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). 10/1/2023 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)? 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) 259.00 Per Week 0.00 259.00 60.00 240.00 259.00 288.00 Family Child Care for Infants (6 months) 180.00 Per Week 0.00 180.00 54.00 175.00 180.00 205.00 Center Care for Toddlers (18 months) 235.00 Per Week 0.00 235.00 59.00 215.00 235.00 265.00 Family Child Care for Toddlers (18 months) 175.00 Per Week 0.00 175.00 59.00 167.00 175.00 200.00 Center Care for Preschool ers (4 years) 205.00 Per Week 0.00 205.00 60.00 191.00 205.00 237.00 Family Child Care for Preschool ers (4 years) 160.00 Per Week 0.00 160.00 55.00 153.00 160.00 173.00 Center Care for School- Age (6 years) 119.00 Per Week 0.00 119.00 57.00 102.00 120.00 143.00 Family Child Care for School- Age (6 years) 125.00 Per Week 0.00 125.00 58.00 108.00 125.00 150.00 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) 169.00 Per Week 0.00 169.00 61.00 155.00 165.00 180.00 Family Child Care for Infants (6 months) 133.00 Per Week 0.00 133.00 70.00 125.00 130.00 140.00 Center Care for Toddlers (18 months) 155.00 Per Week 0.00 155.00 55.00 150.00 155.00 170.00 Family Child Care for Toddlers (18 months) 126.00 Per Week 0.00 126.00 64.00 120.00 122.00 145.00 Center Care for Preschool ers (4 years) 148.00 Per Week 0.00 148.00 61.00 140.00 147.00 160.00 Family Child Care for Preschool ers (4 years) 120.00 Per Week 0.00 120.00 56.00 115.00 120.00 131.00 Center Care for School- Age (6 years) 110.00 Per Week 0.00 110.00 58.00 100.00 110.00 127.00 Family Child Care for School- Age (6 years) 120.00 Per Week 0.00 120.00 51.00 112.00 120.00 120.00 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. [x] Differential rate for non-traditional hours. Describe: Child care providers may receive a 15% differential when providing services for children during non- traditional hours. (The majority of a child’s care is offered between the hours of 6:00pm and 6:00am.) Differential rates are determined based upon the base rates established following the MRS. ii. [x] Differential rate for children with special needs, as defined by the Lead Agency. Describe: Child care providers may receive a 15% differential when providing services for children with disabilities and special needs. Differential rates are determined based upon the base rates established following the MRS. iii. [x] 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: Child care providers may receive a 15% differential when providing services for infants and toddlers. Differential rates are determined based upon the base rates established following the MRS. 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: Child care providers participating in the Tennessee Quality Rating Improvement System (QRIS) are eligible to receive a quality bonus differential based on annual QRIS scores: A composite score of 90 to 100 receives a 20 percent quality bonus differential. A composite score of 80 to 89 receives a 15 percent quality bonus differential. Differential rates are determined based upon the base rates established following the MRS. vi. [x] Other differential rates or tiered rates. For example, differential rates for geographic area or for type of provider. Describe: Child care providers that deliver child care services in counties determined child care deserts or distressed counties may receive a 15 percent differential. Differential rates are determined based upon the base rates established following the MRS. 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 Lead Agency determines its reimbursement rates for the Child Care Payment Assistance/Certificate Program based on top tier and lower tier counties. Top tier counties are those with the 20 highest average populations and highest per capita incomes as identified by the MRS. The effective date of the Lead Agency’s reimbursement rate schedule is applicable to both the general (or base) reimbursement rates and any changes in county tier level that may impact the amount a child care provider within a county may be paid. The Lead Agency implements quality bonus differentials linked to the Tennessee Quality Rating and Improvement System (QRIS) which incentivize standards that exceed minimum licensing requirements and promote demonstration by providers of higher-quality care. b. How did the Lead Agency determine that the rates are adequate to meet health, safety, quality, and staffing requirements under CCDF? The Lead Agency continuously evaluates its reimbursement rates using Market Rate Surveys and Cost of Quality Care Analyses to ensure child care child providers adequately reimbursed to meet or exceed basic health, safety, quality, and staffing CCDF requirements. Recognizing reimbursement rates may be adequate for a basic level of care, the Lead Agency has implemented a series of statewide reimbursement rate increases and introduced several targeted differential incentives above the reimbursement rates during the prior CCDF Plan cycle as described at 4.3.3.b. 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 Lead Agency used its narrow cost analysis and market rate survey to implement targeted adjustments so that all reimbursement rates were at least at the 60th Percentile of SMI on October 01, 2023. Recognizing that costs associated with infant and toddler care are higher than other care levels, the Lead Agency implemented a 15 percent infant and toddler care on October 01, 2023. d. How did the Lead Agency account for the cost of higher quality while setting payment rates? The Lead Agency implements quality bonus differentials linked to the Tennessee Quality Rating and Improvement System (QRIS) which incentivize standards that exceed minimum licensing requirements and promote demonstration by providers of higher- quality care. Bonus payments are available for child care providers licensed by the Lead Agency as described at 4.3.3.b.v. 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.