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 Lead Agency has a Memorandum of Agreement with the Iowa Department of Revenue (IDR) to share program data regarding public assistance programs (i.e. Social Security Income). The IDR provides a summary of the data from across state agencies to the Lead Agency. This results in the lead agency being able to verify the accuracy of self- reported data (i.e. household size) on the family's child care assistance application. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency has a Memorandum of Agreement with the Iowa Department of Revenue (IDR) to share program data regarding public assistance programs (i.e. Social Security Income). The IDR provides a summary of the data from across state agencies to the Lead Agency. This results in the lead agency being able to verify the accuracy of self- reported data (i.e. household size) on the family's child care assistance applications. 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. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency runs monthly reports from our subsidy billing system focusing on monitoring for overcapacity. When a report shows a program has billed for more children at one time than their capacity allows this triggers a compliance worker to visit the program. The compliance worker will conduct an onsite visit and interview the provider to determine the cause of the overcapacity. If the provider was overcapacity that becomes a regulatory violation which is cited on a complaint report, if the provider made a mistake in billing they are supported to correct the mistake and prevent future mistakes, and if there is suspicion that a provider may be submitting attendance for children that were not present a referral is made to the Department of Inspections, Appeals and Licensing to investigate. These actions results in identification and prevention of program violations. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency runs monthly reports from our subsidy billing system focusing on monitoring for overcapacity. When a report shows a program has billed for more children at one time than their capacity allows this triggers a compliance worker to visit the program. The compliance worker will conduct an onsite visit and interview the provider to determine the cause of the overcapacity. If the provider was overcapacity that becomes a regulatory violation which is cited on a complaint report, if the provider made a mistake in billing they are supported to correct the mistake and prevent future mistakes, and if there is suspicion that a provider may be submitting attendance for children that were not present a referral is made to the Department of Inspections, Appeals and Licensing to investigate. These actions results in identification and prevention of program violations. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency completes monthly reports focusing on monitoring for overpayment. If an Agency error is discovered a process to recoupment the overpayment will be initiated. This results in funds that were paid in error being returned to the Lead Agency to be used for families that meet eligibility requirements. 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 State's child care system, Kinder Track, automatically compares the child’s authorization to the attendance submitted for payment. If the attendance matches the authorized enrollment the payment is processed automatically. This results in more timely payment for child care providers and reduced error rates compared to human processing of payments. If the attendance submitted does not match the child's authorized enrollment, lead agency staff review the attendance compared to enrollment and seek information from the child care provider. If there is a valid reason the payment is processed manually, if there is not a valid reason and the provider has made an error in attendance submission they are supported to correct the error. If there is not a valid reason the payment is denied. This results in accuracy of attendance records and payments sent to child care providers. Additionally during the manual review process if there are repeated discrepancies of concern a referral is sent to the Department of Inspections, Appeals and Licensing (DIAL) to investigate. This results in a determination if there was an overpayment and if an overpayment was determined DIAL will start the collections process which will result in the funds being returned to the Lead Agency to use for eligible families. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The State's child care system, Kinder Track, automatically compares the child’s authorization to the attendance submitted for payment. If the attendance matches the authorized enrollment the payment is processed automatically. This results in more timely payment for child care providers and reduced error rates compared to human processing of payments. If the attendance submitted does not match the child's authorized enrollment, lead agency staff review the attendance compared to enrollment and seek information from the child care provider. If there is a valid reason the payment is processed manually, if there is not a valid reason and the provider has made an error in attendance submission they are supported to correct the error. If there is not a valid reason the payment is denied. This results in accuracy of attendance records and payments sent to child care providers. Additionally during the manual review process if there are repeated discrepancies of concern a referral is sent to the Department of Inspections, Appeals and Licensing (DIAL) to investigate. This results in a determination if there was an overpayment and if an overpayment was determined DIAL will start the collections process which will result in the funds being returned to the Lead Agency to use for eligible families. 