prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: The federal child nutrition programs provide assistance to schools and other institutions in the form of cash, commodity food, and administrative support (such as technical assistance and administrative funding) based on the provision of meals and snacks to children  In general, these programs were created (and amended over time) to both improve children's nutrition and provide support to the agriculture economy  Today, the child nutrition programs refer primarily to the following meal, snack, and milk reimbursement programs (these and other acronyms are listed in Appendix A ): National School Lunch Program (NSLP) (Richard B  Russell National School Lunch Act (42 U S C  1751 et seq )); School Breakfast Program (SBP) (Child Nutrition Act, Section 4 (42 U S C  1773)); Child and Adult Care Food Program (CACFP) (Richard B  Russell National School Lunch Act, Section 17 (42 U S C  1766)); Summer Food Service Program (SFSP) (Richard B  Russell National School Lunch Act, Section 13 (42 U S C  1761)); and Special Milk Program (SMP) (Child Nutrition Act, Section 3 (42 U S C  1772))  The programs provide financial support and/or foods to the institutions that prepare meals and snacks served outside of the home (unlike other food assistance programs such as the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) where benefits are used to purchase food for home consumption)  Though exact eligibility rules and pricing vary by program, in general the amount of federal reimbursement is greater for meals served to qualifying low-income individuals or at qualifying institutions, although most programs provide some subsidy for all food served  Participating children receive subsidized meals and snacks, which may be free or at reduced price  Forthcoming sections discuss how program-specific eligibility rules and funding operate  This report describes how each program operates under current law, focusing on eligibility rules, participation, and funding  This introductory section describes some of the background and principles that generally apply to all of the programs; subsequent sections go into further detail on the workings of each  Unless stated otherwise, participation and funding data come from USDA-FNS's "Keydata Reports " The child nutrition programs are most often dated back to the 1946 enactment of the National School Lunch Act, which created the National School Lunch Program, albeit in a different form than it operates today  Most of the child nutrition programs do not date back to 1946; they were added and amended in the decades to follow as policymakers expanded child nutrition programs' institutional settings and meals provided: The Special Milk Program was created in 1954, regularly extended, and made permanent in 1970  The School Breakfast Program was piloted in 1966, regularly extended, and eventually made permanent in 1975  A program for child care settings and summer programs was piloted in 1968, with separate programs authorized in 1975 and then made permanent in 1978  These are now the Child and Adult Care Food Program and Summer Food Service Program  The Fresh Fruit and Vegetable Program began as a pilot in 2002, was made permanent in 2004, and was expanded nationwide in 2008  The programs are now authorized under three major federal statutes: the Richard B  Russell National School Lunch Act (originally enacted as the National School Lunch Act in 1946), the Child Nutrition Act (originally enacted in 1966), and Section 32 of the act of August 24, 1935 (7 U S C  612c)  Congressional jurisdiction over the underlying three laws has typically been exercised by the Senate Agriculture, Nutrition, and Forestry Committee; the House Education and the Workforce Committee; and, to a limited extent (relating to commodity food assistance and Section 32 issues), the House Agriculture Committee  Congress periodically reviews and reauthorizes expiring authorities under these laws  The child nutrition programs were most recently reauthorized in 2010 through the Healthy, Hunger-Free Kids Act of 2010 (HHFKA, P L  111-296 ); some of the authorities created or extended in that law expired on September 30, 2015  WIC (the Special Supplemental Nutrition Program for Women, Infants, and Children) is also typically reauthorized with the child nutrition programs  WIC is not one of the child nutrition programs and is not discussed in this report  The 114 th Congress began but did not complete a 2016 child nutrition reauthorization (see CRS Report R44373, Tracking the Next Child Nutrition Reauthorization: An Overview )  There was no significant legislative activity with regard to reauthorization in the 115 th Congress  The U S  Department of Agriculture's Food and Nutrition Service (USDA-FNS) administers the programs at the federal level  The programs are operated by a wide variety of local public and private providers and the degree of direct state involvement differs by program and state  At the state level, education, health, social services, and agriculture departments all have roles; at a minimum, they are responsible for approving and overseeing local providers such as schools, summer program sponsors, and child care centers and day care homes, as well as making sure they receive the federal support they are due  At the local level, program benefits are provided to millions of children (e g , there were 30 0 million in the National School Lunch Program, the largest of the programs, in FY2017), through some 100,000 public and private schools and residential child care institutions, nearly 170,000 child care centers and family day care homes, and just over 50,000 summer program sites  All programs are available in the 50 states and the District of Columbia  Virtually all operate in Puerto Rico, Guam, and the Virgin Islands (and, in differing versions, in the Northern Marianas and American Samoa)  This section summarizes the nature and extent to which the programs' funding is mandatory and discretionary, including a discussion of appropriated entitlement status  Table 3 lists child nutrition program and related expenditures  Most spending for child nutrition programs is provided in annual appropriations acts to fulfill the legal financial obligation established by the authorizing laws  That is, the level of spending for such programs, referred to as appropriated mandatory spending, is not controlled through the annual appropriations process, but instead is derived from the benefit and eligibility criteria specified in the authorizing laws  The appropriated mandatory funding is treated as mandatory spending  Further, if Congress does not appropriate the funds necessary to fund the program, eligible entities may have legal recourse  Congress typically considers the Administration's forecast for program needs in its appropriations decisions  For the majority of funding discussed in this report, the formula that controls the funding is not capped and fluctuates based on the reimbursement rates and the number of meals/snacks served in the programs  In the meal service programs, such as the National School Lunch Program, School Breakfast Program, summer programs, and assistance for child care centers and day care homes, federal aid is provided in the form of statutorily set subsidies (reimbursements) paid for each meal/snack served that meets federal nutrition guidelines  Although all (including full-price) meals/snacks served by participating providers are subsidized, those served free or at a reduced price to lower-income children are supported at higher rates  All federal meal/snack subsidy rates are indexed annually (each July) for inflation, as are the income eligibility thresholds for free and reduced-price meals/snacks  Subsequent sections discuss how a specific program's eligibility and reimbursements work  Most subsidies are cash payments to schools or other providers, but a smaller portion of aid is provided in the form of USDA-purchased commodity foods   Laws for three child nutrition programs (NSLP, CACFP, and SFSP) require the provision of commodity foods (or in some cases allow cash in lieu of commodity foods)  Meal and snack service entails nonfood costs  Federal child nutrition per-meal/snack subsidies may be used to cover local providers' administrative and operating costs  However, the separate direct federal payments for administrative/operating costs ("State Administrative Expenses," discussed in the " Related Programs, Initiatives, and Support Activities " section) are limited  In addition to the open-ended, appropriated entitlement funds summarized above, the child nutrition programs' funding also includes certain other mandatory funding and a limited amount of discretionary funding  Some of the activities discussed in " Related Programs, Initiatives, and Support Activities ," such as Team Nutrition, are provided for with discretionary funding  Aside from the annually appropriated funding, the child nutrition programs are also supported by certain permanent appropriations and transfers  Notably, funding for the Fresh Fruit and Vegetable Program is funded by a transfer from USDA's Section 32 program, a permanent appropriation of 30% of the previous year's customs receipts  Federal subsidies do not necessarily cover the full cost of the meals and snacks offered by providers  States and localities help cover program costs, as do children's families by paying charges for nonfree or reduced-price meals/snacks  There is a nonfederal cost-sharing requirement for the school meals programs (discussed below), and some states supplement school funding through additional state per-meal reimbursements or other prescribed financing arrangements  Subsequent sections of this report delve into the details of how each of the child nutrition programs support the service of meals and snacks in institutional settings; first, it is useful to take a broader perspective of primary program elements  Table 1 is a top-level look at the different programs that displays distinguishing characteristics (what meals are provided, in what settings, to what ages) and recent program spending  Other relevant CRS reports in this area include CRS In Focus IF10266, An Introduction to Child Nutrition Reauthorization CRS Report R45486, Child Nutrition Programs: Current Issues CRS Report R42353, Domestic Food Assistance: Summary of Programs CRS Report R41354, Child Nutrition and WIC Reauthorization: P L  111-296 (summarizes the Healthy, Hunger-Free Kids Act of 2010) CRS Report R44373, Tracking the Next Child Nutrition Reauthorization: An Overview CRS Report R44588, Agriculture and Related Agencies: FY2017 Appropriations CRS Report RL34081, Farm and Food Support Under USDA's Section 32 Program Other relevant resources include USDA-FNS's website, https://www fns usda gov/school-meals/child-nutrition-programs USDA-FNS's Healthy, Hunger-Free Kids Act page, http://www fns usda gov/school-meals/healthy-hunger-free-kids-act The FNS page of the Federal Register , https://www federalregister gov/agencies/food-and-nutrition-service This section discusses the school meals programs: the National School Lunch Program (NSLP) and the School Breakfast Program (SBP)  Principles and concepts common to both programs are discussed first; subsections then discuss features and data unique to the NSLP and SBP, respectively  The federal school meals programs provide federal support in the form of cash assistance and USDA commodity foods; both are provided according to statutory formulas based on the number of reimbursable meals served in schools  The subsidized meals are served by both public and private nonprofit elementary and secondary schools and residential child care institutions (RCCIs) that opt to enroll and guarantee to offer free or reduced-price meals to eligible low-income children  Both cash and commodity support to participating schools are calculated based on the number and price of meals served (e g , lunch or breakfast, free or full price), but once the aid is received by the school it is used to support the overall school meal service budget, as determined by the school  This report focuses on the federal reimbursements and funding, but it should be noted that some states have provided state financing through additional state-specific funding  Federal law does not require schools to participate in the school meals programs  However, some states have mandated that schools provide lunch and/or breakfast, and some of these states require that their schools do so through NSLP and/or SBP  The program is open to public and private schools  A reimbursable meal requires compliance with federal school nutrition standards, which have changed throughout the history of the program based on nutritional science and children's nutritional needs  Food items not served as a complete meal meeting nutrition standards (e g , a la carte offerings) are not reimbursable meals, and therefore are not eligible for federal per-meal, per-snack reimbursements  Following rulemaking to implement provisions in the Healthy, Hunger-Free Kids Act of 2010 ( P L  111-296 ), USDA updated the nutrition standards for reimbursable meals in January 2012 (see " Nutrition Standards " for more information)  Schools serving meals that meet the updated nutrition standards are eligible for an increased reimbursement of 6 cents per lunch  USDA-FNS administers the school meals programs federally, and state agencies (typically state departments of education) oversee and transmit reimbursements through agreements with school food authorities (SFAs) (typically local educational agencies (LEAs); usually these are school districts)  Figure 1 provides an overview of the roles and relationships between these levels of government  There is a cost-sharing requirement for the programs, which amounts to a contribution of approximately $200 million from the states  There also are states that choose to supplement federal reimbursements with their own state reimbursements  The school meals programs and related funding do not serve only low-income children  All students can receive a meal at a NSLP- or SBP-participating school, but how much the child pays for the meal and/or how much of a federal reimbursement the state receives will depend largely on whether the child qualifies for a "free," "reduced-price," or "paid" (i e , advertised price) meal  Both NSLP and SBP use the same household income eligibility criteria and categorical eligibility rules  States and schools receive the largest reimbursements for free meals, smaller reimbursements for reduced-price meals, and the smallest (but still some federal financial support) for the full-price meals  There are three pathways through which a child can become certified to receive a free or reduced-price meal: 1  Household income eligibility for free and reduced-price meals (information typically collected via household application), 2  Categorical (or automatic) eligibility for free meals (information collected via household application or a direct certification process), and 3  School-wide free meals under the Community Eligibility Provision (CEP) , an option for eligible schools that is based on the share of students identified as eligible for free meals  Each of these pathways is discussed in more detail below  The income eligibility thresholds (shown in Table 2 ) are based on multipliers of the federal poverty guidelines  As the poverty guidelines are updated every year, so are the eligibility thresholds for NSLP and SBP  Free Meals: Children receive free meals if they have household income at or below 130% of the federal poverty guidelines; these meals receive the highest subsidy rate  (Reimbursements are approximately $3 30 per lunch served, less for breakfast ) Reduced-Price Meals: Children may receive reduced-price meals (charges of no more than 40 cents for a lunch or 30 cents for a breakfast) if their household income is above 130% and less than or equal to 185% of the federal poverty guidelines; these meals receive a subsidy rate that is 40 cents (NSLP) or 30 cents (SBP) below the free meal rate  (Reimbursements are approximately $2 90 per lunch served ) Paid Meals: A comparatively small per-meal reimbursement is provided for full-price or paid meals served to children whose families do not apply for assistance or whose family income does not qualify them for free or reduced-price meals  The paid meal price is set by the school but must comply with federal regulations  (Reimbursements are approximately 30 cents per lunch served ) The above reimbursement rates are approximate; exact current-year federal reimbursement rates for NSLP and SBP are listed in Table B -1 and Table B -3 , respectively  Households complete paper or online applications that collect relevant income and household size data, so that the school district can determine if children in the household are eligible for free meals, reduced-price meals, or neither  Though these income guidelines primarily influence funding and administration of NSLP and SBP, they also affect the eligibility rules for the SFSP, CACFP, and SMP (described further in subsequent sections)  In addition to the eligibility thresholds listed above, the school meals programs also convey eligibility for free meals based on household participation in certain other need-tested programs or children's specified vulnerabilities (e g , foster children)  Per Section 12 of the National School Lunch Act, "a child shall be considered automatically eligible for a free lunch and breakfast     without further application or eligibility determination, if the child is" in a household receiving benefits through SNAP (Supplemental Nutrition Assistance Program); FDPIR (Food Distribution Program on Indian Reservations, a program that operates in lieu of SNAP on some Indian reservations) benefits; or TANF (Temporary Assistance for Needy Families) cash assistance; enrolled in Head Start; in foster care; a migrant; a runaway; or homeless  For meals served to students certified in the above categories, the state/school receive a reimbursement at the free meal amount and children receive a free meal  (See Table B -1 and Table B -3 for school year 2018-2019 rates ) Some school districts collect information for these categorical eligibility rules via paper application  Others conduct a process called direct certification —a proactive process where government agencies typically cross-check their program rolls and certify a household's children for free school meals without the household having to complete a school meals application  Prior to 2004, states had the option to conduct direct certification of SNAP (then, the Food Stamp Program), TANF, and FDPIR participants  In the 2004 child nutrition reauthorization ( P L  108-265 ), states were required under federal law to conduct direct certification for SNAP participants, with nationwide implementation taking effect in school year 2008-2009  Conducting direct certification for TANF and FDPIR remains at the state's discretion  The Healthy, Hunger-Free Kids Act of 2010 (HHFKA; P L  111-296 ) made further policy changes to expand direct certification (discussed further in the next section)  One of those changes was