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 an MOU in place with DSS FSD to share and match data from TANF and SNAP. When the Lead Agency receives TANF information about a family, staff compare the information to child care subsidy to ensure it’s consistent. The Lead Agency has an eligibility investigator under the Program Integrity Team who investigates cases of potential fraud.. When applicable, the Lead Agency uses the outcome of investigations to revise guidance for families, providers, and staff. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency has an MOU in place with DSS FSD to share and match data from TANF and SNAP. When the Lead Agency receives TANF information about a family, staff compare the information to child care subsidy to ensure it’s consistent. The Lead Agency has an eligibility investigator under the Program Integrity Team who investigates cases of potential fraud. When applicable, the Lead Agency uses the outcome of investigations to revise guidance for families, providers, and staff. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice:: Staff in the Lead Agency are trained on policies during the hiring and onboarding process. Staff are also re-trained on key topics on a regular basis from results of investigations, as determined by the Lead Agency, but at a minimum on an annual basis. Lead Agency staff are trained to identify errors that may be intentional or unintentional. An eligibility investigator with the Lead Agency is notified when there are concerns of fraud or other program violations. 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: Staff in the Lead Agency run monthly reports and review the reports to monitor absence and holiday errors, duplicate authorizations, holiday usage, other provider risk factors, and potential system errors as needed to identify misuse. Staff distribute report summaries that identify potential cases of fraud to agency leadership for review and input on additional actions to take as needed. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency flags absence and holiday errors, duplicate authorizations, reports on holiday usage, and reports based on provider risk factors. All of the reports help identify unintentional program violations. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Lead Agency staff flag absence and holiday errors, duplicate authorizations, and other reports that may be as a result of a system error or agency error. The reports are a method of identifying system issues or misapplication of policy. 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 Lead Agency's Program Integrity Team selects providers each month to review and compare attendance records. Providers under review are selected based on various risk factors (i.e., large number of subsidy eligible children in care, no reported absences, etc.) that may indicate a higher risk of fraud or intentional program violations. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency's Program Integrity Team selects providers each month to review and compare attendance records. Providers under review are selected based on various risk factors (i.e., large number of subsidy eligible children in care, no reported absences, etc.) that may indicate a higher risk of fraud or program violations. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Enrollment documents, such as child care need verification, income verification, and documented requested schedule for child care, are reviewed during Eligibility Supervisory staff reviews to ensure the documents are accurately reflected and policy is applied appropriately. A sample of eligibility determinations are reviewed by Lead Agency staff monthly. Provider enrollment documents are reviewed initially, annually, and upon complaint by licensing and monitoring staff. The Program Integrity Team reviews a sample of provider attendance and billing records monthly. d. [x] Conduct supervisory staff reviews or quality assurance reviews. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Eligibility Supervisory staff conducts routine data reviews and quality assurance reviews to ensure policies are applied correctly and as a second view of documentation to ensure program integrity. The Lead Agency’s management team reviews a set of randomly selected cases from the previous month’s eligibility determinations and provides feedback and guidance if errors are discovered. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Eligibility Supervisory staff conducts routine data reviews and quality assurance reviews to ensure policies are applied correctly and as a second view of documentation to ensure program integrity. The Lead Agency’s management team reviews a set of randomly selected cases from the previous month’s eligibility determinations and provides feedback and guidance if errors are discovered. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Supervisory staff in the Lead Agency conduct quality assurance reviews to ensure policy is applied correctly, as well as to identify any staff training needs that may need to be addressed. e. [x] Audit provider records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency's Program Integrity Team selects providers each month to review and compare attendance records. Providers under review are selected based on various risk factors (i.e., large number of subsidy eligible children in care, no reported absences, etc.) that may indicate a higher risk of fraud or intentional program violations. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency's Program Integrity Team selects providers each month to review and compare attendance records. Providers under review are selected based on various risk factors (i.e., large number of subsidy eligible children in care, no reported absences, etc.) that may indicate a higher risk of fraud or program violations. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Lead Agency's Program Integrity Team selects providers each month to review and compare attendance records. Providers under review are selected based on various risk factors (i.e., large number of subsidy eligible children in care, no reported absences, etc.) that may indicate a higher risk of fraud or program violations. f. [x] Train staff on policy and/or audits. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Staff in the Lead Agency are trained on policies upon hire and are provided refresher training on a regular basis, as determined by the Lead Agency but at a minimum on an annual basis. Lead Agency staff are trained to identify errors that may be intentional and send a referral for internal review when there are concerns of fraud or intentional program violations. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Staff in the Lead Agency are trained to identify errors that may be intentional or unintentional. This may result in the identification of additional follow up training needs. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Staff in the Lead Agency are trained on Lead Agency and CCDF policies upon hire and are provided refresher training on a regular basis, as determined by the Lead Agency but at a minimum on an annual basis, to ensure policy is applied correctly and to ensure there is an understanding of policy and procedure. Lead Agency staff are trained on CCDF rules, as well as state statutes, rules, and policies pertaining to child care subsidy. In addition, Lead Agency supervisory staff are required to complete 40 hours of professional development annually. As a result of these activities, staff are knowledgeable of the requirements when implementing the procedures and practices. 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 Lead Agency uses a system of checks and balances to ensure integrity within contracted work. Based on contract requirements, invoices are submitted as required with supporting documentation as required. The contract manager reviews all submissions , ensuring the invoice only contains allowable expenses. The invoice is then routed to the finance department for another level of review to verify the amount falls within the contracted amount. Upon approval of services provided by contractors and a properly prepared invoice, payments are made to the contractor. If the contractor fails to perform required work or services, fails to submit reports when due, the Lead Agency may withhold payment or reject invoices under the contract. The Lead Agency is responsible for overseeing all reports and recoupment of improper payments in the Child Care Subsidy Program. If intentional client or provider fraud is reported, it is investigated by the eligibility investigator within the Program Integrity Unit prior to a referral being sent to the prosecutor. If an error is discovered on a family eligibility application that is not intentional, the eligibility investigator will analyze the situation and recommend a course of action; the recommendation is reviewed by DESE OOC leadership prior to initiating a recoupment plan. If a provider overpayment occurs, it is investigated by the Lead Agency’s Program Integrity Team to determine if and how much should be recovered. 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 Lead Agency requires recovery of an improper payment with a minimum dollar amount of $5.00. Providers are notified of the amount, the dates of the errors, the reason for the overpayment and the method to contest the results. 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: The Lead Agency investigates any cases of improper payments for child care that appear to be as a possible result of fraud or intentional violation. In these cases, the Lead Agency will investigate the case and determine if fraud can be identified for prosecution or if there is an intentional violation that can be identified for recovery. Additionally, the Lead Agency has an MOU in place with DSS FSD to share and match data from TANF and SNAP. When the Lead Agency receives TANF information about a family, staff compare the information to child care subsidy to ensure it’s consistent. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Once overpayment has been identified, the Lead Agency can recover through a repayment plan any overpayments identified, whether by an intentional or unintentional overpayments and regardless of the provider being a contracted or registered child care provider. The Lead Agency and the provider shall negotiate a repayment plan within 45 days from when the decision becomes final and may include a lump sum payment or equal monthly payments over a specified period of time. Every repayment plan that includes monthly installments shall also include a promissory note executed by the participant in favor of the Lead Agency. The participant shall then make payments as directed in the repayment plan. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Lead Agency can recover from future payments any overpayments identified, whether by an intentional or unintentional violation, and regardless of the provider being a regulated child care provider. 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: The Lead Agency has established a Program Integrity Team to investigate potentially improper attendance practices that may result in improper payments. Each month a percentage of randomly selected providers will be reviewed for accuracy and any discrepancies will be investigated to determine if any improper invoicing occurred. Additionally, the child attendance system has reporting features that will also identify potential circumstances that could be indicators of improper practices. The Program Integrity Team will use this information to determine if an investigation will be conducted. The Lead Agency investigates any cases of improper payments for child care that appear to be as a possible result of fraud. In these cases, the Lead Agency’s eligibility investigator will analyze the case and determine if fraud can be identified for prosecution or if there is an intentional violation that can be identified for recovery. All improper payments will be referred to the financial unit to initiate recovery. Using the data collected, the Lead Agency will consider if additional methods should be added to the investigation practices. viii. [x] Other. Describe the activities and the results of these activities: Upon approval of services provided by contractors and a properly prepared invoice, payments are made to the contractor. If the contractor fails to perform required work or services, fails to submit reports when due, the Lead Agency may withhold payment or reject invoices under the contract. 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: The Lead Agency requires recovery of an improper payment with a minimum dollar amount of $5.00. Providers are notified of the amount, the dates of the errors, the reason for the overpayment, and the method to contest the results. 