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)? [x] Yes. If yes, describe: Once determined eligible and initial payments have been issued, the Department of Human Services pays the child care subsidy payments prospectively to the family at the start of the month for that month’s child care needs. [ ] 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: 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: [ ] 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: 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)? [x] Yes. [ ] 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: 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: The Department of Human Services provides payment for a registration fee up to $125 once per state fiscal year. If the subsidy family changes providers, the family is responsible to cover any registration fees charged by any subsequent provider during the same state fiscal year. [ ] No. If no, identify the data and how data were collected to show that paying for fees is not a generally-accepted payment practice: 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: The Department of Human Services (DHS) pays the child care subsidy to the eligible family. Due to confidentiality requirements, DHS is not allowed to release any information to the child care provider regarding the family's eligibility status or the payment amount without the family's written consent. DHS utilizes Electronic Benefit Transfer (EBT) cards or direct deposit to the family for the family to make payments to a legally exempt child care provider. If the family uses a licensed or registered child care provider, with the consent of the family, DHS may forward the family's child care subsidy payment from the family's EBT account to the bank account which the provider has registered with DHS for the forwarding of payments; however, all communication about the eligible child care subsidy payment amount is still directed to the family. It is the family's responsibility to communicate with their child care provider regarding continued eligibility requirements and child care subsidy payment amounts. 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 Department of Human Services (DHS) pays the subsidy to the eligible family. Due to confidentiality laws and administrative requirements, DHS is not allowed to release any information to the child care provider regarding the family's eligibility status for child care subsidies or the payment amount without the family's written consent. Therefore, all notices regarding disposition of an application or changes to ongoing eligibility or subsidy payment amounts are sent to the family. It is the family's responsibility to communicate with their child care provider about their eligibility status and child care subsidy payment amount. e. Describe the Lead Agency’s timely appeal and resolution process for payment inaccuracies and disputes: All notices regarding disposition of an application, redetermination, changes to ongoing eligibility, or changes to child care subsidy payment amounts are sent to the family. The family is provided with an appeal and resolution process for inaccuracies and disputes, in accordance with Hawaii Administrative Rules Chapters 17-798.3 and 17-602-1. The family has 90 days from the date of the notice to request an appeal of the adverse action taken by the Department of Human Services. f. Other. Describe any other payment practices established by the Lead Agency: N/A 4.4.3 Payment practices and parent choice How do the Lead Agency’s payment practices facilitate provider participation in all categories of care? The Department of Human Services (DHS) issues child care subsidy payments prospectively at the start of the month based on the child’s enrollment rather than attendance. DHS issues child care subsidy payments prospectively at the start of the month based on part-time or full-time basis rather than paying for hours of service. DHS pays for a registration fee cost up to $125 once per state fiscal year, as most licensed and registered child care providers do charge registration fees to all families needing child care services. DHS utilizes Electronic Benefit Transfer (EBT) cards or direct deposit to the family for the family to make payments to a legally exempt child care provider. If the family uses a licensed or registered child care provider, with the consent of the family, DHS may forward the family’s child care subsidy payment from the family’s EBT account to the bank account which the provider has registered with DHS for the forwarding of payments; however, all communication about the eligible child care subsidy payment amount is still directed to the family. It is the family’s responsibility to communicate with the child care provider about their eligibility and child care subsidy payment amount. DHS payment practices allow families to access a range of legally exempt and licensed and registered child care providers. Most child care providers, whether regulated or not, charge families at the beginning of the month for child care services that will be rendered based on the child’s enrollment in the child care program. Because the Department issues child care subsidy payments at the beginning of the month, subsidy families do not need to incur the child care cost up-front and wait for after-the-fact reimbursement from the Department. DHS reimbursement is timely to coincide with when the child care cost is incurred by the subsidy family. Licensed and registered child care providers that have opted to set up their bank account information with the Department do not require subsidy families to pay the full child care cost up-front and the provider works with the subsidy family to have the child care subsidy payment forwarded on to the provider’s financial account. This practice reduces the financial hardship for a subsidy family to pay for their monthly child care cost.