AN ACT RELATIVE TO RATES FOR HUMAN AND SOCIAL SERVICE PROGRAMS.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:
SECTION 1. Chapter 7 of the General Laws is hereby amended by inserting after section 22M the following section:-
Section 22N. The operational services division shall include a bureau of purchased services, hereinafter known as the bureau. The bureau shall have primary responsibility for the implementation and coordination of an efficient and accountable system of procurement, selection, special education pricing, contract administration, program monitoring and evaluation, contract compliance and post audit for any department, agency, board or commission of the commonwealth which procures or pays for social service programs from providers. Pricing for social service programs, other than special education programs, shall be set by the executive office of health and human services under chapter 118G.
For the purposes of this section, “social service program” shall mean any social, special educational, mental health, mental retardation, habilitative, rehabilitative, vocational, employment and training, or elder services program or accommodations, purchased by a governmental unit, including any program provided pursuant to chapter 71B, but excluding any program or service which is reimbursable under Title XIX of the Social Security Act. “Governmental unit” shall mean the commonwealth and any school district or other political subdivision of the commonwealth.
The bureau shall be headed by an assistant commissioner, who shall be appointed by and serve at the pleasure of the secretary of administration and finance, and who shall have administrative responsibility for the bureau. The position shall be classified in accordance with section 45 of chapter 30, and the salary therefor shall be determined in accordance with section 46C of said chapter 30.
The bureau shall be comprised of such offices as may be necessary to carry out the mission of the bureau, which may include an audit office and a unit for special education pricing.
The bureau shall have the responsibility for prescribing the methods to be used in determining the prices to be reimbursed to providers of special education programs by governmental units. The methods prescribed by the division in determining prices shall incorporate cost containment standards and shall be fair to both governmental units and providers. All governmental units shall pay the prices developed in accordance with the methods prescribed by the bureau. Pricing for social service programs, other than special education programs, shall be set by the executive office of health and human services under chapter 118G.
The prices determined by the bureau of purchased services, or pursuant to its methods, for programs pursuant to chapter 71B shall be set annually by the first Wednesday in February for the next fiscal year. If the bureau fails to determine the final annual prices on or before the first Wednesday in February, the prices in effect at that time shall continue to be in effect for the next fiscal year. Program prices for programs approved under said chapter 71B which are located outside of the commonwealth may be adjusted prospectively to account for rate or price adjustments authorized by the host state's rate setting body. Program prices may also be adjusted prospectively to account for unanticipated emergencies beyond the reasonable control of the provider, or to reflect costs attributable to extraordinary changes in volume, or to account for compliance with federal or state statutory or local regulatory requirements as determined by the bureau and pursuant to standards developed by the bureau. No such price may be adjusted retroactively to its effective date except to account for the results of administrative reviews, if any, as provided in the regulations of the bureau. Nothing herein shall preclude the bureau from setting a price for a new program established for the first time under said chapter 71B, or individual or sole source prices as provided in the regulations of the bureau after the first Wednesday in February of any fiscal year.
The bureau shall submit an estimated rate of inflation for social service programs to the secretary of administration and finance annually by December 1 for consideration in the preparation of the governor's annual budget recommendation. The bureau shall also notify superintendents of this estimated rate of inflation by December 1.
A provider or governmental unit aggrieved by the bureau's action or failure to act with respect to the determination of a price pursuant to the bureau's pricing methods, and desiring a review thereof, may file, pursuant to regulations promulgated by the bureau, an appeal with the division of administrative law appeals in accordance with section 4H of chapter 7. The question on appeal of the decision of the bureau of purchased services shall be whether the bureau, in taking the action challenged by the aggrieved party, has properly applied its regulations. This paragraph shall not be construed to confer a right upon an aggrieved party to challenge, in a proceeding before the division of administrative law appeals, the procedural or substantive validity of a regulation of general applicability promulgated by the bureau of purchased services. Any such challenges shall be brought exclusively in the superior courts of the commonwealth in accordance with the provisions of chapter 30A.
The bureau shall establish guidelines and standards, consistent with generally accepted governmental auditing standards, for independent financial and performance audits of providers of social service programs and governmental units purchasing programs. The bureau shall coordinate or conduct audits of providers as needed to monitor compliance with applicable fiscal policies. The bureau shall develop and administer a uniform system of financial accounting, allocation, reporting and auditing of providers which conforms to generally accepted governmental auditing standards. The bureau may conduct quality assurance reviews of provider financial statements and their auditors' reports and work papers. The disclosure of client records by providers to auditors, including independent auditors as defined by federal Office of Management and Budget Circular A-133, as amended, as necessary to comply with state and federal audit requirements shall not constitute an invasion of privacy, or otherwise be grounds for civil or criminal penalty.