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: The Lead Agency investigates any cases of improper payments for child care that appear to be due to an unintentional violation. In these cases, the Lead Agency will investigate the case and determine if the unintentional violation can be identified for recovery. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Once overpayment has been identified, the Lead Agency can recover through a repayment plan any overpayments identified, whether by an unintentional or intentional violation, and regardless of the provider being a contracted or registered child care provider. The Lead Agency and the provider shall negotiate a repayment plan within 45 days from when the decision becomes final and may include a lump sum payment or equal monthly payments over a specified period of time. Every repayment plan that includes monthly installments shall also include a promissory note executed by the participant in favor of the Lead Agency. The participant shall then make payments as directed in the repayment plan. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Once overpayment has been identified, the Lead Agency can recover from future payments any overpayments identified, whether by an unintentional or intentional violation, and regardless of the provider being a regulated child care provider. 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: The Lead Agency has established a Program Integrity Team to investigate potentially improper attendance practices that may result in improper payments. Each month a percentage of randomly selected providers will be reviewed for accuracy and any discrepancies will be investigated to determine if any improper invoicing occurred. Additionally, the child attendance system has reporting features that will also identify potential circumstances that could be indicators of improper practices. The Program Integrity Team will use this information to determine if an investigation will be conducted. The Lead Agency investigates any cases of improper payments for child care that appear to be as a possible result of fraud. In these cases, the Lead Agency will investigate the case and determine if there is an unintentional violation that can be identified for recovery and will send the information to the financial unit to initiate recovery. Using the data collected, the Lead Agency will consider if additional methods should be added to the investigation practices. 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: The Lead Agency requires recovery of an improper payment with a minimum dollar amount of $5.00. The Lead Agency investigates any cases of improper payments for child care that appear to be the result of an agency error. In these cases, the Lead Agency will investigate the case and determine the amount identified for recovery. As a result of such error, the Lead Agency will review and update any internal policies, procedures, or system functionality as needed to ensure a future error does not occur. 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: The Lead Agency investigates any cases of improper payments for child care that appear to be the result of an agency error. In these cases, the Lead Agency will investigate the case and determine the amount identified for recovery. As a result of such error, the Lead Agency will review and update any internal policies, procedures, or system functionality as needed to ensure a future error does not occur. Additionally, the Lead Agency has an MOU in place with DSS FSD to share and match data from TANF and SNAP. When the Lead Agency receives TANF information about a family, staff compare the information to child care subsidy to ensure it’s consistent. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Once overpayment is identified, the Lead Agency may recover the overpayment amount through a repayment plan. This includes an agency error, and regardless of the provider being a contracted or regulated child care provider or a contracted vendor. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: Once an overpayment is identified, the Lead Agency may recover the overpayment amount through a repayment plan. This includes overpayments due to agency error, and regardless of the provider being a contracted or regulated child care provider or a contracted vendor. 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: The Lead Agency investigates any cases of improper payments for child care that appear to be the result of an agency error. In these cases, the Lead Agency will investigate the case and determine the amount identified for recovery. As a result of such error, the Lead Agency will review and update any internal policies, procedures or system functionality as needed to ensure a future error does not occur. 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. [x] 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: Participants are disqualified when a sanction is placed on their account for either intentional program violations or fraudulent behavior. Participants may request a hearing on the adverse action within 90 days of the action and are advised to submit any supporting documentation prior to the hearing. All supporting documentation is reviewed during the hearing in conjunction with participant testimony and the final decision is rendered. A sanction can be removed in the case of the final decision of a hearing being in a participants favor or if they are able to correct the issue which caused them to be in on the sanction initially. 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: The Lead Agency will create a sanction on the account of any child care providers who have previously been terminated due to fraudulent behavior or who are prosecuted in a criminal court for committing fraud in the Child Care Subsidy program prohibiting them from being able to contract at any future point. After a provider is disqualified, the provider may request an administrative review within ten business days. Upon completion of the administrative review, the department shall notify the child care provider of the results of the administrative review in writing. iii. [x] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: The eligibility investigator in the Lead Agency makes referrals to the local prosecuting attorney when it has established a case of fraud by a provider or child care recipient. 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: