4.3 Adequate Payment Rates

The Lead Agency must set CCDF subsidy payment rates in accordance with the results of the current MRS or ACF pre-approved alternative methodology and at a level to ensure equal access for eligible families to child care services comparable with those provided to families not receiving CCDF assistance. Lead Agencies are also required to provide a summary of data and facts to demonstrate how payment rates ensure equal access, which means the Lead Agency must also consider the costs of base level care and higher quality care as part of its rate setting. Finally, the Lead Agency must re-evaluate its payment rates at least every 3 years. The ages and types of care listed in the base payment rate tables are meant to provide a snapshot of the categories of rates and are not intended to be comprehensive of all categories that might exist or to reflect the terms used by the Lead Agency for particular ages. If rates are not statewide, please provide all variations of payment rates when reporting base payment rates below. Base rates are the lowest, foundational rates before any differentials are added (e.g., for higher quality or other purposes) and must be sufficient to ensure that minimum health, safety, quality, and staffing requirements are covered. These are the rates that will be used to determine compliance with equal access requirements. 4.3.1 Payment rates a. Are the payment rates that the Lead Agency is reporting in 4.3.2 set statewide by the Lead Agency? [x] Yes. i. If yes, check if the Lead Agency: [ ] Sets the same payment rates for the entire State or Territory. [x] Sets different payment rates for different regions in the State or Territory. [ ] No. ii. If no, identify how many jurisdictions set their own payment rates: b. Provide the date the current payment rates became effective (i.e., date of last payment rate update based on most recent MRS or ACF pre-approved alternative methodology as reported in 4.2.1). 5/31/2024 c. If the Lead Agency does not publish weekly rates, then how were the rates reported in 4.3.2 or 4.3.3 calculated (e.g., were daily rates multiplied by 5 or monthly rates divided by 4.3)? MSDE anticipates having market rate survey and narrow cost analysis data entered no later than September 15, 2024. 4.3.2 Base payment rates a. Provide the base payment rates in the tables below. If the Lead Agency completed a market rate survey (MRS), provide the percentiles based on the most recent MRS for the identified categories. If the Lead Agency sets different payment rates for different regions in the State or Territory (and checked 4.3.1aii), provide the rates for the most populous region as well as the region with payment rates set at the lowest percentile. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. The preamble to the 2016 final rule states that a benchmark for adequate payment rates is the 75th percentile of the most recent MRS. The 75th percentile benchmark applies to the base rates. The 75th percentile is the number separating the lowest 75 percent of rates from the highest 25 percent. Setting rates at the 75th percentile, while not a requirement, would ensure that eligible families can afford three out of four child care providers. In addition to reporting the 75th percentile in the tables below, the Lead Agency must also report the 50th percentile and 60th percentile for each identified category. If the Lead Agency conducted an ACF pre-approved alternative methodology, provide the estimated cost of care for the identified categories, as well as the percentage of the cost of care covered by the established payment rate. If the Lead Agency indicated it sets different payment rates for different regions in the State or Territory in 4.3.1.a, provide the estimated cost of care and the percentage of the cost of care covered by the established payment rate for the most populous region as well as the region with rates established at the lowest percent of the cost of care. For each identified category below, provide the percentage of providers who are receiving the base rate without any add-ons or differential payments. Provide the full-time weekly base payment rates in the table below. If weekly payment rates are not published, then the Lead Agency will need to calculate its equivalent. i. Table 1: Complete if rates are set statewide. If rates are not set statewide, provide rates for most populous region. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Center Care for Infants (6 months) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Family Child Care for Infants (6 months) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 Center Care for Toddlers (18 months) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 Family Child Care for Toddlers (18 months) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 Center Care for Preschool ers (4 years) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 Family Child Care for Preschool ers (4 years) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 Center Care for School- Age (6 years) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 Family Child Care for School- Age (6 years) 0.00 Per Day 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Day 0.00 ii. Table 2: Do not complete if rates are set statewide. If rates are not set statewide, provide rates for region with payment rates set at the lowest percentile. Percentiles are not required if the Lead Agency also conducted an ACF pre-approved alternative methodology but must be reported if the Lead Agency conducted an MRS only. Care Type Base payment rate (specify unit, e.g., per day, per week, per month) % of providers receiving Base rate Full-Time Weekly Base Payment Rate What is the percentile of the rate? (MRS) What is the 50th percentile of the rate? (MRS) What is the 60th percentile of the rate? (MRS) What is the 75th percentile of the rate? (MRS) What is the estimated cost of care? (Alternative Methodology) What percent of the estimated cost of care is the rate? Center Care for Infants (6 months) Family Child Care for Infants (6 months) Center Care for Toddlers (18 months) Family Child Care for Toddlers (18 months) Center Care for Preschool ers (4 years) Family Child Care for Preschool ers (4 years) Center Care for School- Age (6 years) Family Child Care for School- Age (6 years) b. Does the Lead Agency certify that the percentiles reported in the table above are calculated based on their most recent MRS or ACF pre-approved Alternative Methodology? [ ] Yes. [x] No. If no, what is the year of the MRS or ACF pre-approved alternative methodology that the Lead Agency used? What was the reason for not using the most recent MRS or ACF pre-approved alternative methodology? Describe: MSDE anticipates having market rate survey and narrow cost analysis data entered no later than September 15, 2024. 4.3.3 Tiered rates, differential rates, and add-ons Lead Agencies may establish tiered rates, differential rates, or add-ons on top of their base rates as a way to increase payment rates for targeted needs (e.g., a higher rate for serving children with special needs). a. Does the Lead Agency provide any rate add-ons above the base rate? [x] Yes. If yes, describe the add-ons, including what they are, who is eligible to receive the add-ons, and how often are they paid: The child care provider can submit to the Child Care Scholarship (CCS) vendor a completed special disability rate request form that describes the need for the child care provider to provide special accommodation. Upon receipt of a special disability rate request form that meets the requirements to receive funding above the base rate, the Maryland State Department of Education vendor shall: Approve the additional cost not to exceed the annual allocated amount up to 15 percent above the weekly base rate; or If the requested cost exceeds 15 percent, submit a recommendation to the CCS Branch for approval of a higher payment not to exceed the annual allocated amount. [ ] No. b. Has the Lead Agency chosen to implement tiered reimbursement or differential rates? [x] Yes. [ ] No. Tiered or differential rates are not implemented. If yes, identify below any tiered or differential rates, and, at a minimum, indicate the process and basis used for determining the tiered rates, including if the rates were based on the MRS or an ACF pre-approved alternative methodology. Check and describe all that apply: i. [x] Differential rate for non-traditional hours. Describe: Parents needing non- traditional hours are issued a separate scholarship that covers nontraditional hours. The payment rate for non-traditional hours is higher than scholarship reimbursement rates for non-traditional hours. The differential rate for non- traditional hours is not based upon variation in age but is set based upon the hours the parent needs care. The additional reimbursement rates for non- traditional care exceed the payment rates in §§B-D of Regulation 13A.14.06.11 may be approved when child care is provided during non-traditional hours. Nontraditional hours are defined as: (a) 1 hour or more between 7 p.m. and 6 a.m. on Monday through Friday; and (b) Any period of 1 hour or more on Saturday or Sunday. Maryland approves additional costs that exceed the scholarship reimbursement rate when child care is provided during nontraditional hours. Additional costs above the base scholarship reimbursement rate shall be authorized for care provided weekly during nontraditional hours up to: (a) 5 percent for one unit of care; (b) 10 percent for two units of care; or (c) 15 percent for three units of care. ii. [x] Differential rate for children with special needs, as defined by the Lead Agency. Describe: For a child with a disability/special need, the payment rates of Regulation 13A.14.06.11 apply except if the service provider offers documentation that the cost of caring for the child exceeds the reasonable accommodation definition. In that case, the additional cost may be approved but may not exceed the annual allocated amount up to 15% above the rates set out in §§C and D of the regulation; or if the requested amount exceeds 15%, a recommendation must be submitted to the central Child Care Scholarship branch for approval of a higher payment not to exceed the annual allocated amount. iii. [ ] Differential rate for infants and toddlers. Note: Do not check if the Lead Agency has a different base rate for infants/toddlers with no separate bonus or add-on. Describe: iv. [x] Differential rate for school-age programs. Note: Do not check if the Lead Agency has a different base rate for school-age children with no separate bonus or add-on. Describe: Maryland pays a Tiered Reimbursement above the base scholarship rate for higher quality child care (1) Eligibility for tiered reimbursement payments is limited to a child care center or a family child care home that has a published Maryland EXCELS quality rating level of 3, 4, or 5. The rate is determined by program type, age of child, and published quality rating. (2) An informal child care provider is not eligible for tiered reimbursement payments. (3) An eligible provider shall be paid a tiered reimbursement amount for each CCS Program child in care that is: (a) In addition to the child's scholarship payment; and (b) Reflective of the applicable percentage specified at §C(4) of this regulation. v. [ ] Differential rate for higher quality, as defined by the Lead Agency. Describe: vi. [ ] Other differential rates or tiered rates. For example, differential rates for geographic area or for type of provider. Describe: vii. If applicable, describe any additional add-on rates that you have besides those identified above. Does the Lead Agency reduce provider payments if the price the provider charges to private-pay families not participating in CCDF is below the Lead Agency’s established payment rate? [x] Yes. If yes, describe: Maryland reimburses the provider the lesser amount if the provider’s rate is lower than the established reimbursement rate for the provider’s payment region . [ ] No. 4.3.4 Establishing payment rates Describe how the Lead Agency established payment rates: a. What was the Lead Agency’s methodology or process for setting the rates or how did the Lead Agency use their data to set rates? Maryland set rates at the 70th percentile of the Market Rate Survey per recommended increases per legislator. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? Maryland providers were currently meeting the health, safety, quality and staffing requirements set by licensing when reimbursement rates were set at the 30th percentile of the Market Rate Survey in 2019. Therefore, when the reimbursement rate increased to the 70th percentile, the ability of providers to provide safe and quality child care strengthened. c. How did the Lead Agency use the cost of care, either from the narrow cost analysis or the ACF pre-approved alternative methodology to inform rate setting, including how using the cost of care promotes the stabilization of child care providers? The narrow cost analysis was used to inform Maryland that the 70th percentile of reimbursement did not cover the cost of care, did not cover the amount providers charged based upon the Market Rate Survey, and informed Maryland of the need to conduct a cost of care survey to understand better what modifications in payment policies and procedures are needed to increase equal access to child care. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? Maryland uses tiered reimbursement to account for higher quality care above the base Child Care Scholarship reimbursement rate. e. Identify and describe any additional facts (not covered in responses to 4.3.1 – 4.3.3) that the Lead Agency considered in determining its payment rates to ensure equal access. The reimbursement rate is based on geographical locations (payment regions) with similar costs and care types within the payment region. Maryland has seven payment regions, which consist of the following: Region U: Cecil, Queen Anne’s, St. Mary’s, Talbot, and Washington Counties; Region V: Caroline, Dorchester, Kent, Somerset, and Wicomico Counties; Region W: Anne Arundel, Calvert, Carroll, Charles, and Prince George’s Counties; Region X: Howard and Montgomery Counties; Region Y: Baltimore, Frederick, and Harford Counties; Region Z: Allegany, Garrett, and Worcester Counties; and Region BC: Baltimore City.