Bad Debt CollectionBad Debt Collection

Nutrition ProgramsNutrition Programs

Illinois State Board of Illinois State Board of EducationEducation

August 20, 2010August 20, 2010

Bad Debt CollectionBad Debt Collection

What to do???What to do???

Discovery Of Debt OwedDiscovery Of Debt Owed

Provider has a claim adjustment for a Provider has a claim adjustment for a prior month.prior month. Provider still activeProvider still active Provider no longer activeProvider no longer active

Provider ActiveProvider Active

Is provider Serious Deficient?Is provider Serious Deficient?

Is provider still claiming?Is provider still claiming?

Provider Is Seriously Provider Is Seriously DeficientDeficient

A provider can continue to claim through A provider can continue to claim through the seriously deficient process up and to the seriously deficient process up and to the termination date. the termination date.

The claim must be a valid claim for eligible The claim must be a valid claim for eligible meals served.meals served.

Therefore, deductions for prior claim Therefore, deductions for prior claim errors may continue to be made. errors may continue to be made.

UNLESS……UNLESS……

The serious deficiency(ies) constitute(s) The serious deficiency(ies) constitute(s) an an imminent threat to the health imminent threat to the health and safety of participantsand safety of participants, or the , or the provider has engaged in activities provider has engaged in activities that threatened the public’s health that threatened the public’s health and safetyand safety. Then the Sponsor is . Then the Sponsor is prohibited to make payment until an prohibited to make payment until an Administrative Review (appeal) of the Administrative Review (appeal) of the proposed termination is completed.proposed termination is completed.

No Appeal Or Loses AppealNo Appeal Or Loses Appeal

Provider is immediately terminated at the Provider is immediately terminated at the expiration of the right to appeal. expiration of the right to appeal. Deductions can be made for any valid Deductions can be made for any valid new claims and suspended claims new claims and suspended claims submitted prior to termination date.submitted prior to termination date.

Any debt unable to collect will be listed Any debt unable to collect will be listed on the termination letter and identified as on the termination letter and identified as debt owed on the National Disqualified debt owed on the National Disqualified List.List.

What Happens After The What Happens After The Appeal?Appeal?

The deductions can be made to the claims The deductions can be made to the claims if the provider wins the appeal.if the provider wins the appeal.

If the provider loses the appeal, provider If the provider loses the appeal, provider is terminated immediately.is terminated immediately. Termination date is the Appeal Official’s Termination date is the Appeal Official’s

decision date.decision date. Valid claims submitted prior to the date can Valid claims submitted prior to the date can

be used for offsets of deductions owed.be used for offsets of deductions owed.

What If The Provider Stops What If The Provider Stops Claiming During The Seriously Claiming During The Seriously

Deficient Process?Deficient Process?

Any debt remaining will be required to Any debt remaining will be required to be repaid prior to the provider be repaid prior to the provider returning to the program. returning to the program.

A provider not repaying CACFP debt is A provider not repaying CACFP debt is a seriously deficient violation ending in a seriously deficient violation ending in termination from the program.termination from the program.

What If The Provider Is Not What If The Provider Is Not Seriously Deficient, But Quits Seriously Deficient, But Quits

And A Previous Claim And A Previous Claim Adjustment Has Not Been Able Adjustment Has Not Been Able To Be Deducted Prior To Them To Be Deducted Prior To Them

Quitting?Quitting? Any debt remaining will be required to be repaid Any debt remaining will be required to be repaid

prior to the provider returning to the program. prior to the provider returning to the program. A provider not repaying CACFP debt is a seriously A provider not repaying CACFP debt is a seriously

deficient violation ending in termination from the deficient violation ending in termination from the program.program.

Sponsor’s ResponsibilitySponsor’s Responsibility

Must make reasonable effort to collectMust make reasonable effort to collect Seriously deficiency process identifying debt Seriously deficiency process identifying debt

owed from provider as seriously deficiency.owed from provider as seriously deficiency. Turn to the State’s Attorney for prosecution.Turn to the State’s Attorney for prosecution. Turn to collectionTurn to collection

Be sure to add wording of debt plus claim feeBe sure to add wording of debt plus claim fee If dollar amount is within limits, take to If dollar amount is within limits, take to

Small Claims Court.Small Claims Court.

Sponsor Minimum Sponsor Minimum RequirementRequirement

Seriously deficient letters requiring Seriously deficient letters requiring return of funds would be the return of funds would be the minimum requirement to satisfy minimum requirement to satisfy sponsor responsibility.sponsor responsibility.

If Claims Are Still Not If Claims Are Still Not Recovered.Recovered.

Sponsor should use the seriously Sponsor should use the seriously deficient process to place the deficient process to place the provider on the National Disqualified provider on the National Disqualified List. The seriously deficiency letters List. The seriously deficiency letters must must includeinclude the amount owed the the amount owed the CACFP.CACFP.

Sponsor Has No Success In Sponsor Has No Success In Collecting…Collecting…

Sponsor records the owed funds on an Sponsor records the owed funds on an internal report. internal report. Amount owed by providerAmount owed by provider Month of claim (s)Month of claim (s) All details for unrecovered claim All details for unrecovered claim

TieringTiering Number of mealsNumber of meals Type of mealsType of meals

ISBE site numberISBE site number Maintain record (s) for seven years after Maintain record (s) for seven years after

repayment. Forever if never repaid.repayment. Forever if never repaid. Provider actual record file must also be maintained. Provider actual record file must also be maintained.

Does Sponsor Adjust The Does Sponsor Adjust The Claim?Claim?

NO!NO! Claim is not adjusted! Claim is not adjusted! Claim is only adjusted when provider Claim is only adjusted when provider

pays 100% of the debt and the pays 100% of the debt and the sponsor submits the funds due to sponsor submits the funds due to ISBE-Funding and Disbursements.ISBE-Funding and Disbursements.

When Are Provider Funds When Are Provider Funds Submitted To ISBE?Submitted To ISBE?

Provider Claim funds are not returned Provider Claim funds are not returned until 100% of the funds are received until 100% of the funds are received from the provider. from the provider.

Funds are submitted with the adjusted Funds are submitted with the adjusted provider claim for the original provider claim for the original discovered errors and irregularities.discovered errors and irregularities.

What About The Admin Money What About The Admin Money For The Home?For The Home?

Admin money for the home is not Admin money for the home is not returned, even if the total month returned, even if the total month claim for the provider is adjusted to claim for the provider is adjusted to zero.zero. Consider it a payment for all your Consider it a payment for all your

trouble.trouble.

When Provider Pays Later…. When Provider Pays Later….

Sponsor receives funds from Sponsor receives funds from provider.provider.

The Sponsor, and The Sponsor, and notnot ISBE, receives ISBE, receives the funds.the funds.

What If Partial Payments Are What If Partial Payments Are Received?Received?

Sponsor records payment and Sponsor records payment and reduces debt owed in sponsor reduces debt owed in sponsor records. Once all debt is repaid, the records. Once all debt is repaid, the funds are submitted.funds are submitted.

Partial payments are not submitted Partial payments are not submitted to ISBE-Funding and Disbursements.to ISBE-Funding and Disbursements.

What’s Next?What’s Next?

Sponsor submits funds to ISBE- Sponsor submits funds to ISBE- Funding and Disbursements with Funding and Disbursements with revised claim.revised claim. Identifying month and fiscal year of the Identifying month and fiscal year of the

adjustment.adjustment. Downward revisions have no expiration.Downward revisions have no expiration.

Something To Consider…Something To Consider…

Providers on the National Disqualified Providers on the National Disqualified List will not be considered by ISBE for List will not be considered by ISBE for removal until the outstanding debt removal until the outstanding debt for the related claim has been for the related claim has been cleared through the sponsoring cleared through the sponsoring organization.organization.

Questions?Questions?

Deborah StoneburnerDeborah StoneburnerPrincipal ConsultantPrincipal Consultant

Nutrition ProgramsNutrition ProgramsIllinois State Board of EducationIllinois State Board of Education

(800) 545-7892(800) 545-7892(217) 782-2491(217) 782-2491

dstonebu@isbe.netdstonebu@isbe.net