2007 California Welfare and Institutions Code Article 2.7. Contracts For Medi-cal Services And Case Management

CA Codes (wic:14087.3-14087.48)

14087.3.  (a) The director may contract, on a bid or nonbid basis,
with any qualified individual, organization, or entity to provide
services to, arrange for or case manage the care of Medi-Cal
beneficiaries.  At the director's discretion, the contract may be
exclusive or nonexclusive, statewide or on a more limited geographic
basis, and include provisions to do the following:
   (1) Perform targeted case management of selected services or
beneficiary populations where it is expected that case management
will reduce program expenditures.
   (2) Provide for delivery of services in a manner consistent with
managed care principles, techniques, and practices directed at
ensuring the most cost-effective and appropriate scope, duration, and
level of care.
   (3) Provide for alternate methods of payment, including, but not
limited to, a prospectively negotiated reimbursement rate,
fee-for-service, retainer, capitation, shared savings, volume
discounts, lowest bid price, negotiated price, rebates, or other
basis.
   (4) Secure services directed at any or all of the following:
   (A) Recruiting and organizing providers to care for Medi-Cal
beneficiaries.
   (B) Designing and implementing fiscal or other incentives for
providers to participate in the Medi-Cal program in cost-effective
ways.
   (C) Linking beneficiaries with cost-effective providers.
   (5) Provide for:
   (A) Medi-Cal managed care plans contracting under this chapter or
Chapter 8 (commencing with Section 14200) to share in the
efficiencies and economies realized by those contracts.
   (B) Effective coordination between contractors operating under
this article and Medi-Cal managed care plans in the management of
health care provided to Medi-Cal beneficiaries.
   (6) Permit individual physicians, groups of physicians, or other
providers to participate in a manner that supports the organized
system mode of operation.
   (7) Encourage group practices with relationships with hospitals
having low unit costs.
   (b) The director may require individual physicians, groups of
physicians, or other providers as a condition of participation under
the Medi-Cal program, to enter into capitated contracts pursuant to
this section in order to correct or prevent irregular or abusive
billing practices.  No physician, groups of physicians, or other
providers shall be reimbursed for services rendered to Medi-Cal
beneficiaries if the physician, group of physicians, or other
providers has declined to enter into a contract required by the
director pursuant to this section.
   (c) The department shall seek federal waivers necessary to allow
for federal financial participation under this section.
   (d) (1) Notwithstanding the provisions of this chapter, the
department shall determine preliminary per capita rates of payment
for services provided to Medi-Cal beneficiaries enrolled in a managed
care program contracting in areas specified by the director for
expansion of the Medi-Cal managed care program under this section, or
Sections 14018.7, 14087.31, 14087.35, 14087.36, 14087.38, or
14087.96.  The department shall provide to each managed care plan the
preliminary contract rates and source documents at least 60 days
prior to the effective date of each new rate period.
   (2) On or before June 1, 1999, the department shall enter into a
memorandum of understanding with the managed care plans subject to
paragraph (1) regarding the development of capitation rates.  This
memorandum of understanding, which is intended to ensure that
capitation rates become effective in a timely manner and remain
stable throughout the rate year, shall establish all of the
following:
   (A) A process and timetable for the managed care plans to review
and comment on any modifications in the rate development methodology.

   (B) A process and timetable for managed care plans to provide
comments on the draft rates.
   (C) A process and timetable for the department to respond to
managed care plan comments on the draft rates.
   (D) A process and timetable to managed care finalize capitation
rates.



14087.301.  When entering into contracts with health care service
plans that provide comprehensive dental benefits to Medi-Cal
beneficiaries on an at-risk basis, the department may require that
the health care service plans pay for the costs of the administrative
and regulatory oversight required to monitor the contract compliance
terms of the agreement with the department.



14087.305.  (a) In areas specified by the director for expansion of
the Medi-Cal managed care program under Section 14087.3 and where the
department is contracting with a prepaid health plan that is
contracting with, governed, owned or operated by a county board of
supervisors, a county special commission or county health authority
authorized by Sections 14018.7, 14087.31, 14087.35, 14087.36,
14087.38, and 14087.96, a Medi-Cal or California Work Opportunity and
Responsibility for Kids (CalWORKs) applicant or beneficiary shall be
informed of the health care options available regarding methods of
receiving Medi-Cal benefits. The county shall ensure that each
beneficiary is informed of these options and informed that a health
care options presentation is available.
   (b) The managed care options information described in subdivision
(a) shall include the following elements:
   (1) Each beneficiary or eligible applicant shall be provided, at a
minimum, with the name, address, telephone number, and specialty, if
any, of each primary care provider, by specialty, or clinic,
participating in each managed care health plan option through a
personalized provider directory for that beneficiary or applicant.
This information shall be presented under the geographic area
designations, by the name of the primary care provider and clinic and
shall be updated based on information electronically provided
monthly by the health care plans to the department, setting forth any
changes in the health care plan's provider network. The geographic
areas shall be based on the applicant's residence address, the minor
applicant's school address, the applicant's work address, or any
other factor deemed appropriate by the department, in consultation
with health plan representatives, legislative staff, and consumer
stakeholders. In addition, directories of the entire service area of
the local initiative and commercial plan provider networks,
including, but not limited to, the name, address, and telephone
number of each primary care provider and hospital, shall be made
available to beneficiaries or applicants who request them from the
health care options contractor. Each personalized provider directory
shall include information regarding the availability of a directory
of the entire service area, provide telephone numbers for the
beneficiary to request a directory of the entire service area, and
include a postage-paid mail card to send for a directory of the
entire service area. The personalized provider directory shall be
implemented as a pilot project in Los Angeles County pursuant to this
article, and in Sacramento County (Geographic Managed Care Model)
pursuant to Article 2.91 (commencing with Section 14089). The
content, form, and the geographic areas used in the personalized
provider directories shall be determined by the department, in
consultation with a workgroup to include health plan representatives,
legislative staff, and consumer stakeholders, with an emphasis on
the inclusion of stakeholders from Los Angeles and Sacramento
Counties. The personalized provider directories may include a section
for each health plan. Prior to implementation of the pilot project,
the department, in consultation with consumer stakeholders,
legislative staff, and health plans, shall determine the parameters,
methodology, and evaluation process of the pilot project. The pilot
project shall thereafter be in effect for a minimum of two years.
Three months prior to the end of the first two years of the pilot
project, the department shall promptly provide the fiscal and policy
committees of the Legislature with an evaluation of the personalized
provider directory pilot project and its impact on the Medi-Cal
managed care program, including whether the pilot project resulted in
a reduction of default assignments and a more informed choice
process for beneficiaries, and its overall cost-benefit to the state.
Following two years of operation as a pilot project in two counties
and submission of the evaluation to the Legislature, the department,
in consultation with consumer stakeholders, legislative staff, and
health plans, shall determine whether to implement personalized
provider directories as a permanent program statewide. This
determination shall be based on the outcomes set forth in the
evaluation provided to the Legislature. If necessary, the pilot
project shall continue beyond the initial two-year period until this
determination is made. This pilot project shall only be implemented
to the extent that it is budget neutral to the department.
   (2) Each beneficiary or eligible applicant shall be informed that
he or she may choose to continue an established patient-provider
relationship in a managed care option, if his or her treating
provider is a primary care provider or clinic contracting with any of
the prepaid health plan options available and has available capacity
and agrees to continue to treat that beneficiary or applicant.
   (3) Each beneficiary or eligible applicant shall be informed that
if he or she fails to make a choice, he or she shall be assigned to,
and enrolled in, a prepaid health plan.
   (c) No later than 30 days following the date a Medi-Cal or
CalWORKs beneficiary or applicant is determined eligible for
Medi-Cal, the beneficiary shall indicate his or her choice, in
writing, from among the available prepaid health plans in the region
and his or her choice of primary care provider or clinic contracting
with the selected prepaid health plan. Notwithstanding the 30-day
deadline set forth in this subdivision, if a beneficiary requests a
directory for the entire service area within 30 days of receiving an
enrollment form, the deadline for choosing a plan shall be extended
an additional 30 days from the date of the request.
   (d) At the time the beneficiary or eligible applicant selects a
prepaid health plan, the department shall, when applicable, encourage
the beneficiary or eligible applicant to also indicate, in writing,
his or her choice of primary care provider or clinic contracting with
the selected prepaid health plan.
   (e) In areas specified by the director for expansion of the
Medi-Cal managed care program under Section 14087.3, and where the
department is contracting with a prepaid health plan that is
contracting with, governed, owned or operated by a county board of
supervisors, a county special commission or county health authority
authorized by Sections 14018.7, 14087.31, 14087.35, 14087.36,
14087.38, and 14087.96, a Medi-Cal or CalWORKs beneficiary who does
not make a choice of managed care plans, shall be assigned to and
enrolled in an appropriate Medi-Cal prepaid health plan providing
service within the area in which the beneficiary resides.
   (f) If a beneficiary or eligible applicant does not choose a
primary care provider or clinic, or does not select any primary care
provider who is available, the prepaid health plan that was selected
by or assigned to the beneficiary shall ensure that the beneficiary
selects a primary care provider or clinic within 30 days after
enrollment or is assigned to a primary care provider within 40 days
after enrollment.
   (g) Any Medi-Cal or CalWORKs beneficiary dissatisfied with the
primary care provider or prepaid health plan shall be allowed to
select or be assigned to another primary care provider within the
same prepaid health plan. In addition, the beneficiary shall be
allowed to select or be assigned to another prepaid health plan
contracted for pursuant to this article that is in effect for the
geographic area in which he or she resides, in accordance with
Section 1903(m)(2)(F)(ii) of the Social Security Act.
   (h) The department or its contractor shall notify a prepaid health
plan when it has been selected by or assigned to a beneficiary. The
prepaid health plan that has been selected by or assigned to a
beneficiary shall notify the primary care provider that has been
selected or assigned.  The prepaid health plan shall also notify the
beneficiary of the prepaid health plan and primary care provider or
clinic selected or assigned.
   (i) (1) The managed health care plan shall have a valid Medi-Cal
contract, adequate capacity, and appropriate staffing to provide
health care services to the beneficiary.
   (2) The department shall establish standards for all of the
following:
   (A) The maximum distances a beneficiary is required to travel to
obtain primary care services from the managed care plan, in which the
beneficiary is enrolled.
   (B) The conditions under which a primary care service site shall
be accessible by public transportation.
   (C) The conditions under which a managed care plan shall provide
nonmedical transportation to a primary care service site.
   (3) In developing the standards required by paragraph (2) the
department shall take into account, on a geographic basis, the means
of transportation used and distances typically traveled by Medi-Cal
beneficiaries to obtain fee-for-service primary care services and the
experience of managed care plans in delivering services to Medi-Cal
enrollees. The department shall also consider the provider's ability
to render culturally and linguistically appropriate services.
   (j) To the extent possible, the arrangements for carrying out
subdivision (e) shall provide for the equitable distribution of
Medi-Cal beneficiaries among participating prepaid health plans, or
managed care plans.
   (k) This section shall be implemented in a manner consistent with
any federal waiver required to be obtained by the department in order
to implement this section.



14087.31.  (a) It is necessary that a special commission be
established in the Counties of Tulare and San Joaquin in order to
meet the problems of delivery of publicly assisted medical care in
the county and to demonstrate ways of promoting quality care and cost
efficiency.  Because there is no general law under which such a
commission could be formed, the adoption of a special act and the
formation of a special commission is required.
   (b) (1) The Board of Supervisors of the County of Tulare and the
County of San Joaquin may, for each respective county, by ordinance,
establish a commission to negotiate and enter into contracts
authorized by Section 14087.3, and to arrange for the provision of
health care services provided pursuant to this chapter.  If the board
of supervisors elects to enact this ordinance, all rights, powers,
duties, privileges, and immunities vested in a county contracting
with the department under this article shall be vested in the county
commission.
   (2) Health plans operated by the commission may also include, but
are not limited to, individuals covered under Title XVIII of the
Social Security Act (Subchapter XVIII (commencing with Section 1395)
of Chapter 7 of Title 42 of the United States Code), individuals and
groups entitled to coverage under other publicly supported programs,
individuals and groups employed by public agencies or private
businesses, and uninsured or indigent persons.
   (c) The enabling ordinance shall specify the membership of the
county commission, the qualifications for individual members, the
manner of appointment, selection, or removal of commissioners, and
how long they shall serve, and any other matters as the board of
supervisors deems necessary or convenient for the conduct of the
county commission's activities.  Members of the commission shall be
appointed by the county board of supervisors to represent the
interests of the public, county, beneficiaries, physicians,
hospitals, other health care providers, or other health care
organizations.  The commission so established shall be considered an
entity separate from the county and shall file a statement required
by Section 53051 of the Government Code.  The commission shall have
the power to acquire, possess, and dispose of real or personal
property, as may be necessary for the performance of its functions,
to employ personnel and contract for services required to meet its
obligations, to sue or be sued, and to enter into agreements under
Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of
the Government Code.  Any obligations of a commission, statutory,
contractual or otherwise, shall be obligations solely of the
commission and shall not be the obligations of the county or of the
state.
   (d) Upon creation, the commission may borrow from the county, and
the county may lend the commission, funds or issue revenue
anticipation notes to obtain those funds necessary to commence
operations.  Prior to commencement of operations, the commission
shall be licensed pursuant to the Knox-Keene Health Care Service Plan
Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division
2 of the Health and Safety Code).
   (e) In the event a commission may no longer function for the
purposes for which it is established, at the time as the commission's
then existing obligations have been satisfied or the commission's
assets have been exhausted, the board of supervisors may, by
ordinance, terminate the commission.
   (f) Prior to the termination of the commission, the board of
supervisors shall notify the department of its intent to terminate
the commission.  The department shall conduct an audit of the
commission's records within 30 days of the notification to determine
the liabilities and assets of the commission.  The department shall
report its findings to the board within 10 days of completion of the
audit.  The board shall prepare a plan to liquidate or otherwise
dispose of the assets of the commission and to pay the liabilities of
the commission to the extent of the commission's assets, and present
the plan to the department within 30 days upon receipt of these
findings.
   (g) Any assets of the commission shall be disposed of pursuant to
provisions contained in the contract entered into between the state
and the commission pursuant to Section 14087.
   (h) (1) It is the intent of the Legislature that if a commission
is formed pursuant to this section, the county shall, with respect to
its medical facilities and programs, occupy no greater or lesser
status than any other health care provider with similar cost
structure and patient population including, but not limited to,
considerations of indigent care burden, capital requirements,
graduate medical education, and disproportionate share status, in
negotiating with the commission for contracts to provide health care
services.
   (2) Contracts between the department and the commission shall be
on a nonbid basis and shall be exempt from Chapter 2 (commencing with
Section 10290) of Part 2 of Division 2 of the Public Contract Code.

   (3) Nothing in this subdivision shall be construed to interfere
with or limit the commission from giving preference in negotiating to
disproportionate share hospitals or other providers of health care
to medically indigent or uninsured persons.
   (i) Upon termination of the commission by the board, the county
shall manage any remaining assets of the commission until superseded
by a department approved plan.  Any liabilities of the commission
shall not become obligations of the county upon either the
termination of the commission or the liquidation or disposition of
the commission's remaining assets.
   (j) (1) The commission shall be considered a public entity for
purposes of Division 3.6 (commencing with Section 810) of Title 1 of
the Government Code.
   (2) The commission, its members, and employees, are protected by
the immunities applicable to public entities and public employees
governed by Division 3.6 (commencing with Section 810) of Title 1 of
the Government Code, except as provided by other statutes or
regulations that apply expressly to the commission.
   (k) Notwithstanding any other provision of law, a member of the
commission shall not be deemed to be interested in a contract entered
into by the commission within the meaning of Article 4 (commencing
with Section 1090) of Chapter 1 of Division 4 of Title 1 of the
Government Code if all of the following apply:
   (1) The member was appointed to represent the interest of
physicians, health care practitioners, hospitals, pharmacies, or
other health care organizations.
   (2) The contract authorizes the member or the organization the
member represents to provide services to Medi-Cal beneficiaries under
the commission's programs.
   (3) The contract contains substantially the same terms and
conditions as contracts entered into with other individuals or
organizations that the member was appointed to represent.
   (4) The member does not influence or attempt to influence the
commission or another member of the commission to enter into the
contract in which the member is interested.
   (5) The member discloses the interest to the commission and
abstains from voting on the contract.
   (6) The commission notes the member's disclosure and abstention in
its official records and authorized the contract in good faith by a
vote of its membership sufficient for the purpose without counting
the vote of the interested member.
   (l) All claims for money or damages against the commission shall
be governed by Part 3 (commencing with Section 900) and Part 4
(commencing with Section 940) of Division 3.6 of Title 1 of the
Government Code, except as provided by other statutes or regulations
that expressly apply to the commission.
   (m) Notwithstanding any other provision of law, except as
otherwise provided in this section, a county shall not be liable for
any act or omission of the commission.
   (n) For the purposes of this section, "commission" means an entity
separate from the county that meets the requirements of state and
federal law and the quality, cost, and access criteria established by
the department.
   (o) The transfer of responsibility for health care services shall
not relieve the county of its responsibility for indigent care
pursuant to Section 17000.
   (p) Notwithstanding any other provision of law, the commission may
meet in closed session to consider and take action on matters
pertaining to contracts and contract negotiations by commission staff
with providers of health care services concerning all matters
related to rates of payment.
   (q) Notwithstanding Article 9 (commencing with Section 11120) of
Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code
and Article 2 (commencing with Section 54340) of Chapter 6 of
Division 2 of Title 5 of the Government Code, or any other provision
of law, any "peer review body," as defined in paragraph (1) of
subdivision (a) of Section 805 of the Business and Professions Code,
formed pursuant to the powers granted to the commission authorized by
this section, may, at its discretion and without notice to the
public, meet in closed session, so long as the purpose of the meeting
is the peer review body's discharge of its responsibility to
evaluate and improve the quality of care rendered by health
facilities of health practitioners, pursuant to the powers granted
the commission.  The peer review body and its members shall receive
to the fullest extent all immunities, privileges, and protections
available to these peer review bodies, their individual members, and
persons or entities assisting in the peer review process, including,
but not limited to, those afforded by Section 1370 of the Health and
Safety Code.
   (r) Notwithstanding any other provision of law, both the county
and the commission shall be eligible to receive funding under
subdivision (p) of Section 14163, and the commission shall be
considered for all purposes to satisfy the requirements of
subdivision (p) of Section 14163.
   (s) The commission shall be deemed to be a public agency that is a
unit of local government for purposes of all grant programs and
other funding and loan guarantee programs.
   (t) Notwithstanding any other provision of law, those records of
the commission and of the county that reveal the rates of payment for
health care services or the commission's deliberative processes,
discussions, communications, or any other portion of the negotiations
with providers of health care services for rates of payment, shall
not be disclosed pursuant to the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code), or any similar local law requiring
disclosure of public records.  However, three years after a contract
or amendment to a contract is fully executed, the portion of the
contract or amendment containing the rates of payment shall be open
to inspection.
   (u) Notwithstanding the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), Article 3 (commencing with Section 11200) of
Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code,
Chapter 9 (commencing with Section 54960) of Part 1 of Division 2 of
Title 5 of the Government Code, or any other provision of state or
local law requiring disclosure of public records, those records of
the commission and the county that reveal the proceedings of a peer
review body, as defined in paragraph (1) of subdivision (a) of
Section 805 of the Business and Professions Code, formed pursuant to
the powers granted to the commission authorized by this section,
shall not be required to be disclosed.  The records and proceedings
of the peer review body and its members shall receive to the fullest
extent, all immunities, privileges, and protections available to
these records and proceedings, including, but not limited to, those
afforded by Section 1157 of the Evidence Code.
   (v) (1) Provisions of the Evidence Code, the Government Code,
including the California Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1 of the Government Code),
the Civil Code, the Business and Professions Code, and other
applicable law pertaining to the confidentiality of peer review
activities of peer review bodies shall apply to the peer review
activities of the commission.  Peer review proceedings shall
constitute an official proceeding authorized by law within the
meaning of Section 47 of the Civil Code, and those privileges set
forth in that section with respect to official proceedings shall
apply to peer review proceedings of the commission.  If the
commission is required by law or contractual obligation to submit to
the state or federal government peer review information or
information relevant to the credentialing of a participating
provider, that submission shall not constitute a waiver of
confidentiality.  All laws pertaining to the confidentiality of peer
review activities shall be construed together as extending, to the
extent permitted by law, the maximum degree of protection of
confidentiality.
   (2) Notwithstanding any other provision of law, Section 1461 of
the Health and Safety Code shall apply to hearings on the reports of
hospital medical audit or quality assurance committees as they relate
to network providers or applicants.
   (w) Except as expressly provided by other provisions of this
section, all exemptions and exclusions from disclosure as public
records pursuant to the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), including, but not limited to, those pertaining to
trade secrets and information withheld in the public interest, shall
be fully applicable for all state agencies and local agencies with
respect to all writings that the commission is required to prepare,
produce, or submit pursuant to this section.
   (x) (1) The commission may use a computerized management
information system in connection with the administration of its
health delivery system, including the administration of the
state-mandated two-plan Medi-Cal managed care model.
   (2) Information maintained in the management information system
that pertains to persons who are Medi-Cal applicants or recipients
shall be confidential pursuant to Section 14100.2, and shall not be
open to examination other than for purposes directly connected with
the administration of the Medi-Cal program, including, but not
limited to, those set forth in subdivision (c) of Section 14100.2.
This safeguarded information includes, but is not limited to, the
names and addresses of recipients, the medical services provided, the
social and economic conditions or circumstances of the recipients,
an evaluation by the commission of personal information, and medical
data, including the diagnosis and past history of disease or
disability.
   (3) Information maintained in the management information system
that pertains to peer review-related activities shall be confidential
and subject to the full protections of the law with respect to the
confidentiality of activities related to peer review generally.
   (y) (1) The records of the commission, whether paper records,
records maintained in the management information system, or records
in any other form, that relate to rates of payment, including records
relating to rates of payment determination, allocation or
distribution methodologies, formulas or calculations, and records of
the health authority that relate to contract negotiations with
providers of health care for alternative rates, shall not be subject
to disclosure pursuant to the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).
   (2) The transmission of the records of the commission, or the
information contained therein in an alternative form, to the board of
supervisors shall not constitute a waiver of exemption from
disclosure, and the records and information, once transmitted to the
county board of supervisors, shall be subject to this same exemption.
  The information, if compelled pursuant to an order of a court of
competent jurisdiction or administrative body in a manner permitted
by law, shall be limited to in camera review, and shall not be shared
with the parties to the proceeding.
   (3) The submission, to the Department of Managed Health Care, of
information described in this section for the purpose of obtaining
licensure under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, or to the State Department
of Health Services, shall not constitute a waiver of exemption from
disclosure.
   (z) (1) (A) Notwithstanding the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5 of
the Government Code), the commission may meet in closed session for
the purpose of discussion of, or taking action on matters involving,
commission trade secrets.
   (B) The requirement that the commission make a public report of
actions taken in closed session and the vote or abstention of every
member present may be limited to a brief general description of the
action taken and the vote so as to prevent the disclosure of a trade
secret.
   (C) For purposes of this subdivision, "commission trade secret"
means a trade secret, as defined in subdivision (d) of Section 3426.1
of the Civil Code, that also meets both of the following criteria:
   (i) The secrecy of the information is necessary for the commission
to initiate a new service, program, marketing strategy, business
plan, or technology, or to add a benefit or product.
   (ii) Premature disclosure of the trade secret would create a
substantial probability of depriving the commission of a substantial
economic benefit or opportunity.
   (2) Those records of the commission that reveal the commission's
trade secrets are exempt from disclosure pursuant to the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code), or any similar local
law requiring the disclosure of public records.  This exemption shall
apply for a period of two years after the service, program,
marketing strategy, business plan, technology, benefit, or product
that is the subject of the trade secret is formally adopted by the
governing body of the commission, provided that the service, program,
marketing strategy, business plan, technology, benefit, or product
continues to be a trade secret.  The commission may delete the
portion or portions containing trade secrets from any documents that
were finally approved in the closed session held pursuant to
paragraph (1) that are provided to persons who have made the timely
or standing request.
   (3) Nothing in this section shall be construed as preventing the
commission from meeting in closed session as otherwise provided by
law.



14087.316.  (a) In lieu of establishing the special commission
authorized by Section 14087.31, the county may, itself, negotiate
with the department the contract specified in Section 14087.3 and
arrange for the provision of health care services provided pursuant
to this chapter.  If the county elects to exercise this option,
subdivisions (p), (q), (t), (u), (v), (w), (x), and (z), of Section
14087.31 shall apply with equal force and effect to the County of
Tulare, its board of supervisors and its members, and any advisory
commission and its members appointed by the board of supervisors to
assist with the provision of health care services provided pursuant
to this section.
   (b) The Tulare County Board of Supervisors shall establish and
maintain an advisory commission.  The advisory commission shall have
a membership that includes beneficiaries, representatives of the
community clinics, representatives of hospitals, and physicians.
Physician membership shall be nominated by the Tulare County Medical
Society.


14087.32.  Commencing on the date the authority first receives
Medi-Cal capitated payments for the provision of health care services
to Medi-Cal beneficiaries and until a commission established
pursuant to Section 14087.31 is in compliance with all the
requirements regarding tangible net equity applicable to a health
care service plan licensed under Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code, all of the
following shall apply:
   (a) The commission may select and design its automated management
information system.  The department, in cooperation with the
commission, prior to making capitated payments, shall test the system
to ensure that the system is capable of producing detailed,
accurate, and timely financial information on the financial condition
of the commission, and any other information that is generally
required by the department in its contracts with other health care
service plans.
   (b) In addition to the reports required by the Department of
Managed Health Care under Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code, and the rules of the
Director of the Department of Managed Health Care promulgated
thereunder, a commission established pursuant to Section 14087.31
shall provide, on a monthly basis, to the department, the Department
of Managed Health Care, and the members of the commission, a copy of
the automated report described in subdivision (a) and a projection of
assets and liabilities, including those that have been incurred but
not reported, with an explanation of material increases or decreases
in current or projected assets or liabilities.  The explanation of
increases and decreases in assets or liabilities shall be provided,
upon request, to a hospital, independent physicians' practice
association or community clinic, which has contracted with the
authority to provide health care services.
   (c) In addition to the reporting and notification obligations the
commission has under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, the chief executive officer
or director of the commission shall immediately notify the
department, the Department of Managed Health Care, and the members of
the commission, in writing, of any fact or facts that, in the chief
executive officer's or director's reasonable and prudent judgment, is
likely to result in the commission being unable to meet its
financial obligations to health care providers or to other parties.
The written notice shall describe the fact or facts, the anticipated
fiscal consequences, and the actions which will be taken to address
the anticipated consequences.
   (d) The Department of Managed Health Care shall not, in any way,
waive or vary, nor shall the department request the Department of
Managed Health Care to waive or vary, the tangible net equity
requirements for a commission under Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code, after
three years from the date of commencement of capitated payments to
the commission.  Until the commission is in compliance with all of
the tangible net equity requirements under Chapter 2.2 (commencing
with Section 1340) of Division 2 of the Health and Safety Code, and
the rules of the Director of the Department of Managed Health Care
adopted thereunder, the commission shall develop a stop-loss program
appropriate to the risks of the commission, which program shall be
satisfactory to both the department and the Department of Managed
Health Care.
   (e) (1)  If the commission votes to file a petition of bankruptcy,
or the county board of supervisors notifies the department of its
intent to terminate the commission, the department shall immediately
transfer the authority's Medi-Cal beneficiaries as follows:
   (A) To other managed care contractors, when available, provided
those contractors are able to demonstrate that they can absorb the
increased enrollment without detriment to the provision of health
care services to their existing enrollees.
   (B) To the extent that other managed care contractors are
unavailable or the department determines that it is otherwise in the
best interest of any particular beneficiary, to a fee-for-service
reimbursement system pending the availability of managed care
contractors provided those contractors are able to demonstrate that
they can absorb the increased enrollment without detriment to the
provision of health care services to their existing enrollees, or the
department determines that providing care to any particular
beneficiary pursuant to a fee-for-service reimbursement system is no
longer necessary to protect the continuity of care or other interests
of the beneficiary.
   (2) Beneficiary eligibility for Medi-Cal shall not be affected by
actions taken pursuant to paragraph (1).
   (3) Beneficiaries who have been or who are scheduled to be
transferred to a fee-for-service reimbursement system or managed care
contractor may make a choice to be enrolled in another managed care
system, if one is available, in full compliance with the federal
freedom-of-choice requirements.
   (f) (1) A commission established pursuant to Section 14087.31
shall submit to a review of financial records when the department
determines, based on data reported by the commission or otherwise,
that the commission will not be able to meet its financial
obligations to health care providers contracting with the commission.
  Where the review of financial records determines that the
commission will not be able to meet its financial obligations to
contracting health care providers for the provision of health care
services, the Director of Health Services shall immediately terminate
the contract between the commission and the state, and immediately
transfer the commission's Medi-Cal beneficiaries in accordance with
subdivision (e) in order to ensure uninterrupted provision of health
care services to the beneficiaries and to minimize financial
disruption to providers.
   (2) The action of the Director of Health Services pursuant to
paragraph (1) shall be the final administrative determination.
Beneficiary eligibility for Medi-Cal shall not be affected by this
action.
   (3) Beneficiaries who have been or who are scheduled to be
transferred under subdivision (e) may make a choice to be enrolled in
another managed care plan, if one is available, in full compliance
with federal freedom-of-choice requirements.
   (g) It is the intent of the Legislature that the department shall
implement Medi-Cal capitated enrollments in a manner that ensures
that appropriate levels of health care services will be provided to
Medi-Cal beneficiaries and that appropriate levels of administrative
services will be furnished to health care providers.  The contract
between the department and the commission shall authorize and permit
the department to administer the number of covered Medi-Cal
enrollments in such a manner that the commission's provider network
and administrative structure are able to provide appropriate and
timely services to beneficiaries and to participating providers.
   (h) In the event a commission is terminated, files for bankruptcy,
or otherwise no longer functions for the purpose for which it was
established, the county shall, with respect to compensation for
provision of health care services to beneficiaries, occupy no greater
or lesser status than any other health care provider in the
disbursement of assets of the commission.
   (i) Nothing in this section shall be construed to impair or
diminish the authority of the Director of the Department of Managed
Health Care under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, nor shall anything in the
section be construed to reduce or otherwise limit the obligation of a
commission licensed as a health care service plan to comply with the
requirements of Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code and the rules of the
Director of the Department of Managed Health Care adopted thereunder.

   (j) Except as expressly provided by other provisions of this
section, all exemptions and exclusions from disclosure as public
records pursuant to the Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1 of the Government Code),
including, but not limited to, those pertaining to trade secrets and
information withheld in the public interest, shall be fully
applicable for all state agencies and local agencies with respect to
all writings that the commission is required to prepare, produce, or
submit pursuant to this section.



14087.325.  (a) The department shall require, as a condition of
obtaining a contract with the department, that any local initiative,
as defined in subdivision (v) of Section 53810 of Title 22 of the
California Code of Regulations, offer a subcontract to any entity
defined in Section 1396d(l)(2)(B) of Title 42 of the United States
Code providing services as defined in Section 1396d(a)(2)(C) of Title
42 of the United States Code and operating in the service area
covered by the local initiative's contract with the department.
These entities are also known as federally qualified health centers.

   (b) Except as otherwise provided in this section, managed care
subcontracts offered to a federally qualified health center or a
rural health clinic, as defined in Section 1396d(l)(1) of Title 42 of
the United States Code, by a local initiative, county organized
health system, as defined in Section 12693.05 of the Insurance Code,
commercial plan, as defined in subdivision (h) of Section 53810 of
Title 22 of the California Code of Regulations, or a health plan
contracting with a geographic managed care program, as defined in
subdivision (g) of Section 53902 of Title 22 of the California Code
of Regulations, shall be on the same terms and conditions offered to
other subcontractors providing a similar scope of service.  Any
beneficiary, subscriber, or enrollee of a program or plan who
affirmatively selects, or is assigned by default to, a federally
qualified health center or rural health clinic under the terms of a
contract between a plan, government program, or any subcontractor of
a plan or program, and a federally qualified health center or rural
health clinic, shall be assigned directly to the federally qualified
health center or rural health clinic, and not to any individual
provider performing services on behalf of the federally qualified
health center or rural health clinic.
   (c) The department shall provide incentives in the competitive
application process described in paragraph (1) of subdivision (b) of
Section 53800 of Title 22 of the California Code of Regulations, to
encourage potential commercial plans as defined in subdivision (h) of
Section 53810 of Title 22 of the California Code of Regulations to
offer subcontracts to these federally qualified health centers.
   (d) Reimbursement to federally qualified health centers and rural
health centers for services provided pursuant to a subcontract with a
local initiative, a commercial plan, geographic managed care program
health plan, or a county organized health system, shall be paid in a
manner that is not less than the level and amount of payment that
the plan would make for the same scope of services if the services
were furnished by a provider that is not a federally qualified health
center or rural health clinic.
   (e) (1) The department shall administer a program to ensure that
total payments to federally qualified health centers and rural health
clinics operating as managed care subcontractors pursuant to
subdivision (d) comply with applicable federal law pursuant to
Sections 1902(aa) and 1903(m)(2)(A)(ix) of the Social Security Act
(42 U.S.C.A. Secs. 1396a(aa) and 1396b(m)(2)(A)(ix)).  Under the
department's program, federally qualified health centers and rural
health clinics subcontracting with local initiatives, commercial
plans, county organized health systems, and geographic managed care
program health plans shall seek supplemental reimbursement from the
department through a per visit fee-for-service billing system
utilizing the state's Medi-Cal fee-for-service claims processing
system contractor.  To carry out this per visit payment process, each
federally qualified health system and rural health clinic shall
submit to the department for approval a rate differential calculated
to reflect the amount necessary to reimburse the federally qualified
health center or rural health clinic for the difference between the
payment the center or clinic received from the managed care health
plan and either the interim rate established by the department based
on the center's or clinic's reasonable cost or the center's or clinic'
s prospective payment rate.  The department shall adjust the computed
rate differential as it deems necessary to minimize the difference
between the center's or clinic's revenue from the plan and the center'
s or clinic's cost-based reimbursement or the center's or clinic's
prospective payment rate.
   (2) In addition, to the extent feasible, within six months of the
end of the center's or clinic's fiscal year, the department shall
perform an annual reconciliation to reasonable cost, and make
payments to, or obtain a recovery from, the center or clinic.
   (f) In calculating the capitation rates to be paid to local
initiatives, commercial plans, geographic managed care program health
plans, and county organized health systems, the department shall not
include the additional dollar amount applicable to cost-based
reimbursement that would otherwise be paid, absent cost-based
reimbursement, to federally qualified health centers and rural health
clinics in the Medi-Cal fee-for-service program.
   (g) On or before September 30, 2002, the director shall conduct a
study of the actual and projected impact of the transition from a
cost-based reimbursement system to a prospective payment system for
federally qualified health centers and rural health clinics.  In
conducting the study, the director shall evaluate the extent to which
the prospective payment system stimulates expansion of services,
including new facilities to expand capacity of the centers, and the
extent to which actual and estimated prospective payment rates of
federally qualified health centers and rural health clinics for the
first five years of the prospective payment system are reflective of
the cost of providing services to Medi-Cal beneficiaries.  Clinics
may submit cost reporting information to the department to provide
data for the study.
