April 2, 2002

Department of Health and Family Services
Division of Children and Family Services



Area Administrators/Assistant Area Administrators
Bureau Directors
County Departments of Community Programs Directors
County Departments of Developmental Disabilities Services Directors
County Departments of Human Services Directors
County Departments of Social Services Directors
Section Chiefs/Licensing Chiefs
Tribal Chairpersons/Human Services Facilitators


Susan Dreyfus


Results of Federal IV-E Review


This memo is to inform county agencies of the results of the federal Title IV-E eligibility and reimbursability review of Wisconsin that took place during the week of March 4, 2002. Information about the IV-E review process was provided in DCFS Info Memo 2001-22, dated December 21, 2001.

A total of 80 cases were reviewed for the initial IV-E eligibility determination, the ongoing IV-E reimbursability of the out-of-home care episode, and licensing requirements for out-of-home care providers receiving payments. T he period reviewed was April 1, 2001 through September 30, 2001 and all of the 80 cases had at least one month of IV-E reimbursable foster care payments during that period. The review generally focused on the six-month period, except that initial eligibility was examined back to the beginning of the out-of-home episode. The cases were selected at random by the federal government from data files submitted by the state with 43 cases from Milwaukee County and 37 cases from 21 other counties, including five cases that originated with counties but were with the state adoption program during the review period. Twenty other cases from both Milwaukee and other counties were also selected as an over-sample, but these cases were not examined during the IV-E review. The vast majority of the cases reviewed were CHIPS cases, with some juvenile delinquent cases in the sample.

Of the 80 cases reviewed, 23 cases were determined to have a total of 29 errors relating to Title IV-E eligibility and reimbursability requirements. Of the cases with errors, 8 were from Milwaukee, three from the adoption program and 12 from other counties. Of the error cases, 18 cases had a single error and five cases had multiple errors. Specifically:

  • Seven cases had errors relating to initial eligibility, including conversion of voluntary placements, contrary to the welfare finding, reasonable efforts to prevent removal finding or the removal circumstances of the child. One eligibility error case was in Milwaukee for a voluntary placement and six eligibility error cases were in other counties, most frequently for contrary to welfare findings. The contrary to the welfare errors affected both CHIPS and juvenile delinquent cases. Initial eligibility errors are the most serious and result in large disallowances that go back to the beginning of the out-of-home care episode. Initial eligibility errors also cannot be corrected, making the child ineligible for the duration of the out-of-home care episode.

  • Sixteen cases had errors relating to ongoing reimbursability, including lapses in legal responsibility (i.e., CHIPS orders) and the new reasonable efforts to finalize the permanency plan (REPP) finding. Of these cases, six were in Milwaukee, three were adoption cases and seven were in other counties. These errors result in small disallowances for one or more months until subsequent actions make the case reimbursable again.

The legal responsibility errors occurred in cases where the CHIPS order was not extended in a timely manner and the placement was temporarily not reimbursable until the extension order was completed. Once the extension was in place, these cases became reimbursable again.

The REPP finding was the largest source of errors in the IV-E review, with errors resulting from the timing of findings, the need for specific language in court orders, and circumstances for making findings in certain types of cases. New federal IV-E requirements require a specific finding by the court that the agency is making reasonable efforts to finalize or achieve the permanency plan and the finding must be made no less frequently than every 12 months. The REPP requirement was fully effective in March 2001. Without direction in state statutes, the Director of State Courts Office issued new court forms with a specific format for the REPP finding in May 2001. REPP errors were typically identified starting with the April 1, 2001 beginning date of the review period for cases where the most recent extension order for the case was made using old court forms. Using the specific format in the new court forms to make the REPP finding will make the cases reimbursable again and state statutory changes are pending that will provide direction to courts in making REPP findings. For cases on the path to adoption or guardianship for which CHIPS orders may not be extended, REPP findings need to be made through other means to keep the case reimbursable until the adoption or guardianship is finalized.

  • Three cases had licensing errors relating to gaps in provider licensing. Of these cases, two were in Milwaukee and one was in another county. The disallowances in these cases were small, with the placement being not reimbursable until the new license was in effect. The review also looked at criminal background checks for providers and a number of cases statewide did not have complete documentation of criminal background checks. The Division was able to obtain additional information for these cases, so the incomplete documentation did not result in case errors for the IV-E review. The review does show the need for statewide improvement in documenting criminal background checks in provider licensing files.

For the individual cases with errors, federal disallowances in the amount of $206,833 were computed based on the Title IV-E maintenance and administration costs claimed by the state to date for those cases. Of the disallowances, $112, 642 were maintenance costs and $94,191 were administration costs claimed based on time study results. The federal disallowances will be paid by reducing the upcoming quarterly IV-E claim submitted by the Department. The disallowances will reduce the overall amount of Title IV-E revenue on a one-time basis, which will affect the funds available for future support of the Title IV-E Incentive program, but will not have an ongoing impact on the Community Aids program or other programs funded with Title IV-E revenue. Prospectively, the initial eligibility errors and reimbursability errors, until corrected, will continue to reduce future Title IV-E revenue.

The Division, in collaboration with counties, will be required to implement a program improvement plan to improve compliance with Title IV-E eligibility and reimbursability requirements. The program improvement plan must be submitted for federal approval by June 2002 and the state will have one year to implement the improvements. Program improvement efforts are already underway, including broader use of the 2001model court forms with a specific format for the court to make the REPP finding, the updated IV-E eligibility handbook and training provided to county staff in fall 2001, and means to obtain REPP findings for cases with the adoption program. Additional improvement activities will need be undertaken by the Division and counties to further improve compliance with IV-E requirements.

Following the implementation of the program improvement plan, the state will be subject to a secondary IV-E review using a larger sample of 150 cases. The larger sample will result in the majority of counties in the state having at least one case in the secondary review. It is anticipated that this secondary review will take place in 2004 with the review period starting in 2003. Disallowances will be assessed for individual error cases and should both the number of error cases and the dollar amount of individual case disallowances in the secondary review exceed the 10% federal tolerance level, an additional IV-E financial penalty will be imposed on the state. This additional penalty, if assessed against the state, would be extrapolated based on the individual case disallowances and could exceed $10 million. Following the secondary review, subsequent federal IV-E reviews will be conducted every three years and the federal tolerance level for errors drops to 5% for subsequent reviews.

Correct determinations of IV-E eligibility and reimbursability are critical to protect Title IV-E revenue and minimize the potential for a financial penalty in the secondary review. Currently 30 counties statewide are participating in the centralized IV-E eligibility unit. None of the statewide error cases came from a county that participated in the centralized eligibility unit in 2001 during the review period and the one initial eligibility error in Milwaukee was for a case that entered care in 1996 prior to the Bureau of Milwaukee Child Welfare. This demonstrates that participation in the centralized eligibility unit plays a vital quality assurance role for IV-E eligibility determinations. As part of the program improvement plan, all counties should participate in the centralized eligibility unit. For the secondary IV-E review, recoupments will likely be made from counties for individual case disallowances and a proportionate share of any financial penalty from the secondary review, so participation in the centralized eligibility unit will reduce county exposure for such recoupments. Counties may also be directed to implement local quality assurance activities to ensure the accuracy and timeliness of actions necessary to establish IV-E eligibility and maintain reimbursability of cases.

Counties wanting to make arrangements to participate in the centralized eligibility unit should contact Sandy Palmgren. Bringing all counties into the centralized eligibility unit will require expansion of the unit capacity, which may affect the timing of when additional counties can begin participating.

Sandy Palmgren, 
Project Manager of Centralized Eligibility Unit
Milwaukee Phone (414) 220-7036
Madison Phone (608) 266-1842
Email SandyPalmgren@maximus.com

The Division appreciates the cooperation of county agencies in submitting cases for the IV-E review. Many hours of staff effort went into preparing files and obtaining additional information for cases. The Division will work closely with county agencies to keep you informed as the program improvement plan is developed and implemented. I trust that the continued joint efforts of the Division and county agencies to improve compliance with Title IV-E eligibility and reimbursability requirements will be successful.


Regional Contact:

Area Administrator

Central Office Contact:

John Tuohy
Office of Policy, Evaluation and Planning
1 W. Wilson, Street, Room 558
P.O. Box 8916
Madison, WI 53708-8916
Phone: (608) 267-3832
E-mail: tuohyjo@dhfs.state.wi.us


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