CFS-18-11-00010-P Child Care Subsidy Fraud Prevention

5/4/11 N.Y. St. Reg. CFS-18-11-00010-P

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 18

May 04, 2011

RULE MAKING ACTIVITIES

OFFICE OF CHILDREN AND FAMILY SERVICES

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. CFS-18-11-00010-P

Child Care Subsidy Fraud Prevention

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of Parts 414, 415, 416, 417 and Subparts 418-1 and 418-2 of Title 18 NYCRR.

Statutory authority:

Social Services Law, sections 20(3)(d), 34(3)(f), 390(2)(d), (3)(e)(ii), 410(1) and title 5-C

Subject:

Child Care Subsidy Fraud Prevention.

Purpose:

To clarify when child day care providers may be disqualified from receiving payments for child care subsidies due to fraud.

Text of proposed rule:

A new subparagraph (18) is added to paragraph (a) of section 414.15 to read as follows:

(18) All school-age child care programs that accept direct and indirect payments from a social services district, or a payment from a parent or caretaker, for providing subsidized child care must comply with all relevant requirements of the child care subsidy program and section 415.4(h) of this Title.

A new subparagraph (9) of paragraph (c) of section 415.4 is added and reads as follows:

(9)(i) The social services district shall allow, disallow, or defer a claim for reimbursement, submitted by an eligible provider to the social services district, for the purpose of providing child care services pursuant to this Part within 30 days of receiving such claim.

(ii) The social services district may defer a claim for reimbursement only in the following circumstances:

(a) Upon the recommendation of a federal, state, or local agency, when the agency has informed the social services district that continued payments of such claims place the social service district at risk of making payments for services that were not provided in accordance with the applicable state regulations, or

(b) After an initial review of the claim by the social services district revealed inaccuracies in the claim that warrant a more detailed review, or

(c) Upon notification of the existence of a pending criminal charge involving fraud.

(iii) The social services district may disallow payment for claims for services provided to any and all children receiving a child care subsidy for the time period in which:

(a) an enrolled provider is found by the Office to be operating or have operated a child care program, required to be licensed or registered with the Office, without obtaining such license or registration, or

(b) a licensed or registered provider is found by the Office to be operating or have operated over its licensed or registered capacity, or

(c) an enrolled informal provider is found by the Office to be caring or have cared for more children than the limits defined in section 415.1(h).

Paragraph (h) of section 415.4 is amended to read as follows:

(h)(1) A social services district may refuse to allow a child care provider that is not in compliance with this section and regulations promulgated by the Office, or any approved additional requirements of the social services district, to provide subsidized child care services to a child.

(2)(i) A social services district may disqualify a provider from receiving payment for child care services provided under the child care subsidy program if a provider:

(a) is criminally convicted of fraud;

(b) is found to be civilly liable for fraud;

(c) has voluntarily admitted to filing a false claim for reimbursement for child care services;

(d) has been disqualified from the Child and Adult Care Food Program, by the New York State Department of Health and/or its sponsoring agency, for submission of false information on the application, submission of a false claim for reimbursement or failure to keep required records;

(e) has failed to comply with the terms of a repayment plan with the social services district, or

(f) has a conviction of any activity that occurred in the past seven (7) years that indicated a lack of business integrity; or

(g) has been found by a social services district, after the social services district has conducted an administrative review in accordance with clause (ii) of this subparagraph, to have submitted a false claim(s) to a social services district for reimbursement.

(ii) An administrative review by a social services district must include the following:

(a) A review of the claims submitted to the social services district and any other information or documentation obtained by the social services district to determine the accuracy of the information contained in the claims; and if a social services district determines after such a review that a provider submitted inaccurate information in the claims, then a preliminary review report must be prepared by a social services district and sent to the child care provider that is the subject of the review for a response.

(b) A child care provider must be given 20 days, from the date the district sent the preliminary review report to respond to the report. A child care provider may respond in writing presenting evidence and arguments that the provider believes refute the findings of the preliminary review report, or may request a formal review by a social services district, which allows a provider, in person, to present evidence and arguments in support of his/her position.

