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: [x] Sets the same payment rates for the entire State or Territory. [ ] 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). 7/1/2024 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)? N/A 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) 278.25 Per Week 34.36 278.25 15.00 312.50 325.00 355.50 0.00 Per Week 0.00 Family Child Care for Infants (6 months) 262.66 Per Week 56.46 262.66 50.00 260.00 265.00 275.00 0.00 Per Week 0.00 Center Care for Toddlers (18 months) 278.25 Per Week 34.36 278.25 33.00 298.05 315.00 342.00 0.00 Per Week 0.00 Family Child Care for Toddlers (18 months) 262.66 Per Week 56.46 262.66 60.00 256.00 260.00 267.75 0.00 Per Week 0.00 Center Care for Preschool ers (4 years) 236.25 Per Week 34.36 236.25 25.00 275.00 280.00 311.78 0.00 Per Week 0.00 Family Child Care for Preschool ers (4 years) 220.63 Per Week 56.46 220.63 50.00 220.00 225.50 250.00 0.00 Per Week 0.00 Center Care for School- Age (6 years) 210.00 Per Week 34.36 210.00 85.00 170.00 175.00 200.00 0.00 Per Week 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 School- Age (6 years) 194.37 Per Week 56.46 194.37 60.00 170.00 190.00 225.00 0.00 Per Week 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) 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 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? [ ] 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: [x] 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. [ ] Differential rate for non-traditional hours. Describe: 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: Base rates increase as a program’s quality increases. Per the tiered reimbursement structure if a Program’s BrightStars rating (scale is 1 ￿ 5) increases, the reimbursement rate increases. 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? The annual enacted state budget sets the rates for centers in statute and that collective bargaining sets the rates for family child care. The Lead Agency does not have the authority to set rates outside of these processes but can recommend rate changes to the Governor and can provide information to the legislature and advocates working to improve CCAP rates. DHS used the data from the 2021 Market Rate Survey to inform the budget and propose rates throughout the off-cycle MRS years. Rates were set on a tiered basis for quality, with 1 star programs set at the 50th percentile and the 5 star programs set at the 80th percentile of the market rate. The FY25 budget focused on moving the rates up 5% across tiers and we are currently in the middle of gathering data on our 2024 market rate survey, which will help inform our FY26 payment rates. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? During the COVID-19 pandemic, all programs were reimbursed at the 5-star rate as a strategy to stabilize and support the child care sector to ensure that we were providing the maximum amount of money we were able to provide to our child care community at the time. When the state went back to tiered reimbursement, the new rates set all either met or exceeded the pandemic rate. As a result, this ensured that programs continued to have resources to meet health, safety, quality, and staffing requirements under CCDF. The annual enacted state budget sets the rates for centers in statute and that collective bargaining sets the rates for family child care. The Lead Agency does not have the authority to set rates outside of these processes but can recommend rate changes to the Governor and can provide information to the legislature and advocates working to improve CCAP rates. 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? DHS will use the information from the 2024 Market Rate survey to inform future rate setting to promote the stabilization of child care. The Lead Agency does not have the authority to set rates outside of these processes but can recommend rate changes to the Governor and can provide information to the legislature and advocates working to improve CCAP rates. While Rhode Island has been fortunate to be able to put forth and receive rate increases twice in the last three years. However, the cost of care from the narrow coat analysis shows that while we have made progress, the cost of care is outpacing the increase in our rates and we need to keep going. Rhode Island will use this most recent cost analysis to look at the tiered reimbursement and decide how to prioritize the age groups that need it most - such as the infants and preschoolers in center-based care. Our cost of care did show that higher quality programs have lower cost per child, which shows economies of scale and how focusing on higher quality can lead to smarter business practices and overall stronger fiscal practices, which we will use to think about how to move forward with rate setting. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? Rhode Island specifically looked at the rates throughout all of the quality ratings and the 2024 MRS clearly showed that higher quality programming resulted in lower cost per child. This does not mean that tiered reimbursement isn't instrumental, but shows that increasing rates for high quality is an even bigger incentive to providers to actually want to increase their quality. Getting involved in our quality rating and improvement system and truly engaging and moving up the quality continuum can also lead to stronger fiscal and business practices. Throughout the entire survey, in both centers and FCC, the cost of care was looked at through a quality lens. 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