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Honorable members of the U.S.

House of Representatives, Committee on Ways and

Means, Subcommittee on Income Security and Family Support, my name is Beverly Tran
and I come to participate in the discussions of The Use of Child Welfare Waiver
Demonstration Projects to Promote Child Well-Being as An Original Source.


A general consensus has resounded throughout the testimonies that being a need
for financial reform, but the foremost question before this body is, “Have the waivers
worked?” Yes. The waivers have elevated the need for financial child welfare reform to
the national agenda, but have failed to demonstrate the most serious nature in the
promotion of child well-being, which is the need for transparency and accountability.

It is a novel concept to believe the child welfare industry operates without any
flaws but reform may only be formulated with an expansion of waivers.

Improving Access to Home and Community-Based Services

Expansion of the scope of waivers must go beyond the Title IV-E rule of
construction funding stream to become more inclusive of demonstration projects which
must incorporate transparency and accountability in the area of Medicaid.1

Traditionally, the only way for children and individual family members to access
needed services and resources (i.e. housing, medical, transportation, education,
employment) has met by Title IV-A poverty-means testing, the eligibility criteria for
child welfare services, statistically reported as neglect. Much of the time this eligibility
criteria leads to unnecessary and improper removals of children to be placed in long-term
situations of foster care. The purpose of Home and Community-Based Services (HCBS)
is to provide targeted benefits to keep children in the least-restrictive and most integrated
settings based upon States’ Medicaid options of financial eligibility, respective of Federal
Poverty Level.

In addition, HCBS provides an enhanced opportunity for child welfare waiver

demonstration projects under Medicaid provisions for the new features of the 1915(i)
Benefit. With that said, consideration must now be given to the redirection of Title IV-E
funding streams to Medicaid for the purposes of implementing, for the first time in the
history of this nation, regulation of the child welfare industry.

Letter dated August 6, 2010 from the Center for Medicaid, CHIP, Survey & Certification to the States
Medicaid Director informing of several changes to Section 1915(i) of the Social Security Act
(the Act) made by the Affordable Care Act (ACA)1. These changes, which become effective October 1,
2010, include revised and new 1915(i) provisions for removal of barriers to offering home and community-
based services (HCBS) through the Medicaid State plan. This letter is intended to provide States guidance
on those important changes to the law.
Capacities for Medicaid Regulation to Improve the Well-being of Children

1.Child Welfare Exclusionary Database: Even though there is a comprehensive

plan for Medicaid program integrity2 with the exclusionary program, it does not include
the Targeted Case Management,3 the largest component of child welfare services.
Revenue-maximizing schemes in child welfare manifest in a multitude of complex shapes
and forms, yet continue to go undocumented.

The heaviest weighted reason there is no background for Medicaid provider

eligibility or exclusionary database reporting for child welfare providers is, under
Freedom Of Information Act (FOIA) exclusions and exemptions, any information dealing
with a child is protected, under seal, including the management and quality of services
provided. Furthermore, child welfare agencies are, for the most part, non-profit and
privatized4, meaning they are automatically accredited by Quasi-Governmental
Organizations5 which advocate for further exclusions of external audit and quality
improvements in the delivery of services as a charitable organization.

In the event a child welfare agency was found to be ineligible as a child welfare
services provider, the remedy is to reorganize under a different name, for there is limited
to no competition in local regions, allowing rates to be set without comparability to
quality and delivery of services with other regions. These actions and inactions set the
stage for fraud, waste and abuse in child welfare services which artificially generate
national statistics presenting a false façade for the current well-being of children.

2. Electronic Health Record Technology: Currently, data reporting and

warehousing incidences of child abuse and neglect6 should be considered suspect as
studies continuously “mimic”7 previous methodologies, lacking in identification of errors,
obstacles and barriers to reliability and validity. There has never been any
acknowledgement of kickbacks, false claims and other classifications of unallowable or
questionable cost reimbursements of the States.8 Electronic Health Record (EHR)9
The Centers for Medicare and Medicaid (CMS), Medical Integrity Group (MIG) published the May 19,
2010 memorandum report: Excluded Medicaid Providers: Analysis of Enrollment, OEI 09-08-00330,
providing information on States' enrollment procedures for eligible Medicaid providers.
Child Welfare League of America, Targeted Case Management (TCM) and Rehabilitative Services For
Children in Foster Care, May 2007.
Internal Revenue Service Publication 4221-NC, Compliance Guide for Tax-Exempt Organizations (other
than 501(c)(3) Public Charities and Private Foundations)
Council on Accreditation Standards for Private Organizations and Public Agencies, Eight Editions.
Sedlak, A.J., Mettenburg, J., Gasena, M., Petta, I., McPherson, K., Greene, A., and Li, S.. (2010) Fourth
National Incidence Study of Child Abuse and Neglect (NIS-4): Report to Congress. Washington, DC: U.S.
Department of Health and Human Services, Administration for Children and Families.
Ibid, p. A-24, referring to the replication of methodologies of previous NIS publications.
Michigan Auditor General, Financial Audit Including the Provisions for the Single Audit Act of the
Department of Human Services, October 1, 2002 through September 30, 2004, documenting the first in a
series of escalating child welfare services program questionable and unallowable costs in foster care
The Center for Medicaid and State Operations letter to States Medicaid Director dated September 1, 2009,
SMD # 09-006 ARRA HIT #1, providing initial guidance on section 4201 of the American Recovery and
technology is severely constrained in documenting unallowable and questionable costs in
child welfare services as demonstrated in the ad hoc queries of the Office of Inspector
General Health and Human Services evaluations, reviews and litigation.10 Meaningful
data reporting and maintenance may only be established through further waiver
demonstration projects to improve the well-being of children, for there the repercussions
of false claims in child welfare are met with a slap on the wrist.

Funding mechanisms are currently in place to feasibly implement EHR to properly

report the status of the well-being of children receiving services of child welfare under
the States Medical Integrity Program, but the States must still be encouraged to establish
assurances for reporting violations in child welfare programs and Medicaid to the States
Medicaid Fraud Control Units.

3. State Medicaid Fraud Control Units: In the arena of child welfare, there are no
State provisions which penalize the States Medicaid Director for not reporting violations
of law, including Medicaid fraud, to the States Attorney General, who heads up the
Medicaid Fraud Control Unit11, therefore, violations of the material provisions of federal
or state laws would not necessitate exclusion from the Medicaid providers program as
assurances for the reporting of other States agencies outside its Medicaid Directors

States need to be encouraged to establish statutory assurances to prosecute and

recover child welfare program frauds. As it stands in Michigan, there is no authority to
enforce statutory assurances for reporting suspected violations of law to the Counties
prosecutor or Attorney General.12

4. Whistleblower Protections: It is the authority of the States Attorney General

(or in the case of approved exemptions) to prosecute and recover Medicaid fraud, but not
all States have False Claims Acts, or False Claims Acts that encourage reporting from the
general public or that include whistleblower protections for government employees. In
many instances, dedicated and caring child welfare workers are penalized for simply
trying to improve the well-being of children in the care of the States.

5. Original Source Protections: There are established reporting mechanisms for

violations of inter-country adoptions, yet there is nothing in existence for compliance to
the Interstate Compact on the Placement of Children13 nor the Interstate Compact on

Reinvestment Act of 2009 (Recovery Act), Pub. L. 111-5 which establishes a program for payment to
providers who adopt and become meaningful users of electronic health records.
Appellee v. DEPARTMENT OF HEALTH AND HUMAN SERVICES and Michael O. Leavitt, Secretary
of the Department of Health and Human Services, Appellants. No. 04-5429.
It must be noted that there are some States that do not house its Medicaid Fraud Control Unit in its Office
of Attorney General.
TRAN v. RUFFIN, Office of Children’s Ombudsman, Michigan Court of Appeals # 291799, 2009.
U.S. Department of Health and Human Services Office of Inspector General Interstate Compact on the
Placement of Children: State Structure and Process, OEI -02-95-00041.
Adoption and Medical Assistance.14 What this means is that States are allowed to violate
established federal policies while creating an unprotected environment for penalties
against individuals who possess first-hand knowledge of the violations against the well-
being of children receiving services.

These egregious actions and inactions of the States extend further than the
Interstate Compacts; it specifically deals with the original custodians and those
individuals who care deeply for the children who are under the auspices of the States.

Gag orders and threats (i.e. termination of parental rights, non-visitation,

extensions for length of stay in foster care, imprisonment) remain the status quo in the
unregulated industry of child protection. Even if an original guardian can afford and
access adequate legal representation, there are no guarantees the reports of violations of
law and policies will garner reunification, safety or quality services for children in care
due to the demands of due process reported as non-compliance.

Grievance databases have been provided for in the Hague Adoption Convention15
but are non-existent for the States. Silence abounds for the well-being of children as the
child industry is shrouded by the codified iron veil of parens patriae.

There is only one way to improve the well-being of children receiving child
welfare services and that is to end the culture of secrecy. It is only through the
reformation of the financial structures will there be transparency and accountability in the
child welfare industry. Medicaid regulations are well established to implement regulation
of this industry that has been allowed to rampantly flourish with fraud, waste and abuse
of children’s services and resources, yet it remains suspended in the states of moratoria.16

Child welfare waiver demonstration projects must now include Medicaid

reporting mechanisms and its compliance enforcements17 in order to reinvest in the health
of the community and the well-being of children to generate a financially secure and
productive future for society.

Stop Medicaid Fraud in Child Welfare, now.

U.S. Department of Health and Human Services Office of Inspector General Interstate Compact on
Adoption and Medical Assistance, OEI 02-05-00040.
The Hague Convention on the Protection of Children and Co-operation in Respect of Inter-Country
Adoption (Hague Adoption Convention) is an international agreement to safeguard intercountry adoptions.
Concluded on May 29, 1993 in The Hague, the Netherlands, the Convention establishes international
standards of practices for intercountry adoptions. The United States signed the Convention in 1994, and
the Convention entered into force for the United States in April 2008.
Executive Office of the President, Office of Management and Budget, Statement on Administration
Policy H.R. 5613 Protecting the Medicaid Safety Net, 2008.
OMB Circular A-87.