(c) If no response from a provider is received by a social services district within 20 days from the date of the postmark of the preliminary review report, the report may be finalized by a social services district. A final report, issued under this subclause, may be the basis for a social services district to disqualify a provider from providing subsidized child care.

(d) If a response from a provider is received by a social services district within 20 days from the date of the postmark of the preliminary report, the social services district must review and evaluate the response and may make appropriate changes based on the response from the provider, before issuing a final review report. Upon completion of the review, the social services district shall issue a final review report, such report must be sent to the child care provider that is the subject of the review.

(e) A child care provider, upon receipt of a final review report, must be given 10 days from the date of the postmark of the final review report to respond, and to request a formal review by the social services district. A final review report issued under this subclause, where a provider does not request a formal review within the 10-day specified timeframe, or does not provide a response that disproves the findings of said report, may be the basis for a social services district to disqualify a provider from providing subsidized child care.

(f) A social services district, upon receipt of a request for a formal review by a provider found in a final review report to have submitted inaccurate claims, must conduct such a review within 30 days of receipt of the request.

(g) A social services district at a formal review must allow a provider, in person, to present evidence and arguments in support of the provider's position.

(h) A social services district, after a formal review and after reviewing the evidence and arguments supplied by a provider at a formal review must make a final determination of whether a provider submitted false claims. A final determination that a provider submitted false claims may be the basis for a social services district to disqualify a provider from providing subsidized child care.

(iii) A provider who has been disqualified from receiving payment for child care services provided under the child care subsidy program by a social services district under clause (i) of this subparagraph is ineligible to receive such payments through any social services district for five years from the date of the disqualification, if such a provider made full restitution of any and all falsely obtained funds to the social services district. If such a provider did not make full restitution to a social services district, then the provider will remain ineligible to provide subsidized child care.

(iv) A social services district that disqualifies a provider from receiving a payment for child care services provided under the child care subsidy program must provide appropriate information concerning the disqualification to the appropriate regional office of the Office's Division of Child Care Services if the provider is a licensed or registered day care provider, or to the appropriate legally-exempt caregiver enrollment agency if the provider is a legally-exempt child care provider.

(3) In accordance with a plan approved by the Office, a social services district will have the right to make announced or unannounced inspections of the records and premises of any provider that provides care for subsidized children, including the right to make inspections prior to subsidized children receiving care in a home where the inspection is for the purpose of determining whether the child care provider is in compliance with applicable laws and regulations and any additional requirements imposed on such a provider by the social services district. A social services district must notify the Office immediately of any violations of regulations and must provide the Office with an inspection report documenting the results of such inspection.

(4) Nothing contained in this Part will diminish the authority of the local social services district from referring a matter to the appropriate district attorney or law enforcement agency.

A new section 415.12 is added and reads as follows:

Section 415.12 Eligible Provider Responsibilities

(a) An eligible provider that provides child care services to families receiving child care subsidies must comply with the following requirements:

(1) An eligible provider must operate their child care program in compliance the applicable Office regulations. Failure to operate in compliance with the Office regulations may result in the Office taking enforcement action pursuant to section 413.3 of this Title.

(2) An eligible provider, on a daily basis, must maintain current and accurate attendance records for each child showing the date of attendance with the time of arrival and departure. Full day absences must also be noted.

(3) An eligible provider must certify that all documentation and information provided to a social services district is accurate and true. Any false or fraudulent claims for payments by a provider may result in the deferral or disallowance of payment for such claims with a social services district, a referral to the Office for the revocation of a provider's registration or license, and/or referral for criminal prosecution.

(4) An eligible provider must not charge more for subsidized child care than the provider charges for non-subsidized care.

A new subparagraph (21) of paragraph (a) of section 416.15 is added and reads as follows:

(21) All group family day care homes that accept direct and indirect payments from a social services district, or a payment from a parent or caretaker, for providing subsidized child care must comply with all relevant requirements of the child care subsidy program and section 415.4(h) of this Title.

A new subparagraph (21) of paragraph (a) of section 417.15 is added and reads as follows:

(21) All family day care homes that accept direct and indirect payments from a social services district, or a payment from a parent or caretaker, for providing subsidized child care must comply with all relevant requirements of the child care subsidy program and section 415.4(h) of this Title.

A new subparagraph (19) of paragraph (a) of section 418-1.15 is added and reads as follows:

(19) All day care centers that accept direct and indirect payments from a social services district, or a payment from a parent or caretaker, for providing subsidized child care must comply with all relevant requirements of the child care subsidy program and section 415.4(h) of this Title.

A new subparagraph (19) of paragraph (a) of section 418-2.15 is added and reads as follows:

(19) All small day care centers that accept direct and indirect payments from a social services district, or a payment from a parent or caretaker, for providing subsidized child care must comply with all relevant requirements of the child care subsidy program and section 415.4(h) of this Title.

Text of proposed rule and any required statements and analyses may be obtained from:

Public Information Office, NYS Office of Children and Family Services, 52 Washington Street, Rensselaer, New York 12144, [phone]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority:

Section 20(3)(d) of the Social Services Law (SSL) authorizes the Commissioner of the Office of Children and Family Services (Office) to establish rules, regulations and policies to carry out the Office's powers and duties under the SSL.

Section 34(3)(f) of SSL authorizes the Commissioner to establish regulations for the administration of public assistance and care within the State.

Section 390(2)(d) of the SSL authorizes the Office to establish regulations for the licensure and registration of child day care providers.

Section 410(1) of the SSL authorizes a social services official of a county, city or town to provide day care for children at public expense and authorizes the Office to establish criteria for when such day care is to be provided.

Title 5-C (sections 410-u through 410-z) of the SSL governs the New York State Child Care Block Grant. It includes provisions regarding the use of funds by social services districts, the types of families eligible for services, the amount of local funds that must be spent on child care services, and reporting requirements. Section 410-x(3) requires the Office to establish in regulation minimum health and safety requirements that must be met by providers providing child care assistance funded under the New York State Child Care Block Grant, which are not required to be licensed or registered under section 390 of the SSL. Section 410-x(5) of the SSL authorizes the Office to establish regulations under which provision for child care assistance may be made by providing child care directly, through contracts, or through reimbursement to child care providers or to the parent or caretaker.

Section 390(3)(e)(ii) provides that an authorized agency may refuse to allow a child day care provider, who is not in compliance with Section 390 of the SSL, regulations issued by the Office or any approved additional standards, to provide subsidized child care.

2. Legislative objectives:

The legislative intent for the licensure and registration of child day care programs is to promote the development of the child in a safe, caring and healthy environment. The legislative intent of the child care subsidy program is to assist low income families in meeting the costs of child care services and to provide for the health and safety of children in care so that the parent or caretaker can engage in work, or other approved activities.

The regulations support the legislative objectives underlying the SSL by providing social services districts and child care providers with greater clarification on standards for promoting health and safe child care, and processes that need to be employed when determining whether a child care provider is in compliance with the requirements of the Office.

3. Needs and benefits:

The regulations provide for the health and safety of children in care and the fiscal integrity of the New York State Child Care Block Grant subsidy program by defining when a child care provider is in compliance with the requirements of the Office, and the circumstances under which child care providers may be disqualified from receiving payment for child care services from a social services district.

4. Costs:

The State will use existing resources to implement these regulations. Any costs to local social services districts, if any, are expected to be minimal.

5. Local government mandates:

Social services districts will be required to establish a more formal process of engagement with a child care provider if a district alleges that the provider has submitted false claims for reimbursement to a social services district. However, districts are presently required to have child day care subsidy fraud control measures in place per section 415.4(f) of Title 18 of the Official Compilation of Codes, Rules and Regulations of the State of New York. Since no new mandates are being imposed on local governments, there is no compliance issue with the requirements of Executive Order No. 17.

6. Paperwork:

Social services districts will need to process any required payment adjustments after conducting the necessary case reviews. Social services districts will have to prepare written audit reports for those providers they suspect of receiving improper child care subsidy payments.

7. Duplication:

The new requirements do not duplicate any existing State or federal requirements.

8. Alternatives:

The present regulatory structure does not provide a clear means of disqualifying a provider of child care services who receives subsidy payments from continuing to receive such payments even where the provider has engaged in fraud. There is also no process established by regulation for addressing cases of suspected fraud. The alternative to these regulations is to leave the existing process in place, which would continue the existing problem of making child care fraud difficult to detect and combat. The regulatory approach in the proposed regulations is designed to rectify the problems of the existing lack of specific standards and procedures.

9. Federal standards:

The regulations are consistent with applicable federal requirements to receive a grant of federal assistance for child care. Federal statute, section 658E(c)(2)(E) of the Social Security Act, requires that the State certify that it has in effect licensing requirements applicable to child care services. Further, in section 658E(c)(2)(F) of the Social Security Act the State must certify that there are in effect requirements designed to protect the health and safety of children that are receiving service under this subchapter of the statute.

10. Compliance schedule:

These provisions must be implemented within 90 days from final adoption.

Regulatory Flexibility Analysis

1. Effect on small businesses and local governments:

The proposed regulations will affect the 58 social services districts. There is a potential effect on over 20,000 licensed and registered child care providers and an estimated 70,000 informal providers that may provide child care services to families receiving a child care subsidy.

2. Compliance requirements:

Social services districts will be required to establish a more formal process of engagement with a child care provider if a district has alleged that the provider has submitted false claims for reimbursement to a social services district. Social services districts will need to process any required payment adjustments after conducting the necessary case reviews.

3. Professional services:

Neither social services districts, nor child care providers, should have to hire additional professional staff in order to implement these regulations.

4. Compliance costs:

They State will use existing resources to implement these regulations. Costs to social services districts if any are expected to be minimal.

5. Economic and technological feasibility:

The child care providers and social services districts affected by the regulations have the economic and technological ability to comply with the regulations.

6. Minimizing adverse impact:

The regulations support the Social Services Law by providing social services districts with greater clarification on standards for promoting health and safe child care, and processes that need to be employed when determining whether a child care provider is in compliance with the requirements of the Office.

The Office will develop materials to assist the social services districts in establishing a formal process of engagement with a child care provider when it is alleged that the provider has submitted false claims for reimbursement to a social services district.

7. Small business and local government participation:

The Office has met with social services district commissioners at New York Public Welfare Association conferences to help inform our thinking on these regulations.

Rural Area Flexibility Analysis

1. Types and estimated numbers of rural areas:

The regulations will affect the 44 social services districts located in rural areas of the State and the child care providers located in those districts.

2. Reporting, recordkeeping, and other compliance requirements and professional services:

Social services districts will be required to establish a more formal process of engagement with a child care provider when it is alleged that the provider has submitted false claims for reimbursement. Social services districts will need to process any required payment adjustments after conducting the necessary case reviews.

3. Costs:

The State will use existing resources to implement these regulations. Costs to social services districts, if any are expected to be minimal.

4. Minimizing adverse impact:

The regulations support the Social Services Law by providing social services districts with greater clarification on standards for promoting health and safe child care and processes that need to be employed when determining whether a child care provider is in compliance with the requirements of the Office.

The Office will develop materials to assist the social services districts in establishing a formal process of engagement with a child care provider when it is alleged that the provider has submitted false claims for reimbursement to a social services district.

5. Rural area participation:

The Office has met with social services district commissioners at New York Public Welfare Association conferences to help inform our thinking on these regulations.

Job Impact Statement

Nature of Impact: The proposed regulations provide for the health and safety of children in care and the fiscal integrity of the New York State Child Care Block Grant subsidy program. The proposed regulations take these actions by defining when a child care provider is in compliance with the requirements of the Office, and the circumstances under which child care providers may be disqualified from receiving payment for child care services from a social services district.

Categories and Numbers Affected: The number of providers that may be affected by the proposed regulations are unknown.

Regions of Adverse Impact: There are no regions where the regulations would have a disproportionate adverse impact on jobs or employment opportunities.

Self-Employment Opportunities: No measureable impact on opportunities for self-employment is expected.