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Title IV-E foster care funds enable States to provide foster care for children who were or would have been eligible for assistance from Aid to Families With Dependent Children (AFDC) under the State's approved title IV-A plan (as in effect on July 16, 1996), but for their removal from their home. The Social Security Act (the Act) includes requirements that define the circumstances under which the State must, in accordance with its approved title IV-E State plan, make foster care maintenance payments [472(a)] and mandate a child's placement in an approved or licensed facility [472 (b) and (c)].
The periodic title IV-E foster care eligibility reviews assist in the validation of the accuracy of a State's claim for reimbursement of payments made on behalf of eligible children placed in eligible homes and institutions. The validations are made most effectively by an examination of the case records of the child and provider and payment documentation. Payment eligibility also is monitored and reviewed by audits conducted by the Office of the Inspector General and the Administration for Children and Families (ACF) Regional Office when conducting a claims review. In conducting foster care eligibility reviews, ACF is fulfilling its financial and programmatic stewardship responsibilities, while also complying with statutory provisions mandated in the Improper Payments Information Act (IPIA) of 2002. The IPIA requires Federal agencies to manage and reduce or eliminate, where possible, improper payments in Federal programs.
Ultimately, this effort is expected to enable the Federal Government to provide more accurate financial assistance to States, enable programs to service additional eligible recipients without increasing their budgets, and reduce program costs.
The periodic reviews:
The title IV-E foster care eligibility review is a collaborative effort between the Federal and State governments and is conducted by review teams composed of both Federal and State staff. The review is conducted on site, typically in the State capital where the child welfare central office is located. The State agency may negotiate an alternative location with the ACF Regional Office, if warranted due to record access or other logistical concerns.
The eligibility review process began with an initial primary review of foster care cases to ensure that children for whom title IV-E foster care maintenance payments are made meet the eligibility requirements at 472(a) of the Act and the implementing regulations at 45 CFR 1355 and 1356. The initial primary review was the first title IV-E foster care eligibility review conducted in a State following the passage of the final rule in the Federal Register on January 25, 2000, and afforded States an opportunity to implement the various requirements in the regulations. During the initial primary review, 80 cases were reviewed and 8 or fewer error cases were allowed for a State to be determined to be in substantial compliance with the eligibility requirements. If the State was determined not to be in substantial compliance, the State was required to develop and implement a Program Improvement Plan (PIP) designed to correct the areas of non-compliance and a secondary review was conducted following the completion of the implementation of the PIP.
A subsequent primary review must be conducted within 3 years from the date of the initial primary review, or of the secondary review, if the State was determined not to be in substantial compliance during the initial primary review. During the primary review, the review team examines 80 cases. If five or more cases are in error, the State is determined not to be in substantial compliance and is required to develop a PIP. Like the initial primary review, the State has a maximum of 1 year in which to implement and complete the provisions of the PIP unless State legislation is required. In such instances, an extension may be granted, with the ACF and the State negotiating the terms and length of the extension, not to exceed the last day of the first legislative session after the projected date of the PIP completion. States determined to be in substantial compliance based on the primary review will be reviewed at 3-year intervals. States that are determined not to be in substantial compliance will undergo their next primary review 3 years from the date of the secondary review.
A secondary review must be conducted whenever a State is determined not to be in substantial compliance based on the findings of a primary review (or the initial primary review). During the secondary review, a substantially larger number of sample cases is reviewed following full implementation of the PIP. If a State exceeds the error threshold for the case error rate and the dollar error rate, the State is determined not to be in substantial compliance.
Following the evaluation of the State's performance in achieving compliance with the eligibility requirements, improper payments are identified and a payment disallowance is assessed for any sample case identified as having ineligible payments, which are title IVE payments made for an unmet eligibility criterion, for a duplicate payment, for an overpayment, or for any other unallowable program cost. The payment disallowance includes all title IV-E foster care maintenance payments and administrative costs associated with the ineligible payment occurrence and covers the entire period that the ineligible payments are made. In addition to the ineligible payments, the identification of improper payments will include underpayments that are observed during the review of a sample case. An underpayment will be considered to have occurred when a title IV-E maintenance payment or administrative cost is not claimed, but may be claimed, for an allowable title IV-E activity or a period of eligibility.
Requirements Subject to Review
States are reviewed against the requirements of title IV-E of the Act regarding:
- Judicial determinations regarding "reasonable efforts" and "contrary to the welfare" in accordance with 45 CFR 1356.21(b) and (c), respectively;
- Voluntary placement agreements in accordance with 472(e), (f), and (g) of the Act and 45 CFR 1356.22;
- Responsibility for placement and care vested with the State agency in accordance with 472(a)(2) of the Act and 45 CFR 1356.71(d)(iii);
- Placement in a licensed foster family home or childcare institution as defined in 472(b) and (c) of the Act and 45 CFR 1355.20(a); and
- Eligibility for AFDC under the State plan that was in effect on July 16, 1996, in accordance with 472(a)(4) of the Act and 45 CFR 1356.71(d)(1)(v).
The reviewers will use the most current On- Site Review Instrument and Instructions (checklist) to determine compliance with the eligibility requirements. (See Appendix I.) The review instrument may be updated intermittently by the Children's Bureau and is available to State agencies through the ACF Regional Offices, and is posted on the Children's Bureau Web site.
Selecting the Sample and Oversample
The sample of cases to be read for the review will be drawn from the Adoption and Foster Care Analysis and Reporting System (AFCARS) data that are transmitted by the State agency to the ACF Central Office. ACF statistical staff will draw the sample utilizing probability sampling methodologies such as simple random sampling to make sure that the case record of each child in the State's title IV-E foster care maintenance payment program will have an equal and independent chance of being selected for inclusion in the review sample. Other probability methodologies may be used, when necessary, to ensure that the review sample represents to a greater degree the characteristics of the child population that makes up the State's title IV-E foster care maintenance payment program. For example, in selecting cases for the primary review, the sample may be stratified to make sure the sample includes a sufficient representation of children who receive title IV-E foster care maintenance payments through a placement and care agreement between the State child welfare agency and another public agency such as the State juvenile justice agency or tribal child welfare agency.
To make sure a sufficient number of sample cases are available for review, an oversample that consists of 10 percent or more cases will be randomly selected in addition to the 80 sample cases that must be drawn for the primary review or the 150 cases that must be drawn for the secondary review.
In summary:
The case sample and oversample drawn for review will consist of cases of individual children who received at least one title IV-E foster care maintenance payment during the 6- month reporting period reflected in the State's most recent AFCARS data submission. The AFCARS reporting period is the PUR, which serves as a reference point for determining whether a sample case will be considered a case in error. The "most recent AFCARS data submission" is usually the reporting period that ends at least 3 to 6 months before the date of the on-site review. The AFCARS data are submitted to the ACF Central Office within 45 calendar days following the end of the reporting period and are not available for use until 30 calendar days later. Therefore, the AFCARS data submission for the October 1 thru March 31 reporting period must be transmitted to the ACF Central Office no later than May 15 and for the April 1 thru September 30 reporting period must be transmitted no later than November 14.
The review sample is drawn and provided to the State agency a minimum of 60 calendar days before the on-site review. The ACF Regional Office may negotiate with the State agency to obtain a case sample that is drawn closer to the scheduled date of the on-site review, but under no circumstance will the review sample be drawn later than 4 weeks before the on-site review. In this instance, the ACF Regional Office should consult with the ACF statistician or team leader for eligibility monitoring before approving the State agency's request to draw a sample that is closer to the begin date of the on-site review.
The validity of the sample and oversample depends on the accuracy with which the State agency completes the AFCARS data element #59, Title IV-E Foster Care. The AFCARS data element #59 inquires whether or not title IV-E foster care maintenance payments are being paid on behalf of a child in foster care. If title IV-E foster care maintenance payments are being paid on behalf of the child, the data element should be coded "1." If title IV-E foster care maintenance payments are not being paid on behalf of the child, the data element should be coded "0."
The sampling frame will consist of all cases (children) with a "1" coded in AFCARS data element #59 for the PUR. It is critical, therefore, that State agencies report data element #59 accurately.
Verifying the Sample
The State agency must verify, before the review is conducted, that each child coded as a "1" in data element #59 received a title IV-E foster care maintenance payment during the PUR. If a child did not receive a title IV-E foster care maintenance payment during the PUR, the child's case cannot be included in the sample. This also is true if a child's case is closed before the PUR and a payment for that case is made during the PUR. In addition, if the State agency determined that title IV-E foster care maintenance payments for a child were claimed improperly during the PUR, the child's case must be excluded from the sample of cases to be drawn if all title IV-E payments made on behalf of the child during the PUR are rescinded before the sample being provided to the State agency. Payments are "rescinded" if any adjusting claim submitted by the State agency to reflect these payments is received by the ACF Regional Office before the sample is provided to the State agency.
If a child's title IV-E eligibility is affected by a State's participation in a federally approved title IV-E waiver demonstration project, the child's case should be eliminated from the sample as well. Before the on-site review, the State agency must provide the ACF Regional Office with a list of all cases eliminated from the sample and the supporting documentation to substantiate the case elimination. The ACF Regional Office must verify the accuracy of the information included on the list and determine the appropriateness of eliminating the case from the review sample.
Using the Oversample
When it is established that a case is incorrectly coded with a "1" in data element #59, the case may be replaced with a case from the oversample, under special circumstances. However, sample cases must not be replaced with an oversample case because of difficulties in performing the review or because of problems in obtaining the necessary information about the case. If the case file or information documenting the child's or provider's eligibility cannot be located, that case will be considered to be in error and a disallowance will be taken. An oversample case cannot be used as a substitute for a closed adoption case (Child Welfare Policy Manual Section 5.2 1) or for a sample case in which the State agency retained placement and care responsibility of a child the State agency placed with an out-of-state foster care provider. Therefore, cases from the oversample will be substituted and reviewed for a sample case only when the case is included in the sample erroneously.
Some examples of sample cases included erroneously that may be substituted with oversample cases are the following:
Any instructions to the State agency by the ACF Central Office statistician regarding sampling and oversampling or special sampling requirements will be provided in writing, either electronically or in hard copy. The ACF Regional Office should receive copies of all correspondence related to sampling and participate in all necessary conference calls between the ACF Central Office statistician and the State agency staff.
For each of the sample and oversample case records, the State agency must provide the ACF Regional Office with the complete payment history before the on-site review [45 CFR 1356.71(b)(2)]. The complete payment history consists of all foster care payments, including title IV-E maintenance payments and administrative costs, claimed for the most recent foster care episode. The most recent foster care episode refers to the period that begins with the date of the child's last removal from the home and placement in foster care before the end of the PUR and continues to the child's discharge from foster care for such removal. If a child has multiple entries into foster care during the PUR, the child's title IV-E eligibility is examined for each foster care entry during the PUR. If a child has remained in foster care since the original removal from the home, the duration of this foster care event is considered the most recent episode
The ACF Regional Office will review the payment history to make a preliminary assessment of the accuracy of the payment profile and to determine whether a case should be removed from the review sample. While on site, the State agency must provide an updated payment history for each sample and oversample case record to help identify payments claimed between the time the sample is drawn and the on-site review. The updated payment history must include all title IV-E maintenance payments and administrative costs that are made before the beginning of the on-site review and continuing through the end of the service month that is before the month in which the on-site review will be conducted.
All payments in the payment history should include the following:
the invoice number or other identifier,
the amount paid and service period covered,
the activity or service paid and funding source,
the date of payment,
the date of payment adjustment or reversal and period covered,
the child's name and case number, and
the provider's name and number.
The ACF Regional Office must retain all documentation provided by the State agency for calculating maintenance and administrative cost disallowances. This includes the complete payment history for all sample cases including those sample cases in which a disallowance is not assessed. Retention of the material is necessary to calculate the State-by-State and national payment error rates for the title IV-E foster care program in order to comply with the IPIA.
Compliance is based on the number of cases or amount of payments (when applicable), that are found to be in error during an eligibility review. A sample case is determined to be in error when a review of the case record indicates that a title IV-E eligibility criterion is not met at the time of the child's removal from home, or any time during the PUR, and a title IV-E maintenance payment or administrative cost is made for the ineligible period. An eligibility criterion that must be satisfied at removal, such as "contrary to the welfare" or "reasonable efforts to prevent removal" that is not met timely will render the child ineligible for the entire foster care episode. When the previously claimed title IV-E payment is rescinded in either situation, the case is in error if the ineligible payment is not rescinded before the State agency receives the case sample, as verified by the payment history and the receipt of a payment adjustment on a Form ACF-IV-E-1 by the ACF Regional Office.
Substantial Compliance. Substantial compliance means that the case error threshold is not exceeded. For primary reviews held subsequent to the initial primary review, the total number of error cases must be four or fewer. (For the initial primary review, the total number of error cases must have been eight or fewer). For the secondary review, substantial compliance means that either the case error rate or dollar error rate is 10 percent or less.
Noncompliance. Noncompliance means not in substantial compliance. For primary reviews held subsequent to the initial primary review, if five or more cases are determined to be in error, the State is not in substantial compliance. (For the initial primary review, nine or more sample cases meant the State was noncompliant). For secondary reviews, noncompliance means both the case error rate and the dollar error rate exceed 10 percent.
Disallowing Ineligible Payments
Disallowance of ineligible payments refers to the amount of Federal funds to be recovered by the ACF and is determined by the extent to which a State is not in substantial compliance with the eligibility provisions of title IV-E or applicable regulations in 45 CFR Parts 1355 and 1356. A payment disallowance is assessed whenever a title IV-E eligibility criterion is not met and title IV-E funds are paid, or a title IV-E payment is made for an unallowable activity or cost. The payment disallowance includes all unallowable title IV-E foster care maintenance payments and related administrative costs 2) of the error cases and non-error cases that occurred during the foster care placement episode, including ineligible periods that occurred in each foster care entry during the PUR.
A case is determined to be in error and a payment disallowance is assessed when a review of the sample case record indicates that a title IV-E payment for a maintenance or administrative cost is made during the PUR on behalf of a child determined not to meet the criteria for title IV-E eligibility, including ineligible periods that occurred in each foster care entry during the PUR.
A payment disallowance is assessed for a non-error case when a review of the sample case record indicates that a title IV-E payment for a maintenance or administrative cost is made solely outside the PUR on behalf of a child determined not to meet the criteria for title IV-E eligibility.
For States that are found to be in substantial compliance following either a primary or secondary review, a disallowance will be assessed on the basis of maintenance payments and administrative costs associated with error cases and non-error cases for all title IV-E payments made during the entire period that these cases are ineligible for the title IV-E payments. The findings and payment disallowances that pertain to the non-error cases are not considered in the determination of the State's substantial compliance with Federal requirements. If a child has multiple entries into foster care during the PUR and case errors are identified for more than one entry, the sample case is counted as one error case in determining substantial compliance regardless of the number of foster care entries determined to be in error during the PUR.
For States found not to be in substantial compliance during a primary review, a disallowance will be assessed on the basis of maintenance payments and administrative costs associated with error cases and non-error cases for all title IV-E payments made during the entire period that these cases are ineligible for title IV-E payments. The findings and payment disallowances that pertain to the non-error cases are not considered in the determination of the State's substantial compliance with Federal requirements.
For States found not to be in substantial compliance following a secondary review, an extrapolated disallowance will be assessed for the PUR on the basis of the universe of claims paid during the PUR. The universe of claims paid refers to the Federal share of maintenance payments and administrative costs expended and claimed by the State agency for the period of time that a case is ineligible. The extrapolated disallowance is equal to the lower limit of a 90 percent confidence interval for the population's total dollars in error for the amount of time corresponding to the AFCARS reporting period (PUR). Disallowance of foster care maintenance and administrative payments for non-error cases determined to have received ineligible title IV-E payments during the PUR are included in the computation of the extrapolated disallowance. (These cases are excluded in the determination of the case error rate for the secondary review). If a child has multiple entries into foster care during the PUR and errors are identified for more than one entry, then the amount of dollars identified as payments being made for either (or both) of the episodes would be included when calculating the dollar error rate. In addition to the extrapolated disallowance, a case specific disallowance will be assessed on the basis of maintenance payments and administrative costs associated with error and non-error cases for ineligible payments that occurred prior and subsequent to the PUR.
The ACF Regional Office will calculate maintenance payment and administrative cost disallowances on an individual case basis. The ACF Central Office statistician will calculate the extrapolated disallowances to be taken following a secondary review, at the request of the Regional Office staff.
The disallowances reported in the final findings of the on-site review will consist of all ineligible maintenance payments and administrative costs that occurred during the period of ineligibility beginning with the first month of ineligibility and continuing through the date that is the earlier of the end of the month that immediately precedes the month of the on-site review or when the ineligibility ceases for the most recent foster care episode. Any ineligible payments claimed for non-error cases also must be included in the disallowances reported.
If an ineligible payment occurred after the on-site review, the State agency is instructed, and expected, to remove the ineligible payments from its financial claiming system and suspend claiming the unallowable costs until ineligibility ceases. These post on-site review costs should be identified separately in the final report letter to the State agency. A summary of the disallowance of foster care maintenance and administrative costs that differentiates the error cases, non-error cases with ineligible payments, and extrapolations (if applicable) will be included in the report of final findings of the eligibility review. (See "Final Report," Chapter 5.)
Guidance on the methodology for computing payment disallowances for the primary and secondary reviews is included in the information packet entitled "Calculation of the Maintenance Payment and Administrative Cost Disallowances for the Title IV-E Primary and Secondary Foster Care Eligibility Reviews and of the National Foster Care Error Rate for the Title IV-E Foster Care Program." (See Appendix XIV.)
Reporting Underpayments
The fundamental purposes of the title IV-E foster care eligibility reviews are to determine State compliance with the Federal requirements for title IV-E reimbursement and to systematically correct improper payments, which include ineligible payments and underpayments. An underpayment will be considered to have occurred when a title IV-E maintenance payment or administrative cost is not made, but may be made, for an allowable title IV-E activity or a period of eligibility. If an underpayment is observed during the review of the case record, provider documentation or payment documentation, the information will be recorded on the case summary log and reported in the final findings of the eligibility review. (See "Title IV-E Foster Care Eligibility Reviews Table of Completed Case Records and Description of Improper Payments," Appendix VI; and "Final Report," Chapter 5.)
Underpayments identified as the result of the review may be claimed subsequently by a State by filing an increasing adjustment on its form IV-E-1 in the next quarter, but no later than 2 years after the calendar quarter in which the State agency made the expenditure (45 CFR §95.7).
The following general steps in the review process include both Federal and State roles, and some joint Federal/State responsibilities. (See "Timeframes for Title IV-E Foster Care Eligibility Review Activities," Appendix X.)
1
The Child Welfare Policy Manual may be accessed at
www.acf.hhs.gov/programs/cb/laws_policies. back
2 Federal financial participation may be claimed for the administrative costs associated with an otherwise title IV-E eligible child placed in an unlicensed foster family home. Refer to Program Instruction ACYF-CB-PI-02-08. back
