CACFP Administrative Manual Section 4.1Child and Adult Care Food Program Administrative Manual Section 4.1: Steps for Determining Tiering Rate.
Section 4: Day Care Home Reimbursement Determination
4.1 Determining Tiering Rate
DCH providers are reimbursed for meals based on their qualified tiering rate. The two-tier reimbursement system was implemented by Public Law 04-93. The reimbursement structure allows higher reimbursement to providers located in low-income areas, and also to providers and children from low-income households.
- Tier I is equal to the higher per meal reimbursement rate
- Tier II is equal to the lower per meal reimbursement rate
Tier II homes can be further classified into the below three categories:
- Tier II High: All children are eligible for free-reduced price meals (FRPM); all eligible meals are reimbursed at the higher Tier I rate
- Tier II Low: No children are eligible for FRPM; all eligible meals are reimbursed at the Tier II rate
- Tier II Mixed: Some, but not all children, are eligible for free or FRPM; all eligible meals are reimbursed at a combination of the higher Tier I rate and the Tier II rate
In order for a DCH sponsor to determine the level of reimbursement tier for a new DCH, they must follow the determination process below:
Step 1: Determine if the home is located in an eligible geographical area by using either school or census data.
- If the DCH is in an eligible area, the home is determined to be a Tier I home.
- If the home does not qualify for Tier I by area eligibility, the home is determined to be a Tier II home. A DCH sponsor can continue to Step 2 below to qualify the provider for Tier I reimbursement.
Step 2: If the home was not area eligible, the DCH sponsor can distribute the Meal Benefit Form (MBF) for Providers to the provider in order to determine if the provider is either income or categorically eligible; which would make the home eligible for Tier I reimbursement.
- If the provider is eligible for Tier I categorically or by income, the home can be categorized as Tier I
- If the provider is not eligible for Tier I categorically or by income, the home can be categorized as Tier II. A DCH sponsor can continue to Step 3 or qualify the children as Tier II High
Step 3: If the provider is not area, categorically, or income eligible for the Tier I reimbursement, the home is categorized as a Tier II home. The DCH sponsor or provider can distribute the MBF for Parents form in order to qualify the children as Tier II High. The MBF for Parents form must be returned to the DCH sponsor, not the provider. If submitted to the provider, the MBF for Parents form must be in a sealed envelope.
- If all of the children are eligible for FRPM, all eligible meals are reimbursed at the higher Tier I rate, and classified as Tier II High
- If none of the children are eligible for FRPM, all eligible meals are reimbursed at the Tier II rate, and classified as Tier II Low
- If some of the children are eligible for FRPM, all eligible meals are reimbursed at a combination of the higher Tier I rate and the Tier II rate and the home is classified as Tier II Mixed
All documentation to determine the tiering rate must be filed and stored for three program years plus the current program year. The program year begins October 1 and ends the following September 30.
To summarize, the DCH sponsor should first attempt to qualify the home for Tier I reimbursement based on area eligibility. If the home is not located in an eligible area, the DCH sponsor can attempt to qualify the home as Tier I by determining if the provider is income or categorically eligible. If the provider cannot be Tier I, the home qualifies for Tier II reimbursement, and the enrolled children’s household can attempt to qualify for the higher Tier I reimbursement.