the initiation of a demonstration project to look at expanding categorical eligibility and direct certification to some Medicaid households  The law also funded performance incentive grants for high-performing states and authorized correcting action planning for low-performing states in direct certification activities  Under SNAP direct certification rules generally, schools enter into agreements with SNAP agencies to certify children in SNAP households as eligible for free school meals without requiring a separate application from the family  Direct certification systems match student enrollment lists against SNAP agency records, eliminating the need for action by the child's parents or guardians  Direct certification allows schools to make use of SNAP's more in-depth eligibility certification process; this can reduce errors that may occur in school lunch application eligibility procedures that are otherwise used  From a program access perspective, direct certification also reduces the number of applications a household must complete  Figure 2 , created by GAO and published in a May 2014 report, provides an overview of how school districts certify students for free and reduced-price meals under the income-based and category-based rules, via applications and direct certification  A USDA-FNS study of school year 2014-2015 estimates that 11 1 million students receiving free meals were directly certified—68% of all categorically eligible students receiving free meals  HHFKA also authorized the school meals Community Eligibility Provision (CEP), an option in NSLP and SBP law that allows eligible schools and school districts to offer free meals to all enrolled students based on the percentage of their students who are identified as automatically eligible from nonhousehold application sources (primarily direct certification through other programs)  Based on the statutory parameters, USDA-FNS piloted CEP in various states over three school years and it expanded nationwide in school year 2014-2015  Eligible LEAs have until June 30 of each year to notify USDA-FNS if they will participate in CEP  According to a database maintained by the Food Research and Action Center, just over 20,700 schools in more than 3,500 school districts (LEAs) participated in CEP in SY2016-2017, an increase of approximately 2,500 schools compared to SY2015-2016  For a school (or school district, or group of schools within a district) to provide free meals to all children the school(s) must be eligible for CEP based on the share (40% or greater) of enrolled children that can be identified as categorically (or automatically) eligible for free meals, and the school must opt-in to CEP  Though CEP schools serve free meals to all students, they are not reimbursed at the "free meal" rate for every meal  Instead, the law provides a funding formula: the percentage of students identified as automatically eligible (the "identified student percentage" or ISP) is multiplied by a factor of 1 6 to estimate the proportion of students who would be eligible for free or reduced-price meals had they been certified via application  The result is the percentage of meals served that will be reimbursed at the free meal rate, with the remainder reimbursed at the far lower paid meal rate  For example, if a CEP school identifies that 40% of students are eligible for free meals, then 64% of the meals served will be reimbursed at the free meal rate and 36% at the paid meal rate  Schools that identify 62 5% or more students as eligible for free meals receive the free meal reimbursement for all meals served  Some of the considerations that may impact a school's decision to participate in CEP include whether the new funding formula would be beneficial for their school meal budget; an interest in reducing paperwork for families and schools; and an interest in providing more free meals, including meals to students who have not participated in the program before  The Healthy, Hunger-Free Kids Act of 2010 (HHFKA; P L  111-296 ) set in motion changes to the nutrition standards for school meals, requiring USDA to update the standards within a certain timeframe  The law required that the revised standards be based on recommendations from the Institute of Medicine (IOM) (now the Health and Medicine Division) at the National Academy of Sciences  The law also provided increased federal subsidies (6 cents per lunch) for schools meeting the new requirements and funding for technical assistance related to implementation  USDA published the final regulations in January 2012  The final rule sought to align school meal patterns with the 2010 Dietary Guidelines for Americans, and, generally consistent with IOM's recommendations, increased the amount of fruits, vegetables, whole grains, and low-fat or fat-free milk in school meals  The regulations also included calorie maximums and sodium limits to phase in over time, among other requirements  The nutrition standards largely took effect in SY2012-2013 for lunches and in SY2013-2014 for breakfasts  A few other requirements were scheduled to phase in over multiple school years  Some schools experienced difficulty implementing the new guidelines, and Congress and USDA have made changes to the 2012 final rule's whole grain, sodium, and milk requirements  For SY2019-2020 and onwards, schools are operating under a final rule published December 12, 2018  The HHFKA also gave USDA the authority to regulate other foods in the school nutrition environment  Sometimes called "competitive foods," these include foods and drinks sold in a la carte lines, vending machines, snack bars and concession stands, and fundraisers  Relying on recommendations made by a 2007 IOM report, USDA-FNS promulgated a proposed rule and then an interim final rule in June 2013, which went into effect for SY2014-2015  The interim final rule created nutrition guidelines for all non-meal foods and beverages that are sold during the school day (defined as midnight until 30 minutes after dismissal)  The final rule, published on July 29, 2016, maintained the interim final rules with minor modifications  Under the final standards, these foods must meet whole-grain requirements; have certain primary ingredients; and meet calorie, sodium, and fat limits, among other requirements  Schools are limited to a list of no- and low-calorie beverages they may sell (with larger portion sizes and caffeine allowed in high schools)  There are no limits on fundraisers selling foods that meet the interim final rule's guidelines  Fundraisers outside of the school day are not subject to the guidelines  HHFKA and the interim final rule provide states with discretion to exempt infrequent fundraisers selling foods or beverages that do not meet the nutrition standards  The rule does not limit foods brought from home, only foods sold at school during the school day  The federal standards are minimum standards; states and school districts are permitted to issue more stringent policies  In FY2017, NSLP subsidized 4 9 billion lunches to children in close to 96,000 schools and 3,200 residential child care institutions (RCCIs)  Average daily participation was 30 0 million students (58% of children enrolled in participating schools and RCCIs)  Of the participating students, 66 7% (20 0 million) received free lunches and 6 5% (2 0 million) received reduced-price lunches  The remainder were served full-price meals, though schools still receive a reimbursement for these meals  Figure 3 shows FY2017 participation data  FY2017 federal school lunch costs totaled approximately $13 6 billion (see Table 3 for the various components of this total)  The vast majority of this funding is for per-meal reimbursements for free and reduced-price lunches  The HHFKA also provided an additional 6-cent per-lunch reimbursement to schools that provide meals that meet the updated nutritional guidelines requirements
Report 2:  CMS has taken steps to identify some fraud risks through several control activities that target areas the agency has designated as higher risk within Medicare and Medicaid, including specific provider types, such as home health agencies, and specific geographic locations  As discussed earlier, CMS officials told us that CPI initially focused on developing control activities for Medicare FFS and considers these activities to be the most mature of all CPI efforts to address fraud risks  CMS has identified fraud risks in the following selected examples, which are not an exhaustive list of its control activities  Data analytics to assist investigations in Medicare FFS  In 2011, CMS implemented FPS, a data-analytic system that screens all Medicare FFS claims to identify health-care providers with suspect billing patterns for further investigation  Medicare FFS contractors—ZPICs and UPICs— have used FPS to identify and prioritize leads for investigations of potential fraud by high-risk Medicare FFS providers  Contractors told us that FPS allows them to quickly identify and triage leads  CMS’s guidance requires contractors to prioritize investigations with the greatest program impact or urgency and identifies required criteria for prioritizing investigations, such as patient abuse or harm, multistate fraud, and high dollar amount of potential overpayments  One contractor we interviewed developed a risk-prioritization model that incorporated CMS’s required criteria, such as patient harm, as well as additional criteria, such as provider spikes in billing, into a tool that automatically creates a provider risk score to help the contractor focus and prioritize investigative resources  Prior authorization for Medicare FFS services or supplies  CMS published a final rule in December 2015 that identifies a master list of durable medical equipment, prosthetics, orthotics, and supplies for which CMS can require prior authorization before suppliers submit a Medicare FFS claim  In this rule, CMS identified 135 items that are frequently subject to unnecessary utilization and stated that the agency expects the final rule to result in savings in the form of reduced unnecessary utilization, fraud, waste, and abuse  Under this program, prior authorization is a condition of payment for claims  CMS can choose which items on the master list to subject to prior authorization  For example, in March 2017, it began requiring prior authorization for selected power wheelchairs in four states and expanded the prior authorization program for these items to all states in July 2017  CMS also began to test the use of prior authorization on a voluntary basis through a series of fixed-length demonstrations for items and services that have been associated with high levels of improper payments, including high incidences of fraud in some cases, and unnecessary utilization in certain geographic areas  For example, CMS began implementing a voluntary prior authorization demonstration in September 2012 for other power mobility devices, such as power scooters, in seven states where historically there has been extensive evidence of fraud and improper payments  CMS expanded the demonstration to an additional 12 states in October 2014, for a total of 19 states  According to the initial Federal Register notice, CMS planned to use the demonstration to develop improved methods for investigation and prosecution of fraud to protect federal funds from fraudulent actions and the resulting improper payments  Under the demonstration, providers and suppliers are encouraged—but not required—to submit a request for prior authorization for certain items before they provide the item to the beneficiary and submit a claim for payment  Revised provider screening and enrollment processes for Medicare FFS and Medicaid FFS  In response to PPACA, in 2011 CMS implemented a revised screening process for providers and suppliers who enroll in Medicare and Medicaid based on identified provider risk categories  CMS placed all Medicare provider and supplier types into one of three risk categories—limited, moderate, or high—based on its assessment of the potential risk of fraud, waste, and abuse each provider and supplier type poses  For example, CMS designated prospective (newly enrolling) home health agencies and prospective suppliers of durable medical equipment, prosthetics, orthotics, and supplies in the high-risk category  According to the final rule and our interviews with CMS officials, CMS developed these risk-based categories based on its review and synthesis of various information sources about the fraud risks posed by each provider and supplier type, including (1) the agency’s experience with claims data used to identify potentially fraudulent billing practices, (2) expertise of contractors responsible for investigating and identifying Medicare fraud, and (3) GAO and OIG reports  CMS designated specific screening activities for each risk category, with increased requirements for moderate- and high-risk provider and supplier types  For example, moderate- and high-risk providers and suppliers must receive preenrollment site visits, and high-risk providers and suppliers also are subject to fingerprint-based criminal-background checks  As part of the revised screening process, beginning in September 2011, CMS also undertook its first program-wide effort to rescreen, or revalidate, the enrollment records of about 1 5 million existing Medicare FFS providers and suppliers, to determine whether they remain eligible to bill Medicare  Temporary provider enrollment moratoriums for certain providers and geographic areas for Medicare FFS and Medicaid FFS  CMS identified certain provider types and geographic areas as high risk for fraud and used its authority under PPACA to implement temporary moratoriums to suspend enrollment of such Medicare and Medicaid providers in those areas  For example, in July 2016, CMS extended temporary moratoriums statewide on the enrollment of new Medicare Part B nonemergency ambulance suppliers and Medicare home health agencies statewide in six states, as applicable  The statewide moratoriums also apply to Medicaid  According to the Federal Register notice, CMS imposed the temporary moratoriums based on qualitative and quantitative factors suggesting a high risk of fraud, waste, or abuse, such as law-enforcement expertise with emerging fraud trends and investigations  CMS’s data analysis also confirmed the agency’s determination of a high risk of fraud, waste, and abuse for these provider and supplier types within certain geographic areas, according to the notice  Medicaid state program integrity reviews and desk reviews  CMS tailored state Medicaid program-integrity reviews to areas it identified as high risk for improper payments, such as personal care services, which may also be at high risk for fraud  In March 2017, we reported that, from fiscal years 2014 through 2016, CMS conducted focused reviews of state program-integrity efforts in 31 states, reviewing 10 or 11 states annually  For each state, CMS tailored its focused reviews to the state’s managed care plans and relevant other high-risk areas, including provider enrollment and screening, nonemergency medical transportation, and personal care services  CMS and state officials we spoke with as part of that work told us that the tailored oversight had been beneficial and helped identify areas for improvement  CMS has also initiated desk reviews of state program-integrity efforts  According to CMS, these desk reviews allow the agency to provide states with customized program- integrity oversight  Vulnerability tracking system for Medicare  CPI recently initiated an effort to centralize and formalize a vulnerability tracking process for Medicare, which could support identification of specific fraud risks, both in Medicare and possibly Medicaid  As described by CPI officials, the process aims to collect information on fraud-related vulnerabilities from CMS employees, contractors, and other sources, such as GAO and HHS OIG reports  The assess component of the Fraud Risk Framework calls for federal managers to plan regular fraud risk assessments and assess risks to determine a fraud risk profile  Furthermore, federal internal control standards call for agency management to assess the internal and external risks their entities face as they seek to achieve their objectives  The standards state that, as part of this overall assessment, management should consider the potential for fraud when identifying, analyzing, and responding to risks  The Fraud Risk Framework states that, in planning the fraud risk assessment, effective managers tailor the fraud risk assessment to the program by, among other things, identifying appropriate tools, methods, and sources for gathering information about fraud risks and involving relevant stakeholders in the assessment process  Fraud risk assessments that align with the Fraud Risk Framework involve (1) identifying inherent fraud risks affecting the program, (2) assessing the likelihood and impact of those fraud risks, (3) determining fraud risk tolerance, (4) examining the suitability of existing fraud controls and prioritizing residual fraud risks, and (5) documenting the results  (See fig  6 ) Although, as discussed earlier, CMS has identified some fraud risks posed by providers in Medicare FFS and, to a lesser degree, Medicaid FFS, the agency has not conducted a fraud risk assessment for either the Medicare or Medicaid program  Such a risk assessment would provide the detailed information and insights needed to create a fraud risk profile, which, in turn, is the basis for creating an antifraud strategy  According to CMS officials, CMS has not conducted a fraud risk assessment for Medicare or Medicaid because, within CPI’s broader approach of preventing and eliminating improper payments, its focus has been on addressing specific vulnerabilities among provider groups that have shown themselves particularly prone to fraud, waste, and abuse  With this approach, however, it is unlikely that CMS will be able to design and implement the most-appropriate control activities to respond to the full portfolio of fraud risks  A fraud risk assessment consists of discrete activities that build upon each other  Specifically: Identifying inherent fraud risks affecting the program  As discussed earlier, CMS has taken steps to identify fraud risks  However, CMS has not used a process to identify inherent fraud risks from the universe of potential vulnerabilities facing Medicare and Medicaid programs, including threats from various sources  According to CPI officials, most of the agency’s fraud control activities are focused on fraud risks posed by providers  The Fraud Risk Framework discusses fully considering inherent fraud risks from internal and external sources in light of fraud risk factors such as incentives, opportunities, and rationalization to commit fraud  For example, according to CMS officials, the inherent design of the Medicare Part C program may pose fraud risks that are challenging to detect  A fraud risk assessment would help CMS identify all sources of fraudulent behaviors, beyond threats posed by providers, such as those posed by health-insurance plans, contractors, or employees  Assessing the likelihood and impact of fraud risks and determining fraud risk tolerance  CMS has taken steps to prioritize fraud risks in some areas, but it has not assessed the likelihood or impact of fraud risks or determined fraud risk tolerance across all parts of Medicare and Medicaid  Assessing the likelihood and impact of inherent fraud risks would involve consideration of the impact of fraud risks on program finances, reputation, and compliance  Without assessing the likelihood and impact of risks in Medicare or Medicaid or internally determining which fraud risks may fall under the tolerance threshold, CMS cannot be certain that it is aware of the most-significant fraud risks facing these programs and what risks it is willing to tolerate based on the programs’ size and complexity  Examining the suitability of existing fraud controls and prioritizing residual fraud risks  CMS has not assessed existing control activities or prioritized residual fraud risks  According to the Fraud Risk Framework, managers may consider the extent to which existing control activities—whether focused on prevention, detection, or response—mitigate the likelihood and impact of inherent risks and whether the remaining risks exceed managers’ tolerance  This analysis would help CMS to prioritize residual risks and to determine mitigation approaches  For example, CMS has not established preventive fraud control activities in Medicare Part C  Using a fraud risk assessment for Medicare Part C and closely examining existing fraud control activities and residual risks, CMS could be better positioned to address fraud risks facing this growing program and develop preventive control activities  Further, without assessing existing fraud control activities and prioritizing residual fraud risks, CMS cannot be assured that its current control activities are addressing the most-significant risks  Such analysis would also help CMS determine whether additional, preferably preventive, fraud controls are needed to mitigate residual risks, make adjustments to existing control activities, and potentially scale back or remove control activities that are addressing tolerable fraud risks  Documenting the risk-assessment results in a fraud risk profile  CMS has not developed a fraud risk profile that documents key findings and conclusions of the fraud risk assessment  According to the Fraud Risk Framework, the risk profile can also help agencies decide how to allocate resources to respond to residual fraud risks  Given the large size and complexity of Medicare and Medicaid, a documented fraud risk profile could support CMS’s resource-allocation decisions as well as facilitate the transfer of knowledge and continuity across CMS staff and changing administrations  Senior CPI officials told us that the agency plans to start a fraud risk assessment for Medicare and Medicaid after it completes a separate fraud risk assessment of the federally facilitated marketplace  This fraud risk assessment for the federally facilitated marketplace eligibility and enrollment process is being conducted in response to a recommendation we made in February 2016  In April 2017, CPI officials told us that this fraud risk assessment was largely completed, although in September 2017 CPI officials told us that the assessment was undergoing agency review  CPI officials told us that they have informed CM and CMCS officials that there will be future fraud risk assessments for Medicare and Medicaid; however, they could not provide estimated timelines or plans for conducting such assessments, such as the order or programmatic scope of the assessments  Once completed, CMS could use the federally facilitated marketplace fraud risk assessment and apply any lessons learned when planning for and designing fraud risk assessments for Medicare and Medicaid  According to the Fraud Risk Framework, factors such as size, resources, maturity of the agency or program, and experience in managing risks can influence how the entity plans the fraud risk assessment  Additionally, effective managers tailor the fraud risk assessment to the program when planning for it  The large scale and complexity of Medicare and Medicaid as well as time and resources involved in conducting a fraud risk assessment underscore the importance of a well-planned and tailored approach to identifying the assessment’s programmatic scope  Planning and tailoring may involve decisions to conduct a fraud risk assessment for Medicare and Medicaid programs as a whole or divided into several subassessments to reflect their various component parts (e g , Medicare FFS, Medicaid managed care) as well as determining the timing and order of assessments (e g , concurrently or consecutively for Medicare and Medicaid)  CMS’s existing fraud risk identification efforts as well as communication channels with stakeholders could serve as a foundation for developing a fraud risk assessment for Medicare and Medicaid  The leading practices identified in the Fraud Risk Framework discuss the importance of identifying appropriate tools, methods, and sources for gathering information about fraud risks and involving relevant stakeholders in the assessment process  CMS’s fraud risk identification efforts discussed earlier could provide key information about fraud risks and their likelihood and impact  Further, existing relationships and communication channels across CMS and its extensive network of stakeholders could support building a comprehensive understanding of known and potential fraud risks for the purposes of a fraud risk assessment  For example, the fraud vulnerabilities identified through data analysis and information sharing with states, health-insurance plans, law-enforcement organizations, and contractors through the HFPP could inform a fraud risk assessment  CPI’s Command Center missions—facilitated collaboration sessions that bring together experts from various disciplines to improve the processes for fraud prevention in Medicare and Medicaid—could bring together experts to identify potential or emerging fraud vulnerabilities or to brainstorm approaches to mitigate residual fraud risks  As CMS makes plans to move forward with a fraud risk assessment for Medicare and Medicaid, it will be important to consider the frequency with which the fraud risk assessment would need to be updated  While, according to the Fraud Risk Framework, the time intervals between updates can vary based on the programmatic and operating environment, assessing fraud risks on an ongoing basis is important to ensure that control activities are continuously addressing fraud risks  The constantly evolving fraud schemes, the size of the programs in terms of beneficiaries and expenditures, as well as continual changes in Medicare and Medicaid programs—such as development of innovative payment models and increasing managed-care enrollment—call for constant vigilance and regular updates to the fraud risk assessment  The design and implement component of the Fraud Risk Framework calls for federal managers to design and implement a strategy with specific control activities to mitigate assessed fraud risks and collaborate to help ensure effective implementation  According to the Fraud Risk Framework, effective managers develop and document an antifraud strategy that describes the program’s approach for addressing the prioritized fraud risks identified during the fraud risk assessment, also referred to as a risk-based antifraud strategy  A risk- based antifraud strategy describes existing fraud control activities as well as any new fraud control activities a program may adopt to address residual fraud risks  In developing a strategy and antifraud control activities, effective managers focus on fraud prevention over detection, develop a plan for responding to identified instances of fraud, establish collaborative relationships with stakeholders, and create incentives to help effectively implement the strategy  Additionally, as part of a documented strategy, management identifies roles and responsibilities of those involved in fraud risk management activities; describes control activities as well as plans for monitoring and evaluation, creates timelines, and communicates the antifraud strategy to employees and stakeholders, among other things  As discussed earlier, CMS has some control activities in place to identify fraud risk in Medicare and Medicaid, particularly in the FFS program  However, CMS has not developed and documented a risk-based antifraud strategy to guide its design and implementation of new antifraud activities and to better align and coordinate its existing activities to ensure it is targeting and mitigating the most-significant fraud risks  Antifraud strategy  CMS officials told us that CPI does not have a documented risk-based antifraud strategy  Although CMS has developed several documents that describe efforts to address fraud, the agency has not developed a risk-based antifraud strategy for Medicare and Medicaid because, as discussed earlier, it has not conducted a fraud risk assessment that would serve as a foundation for such strategy  In 2016, CPI identified five strategic objectives for program integrity, which include antifraud elements and an emphasis on prevention  However, according to CMS officials, these objectives were identified from discussions with CMS leadership and various stakeholders and not through a fraud risk assessment process to identify inherent fraud risks from the universe of potential vulnerabilities, as described earlier and called for in the leading practices  These strategic objectives were presented at an antifraud conference in 2016, but were not announced publicly until the release of the Annual Report to Congress on the Medicare and Medicaid Integrity Programs for Fiscal Year 2015 in June 2017  Stakeholder relationships and communication  CMS has established relationships and communicated with stakeholders, but, without an antifraud strategy, stakeholders we spoke with lacked a common understanding of CMS’s strategic approach  Prior work on practices that can help federal agencies collaborate effectively calls for a strategy that is shared with stakeholders to promote trust and understanding  Once an antifraud strategy is developed, the Fraud Risk Framework calls for managers to collaborate to ensure effective implementation  Although some CMS stakeholders were able to describe various CMS program- integrity priorities and activities, such as home health being a fraud risk priority, the stakeholders could not communicate, articulate, or cite a common CMS strategic approach to address fraud risks in its programs  Incentives  The Fraud Risk Framework discusses creating incentives to help ensure effective implementation of the antifraud strategy once it is developed  Currently, some incentives within stakeholder relationships may complicate CMS’s antifraud efforts  As discussed earlier, CMS is a partner and provides oversight to states’ program-integrity functions  Officials from one state told us that they were reluctant to share their program vulnerabilities because CMS would use this information to later audit the state  Among contractors, CMS encourages information sharing through conferences and workshops; however, competition for CMS business among contractors can be a disincentive to information sharing  CMS officials acknowledged this concern and said that they expect contractors to share information related to fraud schemes, outcomes of investigations, and tips for addressing fraud, but not proprietary information such as algorithms to risk-score providers  Without developing and documenting an antifraud strategy based on a fraud risk assessment, as called for in the design and implement component of the Fraud Risk Framework, CMS cannot ensure that it has a coordinated approach to address the range of fraud risks and to appropriately target and allocate resources for the most-significant risks  Considering fraud risks to which the Medicare and Medicaid programs are most vulnerable, in light of the malicious intent of those who aim to exploit the programs, would help CMS to examine its current control activities and potentially design new ones with recognition of fraudulent behavior it aims to prevent  This focus on fraud is distinct from a broader view of program integrity and improper payments by considering the intentions and incentives of those who aim to deceive rather than well-intentioned providers who make mistakes  Also, continued growth of the programs, such as growth of Medicare Part C and Medicaid managed care, call for consideration of preventive fraud control activities across the entire network of entities involved  Further, considering the large size and complexity of Medicare and Medicaid and the extensive stakeholder network involved in managing fraud in the programs, a strategic approach to managing fraud risks within the programs is essential to ensure that a number of existing control activities and numerous stakeholder relationships and incentives are being aligned to produce desired results  Once developed, an antifraud strategy that is clearly articulated to various CMS stakeholders would help CMS to address fraud risks in a more coordinated and deliberate fashion  Thinking strategically about existing control activities, resources, tools, and information systems could help CMS to leverage resources while continuing to integrate Medicare and Medicaid program-integrity efforts along functional lines  A strategic approach grounded in a comprehensive assessment of fraud risks could also help CMS to identify future enhancements for existing control activities, such as new preventive capabilities for FPS or additional fraud factors in provider enrollment and revalidation, such as provider risk scoring, to stay in step with evolving fraud risks  The evaluate and adapt component of the Fraud Risk Framework calls for federal managers to evaluate outcomes using a risk-based approach and adapt activities to improve fraud risk management  Furthermore, according to federal internal control standards, managers should establish and operate monitoring activities to monitor the internal control system and evaluate the results, which may be compared against an established baseline  Ongoing monitoring and periodic evaluations provide assurances to managers that they are effectively preventing, detecting, and responding to potential fraud  CMS has established monitoring and evaluation mechanisms for its program-integrity activities that it could incorporate into an antifraud strategy  In Medicare, CMS has taken steps to measure the rate of fraud in a particular service area  We have previously reported that agencies may face challenges measuring outcomes of fraud risk management activities in a reliable way  These challenges include the difficulty of measuring the extent of deterred fraud, isolating potential fraud from legitimate activity or other forms of improper payments, and determining the amount of undetected fraud  Despite these challenges, CMS has taken steps to estimate a fraud baseline—meaning the rate of probable fraud—in the home health benefit  In fiscal year 2016, CMS conducted a pretest in the Miami-Dade area of Florida to evaluate its potential measurement approach that could later be used in a nationwide study of probable fraud among home health agencies  The pretest was not a random sample and was not intended to produce a rate of fraud, but instead was intended to test the interview instruments and data-collection methodology CMS might use in a study nationwide  CMS and its contractor collected information from home health agencies, the attending providers, and Medicare beneficiaries in the Miami-Dade area in order to test these interview instruments  CMS completed this pretest, but, according to CMS officials, the agency does not yet have plans to roll out a nationwide study that would estimate a probable fraud rate for the Medicare FFS home health benefit  In its 2015 annual report to Congress, CMS stated that “documenting the baseline amount of fraud in Medicare is of critical importance, as it allows officials to evaluate the success of ongoing fraud prevention activities ” CMS officials working on the pilot told us that having an estimate of the rate of fraud in home health benefits would allow CMS to reliably assess its efforts at eliminating or reducing fraud  Without a baseline, officials said, the agency cannot know whether its antifraud efforts are as effective as they could be  We previously reported that the lack of a baseline for the amount of health-care fraud that exists limits CMS’s ability to determine whether its activities are effectively reducing health care fraud and abuse  A baseline estimate could provide an understanding of the extent of fraud and, with additional information on program activities, could help to inform decision making related to allocation of resources to combat health-care fraud  As described in the Fraud Risk Framework, in the absence of a fraud baseline, agencies can gather additional information on the short-term or intermediate outcomes of some antifraud initiatives, which may be more readily measured  For example, CMS has developed some performance measures to provide a basis for monitoring its progress towards meeting the program-integrity goals set in the HHS Strategic Plan and Annual Performance Plan  Specifically, CMS measures whether it is meeting its goal of “increasing the percentage of Medicare FFS providers and suppliers identified as high risk that receive an administrative action ” CMS does not set specific antifraud goals for other parts of Medicare or Medicaid; other CMS performance measures relate to measuring or reducing improper payments in CHIP, Medicaid, and the various parts of Medicare  CMS uses return-on-investment and savings estimates to measure the effectiveness of its Medicare program-integrity activities and FPS  For example, CMS uses return-on-investment to measure the effectiveness of FPS and, in response to a recommendation we made in 2012, CMS developed outcome-based performance targets and milestones for FPS  CMS has also conducted individual evaluations of its program-integrity activities, such as an interim evaluation of the prior-authorization demonstration for power mobility devices that began in 2012 and is currently implemented in 19 states  Commensurate with greater maturity of control activities in Medicare FFS compared to other parts of Medicare and Medicaid, monitoring and evaluation activities for Medicare Parts C and D and Medicaid are more limited  For example, CMS calculates savings for its program-integrity activities in Medicare Parts C and D, but not a full return-on-investment  CMS officials told us that calculating costs for specific activities is challenging because of overlapping activities among contractors  CMS officials said they continue to refine methods and develop new savings estimates for additional program-integrity activities  According to the Fraud Risk Framework, effective managers develop a strategy and evaluate outcomes using a risk-based approach  In developing an effective strategy and antifraud activities, managers consider the benefits and costs of control activities  Ongoing monitoring and periodic evaluations provide reasonable assurance to managers that they are effectively preventing, detecting, and responding to potential fraud  Monitoring and evaluation activities can also support managers’ decisions about allocating resources, and help them to demonstrate their continued commitment to effectively managing fraud risks  As CMS takes steps to develop an antifraud strategy, it could include plans for refining and building on existing methods such as return-on- investment or savings measures, and setting appropriate targets to evaluate the effectiveness of all of CMS’s antifraud efforts  Such a strategy would help CMS to efficiently allocate program-integrity resources and to ensure that the agency is effectively preventing, detecting, and responding to potential fraud  For example, while doing so would involve challenges, CMS’s strategy could detail plans to advance efforts to measure a potential fraud rate through baseline and periodic measures  Fraud rate measurement efforts could also inform risk assessment activities, identify currently unknown fraud risks, align resources to priority risks, and develop effective outcome metrics for antifraud controls  Such a strategy would also help CMS ensure that it has effective performance measures in place to assess its antifraud efforts beyond those related to providers in Medicare FFS, and establish appropriate targets to measure the agency’s progress in addressing fraud risks  As CMS makes plans to move forward with a strategy and to further develop evaluation and monitoring mechanisms, it will be important to share its efforts with stakeholders  The Fraud Risk Framework states that effective managers communicate lessons learned from fraud risk management activities to stakeholders  For example, CMS could be a leader to states in measuring the effectiveness of program-integrity efforts  Officials in three of the four states we spoke with expressed interest in receiving CMS guidance on how to measure the effectiveness of their Medicaid program-integrity efforts, such as by providing models for how to calculate return-on-investment  Medicare and Medicaid provide health insurance to over 129 million Americans, but the size—in terms of number of beneficiaries and amount of expenditures—as well as complexity of these programs make them inherently susceptible to fraud and improper payments  CMS currently manages these risks across its programs as part of a broader approach to identifying and controlling for multiple sources of improper payments and by developing relationships with an extensive network of stakeholders  In Medicare and Medicaid specifically, we note that CMS has taken many important steps toward implementing a strategic approach for managing fraud  However, the agency could benefit by more fully aligning its efforts with the four components of the Fraud Risk Framework  CMS is well positioned to leverage its fraud risk management efforts— such as demonstrated leadership for combating fraud, existing control activities, and stakeholder relationships—to provide additional antifraud training, as well as to develop an antifraud strategy based on fraud risk assessments for Medicare and Medicaid  We recognize that the effort may be challenging, given the size and complexity of Medicare and Medicaid, and the need to balance antifraud activities with CMS’s other mission priorities  However, by not employing the actions identified in the Fraud Risk Framework and incorporating them in its approach to managing fraud risks, CMS is missing a significant opportunity to better ensure employee vigilance against fraud, and to organize and focus its many antifraud and program-integrity activities and related resources into a comprehensive strategy  Such a strategy would (1) provide reasonable assurance that CMS is targeting the most-significant fraud risks in its programs and (2) help protect the government’s substantial and growing investments in these programs  We are making the following three recommendations to CMS: The Administrator of CMS should provide fraud-awareness training relevant to risks facing CMS programs and require new hires to undergo such training and all employees to undergo training on a recurring basis  (Recommendation 1) The Administrator of CMS should conduct fraud risk assessments for Medicare and Medicaid to include respective fraud risk profiles and plans for regularly updating the assessments and profiles  (Recommendation 2) The Administrator of CMS should, using the results of the fraud risk assessments for Medicare and Medicaid, create, document, implement, and communicate an antifraud strategy that is aligned with and responsive to regularly assessed fraud risks  This strategy should include an approach for monitoring and evaluation  (Recommendation 3) We provided a draft of this report to HHS and DOJ for comment  HHS provided written comments, which are reprinted in appendix I  DOJ did not have comments  HHS and DOJ also provided technical comments, which we incorporated as appropriate  In commenting on this report, HHS agreed with our three recommendations  Specifically, in response to our first recommendation to provide required fraud-awareness training to all employees, HHS stated that it will develop and implement a fraud-awareness training plan to ensure all CMS employees receive training  Regarding our second recommendation to conduct fraud risk assessments for Medicare and Medicaid, HHS stated that it is currently conducting a fraud risk assessment on the federally facilitated marketplace and, when this assessment is complete, will apply the lessons learned in assessing this program to fraud risk assessments of Medicare and Medicaid  In response to our third recommendation to create, document, implement, and communicate an antifraud strategy that is aligned with and responsive to regularly assessed fraud risks, HHS stated that it will develop respective risk-based antifraud strategies after completing fraud risk assessments for Medicare and Medicaid  We are sending copies of this report to the Acting Secretary of Health and Human Services, the Administrator of CMS, the Assistant Attorney General for Administration at DOJ, as well as appropriate congressional committees and other interested parties  In addition, this report is available at no charge on the GAO website at http://www gao gov  If you or your staff members have any questions about this report, please contact me at (202) 512-6722 or bagdoyans@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made contributions to this report are listed in appendix II  In addition to the contact named above, Tonita Gillich (Assistant Director), Irina Carnevale (Analyst-in-Charge), Michael Duane, Laura Sutton Elsberg, and Catrin Jones made key contributions to this report  Also contributing to the report were Lori Achman, James Ashley, Colin Fallon, Leslie V  Gordon, Maria McMullen, Sabrina Streagle, and Shana Wallace 

ground_truth: Gender-related price differences occur when consumers are charged different prices for the same or similar goods and services because of factors related to gender. While variation in costs and consumer demand may give rise to such price differences, some policymakers have raised concerns that gender bias may also be a factor. While the Equal Credit Opportunity Act and Fair Housing Act prohibit discrimination based on sex in credit and housing transactions, no federal law prohibits businesses from charging consumers different prices for the same or similar goods targeted to different genders. GAO was asked to review gender-related price differences for consumer goods and services sold in the United States. This report examines, among other things, (1) how prices compared for selected goods and services marketed to men and women, and potential reasons for any price differences; (2) what is known about price differences for men and women for products not differentiated by gender, such as mortgages; and (3) the extent to which federal agencies have identified and addressed any concerns about gender-related price differences. To examine these issues, GAO analyzed retail price data, reviewed relevant academic studies, analyzed federal consumer complaint data, and interviewed federal agency officials, industry experts, and academics. Firms differentiate many consumer products to appeal separately to men and women by slightly altering product attributes like color or scent. Products differentiated by gender may sell for different prices if men and women have different demands or willingness to pay for these product attributes. Of 10 personal care product categories (e.g., deodorants and shaving products) that GAO analyzed, average retail prices paid were significantly higher for women's products than for men's in 5 categories. In 2 categories—shaving gel and nondisposable razors—men's versions sold at a significantly higher price. One category—razor blades--had mixed results based on two price measures analyzed, and two others—disposable razors and mass-market perfumes—showed no significant gender price differences. GAO found that the target gender for a product is a significant factor contributing to price differences identified, but GAO did not have sufficient information to determine the extent to which these gender-related price differences were due to gender bias as opposed to other factors, such as different advertising costs. Though the analysis controlled for several observable product attributes, such as product size and packaging type, all underlying differences in costs and demand for products targeted to different genders could not be fully observed. Studies GAO reviewed found limited evidence of gender price differences for four products or services not differentiated by gender—mortgages, small business credit, auto purchases, and auto repairs. For example, with regard to mortgages, women as a group paid higher average mortgage rates than men, in part due to weaker credit characteristics, such as lower average income. However, after controlling for borrower credit characteristics and other factors, three studies did not find statistically significant differences in borrowing costs between men and women, while one found women paid higher rates for certain subprime loans. In addition, one study found that female borrowers defaulted less frequently than male borrowers with similar credit characteristics, and the study suggested that women may pay higher mortgage rates than men relative to their default risk. While these studies controlled for factors other than gender that could affect borrowing costs, several lacked important data on certain borrower risk characteristics, such as credit scores, which could affect analysis of gender disparities. Also, several studies analyzed small samples of subprime loans that were originated in 2005 or earlier, which limits the generalizability of the results. In their oversight of federal antidiscrimination statutes, the Bureau of Consumer Financial Protection, Federal Trade Commission, and Department of Housing and Urban Development have identified limited consumer concerns based on gender-related pricing differences. GAO's analysis of complaint data received by the three agencies from 2012–2017 found that they had received limited consumer complaints about gender-related price differences. The agencies provide general consumer education resources on discrimination and consumer awareness. However, given the limited consumer concern, they have not identified a need to incorporate additional materials specific to gender-related price differences into their existing consumer education resources.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: Many consumer products—such as deodorants, shaving products, and hair care products—are differentiated to appeal specifically to men or women through differences in packaging, scent, or other product characteristics (see fig  1)  These differences related to gender can affect manufacturing and marketing costs that may contribute to price differences in products targeted to different genders  However, firms may also charge consumers different prices for the same (or very similar) goods and services even when there are no differences in costs to produce  To maximize profits, firms use a variety of techniques to charge prices close to the highest price different consumers are willing to pay  Firms may attempt to get segments of the consumer market to pay a higher price than another segment by slightly altering or differentiating the product  Based on the differentiated products, consumers self-select into different groups according to their preferences and what they are willing to pay  For example, some consumer goods have different versions of what is essentially the same product—except for differences in packaging or features, such as scent—with one version intended for women and another version intended for men  The two products may be priced differently because the firm expects that one gender will be willing to pay more for the product than the other based on preference for certain product attributes  Firms may also use some group characteristic, such as age or gender, to charge different prices because some groups may have differences in willingness or ability to pay  For example, a firm may offer discounted movie tickets to students or seniors, as they may have less disposable income  For the seller the cost of providing the movie is the same for any customer, but the seller is able to maximize its profits by offering tickets to different groups of customers at different prices  A firm’s ability to differentiate prices depends on multiple factors, such as the firm’s market power (so that competitors cannot put downward pressure on prices to eliminate the price differences), the presence of consumer segments with different demands and willingness to pay, and control over the sale of its product so it cannot be easily resold to exploit price differences  In addition, the extent to which consumers pay different prices for the same or similar goods can depend on other factors, such as consumers’: willingness to purchase an item they believe may be priced higher for ability to compare prices and product characteristics and choose a product based on its characteristics rather than its price, choices about whether to purchase a more expensive version of the product (e g , a branded item versus a cheaper store brand), choices about where to purchase the item (i e , when different retailers sell the same item at different prices), and use of coupons or promotions  No federal law expressly prohibits businesses from charging different prices for the same or similar consumer goods and services targeted to men and women  However, consumer protection laws do prohibit sex discrimination in credit and real estate transactions  Specifically, the Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against credit applicants based on sex or certain other characteristics and the Fair Housing Act (FHA) prohibits discrimination in the housing market on the basis of sex or certain other characteristics  ECOA and FHA (collectively known as the fair lending laws) prohibit lenders from, among other things, refusing to extend credit or using different standards in determining to extend credit based on sex  Credit, such as a credit card account or mortgage loan, is generally made available and priced based on a number of risk factors, including credit score, income, and employment history  A borrower with a lower credit score is likely to pay a higher interest rate on a loan, reflecting the greater risk to the lender that the borrower could default on the loan  In addition to the interest rate, borrowing costs for consumers can also include fees and other costs charged by lenders or brokers  However, there may be differences in average outcomes for men and women—such as for availability of credit or interest rates—if there are differences related to gender in the factors that determine creditworthiness, such as income  BCFP, FTC, the federal prudential regulators, and DOJ have the authority to investigate alleged violations of ECOA and are primarily responsible for enforcing the act’s requirements, while HUD and DOJ share responsibility for enforcing the provisions of FHA  Further, BCFP and the prudential regulators oversee regulated entities for compliance with ECOA by, among other things, collecting complaints from the public and through routine inspections of the financial institutions they oversee  HUD and DOJ have the authority to bring enforcement actions for alleged violations of FHA  In 5 out of 10 product categories we analyzed, personal care products targeted to women sold at higher average prices than those targeted to men after controlling for certain observable factors  For 2 of the 10 product categories, men’s versions sold at higher average prices  While the factors we controlled for likely proxy for various costs and consumer preferences, we could not fully observe all underlying differences in costs and demand for products targeted to different genders  As a result, we could not determine the extent to which the gender-based price differences we observed may be attributed to gender bias as opposed to other factors  Women’s versions of personal care products sold at a statistically significant higher average price than men’s versions for 5 of the 10 personal care product categories we analyzed—using two different price measures and after controlling for observable factors that could affect price, such as brands, product size or quantity, promotional expenses (see table 1) and other product-specific attributes (e g , scent, special claims, form)  Because women’s and men’s versions of the same product were frequently sold in different sizes, we compared prices using two price measures: average item price and average price per ounce or count of product  For 2 of the 10 product categories—shaving gel and nondisposable razors—men’s versions sold at a statistically significant higher price using both price measures  For one category (razor blades), women’s versions sold at a statistically significant higher average price per count, but there was no gender price difference using average item prices  Additionally, for two product categories—disposable razors and mass-market perfumes—there were no statistically significant price differences between men’s and women’s products using either price measure  In addition to this analysis of retail price scanner data, we also manually collected advertised online prices for a limited selection of personal care products targeted to women and men from several online retailers  Some price comparisons of advertised online prices for men’s and women’s versions of a product were similar to comparisons of average prices paid based on the Nielsen retail price scanner data  For example, for three pairs of comparable underarm deodorants, the women’s deodorant was listed at a higher price per ounce on average than the men’s deodorant (see app  II)  In addition, for one pair of shaving gel products we analyzed, the men’s shaving gel was listed at a higher price per ounce on average  However, for both pairs of nondisposable razors we analyzed, the women’s razors were listed at a higher average price per count than the men’s razors  This contrasted with the Nielsen data showing that men’s nondisposable razors sold at higher prices on average than women’s  An important limitation of our analysis of these advertised prices is that we were unable to determine the extent to which consumers actually paid these prices and in what volume the products were sold, and our results are not generalizable to the broader universe of prices for these products sold at other times or by other online retailers  Though we found that the target gender for a product is a significant factor contributing to price differences we identified, we do not have sufficient information to determine the extent to which these gender- related price differences were due to gender bias as opposed to other factors  Versions differentiated to appeal to men and women can result in different costs for the manufacturer  Our econometric analysis controlled for many observable factors related to costs, such as product size, promotional activity, and packaging type  We also controlled for many product attributes such as forms, scents, and special claims that products make to account for underlying manufacturing cost differences  In addition, we controlled for brands, which can reflect consumer preferences  However, we do not have firm-level data on all cost differences—for example, those related to advertising and packaging  As a result, we could not determine the extent to which the price differences we observed may be explained by remaining cost differences between men’s and women’s products  We also do not have the data to determine the extent to which men and women have different demands and willingness to pay for a product, which would be expected to affect the prices firms charge for differentiated products  For example, some academic experts we spoke with said that women may value some product attributes, such as design and scent, more than men do  If products differentiated to incorporate those attributes do not result in different costs, then differences in prices could be part of a firm’s pricing strategy based on the willingness of one gender to pay more than another  The conditions necessary for firms to be able to implement a strategy of price differentiation likely exist for the personal care products we analyzed  First, our analysis suggests that due to industry concentration, there is limited market competition for the 10 personal care products we analyzed  With more market power, firms can more easily set different prices for different consumer segments  Second, firms have the ability to segment the market for personal care products by tailoring product characteristics related to gender, such as by labeling the product as women’s deodorant or men’s deodorant, or by altering scent or colors  Third, while men and women are able to freely purchase a product targeted to the opposite gender, certain factors may limit the extent to which this occurs  For example, some product differences such as scents may discourage one gender from buying products targeted to another gender  In addition, consumers may find it difficult and time- consuming to compare prices for similar men’s and women’s products because of the ways they are differentiated (such as product size and scents) and because they may be sold in different parts of a store  We reviewed studies that compared prices for men and women in four markets where the product or service is not differentiated by gender: mortgages, small business credit, auto purchases, and auto repairs  First, we reviewed studies on mortgage and small business credit that analyzed interest rates and access to credit to identify any differences for men and women  Second, we reviewed studies that compared prices quoted to men and women in auto purchase and repair markets  However, several of these studies have important limitations, such as using nonrepresentative data samples, and the results are not generalizable  Studies we reviewed found that women as a group pay higher interest rates on average than men in part due to weaker credit characteristics  After controlling for borrower credit characteristics and other factors, three studies did not find statistically significant differences in interest rates between men and women for the same type of mortgage, while one study found that women paid higher mortgage rates for certain subprime loans  In addition, one study found that female borrowers defaulted less frequently on their loans than male borrowers with similar credit characteristics, suggesting that women as a group may pay higher mortgage rates than men relative to their default risk  While these studies attempted to control for factors other than gender or sex that could affect borrowing costs, several lacked important data on certain borrower risk characteristics  For example, several studies we reviewed rely on Home Mortgage Disclosure Act of 1975 (HMDA) data, which did not include data on risk factors such as borrower credit scores that could affect analysis of disparities between men and women  Also, several studies analyzed nonrepresentative samples of loans, such as subprime loans or loans originated more than 10 years ago, which limits the generalizability of the results (see table 2)  Three of the studies we reviewed found that while women on average were charged higher interest rates on mortgage loans than men, this difference was not statistically significant after controlling for other factors  For example, one study found that differences in mortgage interest rates between men and women became insignificant after controlling for differences in how men and women shop for mortgage rates  The authors used data from the 2004 Survey of Consumer Finances (SCF) to analyze the effect on interest rates of mortgage features, borrower characteristics such as gender, and market conditions  However, their analysis did not include data on some borrower credit characteristics such as credit score and debt-to-income ratio that could affect borrowing costs  Another study found that women were charged higher interest rates for subprime loans made in 2005, but once the authors controlled for observed risk characteristics there was no evidence of disparity in interest rates by gender of the borrower in the subprime market  However, the authors’ data did not include any fees paid at loan origination, which could affect the overall cost of borrowing  A third study that examined disparities between men and women in subprime loans found no significant evidence that gender affected the cost of borrowing within the subprime market, though it did find that women—particularly African American women—were more likely to have subprime loans  The authors found that, even after controlling for some financial characteristics and loan terms, single African American women were more likely than non-Hispanic white couples to have subprime loans  One study analyzed subprime loans made by one large lender from 2003 through 2005 and found that women paid more for subprime mortgages than men after controlling for some risk factors  This study found that women had higher average borrowing costs—as measured by annual percentage rate—than men, and controlling for credit characteristics such as credit scores and debt-to-income ratios did not fully explain the differences  However, the authors did not control for other factors that could also affect borrowing costs, such as differences in education, shopping behaviors, and geographic location  Additionally, a research paper found that female-only borrowers—that is, where the only borrower is a woman—default less than male-only borrowers with similar loans and credit characteristics  The authors found that female-only borrowers on average pay more for their mortgage loans because they generally have weaker credit characteristics, such as lower income, and also because a higher percentage of these mortgage loans are subprime  However, after controlling for credit characteristics such as credit score, loan term, and loan-to-value ratio, among others, the analysis showed that these weaker credit characteristics do not accurately predict how well women pay their mortgage loans  Since pricing is tied to credit characteristics and not performance, women may pay more relative to their actual risk than do similar men  Studies we reviewed on small business loans generally did not find differences in interest rates, though some found differences in denial rates and other accessibility issues between female- and male-owned firms  Most of the studies we reviewed used data from the 1993, 1998, or 2003 Survey of Small Business Finances (SSBF), which could limit the applicability or relevance of their findings today  A study that analyzed data from the 1993 SSBF did not find evidence that businesses owned by women paid more for credit than firms owned by white men  However, when the authors took into account the market concentration and competition, they found that white female-owned firms experienced increased denial rates in less competitive markets  In addition, the study found that women may avoid applying for credit in those markets because of the fear of being denied  For example, almost half of all small business owners who needed credit reported that they did not apply for credit, and these rates were even higher for businesses owned by women and minorities  Other studies found that women may have less access to small business credit than men, in part because of higher denial rates and because they may not apply for credit out of fear of rejection  For example, one study found that women-owned firms have higher loan denial rates compared with men; however, this is mainly due to differences in business characteristics of female- and male-owned firms  The authors also found that even when denial rates are the same for small businesses with similar characteristics, women’s loan application rates are lower, suggesting that women may be discouraged from applying for credit by the higher overall denial rates for female-owned firms  Another study by one of the same authors examined the reasons why female borrowers may be discouraged from applying for a business loan compared to male business owners and found that it was mainly because they fear that their application will be rejected  A third study by the same author found that women in general did not have less access to credit than men, though newer female-owned firms received significantly lower loan amounts than requested compared to their male-owned counterparts  Similarly, the study also found that women with few years of experience managing or owning a business received significantly lower loan amounts compared with men with similar years of experience  A fourth study looked at six different types of loans, including lines of credit, and found that white women were significantly more likely than white men to avoid applying for a loan because they assume they would be denied  However, once the authors’ model controlled for education differences, all gender disparities in applying for credit disappeared, though white women were still less likely than white men to have loans  Studies we reviewed on auto purchases and repairs found that a seller’s expectation of what customers are willing to pay and how informed they seemed can differ by gender, which can affect the price customers are quoted  However, these studies were published in 1995 and 2001, which may limit the applicability or relevance of their findings today  The 2001 study we reviewed on auto purchases found that though women paid higher prices than men for car purchases on average, these differences declined when cars were purchased online  The authors suggest that this may be because Internet consumers can effectively convey their level of price knowledge and therefore may seem better informed to the sellers  They also suggest it could be because the dealerships have less information about online consumers and their willingness to pay, which may limit the extent of price differentiation  The 1995 study on auto purchases found that the dealers quoted significantly lower prices to white males than to female or African American test buyers using identical, scripted bargaining strategies in part because dealers may have made assumptions about women’s willingness to bargain for lower prices  We also reviewed one study on auto repairs that found that women were quoted higher prices than men if they seemed uninformed about the cost of car repair when requesting a quote, but the price differences disappeared if the study participant mentioned an expected price  The study suggests that a potential explanation for this result could be that auto repair shops expect women to accept a price that is higher than the market average and men to accept a price below it  BCFP and HUD have responsibilities to monitor consumer complaints in the consumer credit and housing markets, respectively  Additionally, FTC monitors complaints about the consumer credit and consumer goods markets  All three agencies play a role in potentially monitoring or addressing issues of gender-related price differences and have online complaint forms for submission of consumer complaints: BCFP collects and reviews consumer complaints about financial products and services and provides complaints and related data in its Consumer Complaint Database  In 2017 BCFP received approximately 320,200 consumer complaints  The products that generated the most complaints in 2017 were “Credit or consumer reporting,” “Debt collection,” and “Mortgage " According to BCFP officials, BCFP also analyzes loan and demographics data collected through HMDA and other data sources to monitor and identify market trends  In addition, BCFP and the federal financial regulators examine fair lending practices of the institutions they regulate, and these examinations have uncovered sex discrimination in credit products by FDIC and NCUA  FTC receives complaints and the complaints are stored in the Consumer Sentinel Network, a database of consumer complaints received by FTC, as well as those filed with other federal and state agencies and organizations, such as mass marketing fraud complaints from the Council of Better Business Bureaus  The complaints in the Consumer Sentinel Network focus on consumer fraud, identity theft, and other consumer protection matters, such as debt collection, and can include complaints related to consumer credit markets  HUD receives consumer complaints about potential FHA violations through its website, via its toll-free phone hotline, and in writing  HUD monitors those complaints through its online HUD Enforcement Management System  HUD investigates all complaints for which it has jurisdictional authority  HUD may monitor complaints to identify trends, but HUD officials stated that the agency does not generally monitor consumer credit and housing market data, absent a specific complaint  In cases where HUD has jurisdictional authority under FHA, HUD offers conciliation between the parties  If resolution is not reached, and HUD determines there is reasonable cause to believe a violation has occurred, the parties may elect to have the matter heard in U S  District Court or at HUD  In their oversight of federal antidiscrimination statutes, BCFP officials said they have not identified significant consumer concerns about price differences based on a consumer’s sex or gender  FTC and HUD officials identified some examples of concerns of this nature  For example, FTC has taken enforcement actions alleging unlawful race- and gender-related price differences  HUD has also identified several cases where pregnant women and their partners applied for a mortgage while the woman was on maternity leave, and the couple’s mortgage loan application was denied  BCFP, FTC, and HUD have received few consumer complaints about price differences related to sex or gender, according to our analysis of a sample of each agency’s 2012–2017 complaint data (see table 3)  In separate samples of 100 gender-related complaints at BCFP, HUD, and FTC, we found that 0, 4, and 1 complaint, respectively, were related to price differences based on sex or gender  Three of the complaints from HUD also cited differences in price based on other protected classes (such as race or ethnicity)  Half of the academic experts and consumer groups we interviewed told us that in some markets it is difficult for consumers to observe and compare prices paid by other consumers, such as when prices are not posted or can be negotiated (e g , car sales)  In such cases, consumers may not know if other consumers are paying a higher or lower price than the price quoted to them  Most academic experts also told us that when consumers are aware that price differences could exist, they may make different decisions when making purchases  Additionally, officials from BCFP noted that price differences related to gender may be difficult for consumers to identify, or that consumers may not know where to complain  The consumer education resources of BCFP, FTC, and HUD provide general consumer education resources on discrimination (i e , consumer user guide or a website) and consumer awareness  Officials from BCFP and HUD said they have not identified a need to develop other consumer education resources specific to gender-related price differences  For example, BCFP’s print and online consumer education materials are intended to inform consumers of their rights and protections related to credit discrimination, which includes discrimination based on sex or gender  The three agencies’ consumer education materials also provide advice that could help consumers avoid paying higher prices regardless of their gender—such as home-buying resources and resources on comparison shopping  However, the agencies have not developed additional educational resources focused specifically on potential gender- related price differences in part because few complaints on this topic have been collected in their databases, agency officials told us  FTC officials noted that it tries to focus its education efforts on topics that will have the greatest benefit to consumers, often determined by information it gathers through complaints and investigations  Representatives of five consumer groups and industry associations told us that they have received few complaints about gender-related price differences  However, four consumer groups noted that low concern could be the result of consumers being unaware of price differences related to gender  For example, as indicated above, price differences related to gender may be difficult for consumers to identify when they cannot determine whether they are paying a higher price than others  Representatives of two retailing industry associations similarly stated that they have not heard concerns about price differences related to gender  In response to consumer complaints or concerns about gender disparities in pricing, at least one state (California) and two municipalities (Miami- Dade County and New York City) have passed laws or ordinances to prohibit businesses from charging different prices for the same or similar goods or services solely based on gender (see table 4)  In addition, two of these laws included requirements related to promoting price transparency  California enacted the Gender Tax Repeal Act of 1995, which prohibits businesses from charging different prices for the same or similar services based on a consumer’s gender  The law also requires certain businesses to display price information and disclose prices upon request, according to state officials with whom we spoke  Similarly, in 1997, Miami-Dade County passed the Gender Pricing Ordinance, which prohibits businesses from charging different prices based solely on a consumer’s gender (though businesses are permitted to charge different prices if the goods or services involve more time, difficulty, or cost)  In the same year, it also passed an ordinance that prohibits dry cleaning businesses from charging different prices for similar services based on gender  This ordinance also requires those businesses to post all prices on a clear and conspicuous sign, according to county officials with whom we spoke  State and local officials we interviewed identified benefits and challenges associated with these laws  For example, California, New York City, and Miami-Dade County officials noted that these laws give them the ability to intervene to address pricing practices that may lead to discrimination based on gender  In addition, California state officials said that the state’s efforts to implement the Gender Tax Repeal Act helped to improve consumer awareness about gender price differences  However, officials from California and Miami-Dade County cited challenges associated with tracking relevant complaints  For example, Miami-Dade County’s online complaint form includes a narrative section but does not ask for the complainant’s gender  Consumers do not always identify their gender in the narrative or state that that was the reason for their treatment  Additionally, officials from California and Miami-Dade County stated that seeking out violations would be very resource-intensive, and they rely on residents to submit complaints about violations  We provided a draft of this report to BCFP, DOJ, FTC, and HUD  BCFP, FTC, and HUD provided technical comments on the report draft, which we incorporated where appropriate  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the appropriate congressional committees, BCFP, DOJ, FTC, HUD, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-8678 or cackleya@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix VI  We used a multivariate regression model to estimate the effect of gender (to which a product is targeted to) on the price of that product while controlling for other factors that may also affect the product’s price  The factors that we controlled for were the product size, promotional and packaging costs, and other product characteristics discussed in detail later  We used scanner data from the Nielsen Company (Nielsen) for calendar year 2016 and analyzed the following 10 product categories: (1) underarm deodorants, (2) body deodorants, (3) shaving cream, (4) shaving gel, (5) disposable razors, (6) nondisposable razors, (7) razor blades, (8) designer perfumes, (9) mass-market perfumes, and (10) mass-market body sprays  We estimated the following regression model for each of our 10 product categories: P=α+β*Male + λ* Size + θ*Owner +η*Promotion+ μ*X + δ*Y + ε The dependent variable P in the above equation represents price  For our analysis, we constructed two measures of price  The first is the item price, estimated as the total dollar sales of an item (each item is depicted by a unique Universal Product Code (UPC) in the Nielsen data), divided by the total units sold of that item  The second measure of price that we use is price per ounce or price per count  This is estimated as the item price divided by the total quantity of product, where quantity or size depicts the number of ounces (as in the case of fragrances) or the count of blades in razor blade packs  The total quantity of the product is the ounces or counts of one item multiplied by the number of items included in a specific product configuration  For example, a 2-pack of deodorant sticks where each deodorant stick is 2 7 ounces would be a total quantity of 5 4 ounces  The variable Male in the above equation is an indicator variable depicting whether the product is designated as a “men’s” product in the Nielsen data  It is represented as a value of “1” for men’s products and a value of “0” for women’s products  The co-efficient for this variable, parameter β, would therefore show the price difference between a men’s and women’s product  A negative value would imply a lower price for products designated as men’s products  The variable Size represents the most appropriate specification of the size of the product  Owner is a set of indicator variables representing all the brand owners selling a particular product  The brand of a product can be expected to have a substantial effect on prices for the kind of products we analyze because brands can be a proxy for quality for some consumers  However, we also found that firms often create gender-specific brands, so holding brands constant rendered most gender-based price comparisons infeasible  To overcome this, we hold owners instead of brands constant for our price comparison analysis  The variable Promotion represents the percentage of dollar sales that were sold on any type of promotion  This variable proxies for promotional costs to some extent based on the assumption that the greater the proportion of sales due to promotional activity, the greater the promotional costs  The variables X represent a set of indicator variables for packaging characteristics such as package delivery method (for example, roll-on or aerosol spray deodorants) or package shape (for example, bottle, tube, or can)  We expect these characteristics to proxy for different costs associated with different packaging methods  The variables Y represent a set of indicator variables representing different product characteristics (for example, forms such as gel stick or smooth solid and claims such as “active cooling” or “anti-wetness” for underarm deodorants, and blade types such as “triple edge” and “flexible six” for razors)  These product characteristics may proxy for some underlying manufacturing costs or even consumer preferences  Since firms may create gender-specific product attributes—scents like “sweet petals” and “pure sport” or razor head types and colors to differentiate products between genders—we did not always keep every product attribute constant when comparing prices  The idiosyncratic error term is represented by ε  All of our regressions are weighted, with the proportion of units sold for a particular item in that year as the weight  This is because, for personal care products, there are large differences in units sold of various product types and brands, and therefore it not useful to compare simple un- weighted average prices  For example, for one company the highest selling men’s deodorant stick sold almost 12 million units in 2016, and the highest selling women’s deodorant stick sold over 8 million units  The average units sold for underarm deodorants as a whole was just over 300,000 units, and 1,000 products out of a total of almost 3,000 products had less than 100 units sold in 2016  The linear model we used has the usual shortcomings of being subject to specification bias to the extent the relationship between price and each of the independent variables is not linear  The model also does not include complete data on costs, such as advertising and packaging, or consumers’ willingness to pay, both of which have an effect on the price differences  The model may thus also be subject to omitted variable bias  In addition, the model may have some endogeneity issues to the extent the product characteristics themselves are influenced by consumers’ willingness to pay for some of those product features  To reduce the impact of any model misspecifications or heteroscedasticity, we used the robust (or Huber-White sandwich) estimator  We estimated the regression model above for each of the 10 products separately and for each of the two measures of price  We used Nielsen’s in-store, retail price scanner data, which include information on total volume sold and dollar sales for items purchased at 228 retailers including grocery stores, drug stores, mass merchandisers (such as Target), dollar stores, club stores (such as Sam’s Club), and convenience stores  The data capture 82 percent of all U S  sales  Nielsen also projects sales for the remaining noncooperating retailers, and that information is included in this dataset  We excluded some very small brands that did not have enough units sold from our regression analysis in order to avoid outliers  These brands usually had less than 50,000 units sold over the entire year, and for some products they represented less than 1 percent of all units sold  We found that average retail prices paid were significantly higher for women’s products than for men’s in 5 out of 10 personal care products  In 2 categories, men’s versions sold at a significantly higher price  One category had mixed results based on two price measures analyzed, and two others showed no significant gender price differences  A summary of our regression results is presented in table 5  We manually collected prices for 16 pairs of selected personal care products from the websites of four online retailers that also operated physical store locations  We selected comparable pairs of similar men’s and women’s products that were differentiated by product attributes, such as scent or color, and were sold at most or all of the four retailers  The products were selected based on several comparability factors such as brand, product claims, and number of blades in a razor  For two 1-week time periods in January and March 2018, we collected prices manually between 1:00 p m  and 7:00 p m  (ET) over two 7-day time periods  We collected listed prices and did not adjust the prices for any promotions that were available, such as online coupons or buy-one-get-one-free offers  Table 6 presents the results of our online price collection  These results have important limitations: The average prices shown are not generalizable to the broader universe of prices for these products sold at other times or by other online retailers  The data reflect prices advertised to consumers rather than the prices consumers actually paid  The data do not capture the volume of sales for each item for each retailer; in our analysis, we weighted all advertised prices equally across the retailers  As a result, differences we found within these advertised prices may not have translated into comparable differences in prices female and male consumers paid for these products online  The prices do not reflect any promotional discounts, volume discounts, or other discounts that may have been available to some or all consumers  This report examines (1) how prices compared for selected categories of consumer goods that are differentiated for men and women, and potential reasons for any significant price differences; (2) what is known about the extent to which men and women may pay different prices in, or experience different levels of access to, markets for credit and goods and services that are not differentiated based on gender; (3) the extent to which federal agencies have identified and taken steps to address any concerns about gender-related price differences; and (4) state and local government efforts to address concerns about gender-related price differences  To compare prices for selected goods that are differentiated for men and women, we purchased and analyzed Nielsen Company (Nielsen) data on retail prices paid for 10 personal care product categories for calendar year 2016  The product categories included underarm deodorants, body deodorants (typically sold as a spray), disposable razors, nondisposable razors, razor blades, shaving creams, shaving gels, and three categories of fragrances  We selected these categories of personal care products because they are commonly purchased consumer goods that were categorized by gender in the Nielsen data  The women’s and men’s versions of personal care products we selected are generally more similar in terms of the form, size, and packaging in comparison to certain other consumer product categories that are also differentiated by gender, such as clothing  We used regression models to analyze data on retail prices paid for the 10 categories of personal care products differentiated for women and men  To assess the reliability of the Nielsen data, we reviewed relevant documentation and conducted interviews with Nielsen representatives to review steps they took to collect and ensure the reliability of the data  In addition, we electronically tested data fields for missing values, outliers, and obvious errors  We determined that these data were sufficiently reliable for our purposes  For more details on the methodology for, and limitations of, our analysis of these retail price data, see appendix I  We also manually collected listed prices for 16 pairs of selected personal care products from four different retailer websites over two 7-day periods in January and March 2018  For each pair, we selected comparable men’s and women’s products that were differentiated by product attributes, such as scent or color, and were commonly sold across retailers  For more details on our online price data collection and the limitations associated with interpreting the results, see appendix II  To examine what is known about the extent to which men and women may be offered different prices or access for the same goods or services, we reviewed academic literature identified through a literature search covering the last 25 years  To identify existing studies from peer-reviewed journals, we conducted searches using subject and keyword searches of various databases, such as EconLit, Scopus, ProQuest, and Social SciSearch  We also used a snowball search technique—meaning we reviewed relevant academic literature cited in our selected studies—to identify additional studies  We performed these searches and identified articles from December 2016 to April 2018  From these searches, we identified 21 studies that appeared in peer-reviewed journals or research institutions’ publications from 1995 through 2016 and were relevant to gender-related price differences for the same products  We reviewed and assessed each study’s evaluation methodology based on generally accepted social science standards  See the bibliography at the end of this report for a list of the 21 studies  We then summarized the research findings  A GAO economist read and assessed each study, using the same data collection instrument  The assessment focused on information such as the types of disparities examined, the research design and data sources used, and methods of data analysis  The assessment also focused on the quality of the data used in the studies as reported by the researchers and any limitations of data sources for the purposes for which they were used  A second GAO economist reviewed each completed data collection instrument to verify the accuracy of the information included  As a result, the 21 studies that we selected for our review met our criteria for methodological quality  We found the studies we reviewed to be reliable for purposes of determining what is known about price differences for the same products  However, these studies have important limitations, such as using nonrepresentative data samples, and the results are not generalizable  To examine the federal role in overseeing gender-related price differences, we reviewed relevant federal statutes and agency guidance, and interviewed officials from the Federal Trade Commission (FTC), Bureau of Consumer Financial Protection (BCFP), the Department of Housing and Urban Development (HUD), and the Department of Justice (DOJ)  To help identify the extent of concerns about gender-related price differences, we interviewed representatives from eight consumer groups, three industry associations, and four academic experts  Additionally, we reviewed a sample of consumer complaints from databases managed by BCFP, FTC, and HUD (Consumer Complaint Database, Consumer Sentinel Network, and Enforcement Management System, respectively)  Complaints were submitted by consumers across the United States about various financial products, housing grievances, and other consumer protection concerns  To identify our universe of gender-related consumer complaints in BCFP and FTC databases, we used the following search terms that targeted sex or gender discrimination: discriminat, unfair, treat, decept, abus, female, woman, women, man, men, male, gender, sex, female, woman, women, man, men, male, gender, and sex  HUD’s consumer complaint database is categorized by protected class (e g , race, sex, national origin), so we did not need to use search terms to identify gender-related complaints  For the years 2012 through 2017, we identified 6,117 BCFP consumer complaint narratives; 10,472 FTC consumer complaints narratives; and 5,421 HUD consumer complaint narratives that were relevant to our scope  We then drew a stratified random probability sample of 100 gender-related consumer complaints from each database  To determine which complaints in our samples were about price differences related to gender or sex, two team members read through each complaint narrative and coded whether or not the complainant’s narrative indicated that they felt that they paid or were charged more because of their gender or sex  A third team member conducted a final review of the results, and made a final determination in cases where there were differences in the first two team member’s assessments  With this probability sample, each member of the study population had a nonzero probability of being included, and that probability could be computed for any member  We followed a probability procedure based on random selections and our sample is only one of a large number of samples that we might have drawn  Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval (with a margin of error of 5 9 percent)  This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn  We assessed the reliability of these data by reviewing documentation and interviewing agency officials about the databases used to collect these complaints  We determined that these data were sufficiently reliable for our purposes of identifying complaints of gender- related price differences  To explore state and local efforts to address concerns about gender- related price differences, we conducted a literature search and identified three state or local laws or ordinances that specifically address gender- related price differences: California, Miami-Dade County, Florida, and New York City, New York  We reviewed these laws and ordinances and interviewed officials from these jurisdictions to discuss motivations for, oversight of, and the impact of these laws  We conducted this performance audit from October 2016 to