1. CONNECTICUT DEPARTMENT OF SOCIAL SERVICES CARE 4 KIDS CHILD CARE SUBSIDY PROGRAM PROGRAM INTEGRITY METHODS October 27, 2010 1

2. CONNECTICUT DSS STAFF 2 Michael P. Starkowski, Commissioner Peter Palermino, State Administrator Theresa Emery, Public Assistance Consultant Don Beltrame, Public Assistance Consultant Brian McGuiness, Investigation Supervisor

3. AGENDA Overview of Care 4 Kids Subsidy Program History of Program Integrity Methods - Questions and Answers Current Administrative Controls - Questions and Answers Fraud Preventive Measures/Results - Questions and Answers 3

4. CONNECTICUT CHILD CARE SUBSIDY PROGRAM Outsourced to Statewide R&R Agency, which determines eligibility, processes invoices, etc. $100 Million Annual State/Federal Benefits 22,000 Kids/15,000 Families Monthly Applications - 1,800/month Redeterminations – 1,250/month 1,400 licensed / 3,500 unlicensed providers 4

5. Connecticut Child Care Subsidy Program Organizational Chart 5

6. DSS QUALITY CONTROL REVIEWS Started QC reviews when subsidy program was outsourced in 1997 Reviews parallel federal SNAP review process Statistically valid sample of 100 cases per quarter Measured contractor and client error 6

7. QC ERROR FINDINGS (1997-2003) Contractor error averaged 5% - 6% Client error averaged 15% - 18% Client error ranged as high as 23% 7

8. CONTRACTOR ERROR CATEGORIES/INCIDENCE ( 1997 – 2003) Income computed incorrectly or verified (38%) Family co-pay not deducted (13%) Reported or known changes not pursued (9%) Approved care hours not verified (8%) Ineligible provider arrangement approved (7%) School schedule overlapped care hours (5%) Incorrect household composition (5%) 8

9. CLIENT ERROR CATEGORIES/INCIDENCE (1997-2003) Unreported job loss/did not attend training (24%) Misrepresentation of: – Work hours or shift (22%) – Income (4%) Provider not available during care hours (15%) Unreported: – Income (10%) – Spouse in household (6%) – Change in employment (5%) 9

10. 10 QUESTIONS AND ANSWERS

11. CORRECTIVE ACTIONS Change regulations & procedures Enhance staff training and development Increase monitoring (DSS and Contractor) Mine data and expand access to other state databases Develop fraud detection/prevention strategies 11

12. REGULATION AND PROCEDURE CHANGES Payment for care based on: A range of hours vs. strict per hour rates (e.g. half and full- time) Enrollment vs. actual attendance No change in co-payment between redeterminations Go paperless (document imaging) Increase utilization of third party verifications Amend vendor fraud statute to include child care providers and lifetime disqualification penalty Mandate compliance with QA and Investigations 12

13. STAFF TRAINING AND DEVELOPMENT Fund 2 full-time contractor training positions Establish 3 month training program for newly hired staff Increase use of policy transmittals, reminder bulletins and desk aids Targeted training and refresher training of error prone categories 13

14. MONITORING Greater coordination between DSS and contractor Maintain an on-site presence Corrective action planning meetings Monthly desk reviews by contractor Additional system edits Annual audits by DSS Child Care Team and state auditor 14

15. DATA MINING Unlicensed providers with: – Out-of-state residence – PO Boxes Excessive care hours authorized Number of children in care exceeds provider limit Multiple providers reside at same address System screen data not populated 15

16. DATABASE INTERFACES Depts. of Labor, Motor Vehicle, Corrections dbases DSS Public Assistance mainframe (EMS) TANF E&T dbase Child Support dbase and Paternity Registry Child abuse/neglect data match IRS/TIN data match NAEYC data match Licensed provider data match Medicaid provider disability data match 16

17. 17 QUESTIONS AND ANSWERS

18. FRAUD PREVENTION MEASURES AND RESULTS FRaud Early Detection (FRED) unit created 2005: Home visits and verification of information Follow-up home-visits for error prone providers Active Case Assessment Program (ACAP) unit created 2007 18

19. DSS QUALITY ASSURANCE ORGANIZATION CHART 19

20. 20 FRAUD EARLY DETECTION (FRED) Purpose – identify, investigate and determine errors before paying benefits. Staff – 4 full-time non-law enforcement investigators and 1 unit supervisor Complete 120 referrals/mo: 1,421 in SFY 10 Cost Avoidance –$4.4 million SFY 10 –$15.8 million SFY 08-10

21. FRED REFERRAL SOURCES 1-800 Fraud hotline C4K contractor via automated system DSS eligibility staff Database matches Other, i.e. special projects, provider referrals, law enforcement agencies 21

22. 22 FRED PROCESS REFERRALS Top 5 Targeted Error Prone Categories Self-employment Cash employment Questionable household composition 2 nd & 3 rd shift work hours Young Male Providers

23. 23 FRED PROCESS INVESTIGATION Investigation Steps: Case reviews and contractor interviews Database and Internet searches Third party verification - landlords, employers, property records, banks, court records, etc., Field visit to home, work or child care site Subpoena authority

24. 24 ACTIVE CASE ASSESSMENT PROGRAM (ACAP) Parallel to FRED but with active cases Staff – 4 full-time non-law enforcement investigators and 1 supervisor Investigate historical and current eligibility Prepare Arrest Warrant Affidavit Testify in court proceedings

25. ACAP ACTIVITY (2007 – 2009) Completed 1,220 investigations 142 arrest warrant affidavits - 50 criminal convictions - 92 accelerated rehabilitation (AR) granted 121 program disqualifications $500,000 cost avoidance in SFY 10 $700,000 recovered in SFY 10 25

26. ACAP ACTIVITY ACAP ACTIVITY (cont.) #1 Priority is prosecution $8,450 - Avg. claim value $136,000 highest value case Most adjudicated with full restitution Lifetime disqualification if provider convicted or given A&R 26

27. FRED/ACAP PARTNERSHIPS 27

28. 28 QUESTIONS AND ANSWERS

29. FOR MORE INFORMATION CONTACT: CT Child Care Subsidy Program – Child Care Team: Peter Palermino – (860) 424-5006 Peter.Palermino@ct.gov Don Beltrame (860) 424-5363 Don.Beltrame@ct.gov Office of Quality Assurance - Fraud & Recoveries Division: Stephen J. Markowski (860) 424-5954 Stephen.Markowski@ct.gov Brian McGuiness (860) 424-5955 Brian.McGuiness@ct.gov 29