The assistant commissioner may, in accordance with said chapter 30A, promulgate rules and regulations required to develop, implement, administer and monitor the programs and functions of the bureau. These regulations shall provide for right of appeal to the bureau or other appropriate bodies for a procuring governmental unit or provider aggrieved by an action or failure to act under this section or the regulations.
All proposed regulations of the department of early education and care and the department of elementary and secondary education, and any other licensing or certification standards proposed by a department having an impact on chapter 71B Special Education programs, shall be forwarded to the bureau of purchased services with a statement describing the anticipated financial impact of the regulations 14 days prior to publication of the notice of rulemaking required under chapter 30A.
The bureau shall adopt regulations limiting the reimbursement to providers for the salaries of their officers or managers to the maximum salary of Job Group M-XII in the management salary schedule in section 46C of chapter 30.
The bureau shall adopt rules and regulations governing contracts between governmental units and social service program providers which shall include, but not be limited to: a provision requiring that all transactions between the providers and related parties shall be disclosed in writing in advance to the bureau and to such governmental units; a provision requiring a complete inventory of equipment which is to be used by a provider and to which a governmental unit has title, and requiring the return of such equipment to the proper governmental unit upon the completion or termination of the contract; and a provision requiring that any contracts for which funds expended by the commonwealth thereunder reimburse or compensate the providers for the amortization of mortgages for the ownership of any real property, whether owned directly or indirectly by a provider, shall contain provisions for the recoupment of such reimbursement or compensation by the commonwealth in the event the property is sold and may, if necessary, allow for the execution of liens to ensure such recoupment; provided, however, that any such lien shall be subordinated to a statutory lien, to the lien of a first mortgagee who has provided a purchase-money mortgage for such property and to the interest of a banking institution, as defined in section 1 of chapter 167A, holding a security interest in such property in an amount not exceeding 10 per cent of the appraised value of such property as determined and provided by such banking institution; and provided further, that any such recoupment shall be net of any outstanding balance due pursuant to any such superior security interest. If after a hearing the bureau finds a violation of a regulation adopted under this paragraph, the bureau may order that the contract be terminated, or may assess a civil penalty of not more than $2,000 or 10 per cent of the amount payable under the contract, whichever is greater, which the agency shall withhold from payments otherwise due under the contract. Notwithstanding the foregoing, a provider aggrieved under this paragraph may exercise any legal remedies or cause of action available to such provider under law. If the bureau determines after a hearing that a provider has committed repeated willful violations of this paragraph, it may debar the provider from further state contracts but such debarment shall not be for a period longer than 5 years.
SECTION 2. Section 1 of chapter 118G of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by inserting after the definition of “General health supplies, care or rehabilitative services and accommodations” the following definition:-
“Governmental mandate”, a state or federal statutory requirement, administrative rule, regulation, assessment, executive order, judicial order or other governmental requirement that directly or indirectly imposes an obligation and associated compliance cost upon a provider to take an action or to refrain from taking an action in order to fulfill the provider’s contractual duty to a procuring governmental unit.
SECTION 3. Said section 1 of said chapter 118G, as so appearing, is hereby further amended by inserting after the definition of “Small business” the following 2 definitions:-
“Social service program”, a social, mental health, mental retardation, habilitative, rehabilitative, substance abuse, residential care, adult or adolescent day care, vocational, employment and training, or elder service program or accommodations, purchased by a governmental unit or political subdivision of the executive office of health and human services, but excluding any program, service or accommodation that: (a) is reimbursable under a Medicaid waiver granted under section 1115 of Title XI of the Social Security Act; or (b) is funded exclusively by a federal grant.
“Social service program providers”, providers of social service programs in the commonwealth.
SECTION 4. Section 2A of said chapter 118G, as so appearing, is hereby amended by adding the following paragraph:-
The secretary shall have the sole responsibility for establishing rates of payment for social service programs which are reasonable and adequate to meet the costs which are incurred by efficiently and economically operated social service program providers in providing social service programs in conformity with federal and state law, regulations, and quality and safety standards. When establishing rates of payment for social service programs, the secretary shall adjust rates to take into account factors, including, but not limited to: (a) the reasonable cost to social service program providers of any existing or new governmental mandate that has been enacted, promulgated or imposed by any governmental unit or federal governmental authority; (b) a cost adjustment factor to reflect changes in reasonable costs of goods and services of social service programs including those attributed to inflation; and (c) geographic differences in wages, benefits, housing and real estate costs in each metropolitan statistical area of the commonwealth, and in any city or town therein where such costs are substantially higher than the average cost within that area as a whole. The secretary shall not consider any of the resources specified in section 12 when establishing, reviewing or approving rates of payment for social service programs.
SECTION 5. Section 7 of said chapter 118G, as so appearing, is hereby amended by inserting after the word “services”, in line 4, the following:- and social service programs; provided, however, that for the purposes of this section, social service program providers shall be treated as non-institutional providers.
SECTION 6. Said chapter 118G is hereby further amended by inserting after section 24 the following section:-
Section 24A. Every 6 months, the secretary of health and human services shall submit a report to the governor, the secretary of administration and finance, the clerks of the house and senate, who shall forward the same to the joint committee on children, families and persons with disabilities, the joint committee on health care financing, the senate and house committees on ways and means, and the clerks of the senate and the house of representatives, regarding the status and evidence of the implementation of the prospective rate system set forth in section 7. The reports shall include, but not be limited to, information regarding the percentage of social service program providers reimbursed at the time of reporting by the secretary of health and human services through a rate setting process and the percentage of such providers reimbursed through a contract with another state agency and initiatives undertaken to promote efficiency or reduce or control costs and the results thereof.
SECTION 7. Section 99 of chapter 138 of the acts of 1991 is hereby repealed.
SECTION 8. Section 274 of chapter 110 of the acts of 1993 is hereby repealed.
SECTION 9. Section 113 of chapter 151 of the acts of 1993 is hereby repealed.
SECTION 10. Section 3 of chapter 296 of the acts of 1993 is hereby repealed.
SECTION 11. Section 99 of chapter 495 of the acts of 1993 is hereby repealed.
SECTION 12. Section 153 of chapter 184 of the acts of 2002 is hereby repealed.
SECTION 13. Notwithstanding any special or general law to the contrary, on or before December 1, 2008, the secretary of health and human services shall submit a report to the governor, the secretary of administration and finance, the joint committee on children, families and persons with disabilities, the joint committee on health care financing, the senate and house committees on ways and means, and the clerks of the senate and the house of representatives, regarding available resources and a plan for resource allocation within the executive office of health and human services. This report shall include a plan for the reassignment of resources from other state agencies and authorities to the executive office of health and human services as may be necessary to satisfy the requirements of section 7 of chapter 118G of the General Laws, and shall identify potential efficiencies and cost savings and any legislative action necessary to facilitate realizing such efficiencies and savings.
SECTION 14. On or before March 1, 2009, the secretary of health and human services shall submit a report to the governor, the secretary of administration and finance, the joint committee on children, families and persons with disabilities, the joint committee on health care financing, the senate and house committees on ways and means, and the clerks of the senate and the house of representatives, setting forth a plan for the implementation of section 7 of chapter 118G of the General Laws consistent with the requirements of sections 8 to 12, inclusive, of this act. The report shall include information regarding resource allocation within the executive office of health and human services and any reassignment of resources from other state agencies and authorities which were implemented during the preceding year or were needed prospectively to satisfy the requirements of this act, and a timetable for implementation for the prospective rate system set forth in said section 7 of said chapter 118G.
SECTION 15. On or before October 1, 2009, a prospective rate setting process as required by section 7 of chapter 118G of the General Laws shall have been implemented and rates shall have been set under this prospective rate setting process for not less than 10 per cent of the contracts with social service providers by any governmental unit or political subdivision of the executive office of health and human services.
SECTION 16. On or before October 1, 2010, a prospective rate setting process as required by section 7 of chapter 118G of the General Laws shall have been implemented and rates shall have been set under this prospective rate setting process for not less than 40 per cent of the contracts with social service providers by any governmental unit or political subdivision of the executive office of health and human services.
SECTION 17. On or before October 1, 2011, a prospective rate setting process as required by section 7 of chapter 118G of the General Laws shall have been implemented and rates shall have been set under this prospective rate setting process for not less than 70 per cent of the contracts with social service providers by any governmental unit or political subdivision of the executive office of health and human services.
SECTION 18. On or before October 1, 2012, a prospective rate setting process as required by section 7 of chapter 118G of the General Laws shall have been implemented and rates shall have been set under this prospective rate setting process for all contracts with social service providers by any governmental unit or political subdivision of the executive office of health and human services.
SECTION 19. Section 29 of chapter 60 of the acts of 1994 is hereby repealed.
SECTION 20. The first report under section 24A of chapter 118G of the General Laws shall be filed on or before July 1, 2009.
Approved August 5, 2008