4.4 Payment Practices to Providers

Lead Agencies must use subsidy payment practices that reflect practices that are generally accepted in the private pay child care market. The Lead Agency must ensure timeliness of payment to child care providers by paying in advance or at the beginning of delivery of child care services. Lead Agencies must also support the fixed cost of child care services based on paying by the child’s authorized enrollment, or if impracticable, an alternative approach that will not undermine the stability of child care programs as justified and approved through this Plan. Lead Agencies must also (1) pay providers based on established part-time or full-time rates rather than paying for hours of service or smaller increments of time, and (2) pay for reasonable, mandatory registration fees that the provider charges to private-paying parents. These policies apply to all provider types unless the Lead Agency can demonstrate that in limited circumstances the policies would not be considered generally-accepted payment practices. In addition, Lead Agencies must ensure that child care providers receive payment for any services in accordance with a payment agreement or an authorization for services, ensure that child care providers receive prompt notice of changes to a family’s eligibility status that could impact payment, and have timely appeal and resolution processes for any payment inaccuracies and disputes. 4.4.1 Prospective and enrollment-based payment practices Lead Agencies must use payment practices for all CCDF child care providers that reflect generally- accepted payment practices of providers serving private-pay families, including paying providers in advance or at the beginning of the delivery of child care services and paying based on a child’s authorized enrollment or an alternative approach for which the Lead Agency must demonstrate paying for a child’s authorized enrollment is not practicable and it will not undermine the stability of child care programs. Lead Agencies may only use alternate approaches for subsets of provider types if they can demonstrate that prospective payments and authorized enrollment-based payment are not generally-accepted for a type of child care setting. Describe the Lead Agency payment practices for all CCDF child care providers: a. Does the Lead Agency pay all provider types prospectively (i.e., in advance of or at the beginning of the delivery of child care services)? [ ] Yes. If yes, describe: [x] No, it is not a generally-accepted payment practice for each provider type. If no, describe the provider type not paid prospectively and the data demonstrating it is not a generally-accepted payment practice for that provider type, and describe the Lead Agency’s payment practice that ensures timely payment for that provider type: All vendors in the Child Care Subsidy Program receive payment every two weeks by direct deposit through Conduent, a third-party vendor who acts as the State Provider Management Agent. Each month is divided into two service periods, the 1st through the 15th and the 16th through the 30th or 31st. Payment deposit dates are generally two three weeks following the end of the service period. A Payment Schedule is posted on Virginia’s website (www.childcare.virginia.gov). The Agency will make strides toward prospective payment, as required by provision § 98.45(m)(1) to pay providers prospectively in the CCDF Final Rule. The Lead Agency requested a legislative and transitional waiver in June 2024 to provide more time for implementation, due to state policy and technology constraints. b. Does the Lead Agency pay based on authorized enrollment for all provider types? [ ] Yes. The Lead Agency pays all providers by authorized enrollment and payment is not altered based on a child’s attendance or the number of absences a child has. [ ] No, it is not a generally-accepted practice for each provider type. If no, describe the provider types not paid by authorized enrollment, including the data showing it is not a generally-accepted payment practice for that provider type, and describe how the payment policy accounts for fixed costs: [x] It is impracticable. Describe provider type(s) for which it is impracticable, why it is impracticable, and the alternative approach the Lead Agency uses to delink provider payments from occasional absences, including evidence that the alternative approach will not undermine the stability of child care programs, and thereby accounts for fixed costs: The Department pays vendors for up to 60 absent days per-child, per-fiscal year (June 1- May 31). This threshold was identified based on a review of data and reflects the number of absence days that is sufficient to cover the vast majority of absence events among children in the CCSP in an effort to move toward a full pay-by-enrollment model. The Agency will make strides toward payment by enrollment, as required by provision § 98.45(m)(2) in the CCDF Final Rule. In June 2024, VDOE requested a waiver to comply with the requirement to pay by enrollment. This will give the agency time to revise its policies, processes, and technology to comply with the requirement while maintaining strong internal controls and review procedures. 4.4.2 Other payment practices Lead Agencies must (1) pay providers based on established part-time or full-time rates rather than paying for hours of service or smaller increments of time, and (2) pay for reasonable, mandatory registration fees that the provider charges to private-paying parents, unless the Lead Agency provides evidence that such practices are not generally-accepted for providers caring for children not participating in CCDF in its State or Territory. a. Does the Lead Agency pay all providers on a part-time or full-time basis (rather than paying for hours of service or smaller increments of time)? [x] Yes. [ ] No. If no, describe the policies or procedures that are different than paying on a part- time or full-time basis and the Lead Agency’s rationale for not paying on a part-time or full-time basis: b. Does the Lead Agency pay for reasonable mandatory registration fees that the provider charges to private-paying parents? [x] Yes. If yes, identify the fees the Lead Agency pays for: The Commonwealth pays one registration fee per child per fiscal year for children authorized with Level II vendors (up to a maximum of $100). [ ] No. If no, identify the data and how data were collected to show that paying for fees is not a generally-accepted payment practice: c. Describe how the Lead Agency ensures that providers are paid in accordance with a written payment agreement or an authorization for services that includes, at a minimum, information regarding provider payment policies, including rates, schedules, any fees charged to providers, and the dispute-resolution process: Vendors are paid based on the information included in the Purchase of Services Order (POSO), which includes: The name of the child care vendor; Whether the special needs rate is authorized or if in home care is provided; The funding program for the services authorized (TANF/VIEW, Head Start Wraparound, or Fee); The authorized copayment; The child care schedule; and The registration fee. When changes to a parent's eligibility occur, providers are sent a revised POSO outlining the changes. This POSO must be sent to the vendor and to the parent at least 10 days in advance of the date the action is to become effective. d. Describe how the Lead Agency provides prompt notice to providers regarding any changes to the family’s eligibility status that could impact payments, and such a notice is sent no later than the day that the Lead Agency becomes aware that such a change will occur: Changes to a family's eligibility status are sent to the provider through the issuance of a new POSO or a termination POSO if the family is no longer eligible for assistance or elects to terminate care with the provider. This POSO must be sent to the vendor and to the parent at least 10 days in advance of the date the action is to become effective. e. Describe the Lead Agency’s timely appeal and resolution process for payment inaccuracies and disputes: If the Vendor disputes the amount of payment made for a reported time period, the Vendor may submit a written statement to the VDSS Division of Benefit Programs Child Care Subsidy Program detailing the dispute within thirty (30) days from the date the payment was received. Disputes between the Vendor and VDSS on behalf of the Lead Agency regarding the payment for services rendered may be appealed by the Vendor in accordance with the Child Care Vendor Agreement. The Vendor may further appeal this decision and request a formal hearing to be presided over by a hearing officer, pursuant to the Virginia Administrative Process Act (the "APA"; Va. Code § 2.2-4000 et seq.), who will recommend a decision to the Lead Agency’s Superintendent of Public Instruction. The Vendor may seek court review of the Superintendent’s decision pursuant to the APA. f. Other. Describe any other payment practices established by the Lead Agency: NA 4.4.3 Payment practices and parent choice How do the Lead Agency’s payment practices facilitate provider participation in all categories of care? Virginia is committed to ensuring that families participating in the Child Care Subsidy Program have the opportunity to choose from the full range of available providers in the state. Virginia data indicates that children receiving subsidies are enrolled among diverse provider types. Overall, the distribution of children enrolled in subsidy roughly mirrors that of the overall approved capacity, with subsidy enrollment at license-exempt centers (7%) being lower than the share of overall approved capacity (20%). Enrollment in other settings, such as licensed centers (84%), is higher than the share of approved capacity (76%). The share of subsidy-participating children enrolled in licensed (7%) and license-exempt (2%) family day homes is greater than their share of approved capacity (3% and 1%, respectively). Current policies follow generally accepted payment practices, including covering the cost of registration fees, making payments based on a full- and part-day units, and establishing rate differentials for children with special needs. Additionally, Virginia increased the number of paid absence days from 36 to 60 in August 2023, which￿according to Virginia data￿ensures that the vast majority of absence events for CCSP-participating children are paid for by the state. Additionally, Virginia revised payment practices to further minimize burden for parents and providers in June 2021. The Alternative Payment Process (APP) allows Virginia to meet its current regulatory obligations to pay based on attendance while reducing how often parents are 63 | Page FFY 2025￿2027 CCDF State Plan required to use their swipe cards at Point of Service (POS) devices within child care sites. This minimizes the need for manual attendance and delays in payment processing.