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). 3/1/2023 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)? Daily rates were multiplied by 5. Percentile rank is calculated to indicate how sufficient the base rates are in providing CCW families with access to child care. All private pay rates for a provider type, care level, and length of care are ordered from smallest to largest within the region/county class. Then the regionalized rate is compared to the private pay rates to determine what percentage of providers a CCW family would have access to. 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) 59.58 Per Day 24.70 297.90 60.00 278.00 297.90 339.15 Family Child Care for Infants (6 months) 55.02 Per Day 30.10 275.10 60.00 254.25 275.10 300.10 Center Care for Toddlers (18 months) 56.26 Per Day 24.70 281.30 60.00 262.75 281.30 317.45 Family Child Care for Toddlers (18 months) 51.70 Per Day 30.10 258.50 60.00 244.95 258.50 290.75 Center Care for Preschool ers (4 years) 49.93 Per Day 24.70 249.65 60.00 229.05 249.65 281.15 Family Child Care for Preschool ers (4 years) 46.31 Per Day 30.10 231.55 60.00 211.65 231.55 262.95 Center Care for School- Age (6 years) 40.14 Per Day 23.00 200.70 60.00 194.95 200.70 227.75 Family Child Care for School- Age (6 years) 41.16 Per Day 30.10 205.80 60.00 194.35 205.80 244.30 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? [x] Yes. [ ] 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: 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: A daily add-on rate is paid for each CCW child served based on care level and quality rating the provider has achieved. DHS certified child care providers that provide care to children receiving CCW for at least two hours during the hours of 6:00pm and 6:00am on weekdays or any amount of time on weekends will receive a non-traditional care add-on rate. The non-traditional care add-on only applies to the days that the non-traditional care takes place and not to any days that the child only receives care during typical hours. The add-on rate will be 25 percent above the established subsidy base rate for each CCW child served during non-traditional hours. [ ] 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: DHS certified child care providers that provide care to children receiving CCW for at least two hours during the hours of 6:00pm and 6:00am on weekdays or any amount of time on weekends will receive a non-traditional care add-on rate. The non-traditional care add-on only applies to the days that the non-traditional care takes place and not to any days that the child only receives care during typical hours. The add-on rate will be 25 percent above the established subsidy base rate for each CCW child served during non-traditional hours. ii. [ ] Differential rate for children with special needs, as defined by the Lead Agency. Describe: 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. [ ] 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: v. [x] Differential rate for higher quality, as defined by the Lead Agency. Describe: Daily add-on rates were established prior to 2010 to provide an incentive for moving up in STARS as well as recognizing that operating at increased quality was more expensive. Through the years, add-ons have increased based on modeling how funds could be arrayed across the STAR levels based on available funds, CCW enrollments, and projections of STARS move-up in the coming year. Add-ons are available for providers achieving a STAR 2, 3 or 4 designation. 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? [ ] Yes. If yes, describe: [x] 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? OCDEL utilizes a tool built by a third-party vendor to compare provider private pay rates as reported in the MRS to the established child care subsidy payment rate for each region, provider type, and care level/age of child for both full-time and part-time care to determine percentile rank. PA increased subsidy base rates effective March 30, 2023, to meet the 60th percentile based on the 2022 Market Rate Survey results. When considering additional initiatives to increase base rates, OCDEL considers the availability of funds and possible future impacts to service levels. The 2024- 25 Executive Budget proposal recommends increasing the MCCA base subsidy rates to the 75th percentile based on the 2022 MRS. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? Certified STAR 1 providers are required to meet basic health and safety standards and staffing requirements and receive only the established subsidy base rate with no add-ons. 82.5% (2,881 of 3,491) of all certified STAR 1 providers in Pennsylvania have a CCW agreement indicating the adequacy of the offered rate. 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 Market Rate Study is analyzed to determine the appropriate subsidy rate and provides additional insights into factors related to cost of care. The study also included a narrow cost analysis which provides a comprehensive view of the provider expenses that contribute to the total cost of care. This information is essential in understanding the resources most needed by providers and the opportunities for OCDEL to support the child care industry, families and providers. The most recent MRS included an analysis on supplemental charges imposed by providers and determined that most providers implemented a registration fee for care. This information was used to implement a registration fee reimbursement to support families and providers. The narrow cost analysis determined that personnel and facility costs are the largest expenses for providers. OCDEL continuously uses this information to inform funding opportunities for providers and is utilized to support an increase in the percentile rank of established rates. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? Providers receiving a STAR 2, 3, and 4 designation meet higher standards for staff qualifications, quality of care, and the learning environment. The tuition rates analyzed did not include tiered reimbursement payments which are an add-on to the MCCAs based on STAR designation. A linear regression analysis showed that, after controlling for ELRC region, provider type, care level, and care length, providers with higher Keystone STAR designations do charge more than comparable providers with lower designations across all care levels and types of care, which is consistent with expectations. The analysis found that STAR 2 providers charge an average of $1.34 more per day than STAR 1 providers. STAR 3 providers charge an average of $3.17 more per day than STAR 1 providers, while STAR 4 providers charge an average of $7.26 more per day than STAR 1 providers. Tiered reimbursement for STAR 2, 3, and 4 providers remains unchanged and ranges from $0.45 to $13.20 per day. 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. N/A