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: New staff of the family and provider units are 100% case read by supervisors and/or mentors prior to benefits being authorized. The case reading typically last for 6 months unless the new worker is exceeding accuracy expectations (98% to100% accuracy) for policy, procedure and system entries. Supervisors of the family and provider work units also conduct ongoing case readings of staff work as needed, to ensure accuracy and compliance with child care policy. The supervisors also hold regular ongoing meetings with staff to discuss quality control findings of any errors found. This results in low error rates for Iowa’s CCA program. 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: New and current staff that determine eligibility and process payments in the CCA program are trained on policy by the Income Maintenance Training Academy (IMTA). The IMTA is housed within the Lead Agency's Bureau of Income Maintenance Support and Training, which provides training to multiple income maintenance programs. The IMTA trains new staff at hire and also provides training for current staff when there is policy/manual change. This results in staff understanding processes and expectations before processing any actual applications. 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): Iowa Department of Inspections, Appeals and Licensing (DIAL) 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. [ ] 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: 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: If Lead Agency payment workers suspect there has been an overpayment but need additional information they will attempt to get the additional needed information from the client and/or the provider. If the client and/or the provider do not provide the needed information or if the information submitted appears, questionable a referral can be made to the Iowa Department of Inspections, Appeals and Licensing (DIAL) to investigate the matter further. This investigation results in a determination of if there was an overpayment and if the case should be sent to the county attorney for prosecution. If it was determined there was an overpayment DIAL will initiate recoupment of the overpayment which results in those funds being returned to the Lead Agency to use for eligible families. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: If the Iowa Department of Inspections, Appeals and Licensing (DIAL) determines there was an overpayment they start the recovery process by notifying the client or provider of the overpayment and providing information on how to enter into a repayment plan. This results in the overpayment being returned to the Lead Agency to use for eligible families. If the client or provider refuses to enter into a repayment plan or they default on their repayment plan tax intercepts or offsets of future child care subsidy payments are used as described below in (v) and (vi). iv. [ ] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: v. [x] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: If a client or provider does not enter into a repayment plan or stops making payments DIAL has the option to recover overpayments through state income tax refunds. This results in funds being returned to the Lead Agency to use for eligible families. vi. [x] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: If a client or provider does not enter into a repayment plan or stops making payments we have the option to recover funds through offsetting future provider CCA payments. This results in funds being returned to the Lead Agency to use for eligible families. 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. [ ] 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: 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: If Lead Agency payment workers suspect there has been an overpayment but need additional information they will attempt to get the additional needed information from the client and/or the provider. If the client and/or the provider do not provide the needed information or if the information submitted appears, questionable a referral can be made to the Iowa Department of Inspections, Appeals and Licensing (DIAL) to investigate the matter further. This investigation results in a determination of if there was an overpayment and if the case should be sent to the county attorney for prosecution. If it was determined there was an overpayment DIAL will initiate recoupment of the overpayment which results in those funds being returned to the Lead Agency to use for eligible families. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: If the Iowa Department of Inspections, Appeals and Licensing (DIAL) determines there was an overpayment they start the recovery process by notifying the client or provider of the overpayment and providing information on how to enter into a repayment plan. This results in the overpayment being returned to the Lead Agency to use for eligible families. If the client or provider refuses to enter into a repayment plan or they default on their repayment plan tax intercepts or offsets of future child care subsidy payments are used as described below in (v) and (vi). iv. [ ] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: v. [x] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: If a client or provider does not enter into a repayment plan or stops making payments DIAL has the option to recover overpayments through state income tax refunds. This results in funds being returned to the Lead Agency to use for eligible families. vi. [x] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: If a client or provider does not enter into a repayment plan or stops making payments we have the option to recover funds through offsetting future provider CCA payments. This results in funds being returned to the Lead Agency to use for eligible families. 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. [ ] 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: 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: If the Iowa Department of Inspections, Appeals and Licensing (DIAL) determines there was an overpayment they start the recovery process by notifying the client or provider of the overpayment and providing information on how to enter into a repayment plan. This results in the overpayment being returned to the Lead Agency to use for eligible families. If the client or provider refuses to enter into a repayment plan or they default on their repayment plan tax intercepts or offsets of future child care subsidy payments are used as described below in (v) and (vi). iv. [ ] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: v. [x] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: If a client or provider does not enter into a repayment plan or stops making payments DIAL has the option to recover overpayments through state income tax refunds. This results in funds being returned to the Lead Agency to use for eligible families. vi. [x]Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: If a client or provider does not enter into a repayment plan or stops making payments we have the option to recover funds through offsetting future provider CCA payments. This results in funds being returned to the Lead Agency to use for eligible families. 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. [ ] 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. [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: If a provider fails to follow child care rules, their CCA Provider Agreement (which allows them to be paid by the CCA Program for eligible families) may be terminated, and the department may refuse to enter into new agreements with the provider. The department may refuse to enter into or may revoke the Child Care Assistance Provider Agreement, if any of the following occur: a) The department finds a hazard to the safety and well-being of a child, and the provider cannot or refuses to correct the hazard; b) The provider has submitted claims for payment for which the provider is not entitled; c) The provider fails to cooperate with an investigation conducted by the Department of Inspections, Appeals and Licensing (DIAL) to determine whether information the provider supplied to the department regarding payment for child care services is complete and correct. Once the agreement is revoked for failure to cooperate, the department shall not enter into a new agreement with the provider until cooperation occurs; d) The provider does not meet one of the applicable requirements to be a provider; e) The provider fails to comply with any of the terms and conditions of the Child Care Assistance Provider Agreement; f) The provider submits attendance documentation for payment and the provider knows or should have known that the documentation is false or inaccurate; g) An overpayment of CCA funds with a balance of $3,000 or more exists for a provider and that provider fails to enter into a repayment agreement with DIAL or does not make payments according to the repayment agreement on file with DIAL; h) The provider is found to have more children in care at one time than allowed for the provider type. If a Child Care Assistance Provider Agreement, is terminated for any of the reasons above, the agreement shall remain terminated for the time periods set forth below: a) The first time the agreement is terminated, the provider may reapply for another agreement at any time; b) The second time the agreement is terminated the provider may not reapply for another agreement for 12 months from the effective date of termination; c) The third or subsequent time the agreement is terminated the provider may not reapply for another agreement for 36 months from the effective date of termination; d) The department shall not act on an application for a child care assistance provider agreement submitted by a provider during the sanction period. If a child care provider is convicted of fraudulently receiving Child Care Assistance (CCA)funds, they are also subject to sanctions from the CCA program. There are three levels of sanctions that may be imposed: 1.) Review of the provider's claims for payment from the CCA program; 2.) Suspension from receipt of CCA payments for six months; 3.) Ineligibility to receive further CCA payments. The type of sanction imposed on the provider depends upon the nature of the fraudulent practice. The Department’s central office staff will consider the following factors in determining what type of sanction to impose: a) Prior violations or sanctions; b) Seriousness of the violation; c) Extent of the violation; d) Whether a lesser sanction will be sufficient to remedy the problem because the provider has received education or instruction and is willing to follow program rules in the future. A provider has the right to file an appeal if they disagree with any Department decision. They do not have to pay to file an appeal. The provider must file an appeal within 30 calendar days of the date of a decision or before the date a decision goes into effect. If they file an appeal more than 30 but less than 90 calendar days from the date of a decision, they must tell us why their appeal is being filed late. If the provider has a good reason for filing the appeal late, the Appeals Section will decide if they can get a hearing. If the provider files an appeal 90 days after the date of a decision, a hearing cannot begiven. If the applicant is granted a hearing before an administrative law judge and does not agree with the final decision of the hearing, he or she may request a re-hearing. The Director of the Department of Human Services determines if a rehearing will be granted. If a Director's review is requested, and the individual is dissatisfied with the final decision, the individual may file for judicial review in district court. iii. [ ] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: iv. [x] Other. Describe the activities and the results of these activities based on the most recent analysis: Iowa's Preliminary Notice of Possible Non-Compliance dated 1/17/24 noted that Iowa does have processes to investigate and recover payments from clients, however we do not currently have a process to impose sanctions on clients. The Lead Agency needs time to implement this change. We are consulting with our legal counsel and anticipate that legislative code change will be required in the upcoming SFY 25 legislative session to allow the Lead Agency to develop a client sanction process. 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: