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: When processing applications, the Subsidy Caseworkers at the Lead Agency have access to records from various other programs including TANF, SNAP, Medicaid, and the Department of Labor, to assist in eligibility determination. Information from the application is checked against existing information from other programs. This helps to maintain program integrity by identifying when additional information is needed to verify circumstances and aids in fraud and Internal Program Violation (IPV) prevention by allowing discrepancies to be identified, investigated, and resolved prior to eligibility determination preventing errant payments. Staff are trained how to cross check information between multiple programs. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: When processing applications, Subsidy Caseworkers at the Lead Agency have access to records from various other programs including TANF, SNAP, Medicaid, and some Department of Labor records. Information from the application is checked against existing information from these programs. This helps to maintain program integrity by identifying when additional information is needed to verify information in order to prevent unintentional program violations by allowing discrepancies to be identified, investigated, and resolved prior to eligibility determination preventing errant payments. Staff are trained how to cross check information between multiple programs. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice:: When processing applications, Subsidy Caseworkers at the Lead Agency have access to records from various other programs including TANF, SNAP, Medicaid, and the Department of Labor. Information from the application is checked against existing South Dakota information from other programs. This helps to ensure CCS has correct information. Incorrect calculations can also be detected if the Child Care Assistance income amount is different than the amount determined by another program. This helps to maintain program integrity by allowing discrepancies to be identified, investigated, and resolved prior to eligibility determination preventing errant payments. 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: There are several reports that flag errors. A monthly auto-generated report identifies individuals receiving both State and Tribal administered CCDF funds. Use of this report allows for duplicative assistance to be identified and for recovery to be implemented if duplicative assistance has occurred. A monthly autogenerated report also monitors monthly provider billings to evaluate if any suspected overpayments require investigating. A third report reviews provider payments made during an indicated time frame and the results of the report are used as one factor in determining candidates for audit. Staff receive ongoing training on how to utilize these reports and what information reflected on the reports are considered red flags and require follow up. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: There are several reports that flag errors. A monthly auto-generated report identifies individuals receiving both State and Tribal administered CCDF funds. Use of this report allows for duplicative assistance to be identified and for recovery to be implemented if duplicative assistance occurred. A monthly autogenerated report also monitors monthly provider billings to evaluate if any suspected overpayments require investigating. A third report reviews provider payments made during an indicated time frame and the results of the report are used as one factor in determining candidates for audit. These reports can also point to unintentional program violations. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: A monthly auto-generated report monitors against duplicate certificates for families and if duplicate certificates are discovered, the Caseworker immediately corrects the error. Monitoring of this report has decreased the number of duplicative active certificates, preventing additional errors. Use of this report allows for duplicative certificates to be identified and for recovery to be implemented if needed. 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: These records are frequently audited to validate information submitted by the childcare providers or to identify inaccurate provider billing practices. Any resulting over-issuance is established using these records, and they are used to identify potential fraud. The use and review of attendance records has been a longstanding practice for the Child Care Assistance Program and has allowed the lead agency a mechanism to measure discrepancies and validate billing. Audits are conducted in response to provider questions, when possible red flags are identified by Child Care and other Department staff, and based on customer, provider and public tips. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: These records are frequently audited to validate information submitted by the childcare provider. This assists CCS in learning which providers may need technical assistance or training to improve practices. Any resulting over-issuance due to an unintentional program violation is established using these records. The use and review of provider attendance records has been a longstanding practice for the Child Care Assistance Program and has allowed the lead agency a mechanism to measure discrepancies and validate billing. Audits are conducted in response to provider questions, when possible red flags are identified by Child Care and other Department staff, and based on customer, provider and public tips. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Provider enrollment and attendance records are reviewed during any audit to determine compliance with program requirements. Provider practice and interpretation of program requirements can inform needed clarifications in policy. 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: The Subsidy Program Supervisor conducts periodic quality assurance reviews of each Caseworker's individual work. Individual caseworker error rates are monitored and used in annual employee evaluations. If a need for additional training is identified, the Caseworker will receive training from the Supervisor. These reviews help to identify potential fraud and prevent intentional program violations through a secondary review and secondary validation of information including review of data available through other programs and review of procedural accuracy on the part of the Caseworker. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The Subsidy Program Supervisor conducts periodic quality assurance reviews of each Caseworker's individual work. Individual caseworker error rates are monitored and used in annual employee evaluations. If a need for additional training is identified, the Caseworker will receive training from the Subsidy Supervisor. These reviews help to identify fraud and prevent unintentional program violations through a secondary review and secondary validation of information including review of data available through other programs and review of procedural accuracy on the part of the Caseworker. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The Subsidy Supervisor conducts periodic quality assurance reviews of Caseworker's individual work. Individual Caseworker error rates are monitored and addressed immediately, as well as in annual employee evaluations. If a need for additional training is identified the Caseworker will receive such training. These reviews include secondary review and secondary validation of information and allow the Supervisor to identify individual need for improvement for Caseworkers as well as overall gaps in training. When gaps are identified, policy or training material is updated, and additional training is provided leading to a reduction in overall errors in the identified category. 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 attendance records are reviewed during any audit to determine compliance with program requirements. Resulting over-issuance is established using these records, and they are used to identify potential fraud. The use and review of provider attendance records has been a longstanding practice for the Child Care Assistance Program and has allowed the lead agency a mechanism to measure discrepancies and validate billing. Audits are conducted in response to provider questions, when possible red flags are identified by Child Care and other Department staff and based on customer, provider and public tips. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Provider attendance records are reviewed during any audit to determine compliance with program requirements. Comparing these records to billing requests helps determine provider knowledge related to billing and whether assistance is needed. Any resulting over-issuance due to unintentional program violations is established using these records. The use and review of provider attendance records has been a longstanding practice for the Child Care Assistance Program and has allowed the lead agency a mechanism to measure discrepancies and validate billing. Audits are conducted in response to provider questions, when possible red flags are identified by Child Care and other Department staff and based on customer, provider and public tips. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Provider records are reviewed during any audit to determine compliance with program requirements. Comparing these records to billing requests helps determine provider knowledge related to billing and whether assistance is needed. 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: Subsidy Program staff receive ongoing training on any policy or rule changes made to the program. Staff are also trained on the audit processes and assist in completing internal audits. Subsidy staff participate in meetings three times a week to review challenging cases to ensure that Caseworkers are implementing policy and rules with a uniform understanding. These meetings with subsidy staff have proven beneficial in identifying discrepancies in the application of policy and procedure related to both the eligibility determination process and risk management practices. These discussions are used to influence changes to policy, procedure, and enhance staff training materials leading to better identification of risks.. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Subsidy program staff receive ongoing training on all policy or rule changes and their interpretation. Staff are also trained on the audit processes and assist in completing internal audits. Subsidy staff participate in weekly meetings to review cases together that help ensure Caseworkers are implementing policy and rules uniformly. These meetings with subsidy staff have proven beneficial in identifying discrepancies in the application of policy and procedure related to both the eligibility determination process and risk management practices. These discussions are used to influence changes to policy, procedure, and enhance staff training materials leading to better identification of risks. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: To ensure consistent implementation of policies and procedures, subsidy program staff receive ongoing training on any policy or rule changes made to the program. Staff are also trained on the audit processes and assist in completing internal audits. Subsidy staff participate in weekly meetings to review cases together, share other scenarios, etc. Subsidy program staff receive ongoing training on all policy or rule changes and their interpretation. Staff are also trained on the audit processes and assist in completing internal audits. Subsidy staff participate in weekly meetings to review cases together that help ensure Caseworkers are implementing policy and rules uniformly. These meetings with subsidy staff have proven beneficial in identifying discrepancies in the application of policy and procedure related to both the eligibility determination process and risk management practices. These discussions can then be used to influence changes to policy, procedure, or training materials leading to better identification of risks. South Dakota maintains a low error rate. 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): Department of Social Services, Office of Recoveries and Fraud Investigations. 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: Typically, a minimum dollar amount of $50 must be met before recovery due to improper payments or unintentional program violations is implemented. Minimum dollar amounts help ensure efficient use of staff time spent in recovery activities. 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 coordinates with the Department of Social Services, Office of Recoveries and Fraud Investigations (ORFI) when further investigation is necessary in a potential fraud case or intentional program violation case. ORFI staff have expertise in fraud detection and recovery. ORFI staff are utilized to perform on location investigation including obtaining records, conducting interviews, and surveillance to substantiate fraud.. In a case of fraud which may impact various assistance programs, ORFI will take the lead on the case. All improper payment recovery, as a result of an intentional program violation or fraud, is managed through ORFI. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Recovery of improper payment due to fraud or intentional program violations is coordinated by the Department of Social Services, ORFI and may include repayment plans if a lump sum repayment is not negotiated. OFRI staff have expertise in fraud detection and recovery. iv. [ ] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: 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. [ ] 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: 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: Typically, a minimum dollar amount of $50 must be met before recovery due to Improper Payments from Unintentional Program Violations is implemented. Minimum dollar amounts help ensure efficient use of staff time spent in recovery activities. Currently The Lead Agency does not track information on Unintentional Program Violations that would lead to Improper Payments that are not pursued, or below the minimum dollar amount. This again is to ensure efficient use of staff time spent in recovery activities. The Lead Agency is developing new processes to include the tracking of unpursued improper payments due to Unintentional Program Violations or minimum dollar amount to ensure this data is readily available. 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: Repayment plans outline the requirements for repayment and assist in the recovery of funds related to improper payments or unintentional program violations. Repayment plans typically result in an agreement between parties often helping to ensure repayment. Over the past FFY year we have 33 cases that were determined to need to be repaid. Of those cases all of them had payment plans set up. 0 are still in progress and paying as agreed, 31 have completed the repayment plan, and 2 have not upheld the repayment plan and have had reduced payments. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: If a provider fails to repay the funds due to an unintentional program violation, the overpayment may be recovered by reducing future payments made to the provider. Reducing payments is an effective way to ensure repayment from providers who owe the state money and are not delinquent while still being paid for some for their services. Out of the total 33 cases over the last FFY year only 2 did not uphold their repayment plans. The Lead Agency then moved forward with reducing their payments in the following months. Of the 2 cases that we had to reduce payment. 2 are complete and 0 are still in progress. 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. [ ] 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: d. Does the Lead Agency investigate and recover improper payments due to agency errors? [x] No. [ ] 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. [ ] 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: 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. [ ] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: iv. [ ] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: 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. [ ] 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: If a recipient is proven to have committed an IPV, he/she may be disqualified from receiving assistance. The disqualification prevents further improper payments on behalf of the client. The first offense IPV is disqualification from receiving any monies or assistance from CCS for a period of one year. The second offense IPV is a disqualification from receiving any monies or assistance from Child Care Services for a period of two years. The third offense IPV is permanent disqualification from receiving any monies or assistance from CCS. If a recipient believes the action is incorrect, they may request an administrative hearing within 30 days of the disqualification notification letter. The request must be in writing, signed and submitted to the Department of Social Services, Office of Administrative Hearings. Funds related to IPVs are subject to repayment by the client. Recovery of funds occurs through the department Office of Recoveries and Fraud Investigations (ORFI). 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: If a provider is proven to have committed an IPV, he/she may be disqualified from receiving subsidy reimbursement. Disqualification of the provider prevents further fraudulent reimbursement. First offense IPV is disqualification from receiving any monies or assistance from CCS for a period of one year. The second offense IPV is disqualification from receiving any monies or assistance from CCS for a period of two years. The third offense IPV is permanent disqualification from receiving any monies or assistance from CCS. If a recipient believes the action is incorrect, they may request an administrative hearing within 30 days of the notification letter. The request must be inwriting, signed and submitted to the Department of Social Services, Office of Administrative Hearings. Funds related to IPVs are subject to repayment by the provider. iii. [x] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: In cases of fraud, which are handled by Department of Social Services, Office of Recoveries and Fraud Investigations (ORFI), the Department may pursue criminal prosecution. 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: