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. [ ] 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. [ ] 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:: 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: The automated child care system identifies attendance swiped during nontraditional hours. This may indicate the provider has the recipient’s card and is swiping attendance. The Vendor Relations Unit reviews the documentation and refers the case to the VDSS local fraud unit for investigation and then to the Commonwealth’s attorney for the possible prosecution. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The child care automation system is designed with internal controls that ensures payments do not exceed authorized hours of care. Program staff can also review payment reports and compare to attendance records. If there are inconsistencies, reviews are conducted to arrive at a reason for the errors. The errors are corrected by the appropriate team members. The case management system also has internal checks and balances. All benefit programs (SNAP, Medicaid, TANF and Energy Assistance) are housed in the VaCMS (Virginia Case Managment System). This ensures a more accurate processing system and a reduction of error and chances of fraud. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: When audits detect billing errors, the local VDSS agency work out repayment plans with providers. If fraud is involved, the local VDSS fraud unit conducts an investigation. Results include average VDSS payment plans of $30,000 each year. These activities have better informed statewide practice, detect potential fraud, and issues with the automated system. 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: VaCMS is programmed to ensure that all attendance swipes are connected with an authorized payment. Program staff conduct audits of the reports to detect billing that is inconsistent with payment records. These reports and documentation can identify attendance swipes that are over the authorization. This helps identify areas where additional training is needed for either parents and or DSS eligibility staff. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The VaCMS system is programed to ensure that only children enrolled in the program and have approved authorizations receive payments. Program staff can conduct audits of the attendance reports and connect them to billing and payment records. This aids in detecting errors. Regular audits of the reports ensure that then system is working and that authorizations are correct. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: When audits detect billing errors, the local VDSS agency work out repayment plans with providers. If fraud is involved, the local VDSS fraud unit conducts an investigation. Results include average VDSS payment plans of $30,000 each year. These activities have better informed statewide practice, detect potential fraud, and issues with the automated system. 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. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Supervisors and Regional consultants review case actions for proper program implementation. These reviews are conducted with a standard case and fiscal review process. Any errors that are identified can be used for training and or policy clarifications, or revisions to processes. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: During the reviews the regional practice consultants identified issues and worked to help eliminate unnecessary steps in the approval process. Errors were identified on some of the forms used for eligibility determination. Forms with frequent errors were reviewed to determine if the form could be clearer and necessary. Several forms were eliminated that were not necessary. Results included: 1. Eliminate requirement to have a signed Service Plan 2. Eliminate guidance regarding copied driver’s license to verify applicant identity 3.Consolidate Parent Responsibility form into Service Application w/out separate signature 4. Add maximum income limit for reporting changes to NOA 5. System requires valid residency/address verification before certification of eligibility 6. Evaluate income at initial determination and redetermination (no changes to income during 12-month cert. period except for reductions in income) 7. Revised guidance to accept a record of birth issued by the hospital showing birth in one of the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, or the Northern Mariana Islands, (unless the child was born to foreign diplomats residing in such a jurisdiction) to verify a child's citizenship regardless of the child's age. e. [ ] Audit provider records. 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: 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: All local agency child care subsidy staff receive fraud training from DSS and VDOE. This training informs local agency child care staff on identifying fraud and what to do when they suspect fraudulent activities. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: Child care subsidy staff are required to complete training on guidance, policies and procedures for implementing the Child Care Subsidy Program. These trainings make sure that all staff have an understanding of program regulations and policies. Local staff are also trained on using the attendance tracking system. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Training helps to increase the awareness of topics that could be potential errors and also ensures that up to date on policy changes. Each time a policy change is made, a memo describes the policy update and any system changes. Training also helps local workers make sure that parents have the most up to date information when entering attendance. Agency process has been successful in identifying possible errors that will impact future errors that will help eliminate both intentional and unintentional violations and ultimately reduce the 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): Potential fraud and overpayments are identified through monitoring and compliance reviews by the VDSS Payment Accuracy Unit, Regional Practice Consultants, Vendor Relations Unit and Local Review Team, as well as from third party Single Audits and annual audits from the Virginia Auditor of Public Accounts. Findings from the reviews, whether intentional or unintentional, may result in payment recoveries, adjustments, and referrals to fraud investigators. Corrective Action Plans and follow-up reviews by each reviewing entity are conducted to verify corrections are made and misspent funds recovered. The local department of social services or the VDSS Local Reimbursement Unit receive and process the funds recovery, including the establishment of payment plans. Each local department of social services is served by at least one fraud investigator who investigates allegations of fraud. Fraud staff will refer fraud cases to local Commonwealth Attorney’s if the case meets certain criteria established by the Attorney’s office for prosecution, typically based on dollar amount. If overpayment or fraud is established, the child care staff in the applicable local department establishes and monitors a repayment agreement. State staff and regional consultants follow-up with the localities, and recoveries are reported in the financial systems of both the locality and VDSS. 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. [ ] 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. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: Payments are collected through repayment plans with the local department of social services. The plans are recorded in VaCMS so that the system will automatically deduct the recovery payment from future payments to the locality. This process allows providers to make their required payment without undo hardships. A quarterly report is provided to senior fiscal and administrative staff for monitoring purposes. For the quarterly period ending 6/30/24, a total of $119,956.19 in CCDF was recovered through this process. 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. [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: Once an improper payment is identified through the payment accuracy team, regional practice consultants investigate the reason for the improper payment. The regional consultants are able to provide training and technical assistance to the responsible employee (s). Although this is not the only responsibility of the regional consultants, this is a part of their responsibilities. For the quarter ending 6/30/24, improper payments of $50,623 were identified through this procedure. Each local department of social services has a fraud unit also available to assist in investigations. The unit consists of specialized workers trained to identify and investigate fraud. Reviewing improper payments allowed the regional consultants to identify potential training topics. 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? [x] No. [ ] 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. [ ] 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: 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: Applicant/recipients may be disqualified from participating in the child care subsidy program for three months upon the first finding of child care fraud, 12 months upon the second finding and permanently upon the third finding, unless otherwise mandated by the court. Applicants/recipients may appeal through the Lead Agency's Administrative Disqualification process. Appeals are heard and determined by Hearing Officers in the DSS Division of Appeals and Fair Hearings. Should an applicant/recipient choose, they may further appeal to Circuit Court. Clients have 10 days from the date they receive notice of termination or dismissal from the subsidy program to appeal the decision. Clients are advised of this right, in writing that dismisses them from the subsidy program. They are advised that they have the right to a hearing, informs them how to request a hearing, and informs them that they may be represented by legal counsel at the hearing. All client hearing requests are forwarded to the Lead Agency’s Legal Division who then forwards all hearing requests to the Office of the Attorney General. This process has been successful in identifying issues that impact future statewide improper payments and reducing the error rate for improper payments. 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 may be permanently disqualified from participating in the child care subsidy program upon the first finding of child care fraud. Providers may appeal under Virginia's Administrative Process Act. The vendor commits fraud; provides false information or the local department of social services; fails to notify the lead agency of a change in circumstances that affects payments received by the vendor; accepts payments that the vendor knows, or should reasonably have known, that vendor is not entitled to such payments; makes a claim for payment to which the vendor is not entitled pursuant to the terms of this Agreement and all applicable rules, laws and regulations. The vendor shall repay any amounts overpaid due to such actions unless otherwise provided by court order, if any. The vendor, its owners, members or principles if the vendor is corporation, partnership, or limited liability company, shall be permanently disqualified from participating in the Program upon the first finding of any action described herein this paragraph committed by the vendor. This process has been successful in identifying issues that impact future statewide improper payments and reducing the error rate for improper payments. This also helps influence future statewide policy and training for local agencies in identifying fraud. iii. [x] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: Recipient and provider fraud is investigated by the local departments of social services. If they determine that fraud has been committed, the case is referred to their Commonwealth Attorney. If the Commonwealth Attorney declines to prosecute (usually due to the dollar amount involved), recipients many be disqualified from program participation through the Administrative Disqualification process described above. The results of all fraud cases are reviewed by staff and utilize to inform training and policies. The results to include the number of recipient reports for improper payments of the cases and the number of recipient sanctions for fraudulent misrepresentation are reviewed by staff and utilize to inform training and policies. The prosecution of providers has been successful in identifying the specific issues that help impact future error rate estimates and also reduce the error rate. iv. [x] Other. Describe the activities and the results of these activities based on the most recent analysis: The Child Care Subsidy Program Guidance Manual states the following: Sections 3 & 4 - It is the parent's responsibility to repay fraud-related overpayments or non-fraud overpayments according to the repayment schedule entered into with the local department. Parental failure to repay overpayments may result in denial of application or case closure at redetermination. Applicant/recipients who fail to enter into a written repayment schedule with the local department for overpayment due to fraud or for an IPV overpayment will be disqualified from participating in the child care subsidy program until entering into a written repayment schedule. However, if the parent files a valid appeal regarding the overpayment, the parent will not be required to enter into a repayment schedule until the appeal decision is issued. The results to include the number of recipient reports for improper payments of the cases and the number of recipient sanctions for fraudulent misrepresentation are reviewed by staff and utilize to inform training and policies. Applicant/recipients who fail to make three consecutive payments according to the written repayment schedule with the local department for overpayment due to fraud or for non-fraud overpayment will be disqualified from participating in the child care subsidy program, upon missing the third payment, until all delinquent payments are made. If a recipient agrees to make monthly payments, they are out of compliance the first month a payment is missed. VaCMS provides a tracking system to ensure that repayments are established and satisfied. Improper payments collected by local departments of social services must not be sent to the Home Office; instead they must be deposited into local bank accounts according to established local procedures. Home Office staff will make adjusting entries in LASER, based on collection data entered in VaCMS by the LDSS. The result in collecting thee payments results approximately $119,000 for last state fiscal year. 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: