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: DCYF crossmatches the family’s information against what was reported for other programs. This allows for expedited approval times and provides program integrity as discrepancies are found. Additional questions and/or verification may be obtained when discrepancies are discovered amongst the internal systems. When Intentional program violations/fraud is suspected, a referral may be made to the Office of Fraud and Accountability for them to investigate. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: DCYF crossmatches the family’s information against what was reported for other programs allows for expedited approval times and provides program integrity as discrepancies are found. Additional questions and/or verification may be obtained when discrepancies are discovered amongst the internal systems. This also ensures that families are receiving the correct amount of benefits. 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. [ ] 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. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: DCYF has several reports that capture cases with a potential misapplication of the rule. The cases are audited and then sent to the eligibility worker and their supervisor for case correction and training. This includes homeless grace period (HGP) denied for no verification, Copay not assigned to the oldest child, new employment denied for no verification, Active/pending TANF denied for no verification, stop work requested, and Overpayments with errors. When the cases are sent back to the originating worker to fix, not only does the family receive the benefits they are entitled to, but the worker has a better understanding of the program's expectations by having to fix their error. 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: DCYF has two quality assurance audit teams. One team focuses on enrollment or correct eligibility and provider authorizations. The other team focuses on provider payments and billing records. Local lead workers conduct audits on new staff, until they reach 95% accuracy which includes an audit of eligibility and provider authorizations. The most recent audit results from IPIA and the State Auditor’s Office (SAO) show DCYF has an accuracy rate of 95%. The SAO audit, completed annually, has shown a steady decrease in errors year after year, as well as a decrease in the dollar amount of the error. The SAO audit for 2022 resulted in $0 dollars of incorrect CCDF dollars used. Audit findings inform needed changes to rule, policy, procedure, IT, and/or training. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: DCYF has two quality assurance audit teams. One team focuses on enrollment or correct eligibility and provider authorizations. The other team focuses on provider payments and billing records. Local lead workers conduct audits on new staff, until they reach 95% accuracy which includes an audit of eligibility and provider authorizations. The most recent audit results from IPIA and the State Auditor’s Office (SAO) show DCYF has an accuracy rate of 95%. The SAO audit, completed annually, has shown a steady decrease in errors year after year, as well as a decrease in the dollar amount of the error. The SAO audit for 2022 resulted in $0 dollars of incorrect CCDF dollars used. Audit findings inform needed changes to rule, policy, procedure, IT, and/or training. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: DCYF has two quality assurance audit teams. One team focuses on enrollment or correct eligibility and provider authorizations. The other team focuses on provider payments and billing records. Local lead workers conduct audits on new staff, until they reach 95% accuracy which includes an audit of eligibility and provider authorizations. The most recent audit results from IPIA and the State Auditor’s Office (SAO) show DCYF has an accuracy rate of 95%. The SAO audit, completed annually, has shown a steady decrease in errors year after year, as well as a decrease in the dollar amount of the error. The SAO audit for 2022 resulted in $0 dollars of incorrect CCDF dollars used. Audit findings inform needed changes to rule, policy, procedure, IT, and/or training. 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: DCYF eligibility supervisors and leads review eligibility determinations of all newly employed eligibility staff until the new staff demonstrate 95 percent accuracy in all their determinations. Thereafter supervisors and leads continue to randomly spot check staff determinations. Supervisors review all case actions, of their staff, when an overpayment is being submitted to the Office of Financial Recovery for collection, ensuring all rules were applied correctly. Supervisors also review all cases where the family needs more than full-time child care prior to additional care being authorized. DCYF has two quality assurance audit teams. One team focuses on enrollment or correct eligibility and provider authorizations. The other team focuses on provider payments and billing records. Local lead workers conduct audits on new staff, until they reach 95% accuracy which includes an audit of eligibility and provider authorizations. Audit findings inform needed changes to rule, policy, procedure, IT, and/or training. Providers found to have committed an intentional program violation are given technical assistance. When a provider has committed four intentional program violations, they are prohibited from participating in the child care subsidy program. Similarly, those convicted of fraud are prohibited from participating in the child care subsidy program. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: DCYF eligibility supervisors and leads review eligibility determinations of all newly employed eligibility staff until the new staff demonstrate 95 percent accuracy in all their determinations. Thereafter supervisors and leads continue to randomly spot check staff determinations. Supervisors review all case actions, of their staff, when an overpayment is being submitted to the Office of Financial Recovery for collection, ensuring all rules were applied correctly. Supervisors also review all cases where the family needs more than full-time child care prior to additional care being authorized. DCYF has two quality assurance audit teams. One team focuses on enrollment or correct eligibility and provider authorizations. The other team focuses on provider payments and billing records. Local lead workers conduct audits on new staff, until they reach 95% accuracy which includes an audit of eligibility and provider authorizations. The most recent audit results from IPIA and the State Auditor’s Office (SAO) show DCYF has an accuracy rate of 95%. The SAO audit, completed annually, has shown a steady decrease in errors year after year, as well as a decrease in the dollar amount of the error. The SAO audit for 2022 resulted in $0 dollars of incorrect CCDF dollars used. Audit findings inform needed changes to rule, policy, procedure, IT, and/or training. iii. [ ] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: e. [x] Audit provider records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: DCYF’s quality assurance provider team conducts monthly audits of provider records. This team offers about 180 incidents of technical assistance, due to intentional program violations per month. The purpose behind the technical assistance is to provide correct billing practice guidance along with the overpayment being issued to the provider. After four instances of intentional program violations the provider is prohibited from participating in the child care subsidy program. Audits indicating potential fraud are sent to the Office of Fraud and Accountability for investigation. Results of these audits are used to support technical assistance to providers, resulting in improved billing practices. ii. [ ] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: DCYF’s eligibility staff and the quality assurance auditors will write overpayments to providers for agency errors. Overpayments written to the providers for agency errors are reviewed by the overpayment workgroup on a bi-monthly cases. The workgroup ensures correct application of rules and looks for measures to reduce the overpayment from being able to occur in the future. This could be changes to rule, policy, procedure, IT, and/or training. Agency errors identified through these audits are used to improve training for staff, resulting in fewer agency errors going forward. 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 new hires complete a comprehensive onboarding that includes an overview of the program and its expectations, the Washington Administrative Code, as well as the associated policies and procedures. Staff must pass an assessment of learning after each training course to demonstrate that they have understood the content and are able to apply the concepts to practice. In addition, as all new staff begin to work on cases, all their actions are audited by a team lead, thus providing another layer of quality assurance, and highlighting areas of growth in a supported environment. Since the program undergoes periodic policy changes that impact procedures, all staff are required to participate in an informational webinar and additional training, if necessary, to understand the program expectations. Intentional program violations and fraud are submitted to the Office of Fraud and Accountability for investigation. Investigation outcomes are used to inform needed process changes for staff. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: All new hires complete a comprehensive onboarding that includes an overview of the program and its expectations, the Washington Administrative Code, as well as the associated policies and procedures. Staff must pass an assessment of learning after each training course to demonstrate that they have understood the content and are able to apply the concepts to practice. In addition, as all new staff begin to work on cases, all their actions are audited by a team lead, thus providing another layer of quality assurance, and highlighting areas of growth in a supported environment. Since the program undergoes periodic policy changes that impact procedures, all staff are required to participate in an informational webinar and additional training, if necessary, to understand the program expectations. This training results in improved staff accuracy in their determinations. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: All new hires complete a comprehensive onboarding that includes an overview of the program and its expectations, the Washington Administrative Code, as well as the associated policies and procedures. Staff must pass an assessment of learning after each training course to demonstrate that they have understood the content and are able to apply the concepts to practice. In addition, as all new staff begin to work on cases, all their actions are audited by a team lead, thus providing another layer of quality assurance, and highlighting areas of growth in a supported environment. Since the program undergoes periodic policy changes that impact procedures, all staff are required to participate in an informational webinar and additional training, if necessary, to understand the program expectations. This training results in improved staff accuracy in their determinations. 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): The office of Fraud and Accountability is response for investigating intentional program violations and suspected fraud. The Office of Financial Recover is responsible for recouping funds. 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: Office of Financial Recovery (OFR) sends a collection notice for overpayments of any amount. If the overpayment amount exceeds $250, OFR collection staff engage in formal debt collection. In state fiscal year 2023 OFR collected $2,300,087 for DCYF. 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: DCYF refers suspected client and provider criminal fraud to OFA, which investigates and refers for criminal prosecution. In cases where evidence of provider criminal fraud is insufficient, but the provider has committed a program violation, they are subject to progressive penalties and possible disqualification from receiving CCSP funds. In cases of criminal fraud conviction, the client or provider is subject to repayment of funds in question and disqualification from receiving CCSP funds. DCYF referred 1,303 cases to OFA for investigation in 2023. DCYF wrote 1,229 overpayments which were referred to OFR in 2023. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: OFR establishes repayment plans with providers and clients, with the goal of ensuring repayment monthly amounts do not exceed 10 percent of income, where possible. OFR does not have a way to identify specific cases with a repayment plan but in state fiscal year 2023 OFR collected $2,300,087 for DCYF. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: OFR has authority to reduce provider subsidy reimbursement in subsequent months in order to satisfy any overpayment debt established and exercises that authority as needed to ensure timely satisfaction of the debt. In state fiscal year 2023 OFR collected $430,333 through offset payments to providers. 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: OFA investigates improper payments related to fraud. If the improper payment is not related to fraud both the QA staff and the eligibility staff are able to investigate and then send the overpayment to OFR. Overpayments are written to clients and providers as described in WAC 110-15- 0268 and 110-15-0271. 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: DSHS/OFR sends a collection notice for overpayments of any amount. If the overpayment amount exceeds $250, OFR collection staff engage in formal debt collection. In state fiscal year 2023 OFR collected $2,300,087 for DCYF. 