Increasing Flexibility for Verification of For-Profit Center Eligibility in the Child and Adult Care Food Program, 50038-50046 [2018-21445]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 83, Number 193 (Thursday, October 4, 2018)]
[Proposed Rules]
[Pages 50038-50046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21445]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 83, No. 193 / Thursday, October 4, 2018 / 
Proposed Rules

[[Page 50038]]



DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 226

[FNS-2018-0009]
RIN 0584-AE59


Increasing Flexibility for Verification of For-Profit Center 
Eligibility in the Child and Adult Care Food Program

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Proposed rule.

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SUMMARY: USDA proposes a deregulatory action to simplify the 
requirement for for-profit child care centers, for-profit adult care 
centers, and sponsoring organizations of for-profit centers in the 
Child and Adult Care Food Program to verify that they are eligible to 
submit claims for reimbursement each month. This rule would exempt for-
profit centers from monthly verification if they annually demonstrate 
that at least 50 percent of children served are eligible for free and 
reduced-price meals or benefits under title XX of the Social Security 
Act, or at least 50 percent of adult participants are eligible for 
benefits under title XIX or title XX of the Social Security Act. 
Monthly verification represents a small but duplicative paperwork 
burden. Allowing a less frequent verification cycle would reduce the 
administrative burden for those centers that consistently serve a high 
percentage of eligible children or adult participants from low-income 
households.

DATES: Written comments must be received on or before December 3, 2018 
to be assured of consideration.

ADDRESSES: USDA invites interested persons to submit written comments 
on this proposed rule, including the information collection. Comments 
may be submitted in writing by one of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: Send comments to Community Meals Branch, Policy and 
Program Development Division, USDA Food and Nutrition Service, 3101 
Park Center Drive, Alexandria, Virginia 22302.
     All written comments submitted in response to this 
proposed rule will be included in the record and will be made available 
to the public. Please be advised that the substance of the comments and 
the identity of the individuals or entities submitting the comments 
will be subject to public disclosure. USDA will make the written 
comments publicly available via https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Andrea Farmer, Chief, Community Meals 
Branch, Policy and Program Development Division, USDA Food and 
Nutrition Service, 703-305-2590.

SUPPLEMENTARY INFORMATION: 

I. Overview

    USDA is committed to working with States to highlight flexibilities 
and local choices that would both ensure that the Child and Adult Care 
Food Program (CACFP) operates with integrity and alleviate unnecessary 
regulatory burdens, such as the monthly verification required of 
private for-profit centers that serve a high percentage of eligible 
children or adult participants from low-income households. To be 
eligible to claim reimbursement for meals and snacks served in CACFP, 
for-profit centers must document that they meet specified criteria, 
which demonstrates that at least 25 percent of children or adult 
participants in care are from low-income households. This proposed rule 
would simplify the requirement for some for-profit child and adult care 
centers and sponsoring organizations of for-profit centers to verify 
that the 25 percent standard is met. It would allow a less frequent 
verification cycle, from monthly to annual verification, in those 
centers where low-income children or adult participants make up a large 
proportion of the enrollment. This rule proposes to make the following 
amendments to CACFP regulations:
    1. At 7 CFR 226.10(c), exempt for-profit child or adult care 
centers from re-verifying their eligibility on monthly claim forms if 
they annually meet the criteria for for-profit centers to demonstrate 
that at least 50 percent of children or adult participants in care are 
from low-income households.
    2. At 7 CFR 226.6(f), make verification of eligibility of 
participating for-profit institutions an annual State agency 
responsibility.
    3. At 7 CFR 226.9(b) and 226.11(c), allow State agencies to use 
free and reduced-price counts to support the annual eligibility 
determination for for-profit centers that are assigned claiming 
percentages or blended rates of reimbursement, when the 50 percent 
standard is met.

II. Background

    CACFP, authorized under section 17 of the Richard B. Russell 
National School Lunch Act, 42 U.S.C. 1766, supports the efforts of 
public, private non-profit, and private for-profit child care centers, 
outside school-hours-care centers, and adult day care centers to 
provide nutritious foods that contribute to the wellness, healthy 
growth, and development of young children and the health and wellness 
of older and chronically impaired adults. Independent public and 
private non-profit centers and sponsoring organizations of centers 
submit claims to the State agency for reimbursement each month, based 
on the number of meals served to eligible children or adult 
participants and their eligibility for free and reduced-priced meals. 
However, the claiming process is not as simple for independent for-
profit centers and sponsoring organizations of for-profit centers. The 
Omnibus Reconciliation Act of 1981, Public Law 97-35, established a 
legislative standard of participation for for-profit centers that would 
reduce spending and target benefits to low-income children. 
Consequently, for-profit centers must meet additional criteria and 
verify each month that they are eligible to submit claims for 
reimbursement.
    Based on informal input from CACFP stakeholders, USDA understands 
that for-profit centers that have to report information to verify 
monthly eligibility on their claim forms find it to be an unnecessary 
administrative burden, particularly for centers where low-income 
children or adult participants make up a greater proportion of the 
enrollment. USDA has been working with State agencies and local 
partners to examine administrative requirements

[[Page 50039]]

and explore recommendations for reducing unnecessary paperwork and 
easing the burden of those requirements.
    In 2011, USDA formed the Paperwork Reduction Work Group to explore 
ways to streamline CACFP. The Work Group consisted of a representative 
panel of CACFP professionals from State and local agencies and national 
associations, as well as experts in early childhood education and care, 
nutrition, and technology to help USDA understand how to make 
operational requirements more efficient, without compromising the 
measures we have taken to protect program integrity. Recommendations 
from the Work Group were included in a report, Reducing Paperwork in 
the Child and Adult Care Food Program, which was submitted to Congress 
in August 2015.
    The Work Group found it confusing and burdensome that CACFP 
regulations under 7 CFR 226.2 and 226.6 require for-profit centers to 
verify their eligibility in their applications and then, under 7 CFR 
226.10, require for-profit centers to re-verify their eligibility to 
participate and submit claims for reimbursement each month. The Work 
Group reasoned that centers do not experience large variability in the 
percentage of enrollment or licensed capacity and that submitting 
monthly documentation results in a disproportional amount of work for 
any center that serves a high number of low-income children or adult 
participants. To address this paperwork burden, the Work Group 
considered several recommendations regarding eligibility verification 
and payments, including proposals to:
     Establish annual eligibility determinations for for-profit 
centers serving high numbers of low-income children;
     Eliminate requirements to submit monthly backup 
documentation of attendance, income eligibility forms, or title XX 
participation;
     Establish a single, blended-rate method of payment, 
determined annually for centers;
     Compute the blended rates of payment for centers based on 
an individual center's enrollment; and
     Allow centers the option of amending the rate more 
frequently than annually.
    The report's recommendations urged USDA to work with State agencies 
to streamline the annual eligibility determinations for participating 
for-profit centers meeting a 50 percent standard, and eliminate 
requirements to submit monthly backup documentation of children or 
adult participants' attendance or eligibility for meal benefits to 
verify that the 25 percent standard is met. The report also proposed 
recommendations on the assignment of rates of reimbursement, reflecting 
the Work Group's broader concerns about the paperwork burden placed on 
any center, not just for-profit centers, and on sponsoring 
organizations of centers when payment rates must be re-evaluated 
monthly. Instead of basing payments on the actual number or a claiming 
percentage of meals served free, at a reduced-price, or at the paid 
rate, the report asked State agencies to consider updating computer 
systems to move toward an annual blended payment rate, based on an 
individual center's enrollment, and allowing centers the option of 
amending the rate more frequently than annually.
    Through this deregulatory action, USDA proposes to address the 
verification issue in the report by streamlining reporting requirements 
of for-profit centers and sponsoring organizations of for-profit 
centers that meet a 50 percent standard. In those centers where low-
income children or adult participants make up a large proportion of the 
enrollment, the number of times eligibility must be verified would be 
reduced from monthly to annually.
    This rule would exempt for-profit child or adult care centers from 
re-verifying their eligibility to submit claims each month, if they 
annually meet the criteria for for-profit centers to demonstrate that 
at least 50 percent of children or adult participants in care are from 
low-income households. The 50 percent standard is consistent with the 
Paperwork Reduction Work Group's recommendation and adopts a benchmark 
that has been applied by Congress to define low-income areas and 
determine eligibility in CACFP for streamlined reimbursements for non-
profit centers. Corresponding changes would make verification of 
eligibility of participating for-profit institutions an annual State 
agency responsibility and provide options that would allow the State 
agency to use separate free and reduced-price counts that support the 
for-profit eligibility determination to assign each for-profit center 
an annual claiming percentage or blended rate.
    The amendments proposed in this rule would not change fundamental 
CACFP requirements. USDA's intent is to find reasonable ways to ease 
CACFP operational burdens, through State flexibilities and options for 
child and adult care institutions that would make it easier to 
demonstrate and verify compliance with for-profit center requirements. 
For example, this rule would not change the 25 percent standard for 
application approval or the criteria to verify that each for-profit 
center is eligible to submit claims for reimbursement. Every for-profit 
center must continue to meet the 25 percent standard in order to be 
eligible to claim reimbursement each calendar month. No claims for 
reimbursement may be paid for meals served at a for-profit center in a 
calendar month when less than 25 percent of eligible children or adult 
participants meet this standard.
    This rule would also not change the States' responsibilities for 
the assignment and calculation of rates of reimbursement. To calculate 
payments for public, private non-profit, and for-profit centers, State 
agencies receive monthly information from CACFP institutions about the 
eligibility of children and adult participants. Public and private non-
profit institutions will continue to report this information to the 
State agency each month. For-profit institutions that do not meet the 
criteria demonstrating that at least 50 percent of children or adult 
participants in care are from low-income households would also continue 
to report eligibility information each month.
    More than 65,300 child care centers and 2,700 adult care centers 
participated in CACFP in 2017, according to USDA administrative data 
released in April 2018. The numbers represent independent centers and 
centers that participate under a sponsoring organization, which the 
data collectively refer to as outlets--the individual child or adult 
care centers where meals are actually served. Of these outlets, USDA 
estimates that 18,841, or about 28 percent, were for-profit centers. In 
North Carolina, Georgia, and Florida, for-profit centers made up over 
half of the total number of centers.
    The changes proposed in this rule would only apply to CACFP 
institutions--the independent centers and sponsoring organizations that 
are responsible for CACFP for-profit reporting requirements--not the 
individual centers that participate under a sponsoring organization. 
USDA administrative data showed that, in 2017, 9,770 independent for-
profit centers and sponsoring organizations of for-profit centers 
participated in CACFP. Out of this universe of 9,770 for-profit 
institutions, USDA estimates that this rule would change reporting 
requirements for 7,920, or about 80 percent.
    USDA recognizes that State agencies take different approaches in 
assigning and computing rates of reimbursement, depending on the 
structure and capabilities of their automated financial

[[Page 50040]]

systems and the other technology investments they choose. Some of the 
options that USDA has considered addressing in this rule, such as 
allowing eligible for-profit centers to receive the assigned payment 
rate or submit information to the State agency to recalculate the rate 
at other intervals, have raised program integrity issues. Some have 
also raised concerns about preserving equity among public, private non-
profit, and for-profit centers.
    USDA seeks comments to help determine further changes, particularly 
from States where for-profit centers make up a significant proportion 
of CACFP centers. We encourage your comments to help us better 
understand what the differences in claims processing systems are and 
how they may impact for-profit institutions differently from public and 
non-profit centers and sponsoring organizations. It would be especially 
helpful to know how State administrators and local partners view the 
Paperwork Reduction Work Group's recommendations for assigning and 
amending payment rates to centers in CACFP.

Eligibility Determination and Verification

    A for-profit center in CACFP is defined under 7 CFR 226.2 as a 
child care center, outside-school-hours care center, or adult day care 
center providing nonresidential day care services that does not qualify 
for tax-exempt status under the Internal Revenue Code of 1986. Claims 
for reimbursement from, or on behalf of, a for-profit child care center 
or an outside-school-hours-care center may be submitted only for 
calendar months during which at least 25 percent of the children in 
care are eligible for free and reduced-price meals or receive benefits, 
for which the center receives compensation, under title XX of the 
Social Security Act. For-profit centers serving adults may submit 
claims for reimbursement only for calendar months during which at least 
25 percent of the adults enrolled in care receive benefits, for which 
the center receives compensation, under title XIX or title XX of the 
Social Security Act, or a combination of both.
    CACFP payment procedures under 7 CFR 226.10(c) require all for-
profit child and adult care institutions to submit information to the 
State agency to verify their eligibility, for each month in which a 
for-profit child care center, for-profit outside-school-hours care 
center, or for-profit adult day care center claims reimbursement. Child 
care institutions must provide the number and percentage of children in 
care that documents that at least 25 percent of their enrollment or 
licensed capacity, whichever is less, is eligible for free and reduced-
price meals or receive benefits, for which the center receives 
compensation, under title XX of the Social Security Act. Adult day care 
institutions must provide the percentage of enrolled adult participants 
that documents that at least 25 percent receive benefits, for which the 
center receives compensation, under title XIX or title XX of the Social 
Security Act.
    USDA proposes several amendments to 7 CFR 226.10(c), including 
technical changes that would conform 7 CFR 226.10(c) with the 
codification requirements of the Office of the Federal Register and 
present the information in paragraph (c) in a clear, concise, yet 
thorough manner. Programmatically, this rule would exempt new 
institutions from re-verifying their monthly eligibility if their 
initial application demonstrates that at least 50 percent of children 
or adult participants in care are from low-income households.
    With an annual eligibility determination, independent for-profit 
centers and sponsoring organizations of for-profit centers would not be 
required to re-verify their eligibility on monthly claim forms if the 
50 percent standard is met.
    However, to be eligible to submit a monthly claim for 
reimbursement, each institution must also ensure that, if enrollment 
changes, the center will still meet the criteria for for-profit centers 
to demonstrate that at least 25 percent of children or adult 
participants in care are from low-income households. No claims for 
reimbursement may be paid for meals served at a for-profit center in a 
calendar month when less than 25 percent of eligible children or adult 
participants meet this standard. Under this rule, it would be the 
responsibility of the institution to notify the State agency each month 
in which reimbursement would not be claimed.
    This rule would encourage State agencies to utilize flexibilities 
that would also ease the administrative burden of State requirements. 
Based on informal input, USDA understands that in some States, 
additional paperwork may be requested to verify that a for-profit 
center meets the 25 percent standard. For example, a State agency may 
require the sponsoring organization to collect documentation of 
attendance, income eligibility, or title XIX or title XX participation, 
from its for-profit centers, with each month's claiming data. Under 
this rule, no additional submission of information to support the 
eligibility determination would be necessary if the center's annual 
for-profit eligibility percentage were 50 percent or greater. The 
sponsoring organization would check the center's eligibility 
documentation to verify children or adult participants' attendance or 
eligibility for meal benefits during a review. The center would not 
need to submit additional information to the sponsoring organization.
    This rule would also exempt renewing institutions if they annually 
demonstrate that at least 50 percent of the children or adult 
participants in care are from low-income households. USDA proposes 
corresponding changes to make verification of eligibility of 
participating for-profit institutions an annual State agency 
responsibility.
    USDA has not required renewing for-profit institutions to provide 
documentation of eligibility because, as a condition of their 
eligibility, for-profit centers are required to document that the 25 
percent standard is met each month. Although the State agency receives 
this information monthly as part of the claiming process, 7 CFR 
226.6(f)(3)(iv) of the regulations allows, but does not require, the 
State agency to request periodic resubmission of documentation to 
determine the continued eligibility of renewing centers. This rule 
would make annual reporting of eligibility information a requirement 
for all for-profit institutions, and move this provision from 7 CFR 
226.6(f)(3)(iv) to the list of responsibilities under 7 CFR 
226.6(f)(1).
    Accordingly, this rule proposes to make technical changes to 7 CFR 
226.10(c). New paragraphs at 7 CFR 226.10(c)(3) and (c)(4) would exempt 
for-profit child or adult care centers from re-verifying their 
eligibility to submit claims each month, if they annually meet the 
criteria for for-profit centers to demonstrate that at least 50 percent 
of children or adult participants in care are from low-income 
households. A new paragraph at 7 CFR 226.10(c)(5) would require the 
institution to notify the State agency each month in which 
reimbursement would not be claimed if a for-profit center that had 
verified an annual eligibility percentage of 50 percent or greater did 
not meet the 25 percent standard. This rule would also add a new 
paragraph at 7 CFR 226.6(f)(1) to make verification of eligibility of 
all participating for-profit institutions an annual State agency 
responsibility.

Assignment and Computation of Rates of Reimbursement

    State agencies have three options--actual counts, claiming 
percentages, and blended per-meal rates--for assigning

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rates of reimbursement, at 7 CFR 226.9(b), and computing reimbursement, 
at 7 CFR 226.11(c)(5), for child care centers, outside-school-hours-
care centers, and adult day care centers.
    State agencies may assign rates of reimbursement, not less 
frequently than annually, on the basis of family-size and income 
information reported by each institution. The assigned rates of 
reimbursement may be changed more frequently than annually if warranted 
by changes in family size and income information. Annual assignment of 
rates is a State option, not a requirement.
    USDA is not proposing any changes in the assignment or computation 
of rates of reimbursement when the annual for-profit eligibility 
percentage is less than 50 percent. The State agency would continue to 
have the option of assigning rates of reimbursement annually or more 
frequently than annually for for-profit centers that do not meet the 50 
percent standard. However, in States which elect claiming percentages 
or blended rates, this rule proposes that the State agency assign an 
annual rate of reimbursement when the 50 percent standard is met. The 
State agency would use the separate free and reduced-price counts that 
support each center's annual for-profit eligibility percentage to 
compute an annual claiming percentage or an annual blended rate. This 
rule would also provide flexibility, as needed for proper 
administration of CACFP, to allow the State agency to require a for-
profit center to submit information to recalculate the claiming 
percentage or blended rate more frequently than annually.
    These proposed changes are consistent with USDA's long-standing 
view that State agencies should utilize the flexibilities available in 
the regulations to simplify CACFP operations. In policy guidance, CACFP 
15-2013, Existing Flexibilities in the Child and Adult Care Food 
Program, issued on July 26, 2013, USDA encourages State agencies to 
annually assign rates of reimbursement for centers.
    When reviews disclose serious noncompliance, requiring centers to 
re-evaluate the claiming percentage or blended rate each month would be 
an appropriate component of a corrective action plan.
    However, for most centers which operate CACFP in good standing, 
allowing an annually determined claiming percentage or an annually 
determined blended rate would streamline the eligibility process. It 
would reduce the number of times the centers have to determine 
eligibility and provide more transparency for them to understand how 
they are reimbursed.
    Accordingly, this rule proposes to add new paragraphs at 7 CFR 
226.9(b)(2) and 226.11(c)(4) for computing rates of reimbursement for 
for-profit centers in States where claiming percentages or blended 
rates are assigned, if the center's annual eligibility percentage is 50 
percent or greater. The proposed changes would allow State agencies to 
use the free and reduced-price counts that support the for-profit 
eligibility determination to assign each eligible for-profit center an 
annual claiming percentage or annual blended rate, with exceptions when 
needed for proper program administration.

Public Submission

    Public input and assessment, with an opportunity to examine CACFP 
operations and consider improvements related to this rule, are 
essential elements of the rulemaking process. We invite the public to 
submit comments to help USDA gain a better understanding of both the 
possible benefits and any negative impacts associated with the changes 
proposed in this rule.
    This proposed rule reflects USDA's commitment to work with all of 
our partners, including State administrators, sponsoring organization 
leaders, for-profit center operators, advocates, and other CACFP 
stakeholders to develop innovative strategies to ensure that CACFP 
requirements are effective and practical.
    USDA is actively looking for more information, particularly 
regarding the Paperwork Reduction Work Group's recommendations for 
assigning reimbursement rates and USDA's efforts to balance operational 
flexibilities with improvements in program integrity.
    Comments on the economic effects of this rule that include 
quantitative and qualitative data--such as the public's insights on the 
occupations responsible for the paperwork and other inputs, which would 
help USDA prepare benefit cost analyses and narrow down the range of 
cost savings--are also especially helpful.
    Please select those issues that most concern and affect you, or 
that you best understand, and include examples of how the proposed rule 
would impact you, positively or negatively. Consider what could be done 
to foster incentives for flexibility, consistency, eliminating 
duplication, ensuring compliance, and protecting program integrity. For 
example, consider:
     How easily State agency and sponsoring organization 
financial systems could support the changes;
     What impacts, if any, there would be for State agencies or 
sponsoring organizations in processing claims for reimbursement;
     How State agency financial systems could impact for-profit 
institutions differently from other types of institutions;
     How compliance would be monitored;
     How likely it would be for a for-profit center to drop 
below the 25 percent standard, after the center verified an annual 
eligibility percentage of 50 percent;
     How the State agency or sponsoring organization would 
determine that a for-profit center dropped below the 25 percent 
standard, after the center had verified an annual eligibility 
percentage of 50 percent, and how the claiming process would be 
impacted;
     What flexibilities, if any, there could be for for-profit 
centers that fall below the 50 percent standard, but above the 25 
percent standard;
     What impacts there would be if for-profit centers could 
request the State agency to amend the claiming percentages or blended 
rates more frequently than annually;
     How participation could be impacted if for-profit centers 
have the option of submitting information to the State agency to amend 
the claiming percentages or blended rates more frequently than 
annually; and
     How, or if, the changes proposed in this rule would make 
CACFP more efficient and easier to manage.
    We welcome your ideas for improving CACFP and ways that USDA can 
serve you better. USDA will carefully consider all relevant comments 
submitted during the 60-day comment period for this rule. Comments may 
be submitted as outlined in Addresses.

Procedural Matters

Executive Order 12866, 13563 and 13771

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This proposed rule was initially determined to be significant and was 
reviewed by the Office of Management and Budget

[[Page 50042]]

(OMB). On July 24, 2018, OMB changed the designation to not 
significant. Executive Order 13771 directs agencies to reduce 
regulation and control regulatory costs and provides that for every one 
new regulation issued, at least two prior regulations be identified for 
elimination, and that the cost of planned regulations be prudently 
managed and controlled through a budgeting process. FNS considers this 
rule to be an Executive Order 13771 deregulatory action.

Economic Summary

    A regulatory impact analysis must be prepared for major rules with 
economically significant effects ($100 million or more in any one 
year). USDA does not anticipate that this proposed rule is likely to 
have an economic impact of $100 million or more in any one year, and 
therefore, does not meet the definition of ``economically significant'' 
under Executive Order 12866. The changes proposed in this rule would 
result in a small amount of administrative savings from reducing the 
monthly reporting requirements to once a year.
    The proposed changes are not expected to increase CACFP costs. The 
proposed rule decreases the estimated annual staff time required to do 
the reporting by 5.5 hours per year per center. According to the 
Paperwork Reduction Act section of this rule, the number of estimated 
annual responses per center decreases from 12 to 1. At 30 minutes per 
response, this is a decrease of 5.5 staff hours per center per year. It 
is highly unlikely that saving 5.5 hours of staff time per year would 
provide sufficient incentive to induce additional eligible centers to 
participate if those centers are not already participating in CACFP. 
USDA does not estimate that there would be any change in center 
participation, or any changes to any other costs associated with CACFP, 
resulting from this proposed rule.
    While the changes proposed in this rule impact for-profit 
institutions, which are responsible for the reporting requirements, it 
is important to get a sense of how many for-profit outlets--the 
individual child or adult care centers where the meals are actually 
served--would meet the 50 percent standard, and how it would impact the 
decision to participate in CACFP. Administrative data collected by USDA 
does not contain outlet-level information needed to assess the 
potential impact of this proposed rule to participation. USDA obtained 
informal outlet-level information from a number of States to analyze. 
The data contained the number of for-profit outlets and the percent of 
eligible participants as well as two separate months of information to 
evaluate the potential monthly volatility of the eligibility 
percentages in for-profit outlets. These States represent a variety of 
sizes and regions and account for roughly 40 percent of the total 
number of for-profit outlets in Fiscal Year (FY) 2017.
    The majority of for-profit outlets in the State data had annual 
eligibility percentages of 50 percent or more. The percent of for-
profit outlets with an annual eligibility percentage of 50 percent or 
more ranged from 60 percent of the total number of for-profit outlets 
to over 90 percent of the total number of for-profit outlets. The data 
demonstrate that the majority of for-profit outlets continue to 
participate in CACFP because the number of eligible children and adult 
participants make it financially viable. While this rule would create 
administrative efficiencies, it is unlikely that the proposed changes 
would provide the incentive for more outlets with an annual eligibility 
percentage of 50 percent to participate in CACFP.
    USDA also reviewed the State data to gain a sense of the 
distribution of the percentages of eligible participants in for-profit 
outlets that would meet or exceed the proposed 50 percent standard. The 
average percentage of eligible participants was between 70 percent and 
90 percent for those sites meeting or exceeding the standard across all 
eight States. The average percent of eligible participants in sites not 
meeting the standard was above 35 percent. This indicates that, not 
only do the majority of for-profit outlets meet the 50 percent 
standard, but on average, outlets serve a much higher percentage of 
eligible participants.
    The likelihood of outlets falling below the proposed 50 percent 
threshold would be very low. To better understand how many outlets may 
potentially fall below the 50 percent standard, USDA reviewed the State 
data to determine the number of for-profit outlets that have 
eligibility percentages between 50 percent and 55 percent.
    Overall, about 6 percent of outlets (about 300) had eligibility 
percentages that fell within this range. The individual States ranged 
from less than 1 percent to slightly more than 10 percent. Likewise, 
the number of outlets falling between 45 percent and 50 percent were 
slightly less, with only about 4 percent (about 200) of the for-profit 
outlets in the eight States falling in this range.
    The monthly variation in the percentage of for-profit outlets that 
meet the 50 percent standard is relatively small. Overall, there was an 
increase of about 1 percent in the number of for-profit outlets meeting 
the proposed 50 percent threshold from July to September 2017.
    The high percentages of eligible participants, along with the large 
numbers of for-profit outlets meeting the proposed 50 percent standard, 
indicate that the impact of the proposed changes in this rule would be 
largely administrative. The changes aim to increase efficiencies, but 
are not projected to impact CACFP participation and costs.
    Based on this evidence, USDA estimates that the only savings 
associated with this proposed rule would be a decrease in annual 
reporting burden on existing for-profit institutions. There were 9,770 
independent for-profit centers and sponsoring organizations of for-
profit centers participating in CACFP in FY 2017, according to USDA 
administrative data. USDA estimates about 80 percent of for-profit 
institutions would be impacted by this rule and would experience a 
reduction in burden. This percentage allows for some sponsoring 
organizations that do not have outlets meeting the proposed 50 percent 
standard.
    The data provided by the States indicate that the majority of 
outlets exceed the proposed 50 percent standard, making it very likely 
that the vast majority of sponsors contain at least one outlet meeting 
or exceeding the standard.
    As described in the Paperwork Reduction Act section of this rule, 
the reporting burden for these institutions would be 43,559 hours. 
Depending on whether one assumes that an administrative assistant or 
the center director or submits these reports, this decrease would 
result in an annualized estimated savings of $1.3 million (assuming 
administrative assistants submit the reports) to $2.2 million (assuming 
center directors submit the reports), each year from FY 2019 through FY 
2023.

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires Agencies 
to analyze the impact of rulemaking on small entities and consider 
alternatives that would minimize any significant impacts on a 
substantial number of small entities. Pursuant to that review, it has 
been certified that this rule would not have a significant impact on a 
substantial number of small entities. This rule would exempt for-profit 
centers from re-verifying their eligibility to submit claims each 
month, if they

[[Page 50043]]

annually meet the criteria for for-profit centers that consistently 
serve a high number of children or adult participants from low-income 
households. This rule is a deregulatory action that would not impact a 
substantial number of small entities. USDA estimates that 28 percent of 
centers participating in CACFP are for-profit.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA) 
established requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments, and 
the private sector.
    Under Section 202 of UMRA, USDA generally must prepare a written 
statement, including a cost-benefit analysis, for proposed and final 
rules with ``Federal mandates'' that may result in expenditures to 
State, local, or tribal governments in the aggregate, or to the private 
sector, of $100 million or more in any one year. When such a statement 
is needed for a rule, section 205 of UMRA generally requires USDA to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, more cost-effective or least burdensome 
alternative that achieves the objectives of the rule. This proposed 
rule contains no Federal mandates, under the regulatory provisions of 
title II of UMRA, for State, local, and tribal governments, or the 
private sector, of $100 million or more in any one year. Therefore, 
this rule is not subject to the requirements of sections 202 and 205 of 
UMRA.

Executive Order 12372

    CACFP is listed in the Assistance Listings under the Catalog of 
Federal Domestic Assistance (CFDA) Number 10.558 and is subject to 
Executive Order 12372, which requires intergovernmental consultation 
with State and local officials. Since the Child Nutrition Programs are 
State-administered, USDA has formal and informal discussions with State 
and local officials, including representatives of Indian Tribal 
Organizations, on an ongoing basis regarding CACFP requirements and 
operation. This provides USDA with the opportunity to receive regular 
input from State administrators and local CACFP operators, which 
contributes to the development of feasible requirements.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under section 6(b)(2)(B) of Executive Order 13132. USDA has 
determined that this rule does not have federalism implications. This 
rule does not impose substantial or direct compliance costs on State 
and local governments. Therefore, under section 6(b) of the Executive 
Order, a federalism summary is not required.

Executive Order 12988, Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rulemaking, when published as a final rule, 
is intended to have preemptive effect with respect to any State or 
local laws, regulations, or policies which conflict with its provisions 
or which would otherwise impede its full and timely implementation. 
This rulemaking is not intended to have retroactive effect. Prior to 
any judicial challenge to the provisions of a final rule, all 
applicable administrative procedures must be exhausted.

Civil Rights Impact Analysis

    FNS has reviewed this proposed rule in accordance with USDA 
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify any 
major civil rights impacts the rule might have on CACFP participants on 
the basis of age, race, color, national origin, sex, or disability. 
After a careful review of the rule's intent and provisions, USDA has 
determined that this rule would not be expected to limit or reduce the 
ability of protected classes of individuals to participate as CACFP 
operators or as recipients of CACFP meal benefits. USDA also would not 
expect this rule to have any disparate impacts on CACFP operators by 
protected classes of individuals.

Executive Order 13175

    Executive Order 13175 requires Federal agencies to consult and 
coordinate with Tribes on a government-to-government basis on policies 
that have Tribal implications, including regulations, legislative 
comments or proposed legislation, and other policy statements or 
actions that have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes. A consultation with Indian 
Tribal Organizations took place on March 14, 2018. USDA proposes this 
deregulatory action to encourage existing for-profit centers, including 
for-profit child care, outside-school-hours care, and adult day care 
centers in Indian country, to continue to participate in CACFP, and 
maintain access to nutritious meals for eligible children and adult 
participants. USDA anticipates that this action would have no 
significant cost and no major increase in regulatory burden on tribal 
organizations.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35 and 5 CFR 
1320, requires OMB to approve all collections of information by a 
Federal agency before they can be implemented. Respondents are not 
required to respond to any collection of information unless it displays 
a current valid OMB control number. This rule contains an information 
collection requirement that has been approved by OMB under OMB Control 
Number 0584-0055.
    This is a revision to an existing collection: Child and Adult Food 
Care Program, OMB Control Number 0584-0055. This change is contingent 
upon OMB approval under the Paperwork Reduction Act of 1995.
    When the information collection requirement has been approved, FNS 
will publish a separate action in the Federal Register announcing OMB's 
approval. Comments on this proposed rule must be received by December 
3, 2018.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information shall have practical 
utility; (b) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (d) ways 
to minimize the burden of the collection of information on those who 
are to respond, including use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology. All responses to this notification will be 
summarized and included in the request for OMB approval. All comments 
will also become a matter of public record.
    Title: 7 CFR part 226, Increasing Flexibility for Verification of 
For-Profit Center Eligibility in the Child and Adult Care Food Program.
    OMB Number: 0584-0055.
    Expiration Date: February 29, 2020.
    Type of Request: Revision.

[[Page 50044]]

    Abstract: This is a revision of an existing information collection 
associated with 7 CFR part 226, OMB Number 0584-0055, based on this 
rulemaking. USDA proposes to modify regulatory requirements for for-
profit institutions in the Child and Adult Care Food Program (CACFP) to 
provide information verifying their eligibility to submit claims for 
reimbursement each month.
    Under this proposed rule for-profit centers, institutions that 
annually demonstrate that at least 50 percent of children or adult 
participants in care are from low-income households would be exempt 
from monthly verification.
    By reducing the frequency of verification, this rule would modestly 
reduce the reporting burden for eligible for-profit centers and 
sponsoring organizations of for-profit centers.
    There would be no change in reporting burden for for-profit centers 
that do not meet the 50 percent standard. This rule would also not 
affect reporting requirements for public and non-profit institutions.
    The CACFP information collection, approved with a nonsubstantive 
change on August 31, 2018, includes a reporting requirement under 7 CFR 
226.10(c) for sponsoring organizations and other institutions to submit 
documentation to verify the eligibility of for-profit centers. USDA 
estimates that 9,770 for-profit institutions each provide 12 reports 
annually, for a total of 117,240 responses. The estimated average 
number of burden hours per response is 0.50, resulting in an estimated 
total of 58,620 burden hours.
    The program change proposed in this rule would only impact for-
profit institutions that meet the 50 percent standard. USDA estimates a 
subset of 1,850 for-profit institutions, or about 20 percent of the 
9,770 institution respondents that would not meet this standard, would 
each continue to provide 12 reports annually, for a total of 22,203 
responses. Their reporting burden would not change.
    The estimated average number of burden hours per response is 0.50, 
resulting in an estimated total of 11,101 burden hours.
    However, a larger subset of 7,920 for-profit institutions, or about 
80 percent of the 9,770 institution respondents, would meet the 50 
percent standard.
    Each respondent would be exempt from monthly verification and would 
provide only one report annually for a total of 7,920 responses. The 
number of estimated responses from each eligible institution would 
decrease from 12 responses to only one per year. The estimated average 
number of burden hours per response is 0.50, resulting in an estimated 
total of 3,960 burden hours. The estimated total number of burden hours 
would be reduced by 43,559 hours, from 58,620 to 15,061.
    This rule would not require any additional reporting of eligibility 
information from any for-profit institution, nor would it impose any 
changes in recordkeeping requirements. Although this rule would ease 
administrative burden for institutions that may have to report 
information requested by the State agency to support the eligibility 
determination, the collection of information under the Paperwork 
Reduction Act only addresses estimates of federally-imposed reporting 
or recordkeeping requirements. Due to rounding, our estimates may not 
match to totals. Here is a summary of our analysis:
    Respondents: For-Profit Institutions.
    Estimated Number of Respondents: 7,920.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 7,920.
    Estimated Time per Response: 0.50.
    Estimated Total Annual Burden: 3,960.
    Current OMB Inventory (Reporting): 1,870,412.
    Current OMB Inventory (Reporting and Recordkeeping): 2,481,136.
    OMB Inventory with Proposed Rule (Reporting and Recordkeeping): 
2,437,577.
    Difference in Burden as a Result of the Proposed Rule: -43,559.

                                7 CFR Part 226 Child and Adult Food Care Program
                                 Sponsors and Institutions (Currently Approved)
----------------------------------------------------------------------------------------------------------------
                                     Estimated       Number of                       Estimated
           Requirement               number of     responses per   Total annual     total hours      Estimated
                                    respondents     respondent       responses     per response    total burden
----------------------------------------------------------------------------------------------------------------
226.10(c): All for-profit               9,770.00           12.00      117,240.00            0.50       58,620.00
 institutions submit
 documentation to verify for-
 profit center eligibility......
Total Sponsor/Institution              21,052.00           31.88      671,048.00            0.92      616,697.18
 reporting burden...............
Total reporting burden for 0584-    2,828,158.00            2.57    7,276,600.84            0.26    1,870,411.75
 0055...........................
----------------------------------------------------------------------------------------------------------------
* Some totals may not add due to rounding.


                                7 CFR Part 226 Child and Adult Food Care Program
                                Sponsors and Institutions (With Proposed Changes)
----------------------------------------------------------------------------------------------------------------
                                     Estimated       Number of                       Estimated
           Requirement               number of     responses per   Total annual     total hours      Estimated
                                    respondents     respondent       responses     per response    total burden
----------------------------------------------------------------------------------------------------------------
226.10(c): For-profit                   1,850.24           12.00       22,202.86            0.50       11,101.43
 institutions that would not be
 exempt from monthly
 verification submit
 documentation to verify for-
 profit eligibility.............
226.10(c): For-profit                   7,919.76            1.00        7,919.76            0.50        3,959.88
 institutions that would be
 exempt from monthly
 verification...................
                                 -------------------------------------------------------------------------------
    Total Sponsor/Institution          21,052.00           27.74      583,930.62            0.98      573,138.49
     reporting burden...........
----------------------------------------------------------------------------------------------------------------
* Some totals may not add due to rounding.


[[Page 50045]]


 7 CFR Part 226 Increasing Flexibility for Verification of For-Profit Center Eligibility in the Child and Adult
                                                Care Food Program
----------------------------------------------------------------------------------------------------------------
                                     Estimated       Number of                       Estimated
         Affected public             number of     responses per   Total annual     total hours      Estimated
                                    respondents     respondent       responses     per response    total burden
----------------------------------------------------------------------------------------------------------------
                                                 Total Reporting
----------------------------------------------------------------------------------------------------------------
State Agency....................           56.00          552.16       30,921.00            0.14        4,200.92
Sponsor/Institution.............       21,052.00           27.74      583,930.62            0.98      573,138.49
Facilities......................      180,740.00           12.00    2,168,880.00            0.41      883,761.00
Household.......................    2,626,310.00            1.68    4,405,751.84            0.08      365,752.64
                                 -------------------------------------------------------------------------------
    Total reporting burden for      2,828,158.00            2.54    7,189,483.46            0.25    1,826,853.06
     0584-0055..................
----------------------------------------------------------------------------------------------------------------
                                               Total Recordkeeping
----------------------------------------------------------------------------------------------------------------
State Agency....................           56.00           27.00        1,512.00            1.37        2,072.00
Sponsor/Institution.............       21,052.00            9.22      194,196.00            0.34       66,432.00
Facilities......................      180,740.00            3.00      542,220.00            1.00      542,222.00
                                 -------------------------------------------------------------------------------
    Total recordkeeping burden        201,848.00            3.66      737,928.00            0.83      610,724.00
     for 0584-0055..............
----------------------------------------------------------------------------------------------------------------
                                      Total of Reporting and Recordkeeping
----------------------------------------------------------------------------------------------------------------
Reporting.......................    2,828,158.00            2.54    7,189,483.46            0.25    1,826,853.06
Recordkeeping...................      201,848.00            3.66      737,928.00            0.83      610,724.00
                                 -------------------------------------------------------------------------------
    Total.......................    3,030,006.00            2.62    7,927,411.46            0.31    2,437,577.06
----------------------------------------------------------------------------------------------------------------
* Some totals may not add due to rounding.

E-Government Act Compliance

    USDA is committed to complying with the E-Government Act of 2002, 
to promote the use of the internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

List of Subjects in 7 CFR Part 226

    Accounting, Day care, Food assistance programs, Grant programs, 
Grant programs--health, Infants and children, Reporting and 
recordkeeping requirements.

    Accordingly, 7 CFR part 226 is proposed to be amended as follows:

PART 226--CHILD AND ADULT CARE FOOD PROGRAM

0
1. The authority citation for 7 CFR part 226 continues to read as 
follows:

    Authority:  Secs. 9, 11, 14, 16, and 17, Richard B. Russell 
National School Lunch Act, as amended, 42 U.S.C. 1758, 1759a, 1762a, 
1765 and 1766.
0
2. In Sec.  [thinsp]226.6:
0
a. Add a new paragraph (f)(1)(x).
0
b. Remove paragraphs (f)(3)(iv)(D) and (E).
0
c. Redesignate paragraphs (f)(3)(iv)(F) and (G) as paragraphs 
(f)(3)(iv)(D) and (E).
    The addition reads as follows:


Sec.  226.6  State agency administrative responsibilities.

* * * * *
    (f) * * *
    (1) * * *
    (x) Comply with the following requirements for determining the 
eligibility of for-profit centers:
    (A) Require for-profit child care institutions to submit 
documentation on behalf of their centers of:
    (1) Eligibility of at least 25 percent of children in care 
(enrolled or licensed capacity, whichever is less) for free or reduced-
price meals; or
    (2) Compensation received under title XX of the Social Security Act 
of nonresidential day care services and certification that at least 25 
percent of children in care (enrolled or licensed capacity, whichever 
is less) were title XX beneficiaries during the most recent calendar 
month;
    (B) Require for-profit adult care centers to submit documentation 
that they are currently providing nonresidential day care services for 
which they receive compensation under title XIX or title XX of the 
Social Security Act, and certification that not less than 25 percent of 
enrolled participants in each such center, during the most recent 
calendar month, were title XIX or title XX beneficiaries;
* * * * *
0
3. In Sec.  226.9:
0
a. Redesignate paragraphs (b)(1), (b)(2), and (b)(3), as paragraphs 
(b)(1)(i), (b)(1)(ii), and (b)(1)(iii), respectively. Redesignate the 
introductory text in paragraph (b) as paragraph (b)(1) and add the 
paragraph heading ``Reimbursement methods.''
0
b. Add a new paragraph (b)(2).
    The addition reads as follows:


Sec.  226.9  Assignment of rates of reimbursement for centers.

* * * * *
    (b) * * *
    (2) Options for for-profit centers.
    (i) In States where the State agency has elected the methods 
described under paragraphs (b)(1)(ii) or (b)(1)(iii) of this section, 
the State agency uses the free and reduced-price counts that support 
each center's annual for-profit eligibility percentage, if it is 50 
percent or greater, to assign an annual claiming percentage or an 
annual blended per-meal rate.
    (ii) The State agency may require a for-profit center to submit 
information to recalculate the claiming percentage or blended rate more 
frequently than annually, as needed for proper administration of the 
Program.
* * * * *
0
4. In Sec.  [thinsp]226.10:
0
a. In paragraph (a), remove the reference ``Sec.  226.6(f)(3)(iv)(F)'' 
and add in its place the reference ``Sec.  226.6(f)(3)(iv)(D)''.
0
b. Revise paragraph (c).
    The revision reads as follows:


Sec.  226.10  Program payment procedures.

* * * * *

[[Page 50046]]

    (c) Claims for reimbursement.
    (1) Each institution must report information required by the State 
agency's financial management system. This information must have 
sufficient detail to justify the claim for reimbursement and enable the 
State agency to complete the final Report of the Child and Adult Care 
Food Program (FNS-44) required under Sec.  226.7(d) of this part.
    (2) In submitting a claim for reimbursement, each institution must 
certify that the claim is correct and that records are available to 
support it.
    (3) For each month in which reimbursement is claimed, each 
independent for-profit child care center, independent for-profit 
outside-school-hours care center, and sponsoring organization of for-
profit centers must also certify that at least 25 percent of children 
in care (enrolled or licensed capacity, whichever is less) are eligible 
for free or reduced-price meals or receive title XX benefits.
    (i) Claims for reimbursement may be submitted only for months in 
which the 25 percent standard for participation of eligible children is 
met.
    (ii) Children who drop in only to participate in afterschool 
activities and receive at-risk afterschool meals or snacks must not be 
considered in determining this standard.
    (iii) Reimbursement may not be claimed for any meals served at a 
for-profit center when less than 25 percent of children in care meet 
this standard.
    (iv) If the center's annual for-profit eligibility percentage is 
less than 50 percent, as determined under Sec. Sec.  226.6(b)(1)(ix) 
and (f)(1)(x)(A) of this part, the center must report the percentage of 
children in care who meet this standard.
    (v) If the center's annual for-profit eligibility percentage is 50 
percent or greater, as determined under Sec. Sec.  226.6(b)(1)(ix) and 
(f)(1)(x)(A) of this part, the center does not need to report the 
percentage of children in care who meet this standard.
    (vi) No additional submission of information to support the 
eligibility determination, such as attendance or title XX 
participation, is necessary if the center's annual for-profit 
eligibility percentage is 50 percent or greater.
    (4) For each month in which reimbursement is claimed, each 
independent for-profit adult day care center and sponsoring 
organization of for-profit adult day care centers must also certify 
that at least 25 percent of enrolled adult participants received title 
XIX or title XX benefits.
    (i) Claims for reimbursement may be submitted only for months in 
which the 25 percent standard for participation of eligible adult 
participants is met.
    (ii) Reimbursement may not be claimed for any meals served at a 
for-profit center when less than 25 percent of enrolled adult 
participants meet this standard.
    (iii) If the center's annual for-profit eligibility percentage is 
less than 50 percent, as determined under Sec. Sec.  226.6(b)(1)(ix) 
and (f)(1)(x)(B) of this part, the center must report the percentage of 
enrolled adult participants who meet this standard.
    (iv) If the center's annual for-profit eligibility percentage is 50 
percent or greater, as determined under Sec. Sec.  226.6(b)(1)(ix) and 
(f)(1)(x)(B) of this part, the center does not need to report the 
percentage of enrolled adult participants who meet this standard.
    (v) No additional submission of information to support the 
eligibility determination, such as attendance or participation in title 
XIX or title XX, is necessary if the center's annual for-profit 
eligibility percentage is 50 percent or greater.
    (5) For each month in which a for-profit center, described under 
paragraphs (c)(3)(v) or (c)(4)(iv) of this section, does not meet the 
25 percent standard, the institution must notify the State agency that 
reimbursement will not be claimed.
    (6) Prior to submitting its consolidated monthly claim to the State 
agency, each sponsoring organization must perform edit checks on each 
facility's meal claim. At a minimum, the sponsoring organization's edit 
checks must:
    (i) Verify that each facility has been approved to serve the types 
of meals claimed; and
    (ii) Compare the number of children or adult participants enrolled 
for care at each facility, multiplied by the number of days on which 
the facility is approved to serve meals, to the total number of meals 
claimed by the facility for that month. Discrepancies between the 
facility's meal claim and its enrollment must be subjected to more 
thorough review to determine if the claim is accurate.
* * * * *
0
5. In Sec.  226.11, revise paragraph (c)(4) to read as follows:


Sec.  226.11  Program payments for centers.

* * * * *
    (c) * * *
    (4) For-profit centers.
    (i) For-profit child care centers, including for-profit at-risk and 
outside-school-hours care centers, must be reimbursed only for the 
calendar months during which at least 25 percent of the children in 
care (enrolled or licensed capacity, whichever is less) were eligible 
for free or reduced-price meals or were title XX beneficiaries. 
However, children who only receive at-risk afterschool meals or snacks 
must not be considered in determining this eligibility.
    (ii) For-profit adult day care centers must be reimbursed only for 
the calendar months during which at least 25 percent of enrolled adult 
participants were beneficiaries of title XIX, title XX, or a 
combination of titles XIX and XX.
    (iii) In States where the State agency has elected the methods 
described under paragraphs (c)(5)(ii) and (c)(5)(iii) of this section, 
the State agency uses the free and reduced-price counts that support 
each center's annual for-profit eligibility percentage, if it is 50 
percent or greater, to assign an annual claiming percentage or an 
annual blended per-meal rate.
    (iv) The State agency may require a for-profit center to submit 
information to recalculate the claiming percentage or blended rate more 
frequently than annually, as needed for proper administration of the 
Program.
* * * * *

    Dated: June 28, 2018.
Brandon Lipps,
Acting Deputy Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 2018-21445 Filed 10-3-18; 8:45 am]
 BILLING CODE 3410-30-P