child & adult care food program serious deficiency process & provider appeals

Child & Adult Care Child & Adult Care Food ProgramFood Program

Serious Deficiency Serious Deficiency ProcessProcess& Provider Appeals& Provider Appeals

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OverviewOverviewFederal law (ARPA) mandated changes for providers

Established serious deficiency process for providers

Suspension for health or safety violations

Provider appeals

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Why do we need provider Why do we need provider appeal rights?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

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Termination for cause or for Termination for cause or for convenienceconvenience

• Violation of agreement = termination for cause

Initiated by the Sponsor

• Termination for convenience = non-performance issues

Initiated by the provider or the Sponsor

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A rose by any other nameA rose by any other name

• Fair hearing = administrative review = appeal

• Administrative review official = hearing official = hearing officer = appeal officer

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What can be appealed?What can be appealed?

• Proposed termination for cause and proposed disqualification

• Suspension for health or safety violations

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What cannot be appealed?What cannot be appealed?

Anything else

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WhenWhen is an action is an action appealable?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:

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How will providers know How will providers know about their appeal rights?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

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Minimum appeal Minimum appeal proceduresprocedures

• Uniformity

• Representation

• Review of record and opposition

• In-person hearing not required

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Minimum appeal Minimum appeal procedures (cont.)procedures (cont.)

• Basis for decision

• Timeframes for issuing a decision

• Final administrative decision

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Supplemental proceduresSupplemental procedures

• Must be consistent with minimum procedures

• Examples– Timeframe for appeal decision– Deadline for requesting an appeal– Deadline for submitting additional

written documentation

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Supplemental proceduresSupplemental procedures(cont.)(cont.)

• More examples

– In-person hearing

– Additional appealable actions

• State agency approval required

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Ensuring complianceEnsuring 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

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Serious deficienciesSerious deficiencies

• Submission of false information

• Submission of false claims

• Simultaneous participation under more than 1 sponsor

• Meal pattern non-compliance

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Serious deficienciesSerious 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

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Convictions indicating a Convictions indicating a lack of business integritylack of business integrity

• Past 7 years 

• Criminal convictions only

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Sponsor discretionSponsor discretion

• Distinguish between:

– Occasional errors and systemic errors

– Minor errors and major errors

• Improper use of termination for cause = serious deficiency

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Error or serious deficiencyError 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

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Serious Deficiency Serious Deficiency Process for ProvidersProcess for Providers

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Steps in the processSteps in the process

• Serious deficiency determination

• Serious deficiency notice

• Opportunity for corrective action

• Proposed termination/disqualification

• Appeal

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Seriously Deficient noticeSeriously 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

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Seriously Deficient noticeSeriously 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.

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Seriously Deficient noticeSeriously 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.

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Seriously Deficient noticeSeriously Deficient notice

Sponsor must continue to pay valid claims

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Timeframes for corrective Timeframes for corrective actionaction

• Deficiency must be corrected within 30 days

• Ensure prompt resolution

• No provision that allows sponsors to give providers additional time

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Opportunity for corrective Opportunity for corrective actionaction

Yes, but …

No corrective action allowed before suspension for imminent threat to health or safety

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False or Fraudulent False or Fraudulent ClaimsClaims

• No provision to suspend provider participation

• Opportunity to correct

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False or Fraudulent False or Fraudulent Claims (conClaims (con’’t)t)

• Declare the provider seriously deficient

• Opportunity for corrective action

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False or Fraudulent False or Fraudulent Claims (conClaims (con’’t)t)

Deny the claim/recover payment

– Never reimburse providers for invalid claims

– Do not reimburse for invalid portion of claim

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An Example of False or An Example of False or Fraudulent ClaimsFraudulent 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.

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Verifying Corrective Verifying Corrective ActionAction• Unannounced

follow-up review recommended 

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What Happens Next?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

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Notice of Notice of Proposed Proposed Termination/DisqualificationTermination/Disqualification

• Propose to terminate agreement for cause

• Propose to disqualify provider

• Basis for actions = inadequate corrective action

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Notice of Notice of Proposed Proposed Termination/DisqualificationTermination/Disqualification

• Procedures for appeal

• Status of program payments

• Voluntary termination = disqualification

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Status of Program PaymentsStatus 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

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Provider decides to Provider decides to appealappeal• 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

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The hearing officialThe 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)

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Role of the hearing officialRole 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

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Review of record or Review of record or hearinghearing

• Review all evidence and testimony

• Issue decision in writing

– Decision sent to provider and sponsor at same time

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No place to set policyNo place to set policy

• The hearing official is being asked:

Has the program requirement been properly applied?

NOT

Do you agree with the requirement?

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In-person hearingsIn-person hearings

• Allow both sides to present their case, introduce evidence, call witnesses

• Keep proceedings on track

• Maintain decorum

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In-person hearingsIn-person hearings

• Remain objective

• Tape record proceedings, if desired

• Don’t issue your decision at the hearing

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Resources for hearing Resources for hearing officersofficers• Federal

Regulations 7 CFR 226

• Copy of sponsor/provider agreement

• Copy of sponsor’s appeal procedures

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Resources for hearing Resources for hearing officersofficers

• Copy of sponsor’s manual or handbook for providers

• Copies of sponsor’s administrative memos or other communication to providers

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Termination of the Termination of the AgreementAgreement

• Provider fails to appeal

• Hearing official rules in favor of sponsor

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Removal fromRemoval fromthe National Disqualified the National Disqualified ListList

• 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

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Applying after Applying after DisqualificationDisqualification

• 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

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How Long?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

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AAQQ&&

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Question?Question?

What if the provider wins the appeal?

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AnswerAnswer

• Notify provider/state agency

• Remove the seriously deficient determination

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

Question?Question?

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AnswerAnswer

Easier, but the provider could participate with another sponsor

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

Question?Question?

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AnswerAnswer

Both

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

Question?Question?

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AnswerAnswer

NO

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QuestionsQuestions

• Will homes be notified they are off the National Disqualified List after 7 years?

– No. This is not required.

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And justice for all . . .And justice for all . . .

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