text:
(a) The Legislature finds and declares all of the following:

(1) Designated public hospital systems play an essential role in the Medi-Cal program, providing high-quality care to a disproportionate number of low-income Medi-Cal and uninsured populations in the state. Because Medi-Cal covers approximately one-third of the state’s population, the strength of these essential public health care systems is of critical importance to the health and welfare of the people of California.

(2) Designated public hospital systems provide comprehensive health care services to low-income patients and lifesaving trauma, burn, and disaster-response services for entire communities, and train the next generation of doctors and other health care professionals, such as nurses and paramedical professionals, who are critical to new team-based care models that achieve more efficient and patient-centered care.

(3) The Legislature intends to continue to provide levels of support for designated public hospital systems in light of their reliance on Medi-Cal funding to provide quality care to everyone, regardless of insurance status, ability to pay, or other circumstance, the significant proportion of Medi-Cal services provided under managed care by these public hospital systems, and federal requirements related to Medicaid managed care.

(4) It is the intent of the Legislature that Medi-Cal managed care plans and designated public hospital systems that may enter into contracts to provide services for Medi-Cal beneficiaries shall in good faith negotiate for, and implement, contract rates, the provision and arrangement of services and member assignment that are sufficient to ensure continued participation by Medi-Cal managed care plans and designated public hospital systems and to maintain access to services for Medi-Cal managed care beneficiaries and other low-income patients.

(5) It is the intent of the Legislature that, in order to ensure both the financial viability of Medi-Cal managed care plans and support the participation of designated public hospital systems in Medi-Cal managed care, the department shall provide Medi-Cal managed care plans actuarially sound rates reflecting the directed contract services payments implemented to comply with federal requirements relating to Medicaid managed care.

(b) Commencing with the 2017–18 state fiscal year for designated public hospital systems, and commencing with the 2023 calendar year for district and municipal public hospitals, and for each state fiscal year or rate year, as applicable, thereafter, and notwithstanding any other law, the department shall require each Medi-Cal managed care plan to increase contract services payments to the designated public hospital systems and to district and municipal public hospitals by amounts determined under a directed payment methodology that meets federal requirements and as described in this subdivision. The directed payments may be determined and applied as distributions from directed payment pools, as uniform dollar or percentage increases, or on other bases, and may incorporate acuity adjustments or other factors.

(1) The directed payments may separately account for inpatient hospital services and noninpatient hospital services. The directed payments shall be developed and applied separately for classes of designated public hospital systems and district and municipal public hospitals. The department, in consultation with the designated public hospital systems and district and municipal public hospitals, as applicable, shall establish the classes of designated public hospital systems and district and municipal public hospitals, as applicable, consistent with the objectives set forth in subdivisions (a) and (d) and that take into account differences in services provided, service delivery systems, and the level of risk assumed from Medi-Cal managed care plans. For designated public hospital systems, the factors to be considered shall include, but are not limited to, operation by the University of California, designated public hospital systems comprised of multiple acute care hospitals, level 1 or level 2 trauma designation, and the assumption of risk for the provision of inpatient hospital services.

(2) To the extent permitted by federal law and to meet the objectives identified in subdivisions (a) and (d), the department shall develop and implement the directed payment program in consultation with designated public hospital systems and district and municipal public hospitals or Medi-Cal managed care plans, or all, as follows:

(A) The department, in consultation with the designated public hospital systems and district and municipal public hospitals, as applicable, shall annually determine on a prospective basis the aggregate amount of payments that will be directed to each class of designated public hospital systems and district and municipal public hospitals pursuant to this subdivision and the classification of each designated public hospital system and district and municipal public hospital. Once the department determines the classification for each designated public hospital system and district and municipal public hospital for a particular state fiscal year or rate year, that classification shall not be eligible to change until no sooner than the subsequent year. For state fiscal years or rate years following the 2017–18 state fiscal year, the aggregate amounts of payments to a class of designated public hospital systems shall account for trend adjustments to the aggregate amounts available during the prior year, subject to any modifications to account for changes in the classification of designated public hospital systems, changes required by federal law, changes to account for the size of the payments made pursuant to subdivision (c), or other material changes.

(B) The department, in consultation with the designated public hospital systems and district and municipal public hospitals, as applicable, shall develop the methodologies for determining the required directed payments for each designated public hospital system and district and municipal public hospital.

(C) To the extent necessary to meet the objectives identified in subdivisions (a) and (d) or to comply with federal requirements, the department may, in consultation with the designated public hospital systems and district and municipal public hospitals, as applicable, adjust or modify the amounts of the aggregate directed payments for any class of designated public hospital systems and district and municipal public hospitals, the method for determining the distribution of the directed payment amounts within any class of designated public hospital systems and district and municipal public hospitals, and may modify, consolidate, or subdivide the classes of designated public hospital systems and district and municipal public hospitals established pursuant to paragraph (1).

(D) After the aggregate amounts and the distribution methodology of directed payments for each designated public hospital system and district and municipal public hospital class have been established, the department shall consult with the designated public hospital systems, district and municipal public hospitals, and each affected Medi-Cal managed care plan with regard to the impact on the Medi-Cal managed care plan capitation ratesetting process and implementation of the directed payment requirements, including applicable interim and final payment processes, to ensure that 100 percent of the aggregate amounts are paid to the applicable designated public hospital system and district and municipal public hospital.

(3) The required directed payment amounts shall be paid by the Medi-Cal managed care plans as adjustments, in a form and manner specified by the department, to the total amounts of contract services payments otherwise paid to the designated public hospital systems and district and municipal public hospitals.

(4) The directed payments required under this subdivision shall be implemented and documented by each Medi-Cal managed care plan, designated public hospital system, and district and municipal public hospital, as applicable, in accordance with all of the following parameters and any guidance issued by the department:

(A) A Medi-Cal managed care plan and the designated public hospital systems and district and municipal public hospitals shall determine the manner, timing, and amount of payment for contract services, including through fee-for-service, capitation, or other permissible manner. The rates of payment for contract services agreed upon by the Medi-Cal managed care plan and the designated public hospital system and district and municipal public hospital, as applicable, shall be established and documented without regard to the directed payments and quality incentive payments required by this section.

(B) The required directed payment enhancements provided pursuant to this subdivision shall not supplant amounts that would otherwise be payable by a Medi-Cal managed care plan to a designated public hospital system or district and municipal public hospital for an applicable state fiscal year or rate year, and the Medi-Cal managed care plan shall not impose a fee or retention amount that would result in a direct or indirect reduction to the amounts required under this subdivision.

(C) A contract between a Medi-Cal managed care plan and a designated public hospital system or district and municipal public hospital shall not be terminated by either party for the specific purpose of circumventing or otherwise impacting the payment obligations implemented pursuant to this subdivision.

(D) If a Medi-Cal managed care plan subcontracts or delegates responsibility to a separate entity for either or both the arrangement or payment of services, the Medi-Cal managed care plan shall be responsible for paying the designated public hospital system and district and municipal public hospital, as applicable, the directed payment described in this subdivision with respect to the services it provides that are covered by that arrangement. The designated public hospital system or district and municipal public hospital, as applicable, and the applicable subcontractor or delegated entity shall work together with the Medi-Cal managed care plan to provide the information necessary to facilitate the Medi-Cal managed care plan’s compliance with the payment requirements under this subdivision.

(5) Each state fiscal year, a Medi-Cal managed care plan shall provide to the department, at the times and in the form and manner specified by the department, an accounting of amounts paid or payable to the designated public hospital systems and district and municipal public hospitals with which it contracts, including both contract rates and the directed payments, to demonstrate compliance with this subdivision. To the extent that the department determines that a Medi-Cal managed care plan is not in compliance with the requirements of this subdivision, or is otherwise circumventing the purposes thereof, to the material detriment of an applicable designated public hospital system, the department may, after providing notice of its determination to the affected Medi-Cal managed care plan and allowing a reasonable period for the Medi-Cal managed care plan to cure the specified deficiencies, reduce the default assignment into the Medi-Cal managed care plan with respect to all Medi-Cal managed care beneficiaries by up to 25 percent in the applicable county, so long as the other Medi-Cal managed care plan or Medi-Cal managed care plans in the applicable county have the capacity to receive the additional default membership. The department’s determination whether to exercise discretion under this paragraph shall not be subject to judicial review, except that a Medi-Cal managed care plan that has its default assignment reduced pursuant to this paragraph may bring a writ of mandate under Section 1085 of the Code of Civil Procedure to rectify an abuse of discretion by the department under this paragraph. Nothing in this paragraph shall be construed to preclude or otherwise limit the right of any Medi-Cal managed care plan or designated public hospital system to pursue a breach of contract action, or any other available remedy as appropriate, in connection with the requirements of this subdivision.

(6) Capitation rates paid by the department to a Medi-Cal managed care plan shall be actuarially sound and account for the Medi-Cal managed care plan’s obligation to pay the directed payments to designated public hospital systems and district and municipal public hospitals in accordance with this subdivision. The department may require Medi-Cal managed care plans and the designated public hospital systems and district and municipal public hospitals to submit information regarding contract rates and expected or actual utilization of services, at the times and in the form and manner specified by the department. To the extent consistent with federal law and actuarial standards of practice, the department shall utilize the most recently available data and reasonable projections, as determined by the department, when accounting for the directed payments required under this subdivision, and shall account for additional clinics, practices, or other health care providers added to a designated public hospital system or district and municipal public hospital. In implementing the requirements of this section, including the Medi-Cal managed care plan ratesetting process, the department may additionally account for material adjustments, as appropriate under federal law and actuarial standards, as described above, and as determined by the department, to contracts entered into between a Medi-Cal managed care plan or applicable subcontracted or delegated entity and a designated public hospital system or district and municipal public hospital, as applicable.

(c) Commencing with the 2017–18 state fiscal year for designated public hospital systems, and commencing with the 2020–21 state fiscal year for district and municipal public hospitals, and for each state fiscal year or rate year, as applicable, thereafter, the department, in consultation with the designated public hospital systems, district and municipal public hospitals, and applicable Medi-Cal managed care plans, as applicable, shall establish and implement a program or programs under which a designated public hospital system or a district and municipal public hospital may earn performance-based quality incentive payments from the Medi-Cal managed care plan with which they contract in accordance with this subdivision.

(1) Payments shall be earned by each designated public hospital system based on its performance in achieving identified targets for quality of care.

(A) The department, in consultation with the designated public hospital systems and applicable Medi-Cal managed care plans, shall establish and provide a method for updating uniform performance measures for the performance-based quality incentive payment program and parameters for the designated public hospital systems to select the applicable measures. The performance measures shall advance at least one goal identified in the state’s Medicaid quality strategy. Through and until June 30, 2020, performance measures pursuant to this subdivision shall not duplicate measures utilized in the PRIME program established pursuant to Section 14184.50.

(B) Each designated public hospital system shall submit reports to the department containing information required to evaluate its performance on all applicable performance measures, at the times and in the form and manner specified by the department. A Medi-Cal managed care plan shall assist a designated public hospital system in collecting and distributing information necessary for these reports.

(2) The department, in consultation with each designated public hospital system, shall determine a maximum amount that each class established pursuant to paragraph (1) of subdivision (b) may earn in quality incentive payments for the state fiscal year or rate year.

(3) The department shall calculate the amount earned by each designated public hospital system based on its performance score established pursuant to paragraph (1).

(A) This amount shall be paid to the designated public hospital system by each of its contracted Medi-Cal managed care plans. If a designated public hospital system contracts with multiple Medi-Cal managed care plans, the department shall identify each Medi-Cal managed care plan’s proportionate amount of the designated public hospital system’s payment. The timing and amount of the distributions and any related reporting requirements for interim payments shall be established and agreed to by the designated public hospital system and each of the applicable Medi-Cal managed care plans.

(B) A contract between a Medi-Cal managed care plan and designated public hospital system shall not be terminated by either party for the specific purpose of circumventing or otherwise impacting the payment obligations implemented pursuant to this subdivision.

(C) Each Medi-Cal managed care plan shall be responsible for payment of the quality incentive payments described in this subdivision, subject to funding by the department pursuant to paragraph (5).

(4) Commencing with the 2020–21 state fiscal year, payments under this paragraph shall be earned by a district and municipal public hospital based on its performance in achieving identified targets for quality of care.

(A) The department, in consultation with district and municipal public hospitals, shall establish a class of district and municipal public hospitals, or multiple classes to the extent federal approval is available, for purposes of payments under this paragraph.

(B) The department, in consultation with district and municipal public hospitals, shall determine a maximum amount that the class, or classes, of district and municipal public hospitals established pursuant to subparagraph (A) may earn in quality incentive payments for an applicable state fiscal year or rate year.

(C) The department, in consultation with district and municipal public hospitals and applicable Medi-Cal managed care plans, shall establish and provide a method for updating uniform performance measures for the performance-based quality incentive payments and parameters for district and municipal public hospitals to select the applicable measures. The performance measures shall advance at least one goal identified in the state’s Medicaid quality strategy.

(D) Each district and municipal public hospital shall submit reports to the department containing information required to evaluate its performance on all applicable performance measures, at the time and in the form and manner specified by the department. Medi-Cal managed care plans shall assist a district and municipal public hospital in collecting and distributing information necessary for these reports.

(E) The department shall calculate the amount earned by each district and municipal public hospital based on its performance score established pursuant to subparagraphs (C) and (D). This amount shall be paid to the district and municipal public hospital by each of its contracted Medi-Cal managed care plans. If a district and municipal public hospital contracts with multiple Medi-Cal managed care plans, the department shall identify each Medi-Cal managed care plan’s proportionate amount of the district and municipal public hospital’s payment. The timing and amount of the distributions and any related reporting requirements for interim payments shall be established and agreed to by the district and municipal public hospital and each of the applicable Medi-Cal managed care plans.

(F) A contract between a Medi-Cal managed care plan and district and municipal public hospital shall not be terminated by either party for the specific purpose of circumventing or otherwise impacting the payment obligations implemented pursuant to this paragraph.

(G) Each Medi-Cal managed care plan shall be responsible for payment of the quality incentive payments described in this paragraph, subject to funding by the department pursuant to paragraph (5).

(5) The department shall provide appropriate funding to each Medi-Cal managed care plan, to account for and to enable them to make the quality incentive payments described in this subdivision, through the incorporation into actuarially sound capitation rates or any other federally permissible method. The amounts designated by the department for the quality incentive payments made pursuant to this subdivision shall be reserved for the purposes of the performance-based quality incentive payment program.

(d) (1) In determining the amount of the required directed payments described in paragraph (2) of subdivision (b), and the aggregate size of the quality incentive payment program described in paragraph (2) of subdivision (c), the department shall consult with designated public hospital systems to establish levels for these payments that, in combination with one another, are projected to result in aggregate payments that will advance the quality and access objectives reflected in prior payment enhancement mechanisms for designated public hospital systems. To the extent necessary to meet these objectives or to comply with any federal requirements, the department may, in consultation with the designated public hospital systems, adjust or modify either or both the directed payments or quality incentive payment program. Once these payment levels are established, the department shall consult with the designated public hospital systems and the Medi-Cal managed care plans in the development of the Medi-Cal managed care rates needed for the directed payments and the structure of the quality incentive payment program.

(2) (A) For the 2017–18 state fiscal year, the department shall, as soon as practicable after receipt of necessary federal approvals pursuant to paragraph (1) of subdivision (g), provide written notice of the directed payment and quality incentive payment amounts established pursuant to this section. A Medi-Cal managed care plan’s obligation to pay the directed payments and quality incentive payments required under subdivisions (b) and (c), respectively, to a designated public hospital system for the 2017–18 state fiscal year shall be contingent on the receipt of the written notice described in this subparagraph.

(B) For each annual determination, commencing with the 2018–19 state fiscal year and each state fiscal year or rate year thereafter, the department shall provide written notice, as soon as practicable, to each affected Medi-Cal managed care plan, designated public hospital system, and, commencing with the 2020–21 state fiscal year, each district and municipal public hospital of the applicable Medi-Cal managed care plan’s directed payment amounts, the classification of designated public hospital systems and district and municipal public hospitals, as applicable, quality incentive payment amounts, and any other information deemed necessary for the Medi-Cal managed care plan to fulfill its payment obligations under subdivisions (b) and (c), as applicable, for the subject state fiscal year or rate year. If the modification of either or both directed payment amounts or quality incentive payment amounts is necessary after receipt of the written notification, the department shall notify the Medi-Cal managed care plan, designated public hospital system, and district and municipal public hospital, as applicable, in writing of the revised amounts before implementation of the revised amounts.

(e) (1) The provisions of paragraphs (3), (4), and (5) of subdivision (a), paragraphs (3) and (4) of subdivision (b), paragraphs (3) and (5) of subdivision (c), and paragraph (2) of subdivision (d) shall be deemed incorporated into each contract between a designated public hospital system and a Medi-Cal managed care plan, and its subcontractor or designee, as applicable, and any claim for breach of those provisions may be brought by the designated public hospital system or the Medi-Cal managed care plan directly in a court of competent jurisdiction.

(2) Commencing with the 2020–21 state fiscal year, the provisions of paragraph (4) of subdivision (c) and paragraph (2) of subdivision (d) shall be deemed incorporated into each contract between a district and municipal public hospital and a Medi-Cal managed care plan, and its subcontractor or designee, as applicable, and any claim for breach of those provisions may be brought by the district and municipal public hospital or the Medi-Cal managed care plan directly in a court of competent jurisdiction.

(f) (1) (A) The nonfederal share of the portion of the capitation rates specifically associated with directed payments required under subdivision (b) and the quality incentive payments established pursuant to subdivision (c) may consist of voluntary intergovernmental transfers of funds provided by designated public hospitals or district and municipal public hospitals and their affiliated governmental entities, or other public entities, pursuant to Section 14164. Upon providing any intergovernmental transfer of funds, each transferring entity shall certify that the transferred funds qualify for federal financial participation pursuant to applicable federal Medicaid laws, and in the form and manner specified by the department. Any intergovernmental transfer of funds made pursuant to this section shall be considered voluntary for purposes of all federal laws.

(B) Notwithstanding any other law, commencing with the 2025 calendar year, the department may, upon acceptance of the voluntary intergovernmental transfers described in subparagraph (A), assess a fee not to exceed 5 percent on intergovernmental transfers pursuant to this section to reimburse the department for the administrative costs of operating the programs pursuant to this section and for the support of the Medi-Cal program.

(2) (A) When applicable for voluntary intergovernmental transfers described in paragraph (1) that are associated with payments to designated public hospital systems, the department, in consultation with the designated public hospital systems, shall develop and maintain a protocol to determine the available funding for the nonfederal share associated with payments for each applicable state fiscal year or rate year pursuant to this section. The protocol developed and maintained pursuant to this paragraph shall account for any applicable contributions made by public entities to the nonfederal share of Medi-Cal managed care expenditures, including, but not limited to, contributions previously made by those specific public entities for the 2015–16 state fiscal year pursuant to Section 14182.15 or 14199.2, but excluding any contributions made pursuant to Sections 14301.4 and 14301.5. Nothing in this section shall be construed to limit or otherwise alter any existing authority of the department to accept intergovernmental transfers for purposes of funding the nonfederal share of Medi-Cal managed care expenditures.

(B) When applicable for voluntary intergovernmental transfers described in paragraph (1) that are associated with payments to district and municipal public hospital systems, the department, in consultation with district and municipal public hospital systems, shall develop and maintain a protocol to determine the available funding for the nonfederal share associated with payments for each applicable state fiscal year or rate year pursuant to this section. Nothing in this section shall be construed to limit or otherwise alter any existing authority of the department to accept intergovernmental transfers for purposes of funding the nonfederal share of Medi-Cal managed care expenditures.

(g) (1) This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized.

(2) For any state fiscal year in which this section is implemented, in whole or in part, and notwithstanding any other law, the department or a Medi-Cal managed care plan shall not be required to make any payment pursuant to Section 14182.15, 14199.2, or 14301.5. Nothing in this section shall be construed to preclude or otherwise impose limitations on payment amounts or arrangements that may be negotiated and agreed to between the relevant parties, including, but not limited to, the continuation of existing or the creation of new quality incentive or pay-for-performance programs in addition to the quality incentive payment program described in subdivision (c) and contract services payments that may be in excess of the directed payment amounts required under subdivision (b).

(h) (1) The department shall seek any necessary federal approvals for the directed payments and the quality incentive payments set forth in this section.

(2) The department shall consult with the designated public hospital systems and district and municipal public hospitals with regard to the development of the directed payment levels established pursuant to subdivisions (b) and (c) of this section, as applicable, and shall consult with designated public hospital systems, district and municipal public hospitals, and Medi-Cal managed care plans with regards to the implementation of payments under this section.

(3) The director, after consultation with the designated public hospital systems, district and municipal public hospitals, and Medi-Cal managed care plans, may modify the requirements set forth in this section to the extent necessary to meet federal requirements or to maximize available federal financial participation. If federal approval is only available with significant limitations or modifications, or if there are changes to the federal Medicaid program that result in a loss of funding currently available to the designated public hospital systems or to the district and municipal public hospitals, the department shall consult with the designated public hospitals systems, the district and municipal public hospitals, and Medi-Cal managed care plans, as applicable, to consider alternative methodologies.

(i) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section by means of all-county letters, plan letters, provider bulletins, or other similar instructions, without taking regulatory action. The department shall make use of appropriate processes to ensure that affected designated public hospital systems, the district and municipal public hospitals, and Medi-Cal managed care plans, as applicable, are timely informed of, and have access to, applicable guidance issued pursuant to this authority, and that this guidance remains publicly available until all payments made pursuant to this section are finalized.

(j) (1) (A) Directed payments and quality incentive payments to designated public hospital systems pursuant to subdivisions (b) and (c) shall cease to be operative on the first day of the state fiscal year or rate year beginning on or after the date the department determines, after consultation with the designated public hospital systems, that implementation of this section is no longer financially or programmatically supportive of the Medi-Cal program. This determination shall be based solely on the following factors:

(i) The projected amount of nonfederal share funds available is insufficient to support implementation of the payments to designated public hospital systems pursuant to subdivisions (b) and (c) in the subject state fiscal year or rate year.

(ii) The degree to which the payment arrangements for designated public hospital systems will no longer materially advance the goals and objectives reflected in this section and in the department’s managed care quality strategy drafted and implemented pursuant to Section 438.340 of Title 42 of the Code of Federal Regulations in the subject state fiscal year or rate year.

(B) In making its determination, the department shall consider all reasonable options for mitigating the circumstances set forth in subparagraph (A), including, but not limited to, options for curing projected funding shortfalls and options for program revisions and strategy updates to better coordinate payment requirements with the goals and objectives of this section and the managed care quality strategy.

(C) The department shall post notice of the determination on its internet website, and shall provide written notice of the determination to the Secretary of State, the Secretary of the Senate, the Chief Clerk of the Assembly, and the Legislative Counsel.

(2) (A) Directed payments and quality incentive payments to district and municipal public hospitals pursuant to subdivisions (b) and (c) shall cease to be operative on the first day of the state fiscal year or rate year beginning on or after the date the department determines, after consultation with the district and municipal public hospitals, that implementation of this section is no longer financially or programmatically supportive of the Medi-Cal program. This determination shall be based solely on the following factors:

(i) The projected amount of nonfederal share funds available is insufficient to support implementation of the payments to district and municipal hospitals pursuant to subdivisions (b) and (c) in the subject state fiscal year or rate year.

(ii) The degree to which the payment arrangement for district and municipal hospitals will no longer materially advance the goals and objectives reflected in this section and in the department’s managed care quality strategy drafted and implemented pursuant to Section 438.340 of Title 42 of the Code of Federal Regulations in the subject state fiscal year or rate year.

(B) In making its determination, the department shall consider all reasonable options for mitigating the circumstances set forth in subparagraph (A), including, but not limited to, options for curing projected funding shortfalls and options for program revisions and strategy updates to better coordinate payment requirements with the goals and objectives of this section and the managed care quality strategy.

(C) The department shall post notice of the determination on its internet website, and shall provide written notice of the determination to the Secretary of State, the Secretary of the Senate, the Chief Clerk of the Assembly, and the Legislative Counsel.

(k) The department, in consultation with the designated public hospital systems and the Medi-Cal managed care plans, shall provide the Legislature with the federally approved evaluation plan required in Section 438.6(c)(2)(i)(D) of Title 42 of the Code of Federal Regulations to measure the degree to which the payments authorized under this section advance at least one of the goals and objectives of the department’s managed care quality strategy. The department, in consultation with the designated public hospital systems and the Medi-Cal managed care plans, shall report to the Legislature the results of this evaluation once the department determines that the evaluation is finalized and complete according to the terms of any applicable federal approval and no earlier than January 1, 2021.

(l) (1) The department may, after consultation with the designated public hospital systems, the district and municipal public hospitals, and Medi-Cal managed care plans, as applicable, exclude certain Medi-Cal managed care enrollee categories of aid, or subcategories thereof, or certain categories of medical assistance provided under a Medi-Cal managed care plan, or subcategories thereof, from the definition of “contract services payments” for purposes of the directed payment requirements described in subdivision (b).

(2) The department shall seek federal approval to implement this subdivision.

(m) For purposes of this section, the following definitions apply:

(1) “Contract services payments” means the amount paid or payable to a designated public hospital system, including amounts paid or payable under fee-for-service, capitation amounts before any adjustments for service payment withholds or deductions, or payments made on any other basis, under a network provider contract with a Medi-Cal managed care plan for medically necessary and covered services, drugs, supplies, or other items provided to an eligible Medi-Cal beneficiary enrolled in the Medi-Cal managed care plan, excluding services provided to individuals who are dually eligible for both the Medicare and Medi-Cal programs and any additional exclusions that are approved pursuant to subdivision (l). Contract services includes all covered services, drugs, supplies, or other items the designated public hospital system provides, or is responsible for providing, or arranging or paying for, pursuant to a network provider contract entered into with a Medi-Cal managed care plan. If a Medi-Cal managed care plan subcontracts or delegates responsibility to a separate entity for either or both the arrangement or payment of services, “contract services payments” also include amounts paid or payable for the services provided by, or otherwise the responsibility of, the designated public hospital system that are within the scope of services of the subcontracted or delegated arrangement so long as the designated public hospital system holds a network provider contract with the primary Medi-Cal managed care plan.

(2) “Designated public hospital” has the same meaning as set forth in subdivision (f) of Section 14184.10.

(3) “Designated public hospital system” means a designated public hospital and its affiliated government entity clinics, practices, and other health care providers, including the respective affiliated hospital authority and county government entities described in Chapter 5 (commencing with Section 101850) and Chapter 5.5 (commencing with Section 101852), of Part 4 of Division 101 of the Health and Safety Code.

(4) (A) “Medi-Cal managed care plan” means an applicable organization or entity that enters into a contract with the department pursuant to any of the following:

(i) Article 2.7 (commencing with Section 14087.3).

(ii) Article 2.8 (commencing with Section 14087.5).

(iii) Article 2.81 (commencing with Section 14087.96).

(iv) Article 2.82 (commencing with Section 14087.98).

(v) Article 2.91 (commencing with Section 14089).

(vi) Chapter 8 (commencing with Section 14200).

(B) “Medi-Cal managed care plan” does not include any of the following:

(i) A mental health plan contracting to provide mental health care for Medi-Cal beneficiaries pursuant to Chapter 8.9 (commencing with Section 14700).

(ii) A plan not covering inpatient services, such as primary care case management plans, operating pursuant to Section 14088.85.

(iii) A Program of All-Inclusive Care for the Elderly organization operating pursuant to Chapter 8.75 (commencing with Section 14591).

(5) “Network provider” has the same meaning as that term is defined in Section 438.2 of Title 42 of the Code of Federal Regulations, and does not include arrangements where a designated public hospital system or a district and municipal public hospital provides or arranges for services under an agreement intended to cover a specific range of services for a single identified patient for a single inpatient admission, including any directly related followup care, outpatient visit or service, or other similar patient specific nonnetwork contractual arrangement, such as a letter of agreement or single case agreement, with a Medi-Cal managed care plan or subcontractor of a Medi-Cal managed care plan.

(6) “District and municipal public hospital” means a nondesignated public hospital, as defined in subdivision (k) of Section 14184.10, that is a contracted network provider of one or more Medi-Cal managed care plans, and that had an approved project plan under the PRIME program established pursuant to Section 14184.50 or is otherwise authorized to participate in a quality incentive directed payment program pursuant to the applicable terms of federal approval obtained by the department pursuant to paragraph (1) of subdivision (h).

history: (History: Amended by Stats. 2024, Ch. 40, Sec. 68. (SB 159) Effective June 29, 2024.)

article: 6.3. Medi-Cal Managed Care Plans


kind: section

code: WIC

text:
(a) As part of the federally required external quality review organization (EQRO) review of Medi-Cal managed care plans in the annual detailed technical report required by Section 438.364 of Title 42 of the Code of Federal Regulations, effective for contract periods commencing on or after July 1, 2018, the EQRO designated by the department shall compile the data described in subdivision (b), by plan and by county, for the purpose of informing the status of implementation of the requirements of Section 14197.

(b) (1) The information compiled by the EQRO shall include all of the following:

(A) Number of requests for alternative access standards in the plan service area for time and distance, categorized by provider types, including specialists, and by adult and pediatric.

(B) Number of allowable exceptions for the appointment time standard, if known, categorized by provider types, including specialists, and by adult and pediatric.

(C) Distance and driving time between the nearest network provider and ZIP Code of the beneficiary furthest from that provider for requests for alternative access standards.

(D) Approximate number of beneficiaries impacted by alternative access standards or allowable exceptions.

(E) Percentage of providers in the plan service area, by provider and specialty type, that are under a contract with a Medi-Cal managed care plan.

(F) The number of requests for alternative access standards approved or denied by ZIP Code and provider and specialty type, and the reasons for the approval or denial of the request for alternative access standards. If an approval is authorized, the reasons for approval shall identify whether the approval was granted for either of the following reasons:

(i) A provider was not located in the requested ZIP Code.

(ii) The Medi-Cal managed care plan was unable to enter into a contract with a provider or providers in the requested ZIP Code.

(G) The process of ensuring out-of-network access.

(H) Descriptions of contracting efforts and explanation for why a contract was not executed.

(I) Timeframe for approval or denial of a request for alternative access standards by the department.

(J) Consumer complaints, if any.

(2) The information described in paragraph (1) shall be presented in a chart format to enable comparison among counties, provider types, and plans.

(c) The EQRO shall develop a methodology to assess information that will help inform the experience of individuals placed in a skilled nursing facility or intermediate care facility and the distance that they are placed from their place of residence. The EQRO shall report the results from the use of this methodology in the EQRO annual Medi-Cal managed care plan technical report.

(d) The department shall comply with the requirements of subsection (c) of Section 438.364 of Title 42 of the Code of Federal Regulations in making the information described in this section publicly available.

history: (History: Amended by Stats. 2019, Ch. 465, Sec. 5. (AB 1642) Effective January 1, 2020.)

division: 9. PUBLIC SOCIAL SERVICES

chapter: 7. Basic Health Care

article: 6.3. Medi-Cal Managed Care Plans

path: 9. PUBLIC SOCIAL SERVICES > 7. Basic Health Care > 6.3. Medi-Cal Managed Care Plans


text:
(a) Notwithstanding any other law, but no sooner than July 1, 2019, the Cost-Based Reimbursement Clinic Directed Payment Program shall be in operation.

(b) For purposes of this section, the following definitions apply:

(1) “Cost-based reimbursement clinics” or “CBRCs” have the same meaning as the providers described in subdivision (a) of Section 14105.24.

(2) “Cost-Based Reimbursement Clinic Directed Payment Program” or “CBRC DPP” or “program,” means a directed payment initiative implemented pursuant to subsection (c) of Section 438.6 of Title 42 of the Code of Federal Regulations or other applicable federal authority that requires affected Medi-Cal managed care plans to compensate CBRCs that are network providers for all network contract services provided to enrollees of the applicable Medi-Cal managed care plan as those clinics would be reimbursed according to the Medi-Cal cost-based, fee-for-service methodology as described in Section 14105.24. Services provided to enrollees who are dually eligible for both the Medicare and Medi-Cal programs are excluded for purposes of this program.

(3) “Medi-Cal managed care plan” or “plan” has the same meaning as described in paragraph (4) of subdivision (m) of Section 14197.4.

(4) “Network provider” has the same meaning as that term is defined in paragraph (5) of subdivision (m) of Section 14197.4.

(c) (1) The department shall increase the capitation amounts paid to affected plans in each fiscal year by the amount the department deems necessary for the plan to comply with the requirements of this section, subject to the availability of nonfederal share funding described in subdivision (d).

(2) The directed payment amounts paid under this section shall not supplant amounts that would otherwise be payable by a plan to a CBRC for an applicable fiscal year, and the plan shall not impose a fee or retention amount that would result in a direct or indirect reduction to the amounts required under this section.

(d) The nonfederal share of the increases described in subdivision (c) may be funded through voluntary, intergovernmental transfers from affected counties or other public entities pursuant to Section 14164. Subject to an appropriation in the annual Budget Act, the first thirty million dollars ($30,000,000) of nonfederal share in each fiscal year, or any lesser amount as determined by the department pursuant to paragraph (2) of subdivision (e), shall be financed by other state funds appropriated to the department for this purpose. Upon providing any intergovernmental transfer of funds, each transferring entity shall certify, in the form and manner specified by the department, that the transferred funds qualify for federal financial participation pursuant to applicable Medicaid laws. Any intergovernmental transfer of funds made pursuant to this section shall be considered voluntary for purposes of all federal laws. Notwithstanding any other law, the department shall not assess the fee described in subdivision (d) of Section 14301.4 nor any other similar fee.

(e) (1) The department shall consult with the affected counties on a periodic basis, as determined appropriate by the department, to assess the extent to which implementation of the directed payments under this section in a particular fiscal year is likely to be federally approved and remains financially and programmatically supportive of the Medi-Cal program.

(2) After consulting with the affected counties pursuant to paragraph (1), the department may do either of the following:

(A) Reduce the total size of CBRC DPP payments to be made in that applicable fiscal year. If the department elects to reduce the total size of payments, the amount of state funding required to be provided first as nonfederal share for an applicable fiscal year pursuant to subdivision (d) shall be reduced as calculated and determined by the department.

(B) Elect to not implement CBRC DPP payments for an applicable fiscal year or years.

(f) Notwithstanding any other law, for any fiscal year in which the department implements the CBRC DPP payments, the amount of state funding provided as described in subdivision (d) shall not be included in the total revenues as defined in paragraph (7) of subdivision (b) of Section 17612.5.

(g) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section, in whole or in part, by means of plan letters, provider bulletins, or other similar instructions, without taking regulatory action.

(h) This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized.

history: (History: Added by Stats. 2018, Ch. 34, Sec. 32. (AB 1810) Effective June 27, 2018.)

article: 6.3. Medi-Cal Managed Care Plans


text:
(a) For purposes of this section, the following definitions apply:

(1) “Children’s hospital” has the same meaning as that term is defined in Section 10727.

(2) “Medi-Cal managed care plan” has the same meaning as that term is defined in subdivision (j) of Section 14184.101.

(b) Notwithstanding any other law, for dates of service no sooner than July 1, 2024, the department shall establish a directed payment reimbursement methodology, or revise one or more existing directed payment reimbursement methodologies, applicable to children’s hospitals. Medi-Cal managed care plans shall reimburse children’s hospitals in accordance with the requirements of the directed payment arrangement established by the department pursuant to this section and guidance issued pursuant to subdivision (e).

(c) The department shall establish the form and manner of the directed payments authorized pursuant to this section, in consultation with representatives of children’s hospitals and in accordance with the requirements for directed payment arrangements described in Section 438.6(c) of Title 42 of the Code of Federal Regulations and any associated federal guidance.

(d) In implementing this section, the department shall seek any federal approvals that it deems necessary. This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized.

(e) Notwithstanding the rulemaking provisions of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement this section, in whole or in part, by means of all-county letters, plan letters, provider bulletins, information notices, or other similar instructions, without taking any further regulatory action.

(f) The department shall develop the methodologies and parameters for the payments implemented pursuant to subdivisions (b) and (c) and may revise the methodologies and parameters for purposes, including, but not limited to, obtaining or maintaining any necessary federal approvals as required by subdivision (d).

(g) Commencing no sooner than July 1, 2024, and notwithstanding Section 13340 of the Government Code, one hundred fifteen million dollars ($115,000,000) annually shall be continuously appropriated to the department from the General Fund to support the payments implemented pursuant to this section, except that such amount may be adjusted pursuant to subdivision (h).

(h) If the Protect Access to Healthcare Act of 2024 (A.G. No. 23-0024) is approved by the voters, and if children’s hospitals receive increased reimbursement rates or payments pursuant to Section 14199.108, 14199.108.3, 14199.112, or 14199.116, or if children’s hospitals receive increased reimbursement rates or payments funded pursuant to subdivision (c) of Section 14105.200, then the amount available for directed payments to children’s hospitals as specified in subdivision (g) and the amount directed pursuant to subdivision (c) may be reduced by the estimated total amount of such increases, as determined by the Department of Health Care Services, in an amount not to exceed seventy-five million dollars ($75,000,000) annually.

(i) It is the intent of the Legislature that the payments implemented pursuant to this section are to augment amounts that would otherwise be payable to children’s hospitals by a Medi-Cal managed plan or the department. It is not the intent of the Legislature that the payments implemented pursuant to this section replace amounts that would otherwise be payable by a Medi-Cal managed care plan or the department to children’s hospitals.

history: (History: Added by Stats. 2024, Ch. 40, Sec. 69. (SB 159) Effective June 29, 2024.)

article: 6.3. Medi-Cal Managed Care Plans


text:
(a) A Medi-Cal managed care plan shall ensure access to care for latent tuberculosis infection and active tuberculosis disease and coordination with local health department tuberculosis control programs for plan enrollees with active tuberculosis disease, including, but not limited to, both of the following:

(1) Arranging for and coordinating outpatient diagnostic and treatment services to all plan enrollees with suspected or active tuberculosis disease to minimize delays in initiating isolation and treatment of infectious patients. These outpatient services shall include physical examination, drug therapy, laboratory testing, and radiology.

(2) Consulting with local health departments to assess the risk of noncompliance with drug therapy for each plan enrollee who requires placement on antituberculosis drug therapy, in accordance with the plan’s existing contract with the department.

(b) For purposes of this section, “Medi-Cal managed care plan” has the same meaning as set forth in Section 14197.08.

history: (History: Added by Stats. 2024, Ch. 951, Sec. 3. (AB 2132) Effective January 1, 2025.)

article: 6.3. Medi-Cal Managed Care Plans


text:
(a) (1) Notwithstanding any other law, if the director finds that an entity that contracts with the department for the delivery of health care services (contractor), including a Medi-Cal managed care plan or a prepaid health plan, fails to comply with contract requirements, state or federal law or regulations, or the state plan or approved waivers, or for other good cause, the director may terminate the contract or impose sanctions as set forth in this section.

(2) Good cause includes, but is not limited to, a finding of deficiency that results in improper denial or delay in the delivery of health care services, potential endangerment to patient care, disruption in the contractor’s provider network, failure to approve continuity of care, that claims accrued or to accrue have not or will not be recompensed, or a delay in required contractor reporting to the department.

(b) The director may identify findings of noncompliance or good cause through any means, including, but not limited to, findings in audits, investigations, contract compliance reviews, quality improvement system monitoring, routine monitoring, facility site surveys, encounter and provider data submissions, grievances and appeals, network adequacy reviews, assessments of timely access requirements, reviews of utilization data, health plan rating systems, fair hearing decisions, complaints from beneficiaries and other stakeholders, whistleblowers, and contractor self-disclosures.

(c) (1) Except when the director determines there is an immediate threat to the health of Medi-Cal beneficiaries receiving health care services from the contractor, at the request of the contractor, the department shall hold a public hearing to commence 30 days after notice of intent to terminate the contract has been received by the contractor.

(2) The department shall present evidence at the hearing showing good cause for the termination.

(3) The department shall assign an administrative law judge who shall provide a written recommendation to the department on the termination of the contract within 30 days after conclusion of the hearing.

(4) (A) Reasonable notice of the hearing shall be given to the contractor, Medi-Cal beneficiaries receiving services through the contractor, and other interested parties, including any other person and organization the director may deem necessary.

(B) The notice shall state the effective date of, and the reason for, the termination.

(d) In lieu of contract termination, the director shall have the power and authority to require or impose a plan of correction and issue one or more of the following sanctions against a contractor for findings of noncompliance or good cause, including, but not limited to, those specified in subdivision (a):

(1) Temporarily or permanently suspend enrollment and marketing activities.

(2) Require the contractor to suspend or terminate contractor personnel or subcontractors.

(3) Issue one or more of the temporary suspension orders set forth in subdivision (j).

(4) Impose temporary management consistent with the requirements specified in Section 438.706 of Title 42 of the Code of Federal Regulations.

(5) Suspend default enrollment of enrollees who do not select a contractor for the delivery of health care services.

(6) Impose civil monetary sanctions consistent with the dollar amounts and violations specified in Section 438.704 of Title 42 of the Code of Federal Regulations, as follows:

(A) A limit of twenty-five thousand dollars ($25,000) for each determination of the following:

(i) The contractor fails to provide medically necessary services that the contractor is required to provide, under law or under its contract with the department, to an enrollee covered under the contract.

(ii) The contractor misrepresents or falsifies information to an enrollee, potential enrollee, or health care provider.

(iii) The contractor distributes directly, or indirectly through an agent or independent contractor, marketing materials that have not been approved by the state or that contain false or materially misleading information.

(B) A limit of one hundred thousand dollars ($100,000) for each determination of the following:

(i) The contractor conducts an act of discrimination against an enrollee on the basis of their health status or need for health care services. This includes termination of enrollment or refusal to reenroll a beneficiary, except as permitted under the Medicaid program, or a practice that would reasonably be expected to discourage enrollment by beneficiaries whose medical condition or history indicates probable need for substantial future medical services.

(ii) The contractor misrepresents or falsifies information that it furnishes to the federal Centers for Medicare and Medicaid Services or to the department.

(C) A limit of fifteen thousand dollars ($15,000) for each beneficiary the director determines was not enrolled because of a discriminatory practice under clause (i) of subparagraph (B). This sanction is subject to the overall limit of one hundred thousand dollars ($100,000) under subparagraph (B).

(e) Notwithstanding the monetary sanctions imposed for the violations set forth in paragraph (6) of subdivision (d), the director may impose monetary sanctions in accordance with this section based on any of the following:

(1) The contractor violates a federal or state statute or regulation.

(2) The contractor violates a provision of its contract with the department.

(3) The contractor violates a provision of the state plan or approved waivers.

(4) The contractor fails to meet quality metrics or benchmarks established by the department. Any changes to the minimum quality metrics or benchmarks made by the department that are effective on or after January 1, 2020, shall be established in advance of the applicable reporting or performance measurement period, unless required by the federal government.

(5) The contractor fails to demonstrate that it has an adequate network to meet anticipated utilization in its service area.

(6) The contractor fails to comply with network adequacy standards, including, but not limited to, time and distance, timely access, and provider-to-beneficiary ratio requirements pursuant to standards and formulae that are set forth in federal or state law, regulation, state plan, or contract and that are posted in advance to the department’s internet website.

(7) The contractor fails to comply with the requirements of a corrective action plan.

(8) The contractor fails to submit timely and accurate network provider data.

(9) The director identifies deficiencies in the contractor’s delivery of health care services.

(10) The director identifies deficiencies in the contractor’s operations, including the timely payment of claims.

(11) The contractor fails to comply with reporting requirements, including, but not limited to, those set forth in Section 53862 of Title 22 of the California Code of Regulations.

(12) The contractor fails to timely and accurately process grievances or appeals.

(f) (1) Monetary sanctions imposed pursuant to subdivision (e) may be separately and independently assessed and may also be assessed for each day the contractor fails to correct an identified deficiency. For a deficiency that impacts beneficiaries, each beneficiary impacted constitutes a separate violation. Monetary sanctions shall be assessed in the following amounts:

(A) Up to twenty-five thousand dollars ($25,000) for a first violation.

(B) Up to fifty thousand dollars ($50,000) for a second violation.

(C) Up to one hundred thousand dollars ($100,000) for each subsequent violation.

(2) For monetary sanctions imposed on a contractor that is funded from one or more of the realigned accounts described in paragraphs (2) to (4), inclusive, of subdivision (n), the department shall calculate a percentage of the funds attributable to the contractor to be offset per month pursuant to paragraphs (2) to (4), inclusive, of subdivision (n) until the amount offset equals the amount of the penalty imposed pursuant to paragraph (1).

(g) When assessing sanctions pursuant to this section, the director shall determine the appropriate amount of the penalty for each violation based upon one or more of the following nonexclusive factors:

(1) The nature, scope, and gravity of the violation, including the potential harm or impact on beneficiaries.

(2) The good or bad faith of the contractor.

(3) The contractor’s history of violations.

(4) The willfulness of the violation.

(5) The nature and extent to which the contractor cooperated with the department’s investigation.

(6) The nature and extent to which the contractor aggravated or mitigated any injury or damage caused by the violation.

(7) The nature and extent to which the contractor has taken corrective action to ensure the violation will not recur.

(8) The financial status of the contractor, including whether the sanction will affect the ability of the contractor to come into compliance.

(9) The financial cost of the health care service that was denied, delayed, or modified.

(10) Whether the violation is an isolated incident.

(11) The amount of the penalty necessary to deter similar violations in the future.

(12) Other mitigating factors presented by the contractor.

(h) (1) Except in exigent circumstances in which there is an immediate risk to the health of beneficiaries, as determined by the department, the director shall give reasonable written notice to the contractor of the intention to impose any of the sanctions authorized by this section and others who may be directly interested, including any other persons and organizations the director may deem necessary.

(2) The notice shall include the effective date for, the duration of, and the reason for each sanction proposed by the director.

(3) A contractor may request the department to meet and confer with the contractor to discuss information and evidence that may impact the director’s final decision to impose sanctions authorized by this section.

(4) The director shall grant a request to meet and confer prior to issuance of a final sanction if the contractor submits the request in writing to the department no later than two business days after the contractor’s receipt of the director’s notice of intention to impose sanctions.

(i) Notwithstanding subdivision (d), the director shall terminate a contract with a contractor that the United States Secretary of Health and Human Services has determined does not meet the requirements for participation in the Medicaid program contained in Subchapter XIX (commencing with Section 1396) of Chapter 7 of Title 42 of the United States Code.

(j) (1) The department may make one or more of the following temporary suspension orders as an immediate sanction:

(A) Temporarily suspend enrollment activities.

(B) Temporarily suspend marketing activities.

(C) Require the contractor to temporarily suspend specified personnel of the contractor.

(D) Require the contractor to temporarily suspend participation by a specified subcontractor.

(2) The temporary suspension orders shall be effective no earlier than 20 days after the notice specified in subdivision (k).

(k) (1) Prior to issuing a temporary suspension order, or temporarily withholding funds pursuant to subdivision (o), the department shall provide the contractor with a written notice.

(2) The notice shall state the department’s intent to impose a temporary suspension or temporary withhold and specify the nature and effective date of the temporary suspension or temporary withhold.

(3) The contractor shall have 30 calendar days from the date of receipt of the notice to file a written appeal with the department.

(4) Upon receipt of a written appeal filed by the contractor, the department shall, within 15 days, set the matter for hearing, which shall be held as soon as possible but not later than 30 days after receipt of the notice of hearing by the contractor.

(5) The hearing may be continued at the request of the contractor if a continuance is necessary to permit presentation of an adequate defense.

(6) The temporary suspension order shall remain in effect until the hearing is completed and the department has made a final determination on the merits. However, the temporary suspension order shall be deemed vacated if the director fails to make a final determination on the merits within 60 days of the close of the record for the matter.

(7) The department shall stay imposition of a temporary withhold, pursuant to subdivision (o), until the hearing is completed and the department has made a final determination on the merits within 60 days of the close of the record for the matter.

(l) (1) A contractor may request a hearing in connection with sanctions applied pursuant to subdivision (d) or (e) within 15 working days after the notice of the effective date of the sanctions has been given by sending a letter so stating to the address specified in the notice.

(2) The department shall stay collection of monetary sanctions upon receipt of the request for a hearing.

(3) Collection of the sanction shall remain stayed until the effective date of the final decision of the department.

(m) Except as otherwise provided in this section, all hearings to review the imposition of sanctions, including temporary suspension orders, the withholding or offsetting of funds pursuant to subdivision (n), or the temporary withholding of funds pursuant to subdivision (o) shall be held pursuant to the procedures set forth in Section 100171 of the Health and Safety Code.

(n) (1) If the director imposes monetary sanctions pursuant to this section on a contractor, except for a contractor described in paragraphs (2) to (5), inclusive, the amount of the sanction may be collected by withholding the amount from capitation or other associated payments owed to the contractor.

(2) If the director imposes monetary sanctions on a contractor that is funded from the Mental Health Subaccount, the Mental Health Equity Subaccount, the Vehicle License Collection Account of the Local Revenue Fund, or the Mental Health Account, the director may offset the monetary sanctions from the respective account. The offset is subject to paragraph (2) of subdivision (q).

(3) If the director imposes monetary sanctions on a contractor that is funded from the Behavioral Health Subaccount of the Local Revenue Fund 2011, the director may offset the monetary sanctions from that account from the distribution attributable to the applicable contractor. The offset is subject to paragraph (2) of subdivision (q).

(4) If the director imposes monetary sanctions on a contractor that is funded from another mental health or substance use disorder realignment fund from which the Controller is authorized to make distributions to the contractor, the director may offset the monetary sanctions from these funds if the funds described in paragraphs (2) and (3) are insufficient for the purposes described in this subdivision, as appropriate. The offset is subject to paragraph (2) of subdivision (q).

(5) (A) If the director imposes monetary sanctions pursuant to subdivision (e) of Section 5963.04, the director may offset the monetary sanctions from the Behavioral Health Services Fund from the distribution attributable to the applicable contractor.

(B) With respect to an individual contractor, the department shall not collect via offset more than 25 percent of the total amount of the funds distributed from the Behavioral Health Services Fund that are attributable to the contractor in a given month.

(C) If the department is not able to collect the full amount of monetary sanctions imposed on a contractor in a given month, the department shall continue to offset the amounts attributable to the contractor in subsequent months until the full amount of monetary sanctions has been collected. The offset is subject to paragraph (3) of subdivision (q).

(o) (1) (A) Whenever the department determines that a mental health plan or an entity that contracts with the department to provide Drug Medi-Cal services has violated state or federal law, a requirement of this chapter, Chapter 8 (commencing with Section 14200), Chapter 8.8 (commencing with Section 14600), or Chapter 8.9 (commencing with Section 14700), or any regulations, the state plan, a term or condition of an approved waiver, or a provision of its contract with the department, the department may temporarily withhold payments of federal financial participation and payments from the accounts listed in paragraphs (2) to (4), inclusive, of subdivision (n).

(B) The department shall temporarily withhold amounts it deems necessary to ensure the mental health plan or the entity that contracts with the department to provide Drug Medi-Cal services promptly corrects the violation.

(C) The department shall release the temporarily withheld funds when it determines the mental health plan or the entity that contracts with the department to provide Drug Medi-Cal services has come into compliance.

(2) (A) A mental health plan or an entity that contracts with the department to provide Drug Medi-Cal services may appeal the imposition of a temporary withhold pursuant to this subdivision in accordance with the procedures described in subdivisions (k) and (m).

(B) Imposition of a temporary withhold shall be stayed until the effective date of the final decision of the department.

(p) This section shall be read in conjunction with, and apply in addition to, any other applicable law that authorizes the department to impose sanctions or otherwise take remedial action upon contractors.

(q) (1) (A) Notwithstanding any other law, nonfederal moneys collected by the department pursuant to this section, except for moneys collected from a contractor funded from one or more of the realigned accounts described in paragraphs (2) to (4), inclusive, of subdivision (n), shall be deposited into the General Fund for use and, upon appropriation by the Legislature, to address workforce issues in the Medi-Cal program and improve access to care in the Medi-Cal program.

(B) Beginning July 1, 2024, and continuing until June 30, 2027, unless otherwise specified in law, nonfederal moneys collected by the department pursuant to this section, except for moneys collected from a contractor funded from one or more of the realigned accounts described in paragraphs (2) to (4), inclusive, of subdivision (n), shall be deposited into the General Fund for use and, upon appropriation by the Legislature, for the nonfederal share of Medi-Cal costs for health care services furnished to children, adults, seniors, and persons with disabilities, and persons dually eligible for the Medi-Cal program and the Medicare Program.

(2) (A) Monetary sanctions imposed via offset on a contractor that is funded from one or more of the realigned accounts described in paragraphs (2) to (4), inclusive, of subdivision (n) shall be redeposited into the account from which the monetary sanctions were offset pursuant to paragraphs (2) to (4), inclusive, of subdivision (n).

(B) The department shall notify the Department of Finance of the percentage reduction for the affected county.

(C) The Department of Finance shall subsequently notify the Controller, and the Controller shall redistribute the monetary sanction amount to nonsanctioned counties based on each county’s prorated share of the monthly base allocations from the realigned account.

(D) With respect to an individual contractor, the department shall not collect via offset more than 25 percent of the total amount of the funds distributed from the applicable account or accounts that are attributable to the contractor in a given month.

(E) If the department is not able to collect the full amount of monetary sanctions imposed on a contractor funded from one or more of the realigned accounts described in paragraphs (2) to (4), inclusive, of subdivision (n) in a given month, the department shall continue to offset the amounts attributable to the contractor in subsequent months until the full amount of monetary sanctions has been collected.

(3) Monetary sanctions imposed via offset on a contractor pursuant to subdivision (e) of Section 5963.04 shall be redeposited into the account from which the monetary sanctions were offset pursuant to paragraph (5) of subdivision (n).

(r) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section, in whole or in part, by means of plan or county letters, information notices, plan or provider bulletins, or other similar instructions without taking any further regulatory action.

(s) This section shall be implemented only to the extent that necessary federal approvals have been obtained and that federal financial participation is available.

(t) For purposes of this section, “contractor” means an individual, organization, or entity that enters into a contract with the department to provide services to enrolled Medi-Cal beneficiaries or other individuals receiving behavioral health services, as applicable, pursuant to any of the following:

(1) Article 2.7 (commencing with Section 14087.3), including dental managed care programs developed pursuant to Section 14087.46.

(2) Article 2.8 (commencing with Section 14087.5).

(3) Article 2.81 (commencing with Section 14087.96).

(4) Article 2.82 (commencing with Section 14087.98).

(5) Article 2.9 (commencing with Section 14088).

(6) Article 2.91 (commencing with Section 14089).

(7) Chapter 8 (commencing with Section 14200), including dental managed care plans.

(8) Chapter 8.9 (commencing with Section 14700).

(9) A county Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration pursuant to Article 5.5 (commencing with Section 14184) or a successor demonstration or waiver, as applicable.

(10) Chapter 2 (commencing with Section 5650) of Part 2 of Division 5, solely for purposes of imposition of corrective action plans, monetary sanctions, or temporary withholds pursuant to subdivision (e) of Section 5963.04.

(11) Section 12534 of the Government Code.

(12) The Home- and Community-Based Alternatives (HCBA) Waiver pursuant to state law and Section 1915(c) of the federal Social Security Act (42 U.S.C. Sec. 1396n(c)).

(13) The Program of All-Inclusive Care for the Elderly (PACE) pursuant to Chapter 8.75 (commencing with Section 14591).

(u) This section shall become operative on January 1, 2025, if amendments to the Mental Health Services Act are approved by the voters at the March 5, 2024, statewide primary election.

history: (History: Amended by Stats. 2025, Ch. 21, Sec. 113. (AB 116) Effective June 30, 2025.)

article: 6.3. Medi-Cal Managed Care Plans


text:
(a) A contract between the department and a Medi-Cal managed care plan shall require the Medi-Cal managed care plan to do both of the following:

(1) Identify, on a quarterly basis, every enrollee who is a child without a record of completing the blood lead screening tests required pursuant to Chapter 9 (commencing with Section 37100) of Division 1 of Title 17 of the California Code of Regulations.

(2) On a quarterly basis, remind the contracting network provider who is a health care provider responsible for performing the periodic health assessment of the child enrollee pursuant to Section 37100 of Title 17 of the California Code of Regulations of the requirement to perform required blood lead screening tests for that child, and the requirement to provide oral or written anticipatory guidance to a parent or guardian of the child, including at a minimum, the information that children may be harmed by exposure to lead.

(b) The department shall develop and implement procedures, and may impose sanctions pursuant to Section 14197.7, to ensure that a Medi-Cal managed care plan is compliant with the requirements specified in subdivision (a).

(1) As part of these procedures, the department shall require a Medi-Cal managed care plan to maintain a record of all child enrollees six years of age or younger who have missed a required blood lead screening and identify the age at which the required blood lead screenings were missed, including which children are without any record of a completed blood lead screening at each age, and provide that record to the department annually and upon request for auditing and compliance purposes.

(2) If the child enrollee, or the child enrollee’s parent, guardian, or authorized representative refuses a required blood lead screening test, the Medi-Cal managed care plan shall ensure a statement of voluntary refusal is signed by the child enrollee, if an emancipated minor, or by the child enrollee’s parent, guardian, or authorized representative, and is documented in the child enrollee’s medical record. If the refusing party declines to sign the statement of voluntary refusal, it shall be noted in the child enrollee’s medical record. Documented unsuccessful attempts to provide the blood lead screening tests shall be considered evidence of the Medi-Cal managed care plan meeting the requirements in subdivision (a).

(c) For purposes of this section, the following definitions apply:

(1) “Medi-Cal managed care plan” means an individual, organization, or entity that enters into a contract with the department to provide general health care services to enrolled Medi-Cal beneficiaries pursuant to any of the following:

(A) Chapter 3 (commencing with Section 101675) of Part 4 of Division 101 of the Health and Safety Code.

(B) Article 2.7 (commencing with Section 14087.3), excluding dental managed care programs developed pursuant to Section 14087.46.

(C) Article 2.8 (commencing with Section 14087.5).

(D) Article 2.81 (commencing with Section 14087.96).

(E) Article 2.82 (commencing with Section 14087.98).

(F) Article 2.9 (commencing with Section 14088).

(G) Article 2.91 (commencing with Section 14089).

(H) Chapter 8 (commencing with Section 14200), excluding dental managed care programs developed pursuant to Section 14087.46.

(2) “Network provider” has the same meaning as in Section 438.2 of Title 42 of the Code of Federal Regulations.

(d) Notwithstanding Chapter 3.5 (commencing Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section, in whole or in part, by means of plan or county letters, information notices, plan or provider bulletins, or other similar instructions, without taking any further regulatory action.

history: (History: Added by Stats. 2020, Ch. 216, Sec. 3. (AB 2276) Effective January 1, 2021.)

article: 6.3. Medi-Cal Managed Care Plans


text:
(a) (1) As part of the health care options information posted by the department, in the provider directory that lists accepted Medi-Cal managed care plans, through the Medi-Cal Managed Care Health Care Options internet website and any other applicable mechanisms, the directory shall include skilled nursing facilities as one of the available searchable provider types.

(2) This subdivision shall be implemented in conjunction with implementation of any other provisions relating to the directory described in this subdivision, including, but not limited to, Sections 14016.5, 14087.305, and 14089 of this code, Section 53886 of Title 22 of the California Code of Regulations, and Section 1396a(a)(83) of Title 42 of the United States Code, or their applicable successors.

