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Special Needs Rates: Supporting Inclusion of Children with Disabilities in Child Care Programs

No. The purpose of the ADA is to prevent child care programs and states from discriminating against individuals with disabilities. Providers must serve children with disabilities if they can do so by making reasonable accommodations. However, providers may not charge private paying customers/parents for the cost of making these reasonable accommodations. This prohibition on charging private parties more to serve children with disabilities than other children does not preclude states from paying a higher rate in recognition of the increased costs. Certainly, the rationale for the ADA’s enactment was to encourage public policies that promote the availability of services to children with disabilities.

No. The Personal Responsibility and Work Opportunity Act of 1996 repealed various child care subsidy provisions that required that rates paid be the lesser of either an actual market survey or what providers actually charged parents. This had placed a hardship on states desiring to pay a premium for children with special needs. That’s because the ADA’s requirement that providers not charge parents for reasonable accommodations resulted in actual amounts charged to private paying parents not necessarily reflecting actual costs, thereby artificially depressing the market rates. With the repeal of these provisions, states are once again free to use market rates in the development of rates to be paid for children with disabilities, but they are not limited by these rates. Since actual charges and market rate surveys of providers will offer information (because of ADA requirements) that is not necessarily reflective of the true costs of serving children with disabilities (because of the inability of providers to pass on the costs of reasonable accommodations to parents), states now have the ability to develop their rates with this fact in mind.

The ADA was enacted in part to end discrimination against children with disabilities in child care programs.

One impact of an increased rate may be to serve as an incentive for programs to affirmatively market themselves to serve children with disabilities.

A higher reimbursement rate acknowledges that many child care programs operate on the margins, and while they are legally responsible to make reasonable accommodations, they could use financial support to make these reasonable accommodations happen. The Federal Interagency Coordinating Council recently recognized this in its position statement on child care legislation and children with disabilities; it indicated that without a differential rate, payment rates discourage providers from enrolling children with disabilities. Consequently, the statement seeks differential rates or incentive provisions in all relevant legislation.

Moreover, if a child could be excluded under the ADA because the program would require more than providing a reasonable accommodation to allow a child with a disability to be served, a higher reimbursement rate might allow a "more than reasonable" accommodation to occur. Increased rates would allow the provider to consider the costs of going beyond reasonable accommodations either because such accommodations were truly necessary or because using a more costly accommodation might prove to be more effective in ensuring that inclusion really works.

Under the Child Care and Development Fund (CCDF), it is up to each state to define which children are to be considered those with special needs. This definition could track the definition of disability under the ADA, the definition of those entitled to services under the Individuals with Disabilities Education Act (IDEA), or any definition the state selects.

For example, in Maryland, to be eligible for the rate adjustment, there must be a signed and dated statement from a physician, licensed psychologist or licensed social worker that verifies the existence of a diagnosis of a mental or physical disability and provides a description of the condition. The disability must cause the child to be incapable of self care, as appropriate for the child’s age. Further, the inability to provide self care must be significant enough to necessitate additional supervision or specialized care. (FIA Action Transmittal, FIA/OPA 98-32).

In Nebraska, to be considered a child with a special need, the child must have one or more of the following conditions that are not related to chronological age:

1. Emotional impairment: including behavioral impairment; requires special equipment or assistance;
2. Developmental age level lower than chronological age and requires assistance via special supervision;
3. Movement impairment: requires assistance or unable to move;
4. Sensory impairment: requires special environment modifications or assistance;
5. Speech impairment: requires special equipment or assistance;
6. Hygiene: requires assistance or is dependent;
7. Feeding: requires special equipment or assistance;
8. Toileting: requires assistance or special equipment;
9. Medical conditions: requires respiratory aids or special procedures;
10. Therapy required: physical, occupational, speech or respiratory;
11. Medications: requires assistance or special procedures.

These special needs must be documented by a physician or licensed or certified psychologist.

In New York, the increased rate for children with special needs is only available to children who have one or more of 11 conditions specified; these are derived from New York’s education regulations or Head Start’s performance standards. The conditions include the following: visual impairment, deafness, hard of hearing, orthopedic impairment, emotional disturbance, mental retardation, learning disability, speech impairment, health impairment, autism, or multiple handicaps (two or more or the conditions above).

Those paying differential reimbursement rates for children with special needs are doing so using a variety of mechanisms. The primary methods are: (1) conducting an actual survey and multiplying rates by a factor; (2) increasing actual charges by some flat rate amount; and (3) paying actual costs as documented by individual providers.

Some illustrative examples follow.

California applies a factor of 1.5 to its market rates to determine the maximum (ceiling) subsidy rate that can be paid to providers caring for children with special needs. Historically, the state created a ratio of the market rates charged by providers serving typically developing children to the rates charged by providers serving children with special needs. Once the passage of ADA made such a survey no longer a useful instrument for gauging providers’ costs, the State began to apply the 1.5 factor that had historically been used by subsidized programs under contract with the state. The documentation required to obtain the special needs rate varies by county.

Vermont adds an additional $2.10 for the care of children with special needs to usual rates. Vermont has also have instituted two grant programs--not tied to the subsidy rate system--that support inclusion. The first program, integration grants, is available to licensed, accredited centers. These grants are available to increase the capacity of the centers to serve children with disabilities, and cover items such as training, hiring additional staff, consultation and so forth. Funding for these grants comes from the CCDF as well as IV-B and IV-E. The second program, individual grants, is child specific and covers aides and other items necessary for the accommodation of specific children in child care settings. If children are IV-E eligible, IV-E funds are used. Otherwise, funding is available from the CCDF.

Maryland eliminated its special needs rate but allows for a payment rate adjustment of up to 15 percent above the appropriate regional subsidy payment rate. This payment rate adjustment is only available for accommodations above and beyond "reasonable accommodations" required by the ADA. As a consequence, Maryland administrators must not only secure documentation justifying the need for the accommodation, but must secure information (such as the budget of the agency) to determine whether or not the accommodation goes beyond those necessitated by ADA. This is done on a case-by-case basis. Some of the services that may warrant a payment adjustment are: diapering service for a school-age child, hiring extra staff for 1:1 supervision, installation of a special commode, barrier removal, and rearranging toilets and other furniture. Some of the services are for one time only expenses, while others are ongoing (FIA Action Transmittal, FIA/OPA 98-32).

Nebraska allows the district administrator or his/her designee to approve an exception for an increased rate for a child with special needs. This rate is not based on diagnosis but "rather on the care and equipment needed beyond that for normal child care. Considerations for establishing the rate include:

1. Additional staffing required;
2. Skills of staff;
3. Special supplies;
4. Special equipment; and
5. Environmental modifications."

(Nebraska Health and Human Services Manual, 474 NAC 7-006.04 and 04A.)

New York has maintained a policy it developed in 1991, but has changed its rate ceiling. Currently, the statewide rate ceiling for special needs rates is $217 per week.

In New York, the existence of the special needs must be documented on a case-by-case basis and there must also be verification that the child care provider is providing child care related services or is accruing additional costs as the result of caring for a child with special needs. The policy makes clear that reimbursement for child care payments in excess of the local market rates is not allowed to cover special education or other therapeutic services not directly related to the provision of appropriate child care. Some of the additional costs that may warrant increased payments include:

• Purchase or rental of equipment needed to provide appropriate care; maintenance of apparatus that assists in breathing, feeding or toileting;
• Supervision of physical activities such as infant stimulation and follow-up activities recommended by a therapist, physician or other specialist;
• Minor modifications to the environment to make it appropriate for a specific child, such as installation of a ramp or handrails in the bathroom;
• Materials and supplies for use with a child on a routine basis recommended by a therapist, physician or other specialist;
• Increased utility costs due to use of therapeutic machines, such as respirators;
• Transportation of children to and from prescribed therapy sessions;
• Additional staffing when needed to allow a caregiver to work on an individualized basis with a child for scheduled time periods; or
• Increased time and attention needed to provide appropriate care (provider unable to accept additional children).

Social services districts may also submit written requests for Department approval of other child care related services and additional costs that are not listed above.

In order to obtain the additional reimbursement, there must be documentation of the child’s condition and special service needs (from physicians, other specialists or through an IEP), as well verification that the caregiver is providing additional child care related services (through an attestation of the caregiver maintained in the case record).

While not common, other approaches are being taken by states. For example, Pennsylvania reimburses for developmental disabilities based upon the child’s developmental age rather than the child’s chronological age. The assessment of developmental age is undertaken by the local office of the Department of Mental Health and Mental Retardation (MHMR).

It is also important to be aware that some subsidy sources may be available from outside CCDF. For example, Vermont’s programs make use of IV-E funds, and in North Carolina, a special program administered by local Area Mental Health Programs provides subsidies directly to child care providers to care for children with developmental disabilities.

Possibly. Some states may still require that any subsidy payments made not exceed the charges paid by private fee-paying parents. Such a policy, when applied in this context, could present a major and unnecessary obstacle to raising the rates paid to providers serving children with special needs through subsidies. If states choose to increase their subsidies but require private fee-paying parents to ante up the same amount to ensure comparability, this policy would place a particular hardship on those working poor families who are ineligible for child care subsidies. If higher rates were not paid because they would cause this hardship, an opportunity would be lost for states to serve the children with disabilities most in need of assistance. States with such limitations should consider eliminating this "comparability" requirement in special needs situations if it is currently being applied there, recognizing the unique issues presented by serving children with disabilities.

There is no absolute assurance against liability when dealing with a law of such complexity, and with no published decisions on these issues. It is possible to seek guidance from the U.S. Department of Justice (DOJ) which is charged with administratively interpreting the ADA. However, while any response from DOJ would provide guidance for how DOJ approaches these issues and would indicate whether the agency would take action, it would not be legally binding on a court.