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: [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: Child care providers bill electronically after care has been provided on a bi-weekly basis. There is a published deadline, which is a few days after the pay period ends. If the billing is done by the billing deadline, payment is generated within eight to ten days. If billing is done after the deadline, but before 90 days, payment is generated within eight to ten days of the billing. Payroll is processed on a weekly basis to ensure providers are paid in a timely manner. Michigan will be requesting a two year waiver in order to implement this provision. b. Does the Lead Agency pay based on authorized enrollment for all provider types? [ ] 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: [x] 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: License exempt (related and unrelated) child care providers are not paid by enrollment. Providers can bill for care provided up to the maximum number of bi-weekly hours approved for the child. Hourly rates are set and determined through the legislative budget process based on available funding. Each child is allotted 360 absence hours to be paid/used during the fiscal year. Due to a previous IRS audit payments to license exempt providers are made directly to the parent who must pay the provider. Michigan does not currently include/collect data on license exempt providers through the Market Rate Survey but gathers information from license exempt providers through stakeholders who conduct the onsite health and safety visit and provide training. The number of license exempt providers has increased 78% since 2021 indicating this method is supporting the stability of this choice. 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: License exempt (related and unrelated) child care providers are not paid by enrollment. Providers can bill for care provided up to the maximum number of bi-weekly hours approved for the child. Hourly rates are set and determined through the legislative budget process based on available funding. Each child is allotted 360 absence hours to be paid/used during the fiscal year. Due to a previous IRS audit payments to license exempt providers are made directly to the parent who must pay the provider. Michigan does not currently include/collect data on license exempt providers through the Market Rate Survey, but gathers information from license exempt providers through stakeholders who conduct the onsite health and safety visit and provide training. The number of license exempt providers has increased 78% since 2021 indicating this method is supporting the stability of this choice. 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: Licensed providers can bill the CDC program for child care fees. This is intended to help cover the fees that are sometimes charged to families, such as registration fees, annual fees, or field trip fees. This is not intended to cover late payment fees, late pick up fees, or bounced check fees. Payment for fees is limited to $65 for child care centers and $40 for group and family homes, per fiscal year (10/1-9/30). [ ] 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: To ensure that all child care providers understand the CDC payment process, they must certify that they have read the CDC Handbook by selecting the ￿I certify that￿ box before submitting payment information into the IBilling system (providers cannot move forward in the billing process until they check this box). Certification is also indicated in the CDC Handbook in the IBilling Step by Step instructions for providers (pg.8). In addition, when completing their application to become a provider, licensed exempt providers also must sign and submit their application acknowledging that they have read the handbook and understand how they will submit and be paid. Licensed providers are paid on a bi-weekly block reimbursement rate. The block reimbursement rate is the reimbursement amount for child care hours billed that has been rounded up and multiplied by the applicable hourly rate. Block reimbursement allows eligible providers to be paid by the CDC program in a manner more consistent with how the general public pays for child care, by reimbursing for part-time or full-time care, rather than hourly care. Beginning October 2022, the following bi-weekly block reimbursement schedule went into effect: Part-time: Billing 1 to 30 hours, payment is the hourly rate multiplied by 30 hours. Part-time: Billing 31 to 60 hours, payment is the hourly rate multiplied by 60 hours. Full-time plus: Billing 61 or more hours, payment is the hourly rate multiplied by 90 hours. The agency does not charge fees for providers with the exception of payment for required background checks. Information related to provider rates, program requirements for billing, and the payment dispute resolution process are in the CDC Handbook. All child care providers certify that they have read the CDC Handbook, available on the Child Development and Care website: Child Development and Care (michigan.gov) each time they submit a billing. Billing disputes can be resolved by calling the CDC office toll free line at 866-990-3227. If the provider calls the CDC office with a concern about their billing/payment amount, the issue is assigned to a staff member for review and resolution. The review determines if the billing/payment was accurate. If the provider disputes the findings of a billing/payment review, whether initiated by the provider or the department, then a secondary review is completed by a manager, and a final determination is made by the Manager in collaboration with the Director. 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: When a client reports a change to MDHHS the Eligibility Specialist has 10 days once all documentation is received to enter into Bridges. Bridges then will generate a DHS-198, CDC Provider Notice, to notify CDC providers when: an authorization is added; there is a change in the authorization period; the authorized hours change; closing the CDC eligibility determination groups (EDG); or the family contribution changes. The DHS-198 will be mailed to the client and provider within 24 hours of it being generated. e. Describe the Lead Agency’s timely appeal and resolution process for payment inaccuracies and disputes: If there is a billing or payment issue, child care providers or parents may contact the CDC program during normal business hours at 866-990-3227. The situation is reviewed and resolved as soon as possible by a unit dedicated to ensuring accurate provider payments. f. Other. Describe any other payment practices established by the Lead Agency: 4.4.3 Payment practices and parent choice How do the Lead Agency’s payment practices facilitate provider participation in all categories of care? Michigan uses a variety of strategies to ensure families have access to a provider who accepts scholarship children by ensuring we provide reimbursement for an adequate number of absences, reimbursement for some registration fees, payments to providers within 21 days, allowing 90 days for back-billing and a part-time/full-time reimbursement structure. In addition, all licensed providers in Michigan are eligible to receive child care scholarship payments without an additional registration process, therefore CCDF children can be assigned to them without delay, allowing them to begin billing for the care of CCDF eligible children as soon as the parent identifies them. License exempt providers are enrolled through the lead agency and must be approved prior to being eligible to receive payments.