(b) The department shall annually update the provider directory described in subdivision (a) to ensure that information is accurate and readily accessible to the public.

(c) For purposes of this section, the following definitions apply:

(1) “Medi-Cal managed care plan” has the same meaning as set forth in Section 14184.101.

(2) “Skilled nursing facility” has the same meaning as set forth in Section 1250 of the Health and Safety Code.

history: (History: Added by Stats. 2025, Ch. 309, Sec. 1. (SB 250) Effective January 1, 2026.)

article: 6.3. Medi-Cal Managed Care Plans


text:
(a) (1) No later than 12 months after the working group develops its recommendations for curriculum pursuant to subdivision (b) of Section 150950 of the Health and Safety Code, and no later than March 1, 2025, a Medi-Cal managed care plan shall require all of its subcontractors, downstream subcontractors, and all of its managed care plan staff who are in direct contact with beneficiaries in the delivery of care or beneficiary services to complete evidence-based cultural competency training for the purpose of providing trans-inclusive health care for individuals who identify as transgender, gender diverse, or intersex (TGI).

(2) An evidence-based cultural competency training implemented pursuant to paragraph (1) shall include all of the following:

(A) Information about the effects, including, but not limited to, ongoing personal effects, of historical and contemporary exclusion and oppression of TGI communities.

(B) Information about communicating more effectively across gender identities, including TGI-inclusive terminology, using people’s correct names and pronouns, even when they are not reflected in records or legal documents; avoiding language, whether verbal or nonverbal, that demeans, ridicules, or condemns TGI individuals; and avoiding making assumptions about gender identity by using gender-neutral language and avoiding language that presumes all individuals are heterosexual, cisgender or gender conforming, or nonintersex.

(C) Discussion on health inequities within the TGI community, including family and community acceptance.

(D) Perspectives of diverse, local constituency groups and TGI-serving organizations, including, but not limited to, the California Transgender Advisory Council.

(E) Recognition of the difference between personal values and professional responsibilities with regard to serving TGI people.

(F) Facilitation by TGI-serving organizations.

(3) Cultural competency training implemented by a Medi-Cal managed care plan that includes TGI components, as required by its managed care plan contract with the department, shall meet this requirement. This cultural competency training shall consider recommendations made by the working group pursuant to Section 150950 of the Health and Safety Code.

(4) Use of any training curricula for purposes of implementing paragraph (1) shall be subject to approval by the department, following stakeholder engagement with local constituency groups and TGI-serving organizations, including, but not limited to, the California Transgender Advisory Council.

(5) After first-time completion of the evidence-based cultural competency training, in the form of initial basic training, an individual described in paragraph (1) shall complete a refresher course if a complaint has been filed, and a decision has been made in favor of the complainant, against that individual for not providing trans-inclusive health care, or on a more frequent basis if deemed necessary by the Medi-Cal managed care plan or the department for purposes of providing trans-inclusive health care.

(b) (1) No later than 12 months after the working group develops its recommendations for curriculum pursuant to subdivision (b) of Section 150950 of the Health and Safety Code, and no later than March 1, 2025, the department shall develop and implement procedures, and may impose sanctions pursuant to Section 14197.7, to ensure that a Medi-Cal managed care plan is compliant with the requirements described in subdivision (a).

(2) The department shall track and monitor complaints received by the department related to trans-inclusive health care and publicly report this data with other complaint data on its website or with other public reports containing complaint data.

(c) No later than 12 months after the working group develops its recommendations for curriculum pursuant to subdivision (b) of Section 150950 of the Health and Safety Code, and no later than March 1, 2025, a Medi-Cal managed care plan shall include information within or accessible from the plan’s provider directory, and accessible through the plan’s call center, that identifies which of the Medi-Cal managed care plan’s in-network providers have affirmed that they offer and have provided gender-affirming services, including, but not limited to, feminizing mammoplasty, male chest reconstruction, mastectomy, gender-confirming facial surgery, hysterectomy, oophorectomy, penectomy, orchiectomy, feminizing genitoplasty, metoidioplasty, phalloplasty, scrotoplasty, voice masculinization or feminization, hormone therapy related to gender dysphoria or intersex conditions, gender-affirming gynecological care, or voice therapy related to gender dysphoria or intersex conditions. This information shall be updated when an in-network provider requests its inclusion or exclusion as a provider that offers and provides gender-affirming services. Nothing in this act alters any business establishment’s obligation to provide full and equal services to customers or patients regardless of their sex and other protected characteristics, pursuant to the Unruh Civil Rights Act (Section 51 of the Civil Code) and other applicable law.

(d) For purposes of this section, the following definitions apply:

(1) “Medi-Cal managed care plan” means an individual, organization, or entity that enters into a contract with the department to provide general health care services to enrolled Medi-Cal beneficiaries pursuant to any of the following:

(A) Article 2.7 (commencing with Section 14087.3), excluding dental managed care programs developed pursuant to Section 14087.46.

(B) Article 2.8 (commencing with Section 14087.5).

(C) Article 2.81 (commencing with Section 14087.96).

(D) Article 2.82 (commencing with Section 14087.98).

(E) Article 2.9 (commencing with Section 14088).

(F) Article 2.91 (commencing with Section 14089).

(G) Chapter 8 (commencing with Section 14200), excluding dental managed care plans.

(H) Chapter 8.9 (commencing with Section 14700).

(I) A county Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration pursuant to Article 5.5 (commencing with Section 14184), the California Advancing and Innovating Medi-Cal Demonstration pursuant to Section 14184.401, or a successor demonstration or waiver, as applicable.

(2) The requirements described in this section that are imposed on a “Medi-Cal managed care plan” also apply to a Program of All-Inclusive Care for the Elderly (PACE) organization operating pursuant to Chapter 8.75 (commencing with Section 14591). The sanctions described in subdivision (b) also apply to a PACE organization, which may be imposed by the department or the State Department of Public Health pursuant to Section 14592 or any other provisions applicable to PACE organizations.

(3) “TGI” means transgender, gender diverse, or intersex.

(4) “TGI-serving organization” has the same meaning as set forth in paragraph (2) of subdivision (f) of Section 150900 of the Health and Safety Code.

(5) “Trans-inclusive health care” means comprehensive health care that is consistent with the standards of care for individuals who identify as TGI, honors an individual’s personal bodily autonomy, does not make assumptions about an individual’s gender, accepts gender fluidity and nontraditional gender presentation, and treats everyone with compassion, understanding, and respect.

(e) (1) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department, without taking any further regulatory action, shall implement, interpret, or make specific this section by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, until regulations are adopted.

(2) The department shall adopt regulations for purposes of this section by July 1, 2027, in accordance with the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. The department shall provide a status report to the Legislature on a semiannual basis, in compliance with Section 9795 of the Government Code, until regulations are adopted.

history: (History: Added by Stats. 2022, Ch. 822, Sec. 7. (SB 923) Effective January 1, 2023.)

article: 6.3. Medi-Cal Managed Care Plans


text:
(a) To the extent permitted under federal law, the department shall require a Medi-Cal managed care plan that is not licensed by the Department of Managed Health Care to comply with the applicable requirements in Article 11.9 (commencing with Section 1399.870) of Chapter 2.2 of Division 2 of the Health and Safety Code for the purpose of serving applicable Medi-Cal beneficiaries.

(b) For purposes of this section, “Medi-Cal managed care plan” means an individual, organization, or entity that enters into a comprehensive risk contract with the department to provide covered full-scope health care services to enrolled Medi-Cal beneficiaries pursuant to this chapter or Chapter 8 (commencing with Section 14200).

(c) (1) For purposes of implementing the Ensuring Access to Medicaid Services Final Rule, and the Medicaid and Children’s Health Insurance Program Managed Care Access, Finance, and Quality Final Rule, which were published in Volume 89, Number 92 of the Federal Register on May 10, 2024, the department may enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis.

(2) Notwithstanding any other law, contracts entered into or amended pursuant to this subdivision shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Article 4 (commencing with Section 19130) of Chapter 5 of Part 2 of Division 5 of Title 2 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, the Statewide Information Management Manual, the State Administrative Manual, and the State Contracting Manuals, and shall be exempt from the review or approval of any division of the Department of General Services.

(3) This subdivision shall become inoperative on January 1, 2029.

(d) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section, in whole or in part, by means of all-county letters, plan letters, provider bulletins, information notices, or other similar instructions, without taking any further regulatory action.

history: (History: Amended by Stats. 2025, Ch. 418, Sec. 2. (SB 530) Effective January 1, 2026.)

article: 6.3. Medi-Cal Managed Care Plans