General Provisions

(1) Client Identification. No documents submitted to OSD shall include information that identifies a Client by name or by other means that includes personally identifiable information. Client identification numbers or another numbering scheme should be utilized. (2) Waiver of 808 CMR 1.00. Upon request, OSD may consider waiving the applicability of one or more provisions of 808 CMR 1.00, provided that all such requests: are in writing and signed by an authorized signatory; specify the transactions to which such waiver would apply and the specific provisions of 808 CMR 1.00 which are to be waived; and are accompanied by documentation and justification deemed sufficient by OSD to support the need for relief. Waivers do not affect the responsibility of a Department or Contractor to comply with other applicable regulations or statutes. (3) 808 CMR 1.00 Prohibitions. The failure of a Department or OSD to identify violations of 808 CMR 1.00 in determining or authorizing a price shall not be deemed a waiver of violations of 808 CMR 1.00 which are identified later. (4) Price Limitations. The Commonwealth cannot be charged a rate or authorized price which is higher than the lowest fee charged to the general public or third party payor for human and social services except as follows: (a) Where a client receiving Sponsored services from the Department is charged a fee that the Contractor has collected and the fee is calculated based upon that Department’s approved sliding fee scale; or (b) Where a provider has sufficient restricted charitable contributions designated by their donor to be used to offset the difference between the fee charged to a private paying client and the rate charged to the Commonwealth. (5) Reimbursement as Full Payment. Each Contractor shall, as a condition of accepting payment made by one or more Departments for services provided, accept the Authorized Price as full payment and discharge of all obligations for the services provided. There shall be no duplication or supplementation of payment from sources other than those expressly recognized or anticipated in the determination of the Authorized Price. Any Client Resources or third party payments made on behalf of a Client, not expressly recognized or anticipated in the computation of the Authorized Price, shall reduce the amount of the appropriate Department’s obligation for payment. (6) Commercial Fee. For-profit contractors with authorized prices furnished via all compensation structures in all types of contracts are to be reimbursed in an amount not to exceed the contract reimbursable operating costs incurred by the contractor for the services provided to the Department pursuant to 808 CMR 1.00. Departments are permitted to prospectively negotiate a for-profit earnings allowance for the purpose of furnishing a Commercial Fee to for-profit contractors, which is in excess of the contract reimbursable operating costs for the services being procured. Departments are not required or expected to furnish a Commercial Fee, which is in excess of contract reimbursable operating costs to for-profit Contractors. Each contract executed between a department and a for-profit contractor must either: (a) explicitly indicate when a Commercial Fee has not been established by indicating that the earnings allowance is zero; or (b) clearly indicate the amount of the negotiated earnings allowance, by percentage or dollar amount, in the contract. In the event a contract does not specify a commercial fee, the amount authorized shall be assumed to equal the current annual surplus revenue retention limit. For contracts subject to 808 CMR 1.00, the contracting department may authorize a for-profit contractor to retain a Commercial Fee from such a contract not to exceed the amount then-authorized for annual surplus revenue retention. In addition, the for-profit contractor may not retain a Commercial Fee from a contract with deficit results of operations or from a cost reimbursement contract. Departments shall consider several approaches in developing a reasonable for-profit earning allowance in accordance with OSD policies and procedures issued pursuant to 808 CMR 1.00 and 801 CMR 21.00: Procurement of Commodities or Services. The provisions of this language also apply to M.G.L. c. 71B approved private special education Programs and contracts that utilize non-negotiated unit rates established by Departments and the Executive Office for Health and Human Services. OSD shall determine the Commercial Fee, if any, prospectively for M.G.L. c. 71B approved private special education Programs. Departments shall monitor the amount of Commercial Fee from the net surplus from Contract Revenues (or revenues received by M.G.L. c. 71B private special education Programs) and reimbursable costs retained by each for-profit Contractor in any given year and recoup funds or reduce future prices when appropriate in accordance with 808 CMR 1.03(6) and other guidance issued by OSD. (7) Not-for-profit Contractor Surplus Revenue Retention. If, through cost savings initiatives implemented consistent with programmatic and contractual obligations, a non-profit Contractor accrues an annual net surplus from the revenues and expenses associated with services provided to Departments which are subject to 808 CMR 1.00, the Contractor may retain, for future use, a portion of that annual surplus not to exceed 20% of said revenues. Surpluses may be used by the Contractor for any of its established charitable purposes, provided that no portion of the surplus may be used for any non-reimbursable cost set forth in 808 CMR 1.05, the free care prohibition excepted. OSD shall be responsible for determining the amount of surplus that may be retained by each Contractor in any given year and may determine whether any excess surplus shall be used to reduce future prices or be recouped. (8) Procurement of Contractor Furnishings, Equipment and Other Goods and Services. All procurements of furnishings, equipment and other goods and services by or on behalf of a Contractor shall be conducted in a manner to provide, to the maximum extent practical, open and free competition. Capital Items, as defined in 808 CMR 1.02, shall be acquired through solicitation of bids and proposals consistent with generally accepted accounting principles. (9) Fiscal Conduits Prohibited. No procuring Department or contractor providing social, rehabilitative, health or M.G.L. c. 71B approved private special education services for the Commonwealth shall enter into any written or verbal agreement to award a contract or to use or modify the terms or intent of an existing contract: (a) to acquire any goods for the Procuring Department’s use; (b) to defray the expenses of services rendered by individuals hired or supervised in the daily performance of their work by personnel in the classified service of the Commonwealth; or (c) solely to acquire payroll or fiscal management for a Program of Client services operated by the Commonwealth or any third party. This third party exclusion shall not apply to entities that provide payroll or fiscal management to programs directly operated by the Contractor. OSD may refer matters concerning departments, contractors or individuals determined to be responsible for entering into such agreements for investigation pursuant to M.G.L. c. 266, § 67A.