• Overview and Updates
  • Final Service Descriptions
  • Stakeholder Survey Findings

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Overview and Updates

What is Foster Care Rate Modernization?

Foster Care Rate Modernization (FCRM) is the project to define the foster care service continuum, the methodology that goes into calculating the cost of foster care, and collectively establishing a new foster care system in Texas. Defining, purchasing, and reimbursing providers based on individual service packages (as opposed to using a child leveling system) represents a new way of doing business in the Texas foster care system. 

Why Foster Care Rate Modernization?

Over the last three decades, there has been some modification to the Service Level System; however, the process and resulting rate methodology have remained largely unchanged. Many things that impact the foster care system have changed over this time as well. Technology, advancements in data collection, a dedicated foster care Medicaid managed care program, and Community-Based Care all help to better inform a new and improved way to deliver services and compensate foster caregivers.

How Did the Idea of FCRM Begin?

HHSC partnered with Public Consulting Group (PCG) to conduct a study on foster care rates. In the summer and fall of 2020, PCG conducted meetings with providers and other stakeholders to discuss the existing foster care rate structure, looked at other states' models, and evaluated Texas-specific data to identify improvements to address capacity challenges and improve the foster care system.

The PCG study resulted in six key findings:

  1. The current foster care rates do not clearly align with cost of care;
  2. The current rate level system, whereby rates can fluctuate for children based on assessed service level, creates fiscal challenges;
  3. The current rate development process is primarily retrospective;
  4. The rate calculations mix retrospective costs with forecasted placements;
  5. There is an over-reliance on fundraising to support contract requirements; and
  6. There is a lack of financial incentives and accountability in the rates.

Informed by the findings of the PCG study, the HHSC Foster Care Rate Methodology Report was presented to the 87th Legislature in February 2021. After considering the findings and recommendations outlined in the report, the 87th Legislature passed the General Appropriations Act, Senate Bill 1, Regular Session, 2021 (Article II, Special Provisions Relating to All Health and Human Services Agencies, Section 26) which requires DFPS, with the assistance of HHSC, to develop an alternative reimbursement methodology proposal for foster care and Community-based Care rates for consideration by the 88th Texas Legislature. DFPS and HHSC began work on this project known as “Foster Care Rate Modernization” (FCRM) in June of 2021.

Goals and Objectives of FCRM

The goal of FCRM is to improve outcomes for children, youth, and young adults through the establishment of a well-defined service continuum that meets the needs of the foster care population and recognizes and compensates the caregiver for delivering high-quality services.

The FCRM is supported by two objectives:

  • Determine what kind of services are needed, and clearly define each of the needed service models.
  • Establish a new rate methodology that better aligns the cost of care with service provision and incentivizes improved child outcomes.

The parameters for this project include:

  • The newly defined models/continuum and rate methodology will assume provider compensation aligns service provision with the actual cost of care.
  • The scope of this project applies to paid Foster Care Services only.
  • Licensing and regulatory requirements/oversight/structure do not change substantially. If substantial change(s) were to occur, the methodology may need to be re-evaluated.
  • Some providers may need to make significant business model changes in order to move forward under the newly designed service model continuum.
  • Additional resources and time will be needed by DFPS, HHSC, and potential providers in order to fully implement the resulting continuum and rate methodology.

Stakeholder Engagement

This work cannot be done without the entire foster care service continuum of stakeholders. Primary stakeholders to inform FCRM include:

  • Children, youth, and young adults as well as their families
  • Kinship caregivers
  • Foster Parents
  • Single Source Continuum Contractors (SSCC’s)
  • Residential Child Care Providers
  • DFPS and SSCC Regional Staff
  • Judiciary
  • Foster Care Trade Associations
  • Child and Family Advocates
  • Medicaid and other enterprise partners
  • Federal Child Welfare Partners

During this project, input will be collected through workshops, meetings, and surveys to help:

  • Provide guidance in defining service models, including staffing models and training;
  • Assist in identifying gaps in service types;
  • Ensure all (allowable) pricing elements have been considered in development of rate methodology;
  • Inform and assist in selection of uniform assessment tool(s) and utilization management process; and
  • Provide feedback on quality and incentivized performance measures.

What's New?

April 2022

Work has been completed to validate the assumptions in the Foster Care Rate Modernization Report: Final Service Descriptions to more appropriately pay for actual services being required in the service packages and add-ons. HHSC Provider Finance Division is working diligently to complete economic models for the new rates using the validated assumptions.

Research on an assessment tool for DFPS to utilize in placement of foster children into the new packages is under way, with recommendations for the tool expected in Fall 2022.

Release of the Foster Care Rate Modernization Survey Findings conducted by the Texas Institute for Child & Family Well-being will be followed up with a webinar for providers. For a quick summary of the report, jump over to the Stakeholder Survey Findings tab. You can also sign up for email updates to receive notifications for the webinar.


Note: If you have trouble accessing information on this page, please contact the FCRM mailbox. Include a link to this page with an explanation of the issue you encountered.

Final Service Descriptions

This tab provides a summary of the Final Service Descriptions report.

Based on stakeholder feedback, data analysis, and research, DFPS has separated the foster care service continuum into three placement categories.

Using an assessment tool, a child’s placement will be selected from these categories that best meets the child’ specific needs. Inherent in each of these three categories is a Primary Package Setting and Service Add-ons which provide for specialization of care. These packages and add-ons represent a model of care that, once validated, will appropriately meet the varying needs of children and youth in the Texas Foster Care System using a new foster care rate methodology.

Basic Concept for New Service Packages

  • The CANS (or other assessment tool) will inform a child’s Primary Setting.
  • The child will be assigned to ONLY one Primary Setting below.

If the assessment tool indicates more than one setting as equally appropriate, then the setting with the highest rating will be selected and if needed, availability of beds by setting may also be reviewed.

Foster Care Family

Primary Settings

  • Basic Foster Family Care
  • Short-Term Assessment & Stabilization Services
  • Complex Medical Needs
  • Treatment Foster Family Care
  • IDD & Autism
  • Sexual Aggression/Sex Offender
  • Mental & Behavioral Health

Add-Ons (Support Services)

  • Transition
  • Pregnant & Parenting Youth
  • Human Trafficking
  • Substance Use
  • Kinship Care

GRO Tier I

Primary Settings

  • Basic Child Care Operation
  • Emergency Assessment & Stabilization Care
  • Complex Medical Needs
  • IDD & Autism
  • Sexual Aggression/Sex Offender
  • Mental & Behavioral Health
  • Pregnant & Parenting Youth
  • Human Trafficking
  • Substance Use

This package of settings is designed to provide services to support community transition.

Add-ons are not an option for this package.

GRO Tier II

Primary Settings

  • Aggression & Defiance
  • Complex Medical Needs
  • Complex Mental Health
  • Sexual Aggression/Sex Offender
  • Human Trafficking
  • Substance Use

This package of settings is designed to provide services to youth with the highest acuity of needs.

Add-ons are not an option for this package.

Foster Family Care-Home-based/Community Services

One of these seven Primary Package Settings will become a child’s primary placement setting:

  • Basic Foster Family Care
  • Short-Term Emergency Stabilization/Assessment Care
  • Services to Support Children, Youth, and Young Adults with Complex Medical Needs to Support Community Transition
  • Treatment Foster Family Care
  • Services for Children, Youth, and Young Adults with Intellectual Developmental Disabilities (IDD)/Autism to Support Community Transition
  • Sexual Aggression & Sex Offender Treatment Services
  • Mental and Behavioral Health Treatment Services

One or more of these four Service Add-ons can be added to a child’s Primary Setting Package, if indicated in the assessment, to become a child’s full package:

  • Transition Support Services for Youth and Young Adults
  • Human Trafficking Services to Support Community Transition
  • Services to Support Community Transition for Youth and Young Adults who are Pregnant or Parenting
  • Substance Use Services to Support Community Transition

It should be noted that the Primary Setting Package Short-Term Emergency Stabilization/Assessment Care will not be allowed to have any Service Add-ons due to the short length of stay in this particular setting.

General Residential Operations

Residential settings may be more appropriate for to meet a child’s needs. General Residential Operations are divided into Tier I and Tier II based on the complexity of the child’s specific needs.

Tier I-Facility-based Treatment Service Settings include the following. Note that there are no add-on options for these settings:

  • Basic Child Care Operation
  • Emergency Stabilization/Assessment Care
  • Services to Support Children, Youth, and Young Adults with Complex Medical Needs to Support Community Transition
  • Services for Children, Youth, and Young Adults with Intellectual Developmental Disabilities (IDD)/Autism to Support Community Transition
  • Human Trafficking Services to Support Community Transition
  • Services to Support Community Transition for Youth and Young Adults who are Pregnant or Parenting
  • Substance Use Services to Support Community Transition
  • Sexual Aggression and Sex Offender Treatment Services to Support Community Transition
  • Mental and Behavioral Health Treatment Services to Support Community Transition

Tier II-Facility-based Sub-acute Stabilization Services will be modeled after the pilot program for the Qualified Residential Treatment Program (QRTP) model. The Tier II Base Package includes all requirements inherent in the Family First Prevention Services Act to serve children, youth, and young adults with subacute service needs, which may meet one or more of the following criteria:

  • Aggression or defiance;
  • Substance use disorders;
  • Human trafficking victimization;
  • Sexual aggression or who have been adjudicated a sexual offender;
  • Complex medical needs; and
  • Complex mental health needs to include suicidal and other self-harming behaviors.

Supervised Independent Living Placements

Relative to Foster Family Care and GRO, SIL services are new to the service continuum. As a part of this project, DFPS is studying costs of living arrangements in the SIL program to determine if any modification to the rate methodology is needed.  If modifications are needed, DFPS and HHSC will work with stakeholders that provide SIL services in the Spring of 2022.

Stakeholder Survey Findings

This tab provides a summary of the Foster Care Rate Modernization Survey Findings report.

You can also watch the Stakeholder Survey Findings Webinar held on May 9, 2022.

Survey Development

DFPS has contracted with the Texas Institute for Child & Family Well-being (TXICFW) to provide consultation on the Foster Care Rate Modernization project. DFPS tasked TXICFW with surveying the provider community to gather information that will be used to validate assumptions and provide specificity needed by HHSC Provider Finance to build out the rate methodology to support the new foster care service continuum. The survey was just one piece of the larger puzzle.

In January 2022, TXICFW in collaboration with Blackstone Solutions, LLC hosted a series of 12 workshops with stakeholders representing a diverse group of foster parents, residential child care providers, provider trade associations, and advocates from across the state. The workshops were facilitated by the Deckinga Group, LLC. The DFPS Office of Finance and HHSC Provider Finance Division helped inform the content of the agendas for the workshops and participated as resources in the groups. The purpose of the focus groups was to present an overview of DFPS’ final service descriptions and gather input to finalize the content of the Texas Institute for Child & Family Wellbeing’s February survey which will be used to validate assumptions in the base model and service add-ons. This input was necessary to garner the level of specificity needed by HHSC Provider Finance to establish supporting rate methodology.

Survey Deployment

In February 2022, TXICFW developed a robust survey covering the following topics and distributed it to over 400 providers:

  • Capacity
  • Clinical staffing costs
  • Case management staffing costs
  • Direct care staffing costs
  • Family engagement and aftercare costs
  • Ideal lengths of stay
  • Ideal services for youth with varying needs
  • Cost of care for youth with specialized needs
  • Costs for ensuring youth have access to normal and age-appropriate activities
  • Foster parent recruitment and retention
  • Administrative costs not captured in cost reports

The following completed the survey, with an overall response rate of 51%:

  • 73 CPAs (50% response rate)
  • 41 Emergency shelters (68% response rate)
  • 28 GROs (55% response rate)
  • 60 RTCs (44% response rate)

Among many other conclusions TXICFW made with the survey findings, transition to the new service models will require support, coordination, and funding for providers and DFPS.

Agencies need to build capacity to:

  • Bill for different service packages
  • Deliver evidence-informed practices
  • Provide family engagement and aftercare services
  • Meet staffing requirements for service

State needs to build capacity to:

  • Pay for different service packages
  • Assess youth for service packages
  • Build mental health services
  • Fix STAR Health credentialing issue
  • Develop CQI system

Next Steps