(1) All services under this subchapter and ch. 48 and all community-based juvenile delinquency-related services under ch. 938 purchased by the department or by a county department under s. 46.215, 46.22, or 46.23 shall be authorized and contracted for under the standards established under this section. The department may require the county departments to submit the contracts to the department for review and approval. For purchases of $10,000 or less the requirement for a written contract may be waived by the department. No contract is required for care provided by foster homes that are required to be licensed under s. 48.62. When the depart- ment directly contracts for services, the department shall follow the procedures in this section in addition to meeting purchasing requirements established in s. 16.75. (2) All services purchased under this subchapter and ch. 48 and all community-based juvenile delinquency-related services purchased under ch. 938 shall meet standards established by the department and other requirements specified by the purchaser in the contract. Based on these standards the department shall establish standards for cost accounting and management information systems that shall monitor the utilization of the services, and document the specific services in meeting the service plan for the client and the objective of the service. (3) (a) Purchase of service contracts shall be written in accordance with rules promulgated and procedures established by the department. Contracts for client services shall show the total dollar amount to be purchased and for each service the number of clients to be served, number of client service units, the unit rate per client service and the total dollar amount for each service. (b) Payments under a contract may be made on the basis of actual allowable costs or on the basis of a unit rate per client service multiplied by the actual client units furnished each month. The contract may be renegotiated when units vary from the contracted number. The purchaser shall determine actual marginal costs for each service unit less than or in addition to the contracted number. (c) For proprietary agencies, contracts may include a percentage add-on for profit according to rules promulgated by the department. (d) Reimbursement to an agency may be based on total costs agreed to by the parties regardless of the actual number of service units to be furnished, when the agency is entering into a contract for a new or expanded service that the purchaser recognizes will require a start-up period not to exceed 180 days. This reimbursement applies only if identified client needs necessitate the establishment of a new service or expansion of an existing service. (e) If the purchaser finds it necessary to terminate a contract prior to the contract expiration date for reasons other than nonperformance by the provider, the actual cost incurred by the provider may be reimbursed in an amount determined by mutual agreement of the parties. (4) For purposes of this section and as a condition of reimbursement, each provider under contract shall: (a) Except as provided in this subsection, maintain a uniform double entry accounting system and a management information system that are compatible with cost accounting and control systems prescribed by the department. (b) Cooperate with the department and purchaser in establishing costs for reimbursement purposes. (c) Unless waived by the department, biennially, or annually if required under federal law, provide the purchaser with a certified financial and compliance audit report if the care and services purchased exceed $100,000. The audit shall follow standards that the department prescribes. (d) Transfer a client from one category of care or service to another only with the approval of the purchaser. (e) Charge a uniform schedule of fees as specified under s. 49.32 (1) unless waived by the purchaser with the approval of the department. Whenever providers recover funds attributed to the client, such funds shall offset the amount paid under the contract. (5) Except as provided in sub. (5m), the purchaser shall recover from provider agencies money paid in excess of the conditions of the contract from subsequent payments made to the provider. (5m) (a) In this subsection: 1. “Provider” means a nonstock corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), and that contracts under this section to provide client services on the basis of a unit rate per client service or a county department under s. 46.215, 46.22, 46.23, 51.42, or 51.437 that contracts under this section to provide client services on the basis of a unit rate per client service. 2. “Rate-based service” means a service or a group of services, as determined by the department, that is reimbursed through a prospectively set rate and that is distinguishable from other services or groups of services by the purpose for which funds are provided for that service or group of services and by the source of funding for that service or group of services. (b) 1. If revenue under a contract for the provision of a ratebased service exceeds allowable costs incurred in the contract period, the contract shall allow the provider to retain from the surplus up to 5 percent of the revenue received under the contract unless a uniform rate is established by rule under subd. 5., in which case the contract shall allow the provider to retain the uniform percentage rate established by the rule. The retained surplus is the property of the provider. 4. If on December 31 of any year the provider’s accumulated surplus from all contract periods ending during that year for a rate-based service exceeds the allowable retention rate under subd. 1., the provider shall provide written notice of that excess to all purchasers of the rate-based service. Upon the written request of such a purchaser received no later than 6 months after the date of the notice, the provider shall refund the purchaser’s proportional share of that excess. If the department determines based on an audit or fiscal review that the amount of the excess identified by the provider was incorrect, the department may seek to recover funds after the 6-month period has expired. The department shall commence any audit or fiscal review under this subdivision within 6 years after the end of the contract period. 5. The department, in consultation with the department of health services and the department of corrections, shall promulgate rules to implement this subsection including all of the following: a. Requiring that contracts for rate-based services under this subsection allow a provider to retain from any surplus revenue up to 5 percent of the total revenue received under the contract, or a different percentage rate determined by the department. The percentage rate established under this subd. 5. a. shall apply uniformly to all rate-based service contracts under this subsection. b. Establishing a procedure for reviewing rate-based service contracts to determine whether a contract complies with the provisions of this subsection. (em) Notwithstanding par. (b), a county department under s. 46.215, 51.42, or 51.437 providing client services in a county having a population of 750,000 or more or a nonstock, nonprofit corporation providing client services in such a county may not retain a surplus generated by a rate-based service or accumulate funds from more than one contract period for a rate-based service from revenues that are used to meet the maintenance-of-effort requirement under the federal temporary assistance for needy families program under 42 USC 601 to 619. (f) All providers that are subject to this subsection shall comply with any financial reporting and auditing requirements that the department may prescribe. Those requirements shall include a requirement that a provider provide to any purchaser and the department any information that the department needs to claim federal reimbursement for the cost of any services purchased from the provider and a requirement that a provider provide audit reports to any purchaser and the department according to standards specified in the provider’s contract and any other standards that the department may prescribe. (6) Contracts may be renegotiated by the purchaser under conditions specified in the contract. (7) The service provider under this section may appeal decisions of the purchaser in accordance with terms and conditions of the contract and ch. 68 or 227.
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