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Planning for Background Check Program Sustainability
How to Develop a Financially Sustainable Background Check Program
States awarded grants under the Centers for Medicare & Medicaid Services’ (CMS) National Background Check Program (NBCP) receive Federal funding to help them establish fingerprint-based background check systems for screening direct access applicants for work in long term care (LTC) settings. Grant funds can be used to cover costs related to program development, implementation, and operation during the grant period, including personnel, travel, and the direct costs of conducting background checks (e.g., fees paid to law enforcement for fingerprinting), training costs, and indirect and overhead costs.
States need to plan how to sustain their program once their NBCP grant ends. This resource document focuses on answers to common questions; makes suggestions; and describes the NBCP Financial Estimator tool, a detailed spreadsheet/template designed to help States build a financial plan and model for its program. States interested in reviewing the NBCP Financial Estimator tool should contact their State Liaison to receive a customized version for their State.
Related document: See the Evaluation of the Background Check Pilot Program–Final Report  for more information and suggestions for enhancing a program’s overall sustainability.
What can a State do as it designs its NBCP program to ensure sustainability?
How can a State estimate what its ongoing operational costs will be?
How can States use their NBCP grant funds to create a background check program that minimizes fixed costs?
During the design process, States should identify a source for funding program operations once grant funding is no longer available. Generally, a State has four potential, non-grant sources of funding for program operations:
- Program fees;
- State general funds;
- Civil money penalties (CMPs); and
- Federal financial participation funds obtained through the Medicaid program administrative match.
Program fees: Many grantee States establish a program fee or combination of fees to fund their background check program’s operations. The several types of fees include an application fee for each new application entered into the background check system; a one-time or annual enrollment fee for enrolling a facility/provider’s current employees into a registry rap back program; a one-time or annual provider system user registration fee; and an addition to facility/provider licensure fees but designated for the background check program specifically.
Instituting program fees comes with disadvantages and advantages. The primary disadvantage is that these fees represent a new cost to providers, who might be resistant to the additional cost. State background check program staff must be able to clearly explain what providers will receive in return for the fee and how the program will benefit them. It is vital that this information be part of the program staff’s stakeholder outreach. (For more on this, see Outreach and Stakeholder Engagement .)
An advantage of using program fees to fund operations is that these fees can give the program more control over its own funding, in that it will not be subject to the State budget process. In some States, however, all fees collected by State programs must be placed in the State’s general fund. When this is the case, the background check program might want to have language included in its enabling legislation that specifically designates these fees for the program, if possible.
State general funds: The background check program can be funded through the appropriations process. To ensure funding is made available from the State’s general fund, the program needs to establish and maintain support for its work among the State’s legislators. To do this, the program might want to carefully track its activities and outcomes and prepare an annual report that shows legislators and other stakeholders the value received from program expenditures.
Civil money penalties: Under the Civil Monetary Penalties Law , States may impose substantial civil money penalties against entities that engage in unlawful activities related to Medicare and Medicaid claims for nursing home services. These funds can be used only for the part of the background check program that benefits nursing home residents, however, and the State must have an acceptable accounting methodology to make this allocation.
Medicaid administrative match: Federal Medicaid administrative funds might be available for a background check program if it has been approved as part of the State Medicaid Plan. Administrative costs are, with some specific exceptions, matched at a 50-percent Federal Financial Participation (FFP) rate. Claims for FFP must be made by the State’s Medicaid agency. Costs must be allocated in accordance with the benefits received. For example, Medicaid’s share of program administrative costs could be allocated based on the percentage of LTC recipients receiving services from covered providers who are Medicaid eligible.
Accurately estimating ongoing operational costs is an important task for Grantee programs. This information can be used in a State’s legislative process as part of the fiscal note for proposed enabling legislation; in a State’s information technology (IT) project approval processes; and in estimating the dollar amount needed to fund the program so that the fees collected cover the program's expenses.
Ongoing program costs will be driven by the following: fixed administrative costs, which primarily include background check unit staff and IT support, and variable per unit costs, which include the fees paid by the program for background checks and rap back enrollment in States where the program covers these costs for participating providers. Grantees often cover the cost of these fees for some portion of their grant period, and might or might not cover the cost once their grant has ended.
Because ongoing program costs can be difficult to quantify exactly, CNA created an NBCP Financial Estimator tool to help States with this task. The NBCP Financial Estimator tool is an Excel® workbook with three tabs:
- Tab A: Volume Estimator. This spreadsheet can estimate the annual number of NBCP background checks conducted through a State’s program, an expanded version of the Background Checks Estimator . The State enters information on its number of providers and average staff size by provider type. Annual staff turnover rates from published sources are included in the spreadsheet, but can be revised if the State has more accurate staff turnover data available.
- Tab B: Input Cost Assumptions. This spreadsheet lays out the input cost assumptions for the financial model. It allows for changes to assumptions over time (i.e., assumptions are made for year 1 through year 5). Cost assumptions include:
- Program staffing levels, salaries, benefits, and indirect costs;
- IT support costs; and
- Background check and rap back enrollment fees, where programs pay these costs for providers.
The spreadsheet also requires input of assumptions related to the volume of background checks, program fees, and the number of provider system users.
- Tab C: Financial Model. This spreadsheet contains a template for a program financial model. It uses the input cost assumptions to estimate costs, available funds, and fund balances and rollover for program years 1 through 5. CNA State Liaisons can provide assistance in customizing the financial model to meet a State’s individual needs.
Having a detailed financial model in place offers the following advantages:
- Makes it easier to provide financial information to management, legislators, the State Criminal Justice Information System (CJIS) agency, industry associations, and other stakeholders.
- Allows the State to play “what if” to see the impact of changes in fees, staff, covered employees, and other assumptions.
- Allows the State to easily make adjustments to reflect legislative and program implementation realities as they change.
States interested in reviewing the NBCP Financial Estimator tool should contact their State Liaison to receive a customized version for their State.
How can States use their NBCP grant funds to create a background check program that minimizes fixed costs?
Creating a new NBCP-compliant background check program or significantly expanding a State’s existing program requires process improvements as well as the increased use of automation to minimize the need for additional State resources after the grant period ends. New Grantees should plan to allocate resources toward goals that maximize their background check program’s efficiency, effectiveness, and overall benefits to stakeholders.
Most important for increasing the use of automation, Grantee States can develop and implement an Automated Background Check Management System (ABCMS). Such an automated IT system allows for the most efficient processing of applicant background checks by:
- Eliminating paper forms and letters;
- Providing better communication with LTC facilities/providers regarding background checks;
- Attaining faster submission of fingerprints to the State Police and receipt of criminal history results by the background check program, resulting in faster turnaround times; and
- Improving background check compliance by LTC providers/facilities.
Because it increases productivity, an automated system minimizes fixed administrative costs by allowing more background checks to be handled by the same (or fewer) number of State background check unit staff.
CMS-funded technical assistance (TA) is available to assist Grantees in the design, development, and implementation of an ABCMS at no cost to the Grantee. Technical assistance resources can be used to expand and configure the capabilities of the automation tools already in use by the State or to assist the State in customizing publicly available tools developed by other States. TA services have supported software installation, user testing by the Grantee agency, and system training of both providers and State personnel. In using TA resources to create or improve an automated system—rather than doing the work on their own—Grantees benefit from lessons learned from the TA already provided elsewhere.
- Background Check Estimator, NBCP TA Resource Paper. This tool is designed to help States estimate how many background checks they are likely to need to conduct per year for applicants for employment with the nine types of long term care facilities and providers named in the Patient Protection and Affordable Care Act of 2010. Available at: http://bgcheckinfo.cna.org/resources/state-specific-technical-assistance/background-checks-estimator
- Evaluation of the Background Check Pilot Program–Final Report. This August 2008 report describes the background check programs developed by States participating in the pilot program (2004–2007), discusses costs associated with background check programs, and presents results from the evaluation of the pilot program. Available at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Research-Reports-Items/CMS1215663.html
- Outreach and Stakeholder Engagement, NBCP TA Resource Paper. Describes techniques and activities for engaging stakeholders in the NBCP program. Available at: http://bgcheckinfo.cna.org/resources/state-specific-technical-assistance/stakeholder-engagement
- Civil Monetary Penalties Law, HHS OIG website. Available at: https://oig.hhs.gov/fraud/enforcement/cmp/