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 Child Care Wage Match Process is conducted through DHS/DFD's Income and Eligibility Verification System (IEVS). IEVS is a matching system consisting of a coordinated data exchange comprised of various electronic cross matches which match the applicant/recipient. The Wage Match IEVS process is for the ongoing eligibility verification of current recipients of the child care subsidy. DHS/DFD staff also work, often onsite, with CCR&Rs to review cases. The Wage Match process identifies reported income. During this data match against Department of Labor data, underreported income may be discovered with the most common being a second job or income. 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:: 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: DHS/DFD utilizes these reports to help determine program compliance and determine if TA is needed to inform better practice: Monthly Authorized Agreement Reports - utilize a 12-month eligibility period to review the number of agreements per Home-based provider, ensure providers are not over capacity, and assess timeliness of the CCR&R in processing cases within a 45-day period. Terminated Reports - to review if cases were properly terminated, and the correct termination code was utilized. Redetermination Age Reports - to ensure redeterminations are being completed timely and correctly. 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: These reports help determine program activity accuracy and determine if TA is needed to inform better practice: Monthly Authorized Agreement Reports - utilize a 12-month eligibility period to review the number of agreements per Home-based provider, ensure providers are not over capacity, and assess timeliness of the CCR&R in processing cases within a 45-day period. Terminated Reports - to review if cases were properly terminated, and the correct termination code was utilized. Redetermination Age Reports - to ensure redeterminations are being completed timely and correctly. 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: DHS/DFD utilizes an Attendance Calendar Enrollment Report, which tracks and monitors attendance, and provider utilization of reporting data. As of March 2020, payment is based on enrollment, and providers are required to report children’s absences. CCR&RS are responsible for authorizing payment and reviewing the Attendance Transition Reports to determine compliance with the program policy requiring providers to use the system to document attendance. This process can help identify a pattern of excessive absences, and assess the need for outreach to a family to determine if additional support and/or resources are needed to improve attendance. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: DHS/DFD utilizes an Attendance Calendar Enrollment Report, which tracks and monitors attendance, and provider utilization of reporting data. As of March 2020, payment is based on enrollment, and providers are required to report children’s absences. CCR&RS are responsible for authorizing payment and reviewing the attendance transition reports to determine compliance with program policy requiring providers to use system to document attendance to help identify patterns of excessive absences. If a program violation is discovered, further research or investigation is required to identify cause and detail corrective plan of action, which may result in policy clarification, training and/or technical assistance, and/or recoupment if finding is improper payment. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: DHS/DFD utilizes an Attendance Calendar Enrollment Report, which tracks and monitors attendance, and provider utilization of reporting data. As of March 2020, payment is based on enrollment, and providers are required to report children’s absences. CCR&RS are responsible for authorizing payment and reviewing the attendance transition reports to determine compliance with program policy requiring providers to use system to document attendance to help identify patterns of excessive absences. The collective approach used by DHS/DFD and the CCR&Rs engaged in this process provide opportunities to review the effectiveness of internal controls and accuracy of applying rules according to policy. Results will determine action steps required, such as the need for technical assistance, system modifications, and/or revision of reports. 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: DHS/DFD has a multi-level review process, which consists of DHS/DFD's quality control and assurance staff as first level reviewers, and supervisors as second level reviewers. Quarterly case file reviews are also conducted to ensure eligibility determination and policy implementation are correctly applied and based on program rules. The results of these findings are shared with child care operation staff, who provide technical assistance to CCR&Rs and determine appropriate actions to address issues and/or develop an improvement plan. Additionally, CCR&Rs are responsible for conducting quarterly internal reviews and sharing their findings with DHS/DFD. The results of these findings are reviewed and discussed with the program managers at the county level. In cases where there are areas of concerns, technical assistance and training is provided. DHS/DFD utilizes standardized tools to conduct reviews to achieve statewide consistency. CCR&Rs are also provided with a standardized template to document and report case file review findings. Through both approaches, the results of the findings are shared with all staff to keep everyone informed, identify systemic or isolated errors, and provide an opportunity for continuous improvement. DHS/DFD and CCR&R staff work together to determine any technical assistance or training needs to address areas of concerns, and employ strategies to minimize errors. These activities yield improved and targeted technical assistance and continuous quality improvement to minimize and/or eliminate errors. e. [x] Audit provider records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Provider record audits can identify intentional program violations. Examples of specific activities include deliberate falsification of a license, registration, or certificate; knowingly submitting false information resulting in operating without state and local permits; or submission of false enrollment/attendance resulting in improper payment if children are not actually in care. When any of these activities occurred, DHS/DFD involves relevant agencies to implement cross-agency coordinated efforts. This approach allows for immediate information sharing, communication, and monitoring, as well as quickly identifying needs for policy development, technical assistance and/or corrective actions. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: During audits of provider records, to review the effectiveness of internal controls and ensure rules are applied correctly, common unintentional program violations, such as misinterpretation of program policies or lack of awareness of new or amended regulations are discovered. In these instances, DHS/DFD works closely with CCR&Rs to develop targeted trainings and technical assistance to improve communication/dissemination of information. Targeted policy cross-agency collaboration meetings are also held with each respective state agency (DHS, DCF and DOH) along with CCR&R s to go over new regulations, and/or relevant policies requiring clarification. On-site meetings are held with providers to discuss findings from audits and discuss program operations. These meetings provide opportunities to better understand the cause(s) of audit findings and identify next steps￿i.e. providing targeted technical assistance on policies, outlining written corrective action steps, and offering hands-on provider support to minimize risk. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: DHS/DFD's quality control and quality assurance unit reviews payment transactions, while the CCR&Rs review and conduct analysis of payment discrepancy. DHS/DFD staff also review attendance reports for unusual reporting or transactions to assess accurate payment calculations. The results help assess if effective internal controls are in place and if TA is necessary, as well as help identify discrepancies and action needed to correct any improper payments. Timely record reviews help quickly discover and/or address attendance/payment discrepancies. 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: Training staff on program policies and sharing audit findings help staff become much more knowledgeable and accurate in applying policies to minimize errors. Audit findings are used to pinpoint targeted areas to address, identify needed strategies to closely monitor/evaluate improvement, and ensure internal controls are effective. Ongoing education to promote policy awareness and understanding, along with targeted technical assistance are key strategies to help agencies identify risk and prevent errors. Policy clarification training, monitoring and sharing audit findings are best practice strategies to assist in prevention of program violations and are effective methods to quickly catch errors. DHS/DFD and CCR&R staff work together to determine any technical assistance or training needs to address areas of concern and minimize errors. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Training staff on program policies and sharing audit findings help staff become much more knowledgeable and accurate in applying policies to minimize errors. Audit findings are used to pinpoint targeted areas to address, identify needed strategies to closely monitor/evaluate improvement, and ensure internal controls are effective. Ongoing education to promote policy awareness and understanding, along with targeted technical assistance are key strategies to help agencies identify risk and prevent errors. Policy clarification training, monitoring and sharing audit findings are best practice strategies to assist in prevention of program violations and are effective methods to quickly catch errors. DHS/DFD and CCR&R staff work together to determine any technical assistance or training needs to address areas of concern and minimize errors. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Training staff on program policies and sharing audit findings help staff become much more knowledgeable and accurate in applying policies to minimize errors. Audit findings are used to pinpoint targeted areas to address, identify needed strategies to closely monitor/evaluate improvement, and ensure internal controls are effective. Ongoing education to promote policy awareness and understanding, along with targeted technical assistance are key strategies to help agencies identify risk and prevent errors. Policy clarification training, monitoring and sharing audit findings are best practice strategies to assist in prevention of program violations and are effective methods to quickly catch errors. DHS/DFD and CCR&R staff work together to determine any technical assistance or training needs to address areas of concern and minimize errors. 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): DHS/DFD contracts with the CCR&Rs to manage improper payments, and for pursuing overpayments through the establishment of repayment agreements. Additionally, through DHS/DFD’s child care Wage Match process and recently established fraud investigation unit, DFD along with CCR&Rs are jointly responsible for pursuing fraud and overpayments. 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: Overpayment of $100 or greater will be reviewed, investigated and handled through the recovery process effective July 2024. 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: Once an overpayment is established, the CCR&R will inform the parent and together the CCR&R and parent will agree on a repayment plan. The repayment plan will be entered into the DHS/DFD system (ONETrac) to monitor payments. 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: Recovery of payment is requested from the NJ Set-Off of Individual Liability (SOIL) system after a parent is 120 days delinquent. During this period, following numerous outreach attempts by the CCR&R with an opportunity to modify the repayment agreement, the CCR&R will then enter the recovery request into SOIL. vi. [x] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: DHS/DFD's Income and Eligibility Verification System (IEVS). IEVS is a matching system consisting of a coordinated data exchange comprised of various electronic cross-match data specific to the applicant/recipient. The Wage Match process identifies reported income data through the Department of Labor. When underreported income is discovered, it is usually income from a second job. Through this process, reports are generated, which are submitted to the CCR&Rs who conduct further research and communicate with the applicants to gather required documentation and information. If additional income is substantiated and never reported, an analysis is conducted to determine eligibility compliance and accurate co-payment calculation. CCR&Rs establishes repayment agreements if the findings result in payment calculation error. 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: DHS/DFD’s Fraud Identification and Recovery Management (FIRM) will begin tracking and collecting all debt effective July 2024. The CCR&Rs will investigate debt within their county. 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. [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: Overpayment of $100 or greater will be reviewed, investigated, and managed through the recovery process. 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: Once an overpayment is established, the CCR&R will inform the parent and together the CCR&R and parent will agree on a repayment plan. The repayment plan will be entered into the DHS/DFD system (ONETrac) to monitor payments. 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: Recovery of payment is requested from the NJ Set-Off of Individual Liability (SOIL) system after a parent is 120 days delinquent. During this period, following numerous outreach attempts by the CCR&R with an opportunity to modify the repayment agreement, the CCR&R will then enter the recovery request into SOIL. 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: DHS/DFD’s Fraud Identification and Recovery Management (FIRM) will track and collect all debt effective July 2024. The CCR&Rs will investigate debt within their county. 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: Overpayment of $100 or greater will be reviewed, investigated, and managed through the recovery process. 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: Once an overpayment is established, the CCR&R will inform the parent and together the CCR&R and parent will agree on a repayment plan. The repayment plan will be entered into the DHS/DFD system (ONETrac) to monitor payments. 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: Recovery of payment is requested from the NJ Set-Off of Individual Liability (SOIL) system after a parent is 120 days delinquent. During this period, following numerous outreach attempts by the CCR&R with an opportunity to modify the repayment agreement, the CCR&R will then enter the recovery request into SOIL. vi. [ ]Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: 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. [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: A substantiated case of program violation (false or misleading or deliberate misrepresentation of information)) will result in the suspension or disqualification of the child care subsidy and make the parent/applicant ineligible to apply/ reapply for and/or receive subsidized child care for a specified period of time depending upon the number and type of violations. The policy allows potentially for up to three instances of violations at 1-month, 3-months and 12-months (with the exception of substantiated fraud) before potential permanent disqualification. It is the right of every parent who receives a disqualification or suspension notice to request a review of their case by the CCR&R and/or DFD. The CCR&R must inform the parent in writing of his/her right to request a review. A timely request must be made within ten (10) days of the date of the notice for a CCR&R review. Administrative Review requests, handled by DFD’s Bureau of Administrative Review and Appeals (BARA), can be requested without a CCR&R case review; or if the parent is not satisfied with the decision of the CCR&R Review Committee. The request must be submitted within 90 calendar days of receiving the notice or letter about the action. 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: Providers are subject to disqualification for the following reasons: ● Failure to have an active license, registration, approved certification ● Failure to comply with Child Care Assistance Program rules, including CCDBG Health and Safety requirements or underenforcement ● Falsification of required documents ● Posing an imminent danger to children ● Providing false, misleading, or deliberate misrepresentation of required information in connection with eligibility or payment or grant Providers have the right to appeal the action in question, which can be reviewed by the county CCR&R responsible for the decision, and must submit a request in writing within ten days of the effective date of the adverse decision. They may also have an adverse decision reviewed by DHS/DFD in place of, or in addition to, the case review conducted by the county CCR&R, This request must be made within 90 days of the date of the original notice of adverse action. iii. [ ] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: 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: