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RMR Ceilings and Reimbursement Calculations

Letter Head: Jack O'Connell, State Superintendent of Public Instruction, California Department of Education

April 8, 2010

Dear Executive and Program Directors of Alternative Payment Programs:

Statute and Regulation Clarification Regarding Selection of Regional Market Rate Ceilings and Reimbursement Calculations

It has come to my attention that questions and possible confusion about the policies and process to calculate child care reimbursements are being raised in the field. The purpose of this letter is to clarify the statutes and regulations regarding (1) selection of the Regional Market Rate (RMR) ceiling and (2) reimbursement calculations.

Selection of Reimbursement Ceiling

After establishing the certified hours of care for the child, Alternative Payment Provider (APP) contractors should determine the reimbursement ceiling or ceilings that are applicable to the family (California Code of Regulations, Title 5 [5 CCR], Section 18075). Contractors should choose a reimbursement ceiling that most closely matches the rates charged by the type of child care provider that the parent is looking for, allowing them broad access to the local market.

The rate categories described in 5 CCR, Section18075 are intended to be complementary with 5 CCR, Section 18076 to allow an Early Education and Support Division (EESD) contractor to choose from different reimbursement ceiling categories that might be appropriate to meet the certified hours of care. There are specific instances when more than one reimbursement ceiling category may potentially be applicable for the same certified hours of care.

The most important factors for determining the appropriate reimbursement ceiling are: (1) the age of the child; (2) the certified need of the family; and (3) the type of facility the family has chosen. APP contractors are responsible for complying with existing state law, which states that reimbursement ceilings are intended to provide access for subsidized families to approximately eighty-five percent of providers in their service area. For example, a family:

  • Needs full-time care (i.e. six or more hours a day)
  • Has regular hours of employment
  • Prefers services in a licensed family child care home

A best practice would be to have the APP contractor assist the parent in reviewing the RMR ceiling tables for full-time care for a preschool-age child in a family child care home. In general, parents would be informed of the maximum reimbursable amount for care based on the certified need of the parent(s) and for each facility type (licensed-exempt and licensed family home care and center care). In no way should the contractor provide this information in a way that would influence the parent’s selection of a provider.

Additionally, the rate schedules for licensed family child care home providers in the area have been submitted to the agency and indicate the majority of providers charge a weekly rate for full-time care.

The weekly RMR reimbursement ceiling will allow the family access to at least eighty-five percent of the licensed child care home providers within their service area. Therefore, the agency should select the full-time weekly reimbursement ceiling to provide the family with equal access to child care as described in federal regulations.

Calculation of Reimbursement

Provisions in the California Education Code (EC) are also clear on this issue.

EC Section 8222 (c) states, “An alternative payment program shall reimburse a licensed provider for child care of a subsidized child based on the rate charged by the provider to nonsubsidized families, if any, for the same services, or the rates established by the provider for prospective nonsubsidized families.”

To guide the determination of the appropriate reimbursement amount, contractors should look to the provider’s established rate schedule for nonsubsidized families or perspective nonsubsidized families as required in EC Section 8222 (c).

Furthermore, because 5 CCR, Section 18075 is not intended to prescribe how providers should structure charges for their services, APP contractors must not require providers to submit different rates for all the possible RMR categories or define their private rates in the same way they are defined in 5 CCR, Section 18075.

EC Section 8357 (b) states, “APP contractors shall not reimburse a provider more than the provider receives from a private pay client for the same service.” The reimbursement rate must always be the lesser of either the selected RMR ceiling or the provider's established rate for the same services to nonsubsidized or private pay clients.

The process for calculating accurate reimbursement begins with the selection of the lesser of either the reimbursement ceiling or the provider’s documented rate. This formula works in the majority of cases. In some instances, other factors or provider policies (for example, higher weekend rates) affect the amount of reimbursement. If you have questions regarding specific factors, please contact your Field Services Consultant.

Please review your policies and procedures for the selection of reimbursement ceilings and for the calculation of reimbursement rates to ensure compliance with the processes described above. I have asked the Field Services Consultants to work with agencies to review policies and parent handbooks to ensure they reflect the process described above.

As we continue to update our regulations to ensure compliance with applicable state and federal laws and regulations, the application of the RMR reimbursement ceilings and calculation of reimbursement rates will be part of our discussions.

Thank you for reviewing your process and policies to make sure our families are able to access high quality care to support their work or work activity and ensure our young children enter school ready to learn.

Thank you for your continued service to our children and their families.

Sincerely,

Camille Maben, Director

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