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: DCYF sends overpayment referrals to OFR, who will send collection notices for the overpayments. DCYF wrote 1,229 overpayments which were referred to OFR in 2023. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: OFR establishes repayment plans with providers and clients, with the goal of ensuring repayment monthly amounts do not exceed 25 percent of income, unless requested. The repayment plans are created between the OFR revenue agent and the client or provider. OFR does have a way to identify specific cases with a repayment plan but in state fiscal year 2023 OFR collected $2,300,087 for DCYF. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: OFR has authority to reduce provider subsidy reimbursement in subsequent months in order to satisfy any overpayment debt established and exercises that authority as needed to ensure timely satisfaction of the debt. This subsidy offset is something set up by the OFR revenue agent and the provider. In state fiscal year 2023 OFR collected $430,333 through offset payments to providers. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [x] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: OFA conducts investigations for DCYF. They have 38 investigators who will conduct criminal and fraud investigations and then write any overpayment related to their investigations. DCYF QA team has six provider auditors who conduct about 250 providers audits per month. These audits include providing technical assistance for any program violation accompanied by an overpayment for any misspent funds. DCYF QA has 6 eligibility auditors who conduct about 400 audits per month. These audits provide technical assistance to the eligibility worker including instructions when an overpayment needs to be made, or a referral to OFA is needed. 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: DCYF Quality Assurance Unit identifies errors. Unit staff write overpayments to clients and providers as described in WAC 110- 15-0268 and 110-15- 0271. Overpayments are subject to appeal through an administrative hearing under WAC 110-03. OFR is responsible for overpayment collection. In state fiscal year 2023 OFR collected $2,300,087 for DCYF. 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? [ ] No. [x] 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. [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: DSHS/OFR sends a collection notice for overpayments of any amount. If the overpayment amount exceeds $250, OFR collection staff engage in formal debt collection. DCYF processes about 102 overpayments per month. In state fiscal year 2023 OFR collected $2,300,087 for DCYF. 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: DCYF refers client and provider overpayments to OFR for recovery. DCYF refers about 102 overpayments per month to OFR for collection. In state fiscal year 2023 OFR collected $2,300,087 for DCYF. iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: OFR establishes repayment plans with providers and clients, with the goal of ensuring repayment monthly amounts do not exceed 25 percent of income unless requested by provider or client. The repayment plans are created by the OFR revenue agent and the client or provider, DCYF is not involved once the overpayment is sent to OFR. OFR does have a way to identify specific cases with a repayment plan but in state fiscal year 2023 OFR collected $2,300,087 for DCYF. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: OFR has authority to reduce provider subsidy reimbursement in subsequent months to satisfy any overpayment debt established and exercises that authority as needed to ensure timely satisfaction of the debt. The offset of payment option decisions occurs between the OFR revenue agent and the provider. In state fiscal year 2023 OFR collected $430,333 through offset payments to providers. 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: DCYF’s Quality Assurance Unit identifies agency errors. Unit staff write overpayments to clients and providers as described in WAC 110-15-0268 and 110-15- 0271. Overpayments are subject to appeal through an administrative hearing under WAC 110-15-0280. DSHS Office of Financial Recovery (OFR) is responsible for overpayment collection. For SFY2023 DCYF wrote 96 overpayments to consumers for $223,921 and 1,133 overpayments to providers for $650,086. 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: Clients are disqualified from participating in the child care subsidy program for five years when convicted of fraudulently obtaining child care subsidy benefits. This process requires a criminal conviction. Families that are denied child care due to a criminal conviction may request a hearing regarding the denial under the administrative hearing rules. An administrative law judge will preside over the client’s request for a hearing. The disqualification rule has eliminated the need to have additional investigations done due to the family continuing to reapply for child care benefits after a criminal conviction when they were not eligible. DCYF disqualified 6 families during FY 2023 due to being criminally prosecuted and found guilty. 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: In the event DCYF quality assurance audits indicate a provider received an improper payment due to a program violation, staff establish overpayments and provide coaching and technical assistance to the provider to prevent future program violations. In the event the provider repeatedly commits program violations after receiving this assistance, they are subject to disqualification. See WAC 110-15-0277. Providers may appeal overpayments, and disqualification through the administrative hearing process. An administrative law judge will preside over the providers request for a hearing. Providers convicted of fraud are prevented from participating in child care subsidy program permanently. DCYF has only disqualified one provider, for fraud, since 2019 so do not have a sample size large enough to point to results. iii. [x] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: DCYF refers suspected client and provider criminal fraud to OFA, which investigates and refers for criminal prosecution. In cases where evidence of provider criminal fraud is insufficient for OFA referral, but the provider has committed a program violation the provider is subject to progressive penalties and possible disqualification from receiving CCSP funds. In cases of criminal fraud conviction, the provider is subject to repayment of funds in question and permanent disqualification from receiving CCSP funds. Clients convicted of criminal fraud are subject to repayment of funds in question and disqualification from receiving CCSP funds for 5 years. DCYF disqualified 6 families and 0 providers during FY2023 due to criminal convictions. 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: