1. Child & Adult Care Food Program Serious Deficiency Process & Provider Appeals

2. 2 Overview Federal law (ARPA) mandated changes for providers Established serious deficiency process for providers Suspension for health or safety violations Provider appeals

3. 3 Why do we need provider appeal rights? Problem of non-compliant providers switching sponsors Federal law requires USDA to maintain a National Disqualified List of terminated providers Importance of protecting provider rights

4. 4 Termination for cause or for convenience Violation of agreement = termination for cause Initiated by the Sponsor Termination for convenience = non- performance issues Initiated by the provider or the Sponsor

5. 5 A rose by any other name Fair hearing = administrative review = appeal Administrative review official = hearing official = hearing officer = appeal officer

6. 6 What can be appealed? Proposed termination for cause and proposed disqualification Suspension for health or safety violations

7. 7 What cannot be appealed? Anything else

8. 8 When is an action appealable? Sponsor issues a Notice of Proposed Termination for Cause and Proposed Disqualification Sponsor issues a Suspension Notice A provider may request an appeal when:

9. 9 How will providers know about their appeal rights? Language in the agreement between the sponsor and the provider Sponsor gives a copy of the appeal procedures to the provider – Annually – When any appealable action is taken – Upon request

10. 10 Minimum appeal procedures Uniformity Representation Review of record and opposition In-person hearing not required

11. 11 Minimum appeal procedures (cont.) Basis for decision Timeframes for issuing a decision Final administrative decision

12. 12 Supplemental procedures Must be consistent with minimum procedures Examples – Timeframe for appeal decision – Deadline for requesting an appeal – Deadline for submitting additional written documentation

13. 13 Supplemental procedures (cont.) More examples – In-person hearing – Additional appealable actions State agency approval required

14. 14 Ensuring compliance State agency must ensure sponsors properly implement provider appeal process – Part of state agency review of sponsors – Improper implementation of a provider appeal process = Seriously Deficient

15. 15 Serious deficiencies Submission of false information Submission of false claims Simultaneous participation under more than 1 sponsor Meal pattern non-compliance

16. 16 Serious deficiencies Failure to keep required records Imminent threat to health or safety Conviction indicating lack of business integrity during the past 7 years Any other circumstance related to non-performance under agreement

17. 17 Convictions indicating a lack of business integrity Past 7 years Criminal convictions only

18. 18 Sponsor discretion Distinguish between: –Occasional errors and systemic errors –Minor errors and major errors Improper use of termination for cause = serious deficiency

19. 19 Error or serious deficiency Factors to consider: –Frequency of the error –Severity of the error –Length of program experience –Literacy level or English proficiency Provider must move to full compliance ASAP

20. 20 Serious Deficiency Process for Providers

21. 21 Steps in the process Serious deficiency determination Serious deficiency notice Opportunity for corrective action Proposed termination/disqualification Appeal

22. 22 Seriously Deficient notice Notice must be in writing and contain certain information:  Fully describe the serious deficiency  Specify the corrective action required to resolve the serious deficiency & deadline  State that serious deficiency determination is not subject to appeal

23. 23 Seriously Deficient notice Must state that failure to fully and permanently correct the serious deficiency by the deadline will result in: proposed termination of the provider’s agreement for cause, and proposed disqualification of the provider.

24. 24 Seriously Deficient notice Must inform provider if she/he will receive CACFP payments during the period of corrective action Must state that if the provider voluntarily terminates her/his agreement after receiving the notice, the sponsor will still proceed with the proposed disqualification.

25. 25 Seriously Deficient notice Sponsor must continue to pay valid claims

26. 26 Timeframes for corrective action Deficiency must be corrected within 30 days Ensure prompt resolution No provision that allows sponsors to give providers additional time

27. 27 Opportunity for corrective action Yes, but … No corrective action allowed before suspension for imminent threat to health or safety

28. 28 False or Fraudulent Claims No provision to suspend provider participation Opportunity to correct

29. 29 False or Fraudulent Claims (con ’ t) Declare the provider seriously deficient Opportunity for corrective action

30. 30 False or Fraudulent Claims (con ’ t) Deny the claim/recover payment –Never reimburse providers for invalid claims –Do not reimburse for invalid portion of claim

31. 31 An Example of False or Fraudulent Claims Four enrollment forms, three children in care. Claiming 5-7 children for 3 months No explanation Provider is declared Seriously Deficient While corrective action and appeal occur, the invalid portion of the provider’s claims must not be paid.

32. 32 Verifying Corrective Action Unannounced follow-up review recommended

33. 33 What Happens Next? If serious deficiency is corrected – Notify provider & state agency If serious deficiency is not corrected – Notice of Proposed Termination/placement on National Disqualified List is sent to provider & state agency

34. 34 Notice of Proposed Termination/Disqualification Propose to terminate agreement for cause Propose to disqualify provider Basis for actions = inadequate corrective action

35. 35 Notice of Proposed Termination/Disqualification Procedures for appeal Status of program payments Voluntary termination = disqualification

36. 36 Status of Program Payments General rule: Program participation, including Program payments, continues during the serious deficiency process One exception – Suspended providers Sponsors must always deny invalid claims

37. 37 Provider decides to appeal Provider must submit request for administrative review/hearing within time frame specified by sponsor Provider & sponsor submit documentation to hearing official Hearing official reviews the record or sets date for in-person hearing

38. 38 The hearing official Hearing official must be: – Independent – Impartial Hearing official may be: –An employee or board member of the sponsor – A contractor (e.g. sponsor association)

39. 39 Role of the hearing official Review the evidence, documentation and testimony Remain objective Determine if the sponsor complied with regulatory procedures Issue a decision based on the facts, not opinion or feelings

40. 40 Review of record or hearing Review all evidence and testimony Issue decision in writing –Decision sent to provider and sponsor at same time

41. 41 No place to set policy The hearing official is being asked: Has the program requirement been properly applied? NOT Do you agree with the requirement?

42. 42 In-person hearings Allow both sides to present their case, introduce evidence, call witnesses Keep proceedings on track Maintain decorum

43. 43 In-person hearings Remain objective Tape record proceedings, if desired Don’t issue your decision at the hearing

44. 44 Resources for hearing officers Federal Regulations 7 CFR 226 Copy of sponsor/provider agreement Copy of sponsor’s appeal procedures

45. 45 Resources for hearing officers Copy of sponsor’s manual or handbook for providers Copies of sponsor’s administrative memos or other communication to providers

46. 46 Termination of the Agreement Provider fails to appeal Hearing official rules in favor of sponsor

47. 47 Removal from the National Disqualified List Generally removed after 7 years Two exceptions: –If SD is permanently corrected, removal before 7 years –If provider still owes a debt after 7 years, will remain on list until paid

48. 48 Applying after Disqualification What if a provider is on National Disqualified List? Sponsor is not required to: – Offer provider an appeal – Assist provider with removal from National Disqualified List

49. 49 How Long? Provider is placed on the National Disqualified List or on a state agency list prior to July 29, 2002, will remain for 7 years Must remain on the list until July 29, 2009; longer if a debt is still owed

50. 50 &

51. 51 Question? What if the provider wins the appeal?

52. 52 Answer Notify provider/state agency Remove the seriously deficient determination

53. 53 Wouldn’t it be simpler to allow the home to terminate for convenience after serious deficiency is declared? Question?

54. 54 Answer Easier, but the provider could participate with another sponsor

55. 55 Who is the action taken against when the provider is incorporated—the provider or the corporation? Question?

56. 56 Answer Both

57. 57 Can a sponsor permit more than 30 days for corrective action? Question?

58. 58 Answer NO

59. 59 Questions Will homes be notified they are off the National Disqualified List after 7 years? – No. This is not required.

60. 60 And justice for all... Thank you for your contributions to maintaining integrity in the Child and Adult Care Food Program.