office as a result of unsuccessful attempts to work with the families to recover misspent funds. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Any overpayment made to the caretaker shall be recovered through repayment in cash or monthly reductions from an active child care subsidy case. The caretaker must acknowledge the repayment plan and agree to the monthly deductions until the entire overpayment is recovered or their case closes and subsequent repayments will be turned over to the Department of Human Services fiscal office to bill the caretaker directly. The result is the Department of Human Services shall work with the families to recover any misspent 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. [x] 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: Refer to the Department of Human Services Investigations Office within the Department’s Benefit, Employment and Support Services Division comprising of investigators to review, investigate and pursue TANF, SNAP, and CCDF intentional improper violations and fraud. In 2024, the department has one active investigation to review the designated provider payment account of a child care provider. The tax setoff can be utilized if the caretaker fails to make payment. HAR 17- 798.3-22(b)(7): If a caretaker for whom a collection action has been initiated fails to make payment for any month in the calendar tax year, the department may refer debts exceeding twenty-five dollars to the comptroller of the State for tax setoff as specified in chapter 17-606 Cases may then be referred to the Department of the Attorney General by the Division’s Investigations Office for criminal charges being filed in a court of law. The referral is a result of unsuccessful attempts to work with the families to recover misspent funds. 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. [ ] 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: ii. [ ]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: iii. [x] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: The Department of Human Services (DHS) is not compliant by 10/01/24 for Program Integrity - Sanctions to reduce improper payments (Section: 98.68(b)(2). Preliminary Notice of Possible Non-Compliance Rev date: 01/2023. DHS will need additional time and technical assistance from the Office of Child Care to fully implement the requirement. For sanctions, policies and procedures cover the family only and not the provider. DHS currently has repayment options for families regarding errors and incorrect payments that are agency or client caused. Investigations and Recovery Office has a process where families receive a tax offset to repay the department. There are currently no provider sanctions in place. For situations where improper payments occur due to program violations, child care subsidy staff are to complete a referral to the Department of Human Services Investigations Office within the Department’s Benefit, Employment and Support Services Division comprising of investigators to review, investigate and pursue TANF, SNAP, and CCDF intentional improper violations and fraud. Cases may then be referred to the Department of the Attorney General by the Department of Human Services Investigations Office for criminal charges being filed in a court of law as a result of unsuccessful attempts to work with the families to recover misspent funds. 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: