Attachment_I_-_Performance_Work_Statement_(PWS)_for_Line_Item_1-5.pdf

Attachment I – IDIQ PWS - CLIN 1 – 5

C.1 GENERAL OVERVIEW

Under “The Improper Payments Elimination and Recovery Act (IPERA) of 2010” (Public Law 111-

204) the Department of Agriculture (USDA) is required to identify and reduce erroneous payments including overpayments and underpayments in various programs including the Child and Adult Care Food Program (CACFP).

The CACFP has a complicated administrative and operational structure, with risk of improper payments present at multiple stages in the benefit determination, benefit delivery, reimbursement claiming, payment, and program oversight process. Erroneous payments in the CACFP can result from misclassification of the meal eligibility (free, reduced-price, paid) status of participating children or improper meal counting and claiming of reimbursable meals. Misclassification of eligibility status can occur in several ways: (1) Childcare center staff may make administrative errors during the approval or verification processing of income eligibility statements, or the processing of categorical eligibility information, (2) Households can provide incorrect information (either unintentional or intentional) with respect to household size, household income, or participation in other means-tested programs at the time of application or verification. An over- or under-payment results when a misclassified child receives a reimbursable meal that is claimed for reimbursement that does not correctly reflect the child‘s true eligibility status. Improper meal counting and claiming can occur when: (1) a childcare center records the meals served in the incorrect meal reimbursement classification; (2) the center and/or sponsor incorrectly consolidates recorded meal counts; and (3) the center and/or sponsor claims and receives reimbursement for meals that were not served.

The following table displays the levels of reimbursement in CACFP for 2013-2014.

CHILD AND ADULT CARE FOOD PROGRAM (CACFP)

[Per Meal Rates in Whole or Fractions of U.S. Dollars Effective from July 1, 2013–June 30, 2014] Centers Breakfast Lunch and

Supper 1 Snack

CONTIGUOUS STATES:

PAID

REDUCED PRICE

FREE

ALASKA:

PAID

REDUCED PRICE

FREE

HAWAII:

PAID

REDUCED PRICE

FREE

$0.28 1.28 1.58

0.41 2.23 2.53

0.31 1.55 1.85

$0.28 2.53 2.93

0.45 4.34 4.74

0.32 3.02 3.42

$0.07 0.40 0.80

0.11 0.65 1.30

0.08 0.47 0.94

1 These rates do not include the value of USDA foods or cash-in-lieu of USDA foods which institutions receive as additional assistance for each CACFP lunch or supper served to participants. A notice announcing the value of USDA foods and cash-in-lieu of USDA foods is published separately in the FEDERAL REGISTER.

SCOPE

The Government seeks a qualified contractor to assist the Office of Policy Support (OPS), United States Department of Agriculture (USDA), Food and Nutrition Service (FNS) to design, conduct, and report on the level of erroneous payments (dollars and rates) to childcare centers and center sponsors participating in CACFP. It builds on the methods developed for school meals in the Access, Participation, Eligibility and Certification (APEC) study series and complements the annual measure of reimbursement “tiering” errors in family day care homes for reporting on CACFP.

C.2 BACKGROUND

Need for the Study

On November 26, 2002, Congress enacted the Improper Payments Information Act of 2002, P.L. 107- 300 (http://www.whitehouse.gov/omb/memoranda_m03-13/ ). This Act required the Department of Agriculture (USDA) to report annually on the extent of erroneous payments in various programs that might be susceptible to significant erroneous payments (exceeding $10 million and 2.5 percent of benefits paid) and report annually on the actions they were taking to reduce these erroneous payments. An OMB directive issued May 21, 2003, provided specific guidance for Agencies to implement the provisions of this Act (http://www.whitehouse.gov/omb/memoranda_m03-13/ ).

This directive stated that annual erroneous payment estimate is the gross (not net) total of both overpayments and underpayments, i.e. it is the sum of the absolute value of overpayments and underpayments.

On November 20, 2009, President Obama issued Executive Order 13520 aimed at reducing improper payments (http://edocket.access.gpo.gov/2009/pdf/E9-28493.pdf). The purpose was to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government, while continuing to ensure that Federal Programs serve and provide access to their intended beneficiaries.

On July 22, 2010, President Obama signed into public law “The Improper Payments Elimination and Recovery Act (IPERA) of 2010”, P.L. 111-204 (http://www.whitehouse.gov/sites/default/files/omb/financial/_improper/PL_111-204.pdf) . The act was aimed at reducing wasteful payments by $50 billion by 2012. The law was intended to assist agencies in reducing and reversing improper payments by: (1) requiring annual risk assessments and the measurement of improper payments; (2) expanding the type of programs that are required to conduct recovery audits; (3) providing agency heads with more options to use/reallocate recovered funds; and (4) providing a list of actions to ensure agency compliance and corrective actions are taken when non-compliance is found.

To comply with the IPERA 2010, USDA needs a reliable measure to estimate erroneous payments for the CACFP. The program is multi-faceted and consists of various administrative venues that serves both children and adults in both center-type facilities and private homes. FNS currently conducts an annual study of childcare provided in homes and the aim of this study will only include childcare centers (sponsored and independent). A large-scale data collection for a nationally representative study for estimating erroneous payments in childcare centers could be conducted periodically but it would be cost-prohibitive to conduct such a study annually given the number of participating centers. This solicitation seeks to leverage the methodology used to conduct the Access, Participation, Eligibility, and Participation (APEC) study series in both sponsored and independent childcare centers operating under CACFP. Thus USDA also needs reliable estimation models that could be used by USDA staff for updating erroneous payment estimates annually. These estimation models would rely on extant data sources for the annual updates. Finally, as an option, FNS would like a white paper describing methodologies that could generate State-level estimates of erroneous payments.

http://www.whitehouse.gov/omb/memoranda_m03-13/ http://www.whitehouse.gov/omb/memoranda_m03-13/ http://edocket.access.gpo.gov/2009/pdf/E9-28493.pdf http://www.whitehouse.gov/sites/default/files/omb/financial/_improper/PL_111-204.pdf

Overview of the Child and Adult Care Food Program

FNS is the primary Federal agency responsible for providing a nutrition safety net for low-income people across the United States. FNS administers 15 nutrition assistance programs, including the CACFP. CACFP plays a vital role in providing children and the elderly with access to adequate food while improving the quality and affordability of day care for low-income families. The program subsidizes nutritious meals and snacks served to children and adults in participating day care facilities. Meals are also provided to children in emergency shelters and eligible after school programs. Providers are reimbursed for each qualifying meal or snack they serve to program participants.

Information from the USDA FNS National Data Bank1 reveals the following regarding the CACFP sponsored and independent childcare centers based on administrative reporting:

• In FY13, more than 1.3 billion nutritious meals and snacks were served in CACFP centers.

• Of the meals served in centers, over 80% were reimbursed as free or reduced-price meals.

• The total reimbursed meal costs for CACFP centers in FY 13 were more than $1.8 billion.

• There were more than 20,000 sponsored childcare centers in FY 13 with an average daily attendance of more than 2.7 million children.

In Centers, children from families with incomes at or below 130 percent of the federal poverty level (FPL) receive free meals upon certification as free-eligible. Children from families who receive benefits under the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance to Needy Families (TANF), the Food Distribution Program on Indian Reservations (FDPIR), and Head Start or Even Start are also eligible to receive free meals. Children from families with incomes between 130 percent and 185 percent of the FPL are eligible for reduced-price meals. For the period July 1, 2013 through June 30, 2014, 130 percent of the FPL is $30,615 for a family of four;

185 percent is $43,568.2 Children from families with incomes over 185 percent of the FPL are categorized as full price (paid), though centers receive a subsidy for full price (paid) meals as well.3

Program Regulations and Administration

CACFP is authorized at section 17 of the National School Lunch Act (42 U.S.C. 1766). Program regulations are issued by the USDA under 7 CFR part 226.4

FNS administers CACFP through payments made to FNS Regional Offices or State agencies in order to reimburse institutions for enrolled food service participants. However, in certain States, CACFP is administered by an alternate agency such as the State health or social services department. The State agencies or alternate agencies enter into agreements with independent centers and sponsoring organizations to assume administrative and financial responsibility for CACFP operations. The eligible institutions5 must be licensed or alternatively approved according to

1 Data from the FNS National Data Bank (NDB). Last accessed January 28, 2014.

2 http://www.fns.usda.gov/sites/default/files/IEG_Table-032913.pdf

3 http://www.fns.usda.gov/school-meals/income-eligibility-guidelines

4 http://www.fns.usda.gov/cnd/Care/Regs-Policy/CFR226.pdf 5 Institution means a sponsoring organization, childcare center, at-risk afterschool care center, outside-school-hours care center, http://www.fns.usda.gov/sites/default/files/IEG_Table-032913.pdf http://www.fns.usda.gov/school-meals/income-eligibility-guidelines http://www.fns.usda.gov/cnd/Care/Regs-Policy/CFR226.pdf

Federal, State or local standards. The State agencies then support the sponsoring organizations and independent centers by processing applications from institutions, reviewing on-site operations, training personnel, auditing program records, processing payments for meals served to participants, and monitoring compliance with program regulations. The sponsoring organizations provide payment to sponsored day care providers for meals and snacks that meet the requirements. Figure 1 provides an overview of the administrative structure of CACFP.

Figure 1: Overview of CACFP Administration

Past Relevant Research

Research on the existence of improper payments in the childcare center setting is scarce. An audit report by USDA’s Office of Inspector General (OIG) found that one-third of the sites (inclusive of all of the CACFP operating modalities)visited in Florida and Michigan were claiming more meals than were observed being served. The report recommended that FNS issue guidance on the required 5-day reconciliation to ensure consistency across monitoring visits.6 An earlier audit report identified similar findings regarding over-claiming and recommended improved financial reviews as a means to address this issue. 7

The Institute of Medicine (IOM) was asked by FNS to convene an expert panel to assess and recommend revisions to the CACFP meal patterns in 2008. A final report was published in 2010 and while the primary focus of the recommendation was on the meal patterns, the report also recommended that FNS evaluate and assess the monitoring and reimbursement system.8 A follow up workshop in 2012 addressed the future research needs for the program. Workshop emergency shelter or adult day care center, which enters into an agreement with the State agency to assume final administrative and financial responsibility for program operations.

6 http://www.usda.gov/oig/webdocs/27099-0001-DA.pdf

7 http://www.usda.gov/oig/webdocs/27601-0012-SF.pdf 8 http://www.iom.edu/Reports/2010/Child-and-Adult-Care-Food-Program-Aligning-Dietary-Guidance-for-All.aspx

Independent Centers

Centers Sponsoring Organization

State CACFP Agency

Regional FNS Office

USDA, FNS

Headquarters

Family or Group Homes http://www.usda.gov/oig/webdocs/27099-0001-DA.pdf http://www.usda.gov/oig/webdocs/27601-0012-SF.pdf http://www.iom.edu/Reports/2010/Child-and-Adult-Care-Food-Program-Aligning-Dietary-Guidance-for-All.aspx presentations explored a variety of topics and one session focused on exploring a variety of topics that may inform this study, specifically an overview of program administrative data9. A list of available workshop presentations by presenter as well as a conference agenda may be found here:

http://www.iom.edu/Activities/Nutrition/ChildAdultCareFood/2012-FEB-07.aspx.

While little research has been conducted on improper payments in childcare centers, extensive research has been conducted on the primary sources of improper payments in the FDCH component of CACFP and provides some context for this study. FNS conducts an annual series on errors in tiering for Family Day Care Homes (FDCH). The 2012 study found an erroneous payment rate of

1.09 percent which corresponds to an estimate of $8.54 million in erroneous payments.10

In addition to the annual studies on improper payments in FDCHs, FNS conducts a study series called Access, Participation, Eligibility, and Certification (APEC) that examines improper payments in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). FNS expects the contractor to use and modify the data collection and analysis methods from the APEC studies and apply them to CACFP centers for this study. The APEC series utilizes a variety of methods (such as application abstractions, meal observations, surveys, and review of administrative data) to produce national estimates of erroneous payments for NSLP and SBP. A copy of the full report and supporting materials from the first iteration of the study are located here:

http://www.fns.usda.gov/nslpsbp-access-participation-eligibility-and-certification-study- %E2%80%93-erroneous-payments-nslp-and-sbp. The approved study plan for the second APEC study, currently underway, will be provided to the contractor selected for this study after award. In addition, the Office of Management and Budget package for the most recent APEC study is available by visiting: http://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201208-0584-008.

Definition of Erroneous Payment Error and Types of Errors

The focus of this study is to determine the annual estimated amount of “erroneous payments” in CACFP-participating childcare centers (both Independent and Sponsored) as a result of certification and non-certification errors. For this study “erroneous payment” is defined as the gross of overpayments and underpayments of payments made in error for reimbursable meals served to children.

Certification errors are those that occur when a child is incorrectly certified as free or reduced price (eligible). These errors may occur as a result of household misreporting or administrative errors at the center or with the sponsor. Examples of errors associated with households include:

misreporting income, household size or program case numbers. Examples of administrative errors at either the center or sponsor levels include: incorrect determination of a child’s eligibility status and errors associated with recording or transmitting the eligibility status of children. All reimbursable meals served to enrolled children at participating centers are eligible for reimbursement at the “paid eligible” rate. Examples of over and underpayments are provided in the table below. Children whose families receive benefits from SNAP, FDPIR, or State programs funded through TANF are categorically eligible for free meals. Children who are participants of Head Start or Even Start programs, in foster care, or experiencing homelessness are automatically eligible for free meals, without further application or eligibility determination.

9http://www.iom.edu/~/media/Files/Activity%20Files/Nutrition/CACFP/2012-FEB-07/Glantz%20Presentation%20020712_1.pdf 10 http://www.fns.usda.gov/sites/default/files/CACFPTiering12.pdf http://www.iom.edu/Activities/Nutrition/ChildAdultCareFood/2012-FEB-07.aspx http://www.fns.usda.gov/nslpsbp-access-participation-eligibility-and-certification-study-%E2%80%93-erroneous-payments-nslp-and-sbp http://www.fns.usda.gov/nslpsbp-access-participation-eligibility-and-certification-study-%E2%80%93-erroneous-payments-nslp-and-sbp http://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201208-0584-008 http://www.iom.edu/~/media/Files/Activity%20Files/Nutrition/CACFP/2012-FEB-07/Glantz%20Presentation%20020712_1.pdf http://www.fns.usda.gov/sites/default/files/CACFPTiering12.pdf

Certification Status Actual Eligibility Program Participant Type of Payment Error Free Reduced Price Yes Overpayment Free Paid Yes Overpayment

Reduced Price Paid Yes Overpayment Reduced Price Free Yes Underpayment

Erroneous payments also result when centers or sponsors submit improper meal counts and claims for reimbursable meals and are classified as non-certification errors. A meal count may be incorrect because a meal is not counted and claimed in the category which reflects the child’s eligibility, because meals counts are improperly totaled or transmitted, or because reimbursement is claimed for meals which are not served or which are served to ineligible participants (e.g. adults/staff members). Therefore, improper meal counts can result in an erroneous payment for either the free/reduced price component of the reimbursement (if the meal is claimed in the improper category) or for the entire amount of the reimbursement (if a claim is paid for a meal which was not served or served to an ineligible participant). Error rates may differ based on the reimbursement method (actual count, claiming percentage, or blended rate) and this should also be considered when designing the study.11

Sources of Certification Errors Sources of Non-Certification Errors Administrative (i.e., misclassifying children either through application or categorical eligibility)

Meal Counts

Misreporting by households Meal Claims

FNS believes that determining how the interaction between certification and non-certification errors may affect the overall level of erroneous payments in CACFP sponsored and independent childcare centers presents difficult technical and methodological issues. Therefore, for this study, FNS is requesting separate national estimates for CACFP of the erroneous payments associated with certification and with non-certifications errors as well as the subcategories within each.

Subcategories of Certification Errors Subcategories of Non-Certification Errors Administrative:

1. Error in eligibility determination

2. Error in recording eligibility status

3. Error in transmitting eligibility status

4. Missing Income Statement/Case Number

Center Records:

1. Center record of totals

2. Sum of verified counts from individual classroom (or centers if multi-site)

Household Reporting:

1. Incomplete Income Statement/Case

Number

2. Categorical Eligibility

3. Household Income

4. Household Size

Center to Sponsor:

1. Center’s record of the report compared to the Sponsor’s record

2. Sponsor’s record of what center reported

Sponsor to State Agency:

1. Sponsor’s record of what was reported to the State Agency

11 http://origin.www.fns.usda.gov/cnd/Care/CACFP/aboutcacfp.htm http://origin.www.fns.usda.gov/cnd/Care/CACFP/aboutcacfp.htm

We are also requesting an evaluation of methods to adjust the estimate for erroneous payments based on misclassification to create a combined erroneous payments rate that would reflect the overall effect of certification and non-certification errors in the CACFP.

Important Considerations

While FNS expects that the methodology used for the APEC study series will provide some insight into approaches for studying improper payments within the CACFP, these programs are distinct in their respective operations. The APEC series focuses on meals that are served primarily in a lunchroom setting; whereas centers participating in the CACFP may use a variety of meal modalities (family-style, classroom, lunchroom, etc). Another distinction is that children may receive multiple servings upon request during the meal service or students may receive their meal/snack outside of the published meal hours. It should also be noted that the processes for meal counting and claiming for CACFP providers is dependent upon how the center is reimbursed (actual count, blended rate, or claiming percentage). These are just a few of the unique characteristics of the CACFP that will need to be considered when developing the appropriate methodologies for the successful execution of the study being requested. There are a number of flexibilities afforded to participating CACFP centers that may also impact the design of this study that offerors should consider and demonstrate that the project staff exhibit expertise in these areas. Some of these flexibilities are summarized here: http://www.fns.usda.gov/sites/default/files/CACFP15-2013.pdf.

These flexibilities could impact both the errors associated with administrative procedures as well as meal counting and claiming and should be thoroughly considered when designing the study.

http://www.fns.usda.gov/sites/default/files/CACFP15-2013.pdf