Surplus retention limitations for providers of rate-based services purchased by certain state and county departments and requiring the exercise of rule-making authority. (FE)

This bill provides that a contract for a rate-based service must allow a provider to retain from a surplus up to 5 percent of the revenue received under the contract until a different percentage is determined by DCF, DOC, or DHS by rule. Any total annual surplus exceeding the amount the provider is allowed to retain under the bill must be refunded upon written request of the purchasers of the rate-based service.

The bill also eliminates the restrictions on the expenditure of the surplus funds retained by the provider.

Under current law, if the provider accumulates funds from more than one contract period in an amount greater than 10 percent of all current contracts, the provider must, at the request of a purchaser, refund the purchaser's proportional share of that excess. The provider must then use any of that excess that is not refunded to a purchaser to reduce the provider's unit rate per client service in the next contract period. In addition, current law provides that if a provider has held an accumulated reserve of 10 percent or more of the amount of all current contracts for that rate-based service for four consecutive contract periods, the provider must apply 50 percent of those accumulated funds to reducing its unit rate per client service in the next contract period. This bill eliminates those 10 percent accumulated surplus retention limits.