August 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  For each of 10 personal care product categories we analyzed, we compared the overall average prices for women’s products and men’s products using two measures of average price: average item price and average price per ounce or count  While the second price measure adjusts the average price for quantity of product, these comparisons did not take into account the effect on price of differences in product brand, packaging, and other characteristics  As shown in table 7, adjusting the average item price to account for differences in product quantity (ounces or count) significantly affected the size and magnitude of gender price differences for several product categories  This is because men’s products in the dataset were frequently larger in size or count compared with women’s products in the same category  For example, women’s disposable razors sold for 11 percent less than those targeted to men when we compared average item prices  However, when we compared average price per count of razors, women’s disposable razors sold for 19 percent more on average than men’s  This is because women’s disposable razors had on average about one fewer razor per package  In 5 out of 10 product categories, women’s versions of the product on average sold for a higher price per ounce or count than men’s and these differences were statistically significant at the 95 percent confidence level for 4 products and at the 90 percent level for one product  Information about sales and relative sizes of different products targeted to men and women are presented in table 8 below  This appendix provides additional details about the consumer complaint processes at the Bureau of Consumer Financial Protection (BCFP), Federal Trade Commission (FTC), and Department of Housing and Urban Development (HUD)  Consumers with a complaint about unfair treatment related to gender could submit a complaint to one of these agencies  BCFP and FTC monitor consumer complaints related to violations under the Equal Credit Opportunity Act, while HUD and the Department of Justice (DOJ) investigate housing discrimination complaints under the Fair Housing Act  These complaints could be about price differences because of gender  Alicia Puente Cackley, (202) 512-8678 or cackleya@gao gov  In addition to the contact named above, John Fisher (Assistant Director), Jeff Harner (Analyst in Charge), Vida Awumey, Bethany Benitez, Namita Bhatia-Sabharwal, Kelsey Kreider, and Kelsey Sagawa made key contributions to this report  Also contributing to this report were Abigail Brown, Michael Hoffman, Jill Lacey, Oliver Richard, Tovah Rom, and Paul Schmidt  We reviewed literature to identify what is known about the extent to which female and male consumers may face different prices or access in markets for credit and goods and services that are not differentiated based on gender  This bibliography contains citations for the 20 studies and articles that we reviewed that compared prices or access for female and male consumers in markets where the product is not differentiated by gender (mortgages, small business credit, auto purchases, and auto repairs)  Asiedu, Elizabeth, James A  Freeman, and Akwasi Nti-Addae  “Access to Credit by Small Businesses: How Relevant Are Race, Ethnicity, and Gender?” The American Economic Review, vol  102, no  3 (2012): 532- 537  Ayers, Ian and Peter Siegelman  “Race and Gender Discrimination in Bargaining for a New Car ” The American Economic Review, vol  85, no  3  (1995): 304-321  Blanchard, Lloyd, Bo Zhaob, and John Yinger  “Do lenders discriminate against minority and woman entrepreneurs?” Journal of Urban Economics 63 (2008): 467–497  Blanchflower, David G , Phillip B  Levine, and David J  Zimmerman  “Discrimination in the Small-Business Credit Market ” The Review of Economics and Statistics, vol  85, no  4 (2003): 930-943  Busse, Meghan R , Ayelet Israeli, and Florian Zettelmeyer  “Repairing the Damage: The Effect of Price Expectations on Auto Repair Price Quotes ” National Bureau of Economic Research, Working Paper 19154 (2013)  Cavalluzzo, Ken S , Linda C  Cavalluzzo, and John D  Wolken  “Competition, Small Business Financing, and Discrimination: Evidence from a New Survey ” The Journal of Business, vol  75, no  4 (2002): 641- 679  Cheng, Ping, Zhenguo Lin, and Yingchun Liu  “Do Women Pay More for Mortgages?” The Journal of Real Estate Finance and Economics, vol  43 (2011): 423-440  Cheng, Ping, Zhenguo Lin, and Yingchun Liu  “Racial Discrepancy in Mortgage Interest Rates ” The Journal of Real Estate Finance and Economics, vol  51 (2015): 101-120  Cole, Rebel, and Tatyana Sokolyk  “Who Needs Credit and Who Gets Credit? Evidence from the Surveys of Small Business Finances”  Journal of Financial Stability, vol  24 (2016), 40-60  Coleman, Susan  “Access to Debt Capital for Women- and Minority- Owned Small Firms: Does Educational Attainment Have an Impact?” Journal of Developmental Entrepreneurship, vol  9, no  2 (2004): 127-143  Duesterhas, Megan, Liz Grauerholz, Rebecca Weichsel, and Nicholas A  Guittar  “The Cost of Doing Femininity: Gendered Disparities in Pricing of Personal Care Products and Services,” Gender Issues, vol  28, (2011): 175-191  Goodman, Laurie, Jun Zhu, and Bing Bai  “Women Are Better than Men at Paying Their Mortgages ” Urban Institute, Research Report (2016)  Haughwout, Andrew, et al  “Subprime Mortgage Pricing: The Impact of Race, Ethnicity, and Gender on the Cost of Borrowing ” Brookings- Wharton Papers on Urban Affairs (2009): 33-63  Mijid, Naranchimeg  “Gender differences in Type 1 credit rationing of small businesses in the US ” Cogent Economics & Finance, vol  3 (2015)  Mijid, Naranchimeg  “Why are female small business owners in the United States less likely to apply for bank loans than their male counterparts?” Journal of Small Business & Entrepreneurship, vol  27, no  2 (2015): 229- 249  Mijid, Naranchimeg and Alexandra Bernasek  “Gender and the credit rationing of small businesses ” The Social Science Journal, vol  50 (2013): 55-65  Morton, Fiona Scott, Florian Zettelmeyer, and Jorge Silva-Risso  “Consumer Information and Price Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities?” National Bureau of Economic Research, Working Paper 8668 (2001)  O’Connor, Sally  “The Impact of Gender in the Mortgage Credit Market ” University of Wisconsin-Milwaukee Doctoral Dissertation (1996)  Van Rensselaer, Kristy N , et al  “Mortgage Pricing and Gender: A Study of New Century Financial Corporation ” Academy of Accounting and Financial Studies Journal, vol  18, no  4 (2014): 95-110  Wyly, Elvin and C S  Ponder  “Gender, age, and race in subprime America ” Housing Policy Debate, vol  21, no  4 (2011): 529-564  Zimmerman Treichel, Monica and Jonathan A  Scott  “Women-Owned Businesses and Access to Bank Credit: Evidence from Three Surveys Since 1987 ” Venture Capital, vol  8, no  1 (2006): 51-67 


Report 2:  This bonus is not provided for breakfast, but funds may be used to support schools' breakfast programs  NSLP lunch reimbursement rates are listed in Table B -1   In addition to federal cash subsidies, schools participating in NSLP receive USDA-acquired commodity food s   Schools are entitled to a specific, inflation-indexed value of USDA commodity foods for each lunch they serve  Also, schools may receive donations of bonus commodities acquired by USDA in support of the farm economy  In FY2017, the value of federal commodity food aid to schools totaled nearly $1 4 billion  The per-meal rate for commodity food assistance is included in Table B-4   While the vast majority of NSLP funding is for lunches served during the school day, NSLP may also be used to support snack service during the school year and to serve meals during the summer  These features are discussed in subsequent sections, " Summer Meals " and " After-School Meals and Snacks: CACFP, NSLP Options  " Reimbursement rates for snacks are listed in Table B -2   The School Breakfast Program (SBP) provides per-meal cash subsidies for breakfasts served in schools  Participating schools receive subsidies based on their status as a severe need or nonsevere need institution  Schools can qualify as a severe need school if 40% or more of their lunches are served free or at reduced prices  See Table B -3 for SBP reimbursement rates  Figure 4 displays SBP participation data for FY2017  In that year, SBP subsidized over 2 4 billion breakfasts in over 88,000 schools and nearly 3,200 RCCIs  Average daily participation was 14 7 million children (30 1% of the students enrolled in participating schools and RCCIs)  The majority of meals served through SBP are free or reduced-price  Of the participating students, 79 1% (11 6 million) received free meals and 5 7% (835,000) purchased reduced-price meals  Federal school breakfast costs for the fiscal year totaled approximately $4 3 billion (see Table 3 for the various components of this total)  Significantly fewer schools and students participate in SBP than in NSLP  Participation in SBP tends to be lower for several reasons, including the traditionally required early arrival by students in order to receive a meal and eat before school starts  Some schools offer (and anti-hunger groups have encouraged) models of breakfast service that can result in greater SBP participation, such as Breakfast in the Classroom, where meals are delivered in the classroom; "grab and go" carts, where students receive a bagged breakfast that they bring to class, or serving breakfast later in the day in middle and high schools  Unlike NSLP, commodity food assistance is not a formal part of SBP funding; however, commodities provided through NSLP may be used for school breakfasts as well  In addition to the school meals programs discussed above, other federal child nutrition programs provide federal subsidies and commodity food assistance for schools and other institutions that offer meals and snacks to children in early childhood, summer, and after-school settings  This assistance is provided to (1) schools and other governmental institutions, (2) private for-profit and nonprofit child care centers, (3) family/group day care homes, and (4) nongovernmental institutions/organizations that offer outside-of-school programs for children  (Although this report focuses on the programs that serve children, one child nutrition program (CACFP) also serves day care centers for chronically impaired adults and elderly persons under the same general per-meal/snack subsidy terms ) The programs in the sections to follow serve comparatively fewer children and spend comparatively fewer federal funds than the school meal programs  CACFP subsidizes meals and snacks served in early childhood, day care, and after-school settings  CACFP provides subsidies for meals and snacks served at participating nonresidential child care centers, family day care homes, and (to a lesser extent) adult day care centers  The program also provides assistance for meals served at after-school programs  CACFP reimbursements are available for meals and snacks served to children age 12 or under, migrant children age 15 or under, children with disabilities of any age, and, in the case of adult care centers, chronically impaired and elderly adults  Children in early childhood settings are the overwhelming majority of those served by the program  CACFP provides federal reimbursements for breakfasts, lunches, suppers, and snacks served in participating centers (facilities or institutions) or day care homes (private homes)  The eligibility and funding rules for CACFP meals and snacks depend first on whether the participating institution is a center or a day care home (the next two sections discuss the rules specific to centers and day care homes)  According to FY2017 CACFP data, child care centers have an average daily attendance of about 56 children per center, day care homes have an average daily attendance of approximately 7 children per home, and adult day care centers typically care for an average of 48 chronically ill or elderly adults per center  Providers must demonstrate that they comply with government-established standards for other child care programs  Like in school meals, federal assistance is made up overwhelmingly of cash reimbursements calculated based on the number of meals/snacks served and federal per-meal/snack reimbursements rates, but a far smaller share of federal aid (4 3% in FY2017) is in the form of federal USDA commodity foods (or cash in lieu of foods)  Federal CACFP reimbursements flow to individual providers either directly from the administering state agency (this is the case with many child/adult care centers able to handle their own CACFP administrative functions) or through "sponsors" who oversee and provide administrative support for a number of local providers (this is the case with some child/adult care centers and with all day care homes)  In FY2017, total CACFP spending was over $3 5 billion, including cash reimbursement, commodity food assistance, and costs for sponsor audits  (See Table 3 for a further breakdown of CACFP costs ) This total also includes the after-school meals and snacks provided through CACFP's "at-risk after-school" pathway; this aspect of the program is discussed later in " After-School Meals and Snacks: CACFP, NSLP Options  " As with school foods, the HHFKA required USDA to update CACFP's meal patterns  USDA's final rule revised the meal patterns for both meals served in child care centers and day care homes, as well as preschool meals served through the NSLP and SBP, effective October 1, 2017  For infants (under 12 months of age), the new meal patterns eliminated juice, supported breastfeeding, and set guidelines for the introduction of solid foods, among other changes  For children ages one and older, the new meal patterns increased whole grains, fruits and vegetables, and low-fat and fat-free milk; limited sugar in cereals and yogurts; and prohibited frying, among other requirements  Child care centers in CACFP can be (1) public or private nonprofit centers, (2) Head Start centers, (3) for-profit proprietary centers (if they meet certain requirements as to the proportion of low-income children they enroll), and (4) shelters for homeless families  Adult day care centers include public or private nonprofit centers and for-profit proprietary centers (if they meet minimum requirements related to serving low-income disabled and elderly adults)  In FY2017, over 65,000 child care centers with an average daily attendance of over 3 6 million children participated in CACFP  Over 2,700 adult care centers served nearly 132,000 adults through CACFP  Participating centers may receive daily reimbursements for up to either two meals and one snack or one meal and two snacks for each participant, so long as the meals and snacks meet federal nutrition standards  The eligibility rules for CACFP centers largely track those of NSLP: children in households at or below 130% of the current poverty line qualify for free meals/snacks while those between 130% and 185% of poverty qualify for reduced-price meals/snacks (see Table 2 )  In addition, participation in the same categorical eligibility programs as NSLP as well as foster child status convey eligibility for free meals in CACFP  Like school meals, eligibility is determined through paper applications or direct certification processes  Like school meals, all meals and snacks served in the centers are federally subsidized to some degree, even those that are paid  Different reimbursement amounts are provided for breakfasts, lunches/suppers, and snacks, and reimbursement rates are set in law and indexed for inflation annually  The largest subsidies are paid for meals and snacks served to participants with family income below 130% of the federal poverty income guidelines (the income limit for free school meals), and the smallest to those who have not met a means test  See Table B -5 for current CACFP center reimbursement rates  Unlike school meals, CACFP institutions are less likely to collect per-meal payments  Although federal assistance for day care centers differentiates by household income, centers have discretion on their pricing of meals  Centers may adjust their regular fees (tuition) to account for federal payments, but CACFP itself does not regulate these fees  In addition, centers can charge families separately for meals/snacks, so long as there are no charges for children meeting free-meal/snack income tests and limited charges for those meeting reduced-price income tests  Independent centers are those without sponsors handling administrative responsibilities  These centers must pay for administrative costs associated with CACFP out of nonfederal funds or a portion of their meal subsidy payments  For centers with sponsors, the sponsors may retain a proportion of the meal reimbursement payments they receive on behalf of their centers to cover such costs  CACFP-supported day care homes serve a smaller number of children than CACFP-supported centers , both in terms of the total number of children served and the average number of children per facility  Roughly 17% of children in CACFP (approximately 757,000 in FY2017 average daily attendance) are served through day care homes  In FY2017, approximately 103,000 homes (with just over 700 sponsors) received CACFP support  As with centers, payments to day care homes are provided for up to either two meals and one snack or one meal and two snacks a day for each child  Unlike centers, day care homes must participate under the auspices of a public or, more often, private nonprofit sponsor that typically has 100 or more homes under its supervision  CACFP day care home sponsors receive monthly administrative payments based on the number of homes for which they are responsible  Federal reimbursements for family day care homes differ by the home's status as "Tier I" or "Tier II " Unlike centers, day care homes receive cash reimbursements (but not commodity foods) that generally are not based on the child participants' household income  Instead, there are two distinct, annually indexed reimbursement rates that are based on area or operator eligibility criteria Tier I homes are located in low-income areas (defined as areas in which at least 50% of school-age and enrolled children qualify for free or reduced-price meals) or operated by low-income providers whose household income meets the free or reduced-price income standards  They receive higher subsidies for each meal/snack they serve  Tier II (lower) rates are by default those for homes that do not qualify for Tier I rates; however, Tier II providers may seek the higher Tier I subsidy rates for individual low-income children for whom financial information is collected and verified  (See Table B-6 for current Tier I and Tier II reimbursement rates ) Additionally, HHFKA introduced a number of additional ways (as compared to prior law) by which family day care homes can qualify as low-income and get Tier I rates for the entire home or for individual children  As with centers, there is no requirement that meals/snacks specifically identified as free or reduced-price be offered; however, unlike centers, federal rules prohibit any separate meal charges  Current law SFSP and the NSLP/SBP Seamless Summer Option provide meals in congregate settings nationwide; the related Summer Electronic Benefits Transfer (SEBTC or Summer EBT) demonstration project is an alternative to congregate settings  SFSP supports meals for children during the summer months  The program provides assistance to local public institutions and private nonprofit service institutions running summer youth/recreation programs, summer feeding projects, and camps  Assistance is primarily in the form of cash reimbursements for each meal or snack served; however, federally donated commodity foods are also offered  Participating service institutions are often entities that provide ongoing year-round service to the community including schools, local governments, camps, colleges and universities in the National Youth Sports program, and private nonprofit organizations like churches  Similar to the CACFP model, sponsors are institutions that manage the food preparation, financial, and administrative responsibilities of SFSP  Sites are the places where food is served and eaten  At times, a sponsor may also be a site  State agencies authorize sponsors, monitor and inspect sponsors and sites, and implement USDA policy  Unlike CACFP, sponsors are required for an institution's participation in SFSP as a site  In FY2017, nearly 5,500 sponsors with 50,000 food service sites participated in the SFSP and served an average of approximately 2 7 million children daily (according to July data)  Participation of sites and children in SFSP has increased in recent years  Program costs for FY2017 totaled over $485 million, including cash assistance, commodity foods, administrative cost assistance, and health inspection costs  There are several options for eligibility and meal/snack service for SFSP sponsors (and their sites) Open sites provide summer food to all children in the community  These sites are certified based on area eligibility measures, where 50% or more of area children have family income that would make them eligible for free or reduced-price school meals (see Table 2 )  Closed or Enrolled sites provide summer meals/snacks free to all children enrolled at the site  The eligibility test for these sites is that 50% or more of the children enrolled in the sponsor's program must be eligible for free or reduced-price school meals based on household income  Closed/enrolled sites may also become eligible based on area eligibility measures noted above  Summer camps (that are not enrolled sites) receive subsidies only for those children with household eligibility for free or reduced-price school meals  Other programs specified in law , such as the National Youth Sports Program and centers for homeless or migrant children  Summer sponsors get operating cost (food, storage, labor) subsidies for all meals/snacks they serve—up to one meal and one snack, or two meals per child per day  In addition, sponsors receive payments for administrative costs, and states are provided with subsidies for administrative costs and health and meal-quality inspections  See Table B -7 for current SFSP reimbursement rates  Actual payments vary slightly (e g , by about 5 cents for lunches) depending on the location of the site (e g , rural vs  urban) and whether meals are prepared on-site or by a vendor  Although SFSP is the child nutrition program most associated with providing meals during summer months, it is not the only program option for providing these meals and snacks  The Seamless Summer Option, run through NSLP or SBP programs, is also a means through which food can be provided to students during summer months  Much like SFSP, Seamless Summer operates in summer sites (summer camps, sports programs, churches, private nonprofit organizations, etc ) and for a similar duration of time  Unlike SFSP, schools are the only eligible sponsors , although schools may operate the program at other sites  Reimbursement rates for Seamless Summer meals are the same as current NSLP/SBP rates  Beginning in summer 2011 and (as of the date of this report) each summer since, USDA-FNS has operated Summer Electronic Benefit Transfer for Children (SEBTC or "Summer EBT") demonstration projects in a limited number of states and Indian Tribal Organizations (ITOs)  These Summer EBT projects provide electronic food benefits over summer months to households with children eligible for free or reduced-price school meals  Depending on the site and year, either $30 or $60 per month is provided, through a WIC or SNAP EBT card model  In the demonstration projects, these benefits were provided as a supplement to the Summer Food Service Program (SFSP) meals available in congregate settings  Summer EBT and other alternatives to congregate meals through SFSP were first authorized and funded by the FY2010 appropriations law ( P L  111-80 )  Although a number of alternatives were tested and evaluated, findings from Summer EBT were among the most promising, and Congress provided subsequent funding  Summer EBT evaluations showed significant impacts on reducing child food insecurity and improving nutritional intake   Summer EBT was funded by P L  111-80 in the summers from 2011 to 2014  Projects have continued to operate and were annually funded by FY2015-FY2018 appropriations; most recently, the FY2018 appropriations law ( P L  115-141 ) provided $28 million  According to USDA-FNS, in summer 2016 Summer EBT served over 209,000 children in nine states and two tribal nations—an increase from the 11,400 children served when the demonstration began in summer 2011  Schools (and institutions like summer camps and child care facilities) that are not already participating in the other child nutrition programs can participate in the Special Milk Program  Schools may also administer SMP for their part-day sessions for kindergartners or pre-kindergartners  Under SMP, participating institutions provide milk to children for free and/or at a subsidized paid price, depending on how the enrolled institution opts to administer the program (see Table B -8 for current Special Milk reimbursement rates for each of these options) An institution that only sells milk will receive the same per-half pint federal reimbursement for each milk sold (approximately 20 cents)  An institution that sells milk and provides free milk to eligible children (income eligibility is the same as free school meals, see Table 2 ), receives a reimbursement for the milk sold (approximately 20 cents) and a higher reimbursement for the free milks  An institution that does not sell milk provides milk free to all children and receives the same reimbursement for all milk (approximately 20 cents)  This option is sometimes called nonpricing  In FY2017, over 41 million half-pints were subsidized, 9 5% of which were served free  Federal expenditures for this program were approximately $8 3 million in FY2017  States receive formula grants through the Fresh Fruit and Vegetable Program, under which state-selected schools receive funds to purchase and distribute fresh fruit and vegetable snacks to all children in attendance (regardless of family income)  Money is distributed by a formula under which about half the funding is distributed equally to each state and the remainder is allocated by state population  States select participating schools (with an emphasis on those with a higher proportion of low-income children) and set annual per-student grant amounts (between $50 and $75)  Funding is set by law at $150 million for school year 2011-2012 and inflation-indexed for every year after  In FY2017, states used approximately $184 million in FFVP funds  FFVP is funded by a mandatory transfer of funds from USDA's Section 32 program—a permanent appropriation of 30% of the previous year's customs receipts  This transfer is required by FFVP's authorizing laws (Section 19 of the Richard B  Russell National School Lunch Act and Section 4304 of P L  110-246 )  Up until FY2018's law, annual appropriations laws delayed a portion of the funds to the next fiscal year  After a pilot period, the Child Nutrition and WIC Reauthorization Act of 2004 ( P L  108-265 ) permanently authorized and funded FFVP for a limited number of states and Indian reservations  In recent years, FFVP has been amended by omnibus farm bill laws rather than through child nutrition reauthorizations  The 2008 farm bill ( P L  110-246 ) expanded FFVP's mandatory funding, specifically providing funds through Section 32, and enabled all states to participate in the program  The 2014 farm bill ( P L  113-79 ) essentially made no changes to this program but did include, and fund at $5 million in FY2014, a pilot project that requires USDA to test offering frozen, dried, and canned fruits and vegetables and publish an evaluation of the pilot  Four states (Alaska, Delaware, Kansas, and Maine) participated in the pilot in SY2014-2015 and the evaluation was published in 2017  Other proposals to expand fruits and vegetables offered in FFVP have been introduced in both the 114 th and 115 th Congress  Two of the child nutrition programs discussed in previous sections, the National School Lunch Program (NSLP) and Child and Adult Care Food Program (CACFP), provide federal support for snacks and meals served during after-school programs  NSLP provides reimbursements for after-school snacks; however, this option is open only to schools that already participate in NSLP  These schools may operate after-school snack-only programs during the school year, and can do so in two ways: (1) if low-income area eligibility criteria are met, provide free snacks in lower-income areas; or (2) if area eligibility criteria are not met, offer free, reduced-price, or fully paid-for snacks, based on household income eligibility (like lunches in NSLP)  The vast majority of snacks provided through this program are through the first option  Through this program, approximately 206 million snacks were served in FY2017 (a daily average of nearly 1 3 million)  This compares with nearly 4 9 billion lunches served (a daily average of 27 8 million)  CACFP provides assistance for after-school food in two ways  First, centers and homes that participate in CACFP and provide after-school care may participate in traditional CACFP (the eligibility and administration described earlier)  Second, centers in areas where at least half the children in the community are eligible for free or reduced-price school meals can opt to participate in the CACFP At-Risk Afterschool program, which provides free snacks and suppers  Expansion of the At-Risk After-School meals program was a major policy change included in HHFKA  Prior to the law, 13 states were permitted to offer CACFP At-Risk After-School meals (instead of just a snack); the law allowed all CACFP state agencies to offer such meals  In FY2017, the At-Risk Afterschool program served a total of approximately 242 6 million free meals and snacks to a daily average of more than 1 7 million children  Federal child nutrition laws authorize and program funding supports a range of additional programs, initiatives, and activities  Through State Administrative Expenses funding, states are entitled to federal grants to help cover administrative and oversight/monitoring costs associated with child nutrition programs  The national amount each year is equal to about 2% of child nutrition reimbursements  The majority of this money is allocated to states based on their share of spending on the covered programs; about 15% is allocated under a discretionary formula granting each state additional amounts for CACFP, commodity distribution, and Administrative Review efforts  In addition, states receive payments for their role in overseeing summer programs (about 2 5% of their summer program aid)  States are free to apportion their federal administrative expense payments among child nutrition initiatives (including commodity distribution activities) as they see fit, and appropriated funding is available to states for two years  State Administrative Expense spending in FY2017 totaled approximately $279 million  Team Nutrition is a USDA-FNS program that includes a variety of school meals initiatives around nutrition education and the nutritional content of the foods children eat in schools  This includes Team Nutrition Training Grants, which provide funding to state agencies for training and technical assistance, such as help implementing USDA's nutrition requirements and the Dietary Guidelines for Americans  From 2004 to 2018, Team Nutrition also included the HealthierUS Schools Challenge (HUSSC), which originated in the 2004 reauthorization of the Child Nutrition Act  HUSSC was a voluntary certification initiative designed to recognize schools that have created a healthy school environment through the promotion of nutrition and physical activity  Farm-to-school programs broadly refer to "efforts that bring regionally and locally produced foods into school cafeterias," with a focus on enhancing child nutrition  The goals of these efforts include increasing fruit and vegetable consumption among students, supporting local farmers and rural communities, and providing nutrition and agriculture education to school districts and farmers  HHFKA amended existing child nutrition programs to establish mandatory funding of $5 million per year for competitive farm-to-school grants that support schools and nonprofit entities in establishing farm-to-school programs that improve a school's access to locally produced foods  The FY2018 appropriations law provided an additional $5 million in discretionary funding to remain available until expended  Grants may be used for training, supporting operations, planning, purchasing equipment, developing school gardens, developing partnerships, and implementing farm-to-school programs  USDA's Office of Community Food Systems provides additional resources on farm-to-school issues  Through an Administrative Review process (formerly referred to as Coordinated Review Effort (CRE)), USDA-FNS, in cooperation with state agencies, conducts periodic on-site NSLP school compliance and accountability evaluations to improve management and identify administrative, subsidy claim, and meal quality problems  State agencies are required to conduct administrative reviews of all school food authorities (SFAs) that operate the NSLP under their jurisdiction at least once during a three-year review cycle  Federal Administrative Review expenditures were approximately $9 9 million in FY2017  USDA-FNS and state agencies conduct many other child nutrition program support activities for which dedicated funding is provided  Among other examples, there is the Institute of Child Nutrition (ICN), which provides technical assistance, instruction, and materials related to nutrition and food service management; it receives $5 million a year in mandatory funding appropriated in statute  ICN is located at the University of Mississippi  USDA-FNS provides training on food safety education  Funding is also provided for USDA-FNS to conduct studies, provide training and technical assistance, and oversee payment accuracy  Appendix A  Acronyms Used in This Report Appendix B  Per-meal or Per-snack Reimbursement Rates for Child Nutrition Programs This appendix lists the specific reimbursement rates discussed in the earlier sections of the report  Reimbursement rates are adjusted for inflation for each school or calendar year according to terms laid out in the programs' authorizing laws  Each year, the new rates are announced in the Federal Register   

ground_truth: The "child nutrition programs" refer to the U.S. Department of Agriculture's Food and Nutrition Service (USDA-FNS) programs that provide food for children in school or institutional settings. The best known programs, which serve the largest number of children, are the school meals programs: the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). The child nutrition programs also include the Child and Adult Care Food Program (CACFP), which provides meals and snacks in day care and after school settings; the Summer Food Service Program (SFSP), which provides food during the summer months; the Special Milk Program (SMP), which supports milk for schools that do not participate in NSLP or SBP; and the Fresh Fruit and Vegetable Program (FFVP), which funds fruit and vegetable snacks in select elementary schools. Funding: The vast majority of the child nutrition programs account is considered mandatory spending, with trace amounts of discretionary funding for certain related activities. Referred to as open-ended, "appropriated entitlements," funding is provided through the annual appropriations process; however, the level of spending is controlled by benefit and eligibility criteria in federal law and dependent on the resulting levels of participation. Federal cash funding (in the form of per-meal reimbursements) and USDA commodity food support is guaranteed to schools and other providers based on the number of meals or snacks served and participant category (e.g., free meals for poor children get higher subsidies). Participation: The child nutrition programs serve children of varying ages and in different institutional settings. The NSLP and SBP have the broadest reach, serving qualifying children of all ages in school settings. Other child nutrition programs serve more-narrow populations. CACFP, for example, provides meals and snacks to children in early childhood and after-school settings among other venues. Programs generally provide some subsidy for all food served but a larger federal reimbursement for food served to children from low-income households. Administration: Responsibility for child nutrition programs is divided between the federal government, states, and localities. The state agency and type of local provider differs by program. In the NSLP and SBP, schools and school districts ("school food authorities") administer the program. Meanwhile, SFSP (and sometimes CACFP) uses a model in which sponsor organizations handle administrative responsibilities for a number of sites that serve meals. Reauthorization: The underlying laws covering the child nutrition programs were last reauthorized in the Healthy, Hunger-Free Kids Act of 2010 (HHFKA, P.L. 111-296, enacted December 13, 2010). This law made significant changes to child nutrition programs, including increasing federal financing for school lunches, expanding access to community eligibility and direct certification options for schools, and expanding eligibility options for home child care providers. The law also required an update to school meal nutrition guidelines as well as new guidelines for food served outside the meal programs (e.g., snacks sold in vending machines and cafeteria a la carte lines). Current Issues: The 114th Congress began but did not complete a 2016 child nutrition reauthorization, and there was no significant legislative activity with regard to reauthorization in the 115th Congress. However, the vast majority of operations and activities continue with funding provided by appropriations laws. Current issues in the child nutrition programs are discussed in CRS Report R45486, Child Nutrition Programs: Current Issues.