   (h) The department shall approve all contracts between federally
qualified health centers or rural health clinics and any local
initiative, commercial plan, geographic managed care program health
plan, or county organized health system in order to ensure compliance
with this section.
   (i) This section shall not preclude the department from
establishing pilot programs pursuant to Section 14087.329.




14087.329.  (a) The department may establish, for local initiative
and for commercial plans, that are providing services to Medi-Cal
beneficiaries under a two-plan model contract with the department,
not more than two pilot programs for the establishment of
reimbursement methodologies.  The reimbursement methodologies shall
not be limited to those provided in Section 14087.325.  The pilot
programs may be implemented by amendment to the contract between the
department and the local initiative or commercial plan.  The
department may select the pilot program county or counties on a
nonbid basis.  The selected counties shall include one county with a
sizable number of entities defined in Section 1396d(l)(2)(B) of Title
42 of the United States Code.  The department shall review each
pilot program annually.  Following the review, and notwithstanding
any determination made pursuant to subdivision (d), the department
shall terminate a pilot program established under this section and
shall delete amendments made to the contract implementing the pilot
program if the department determines that the pilot program creates
any additional cost to the General Fund.  The department may also
terminate a pilot program based upon criteria specified in the
department's contract establishing the pilot program.  The department
shall provide the local initiative and commercial plan with notice
of the department's decision to terminate the pilot program for this
reason at least 90 days prior to the termination date of the pilot
program and deletion of the contract amendments.
   (b) Each local initiative and commercial plan participating in a
pilot program under this section shall make available to the
department any and all financial, membership, utilization, and other
information reasonably required by the department to conduct the
annual review described in subdivision (a).  The information may
include, but is not limited to, the financial or other records of
participating providers.  The amendment to the contract between the
local initiative or commercial plan and the department establishing
the pilot program shall specify a reasonable timeframe in which the
commercial plan or local initiative shall furnish records to the
department pursuant to the request of the department.
   (c) In assessing whether the pilot program creates any additional
cost to the General Fund, as described in subdivision (a), the
department shall specifically consider all of the following factors,
and may consider additional factors:
   (1) Increases in the number of Medi-Cal beneficiaries assigned by
the plan to cost-based primary care providers.  To enable the
department to evaluate these factors, the department may include in
the contract amendments establishing the pilot program a requirement
that contractors shall periodically report data regarding the number
of plan members assigned to each cost-based primary care provider in
the plan's network.
   (2) Expansions in the services provided by providers entitled to
cost-based reimbursement under the Medi-Cal program.
   (3) Medi-Cal caseload or plan membership growth.
   (4) Inflation or other reasonable costs of provider operations.
   (5) The necessity for a plan to assign plan members to specific
primary care providers to meet all of the following requirements:
   (A) Medi-Cal contract requirements for access to care.
   (B) Unique Medi-Cal member cultural and linguistic needs.
   (C) Unique member needs for age-appropriate, gender-appropriate,
or pregnancy care requirements.
   (d) The pilot program shall be deemed to be successful if the
alternative reimbursement methodologies tested result in no
additional cost to the General Fund as described in subdivision (c),
and the local initiatives, commercial plans, and federally qualified
health centers participating in the pilot program agree to accept
full financial risk for the scope of services provided by the
federally qualified health centers during the final year of the pilot
program.


14087.35.  (a) Because of the unique circumstances that exist in the
County of Alameda, it is necessary that the Board of Supervisors of
the County of Alameda be given authority to create a health authority
separate and apart from the County of Alameda as a means of
establishing the local initiative component of the state-mandated
two-plan managed care model for the delivery of medical care and
services to the Medi-Cal populations.  It is further necessary to
enable the board of supervisors to expand publicly assisted medical
and health care delivery by the newly created health authority to
other populations should the board of supervisors elect to do so.
Thus, the adoption of a special act is required.
   (b) The Board of Supervisors of the County of Alameda may, by
ordinance, establish a health authority separate and apart from the
County of Alameda, whose governing board shall reflect the diversity
of local stakeholders such as provider groups, beneficiary groups,
and officials of government, and that is appointed by the board of
supervisors.  Notwithstanding any other provision of this chapter,
the governing board may include, but need not be limited to, the
following:  a member of the board of supervisors, individuals that
represent and further the interests of the perspectives of Medi-Cal
beneficiaries, and individuals that represent and further the
interests of the perspectives of Medi-Cal provider physicians and
other health practitioners, hospitals, and nonprofit community health
centers.  Other perspectives may be represented at the discretion of
the board of supervisors.  The enabling ordinance shall more
specifically set forth the membership of the health authority
governing board, the qualifications for individual members, the
manner of appointment, selection, or removal of governing board
members, their terms of office, and all other matters that the board
of supervisors deems necessary or convenient for the conduct of the
health authority's activities.
   (c) The governing board of the health authority and the
appropriate state departments, to the extent permitted by federal
law, may negotiate and enter into contracts to provide or arrange for
health care services for any or all persons who are eligible to
receive benefits under the Medi-Cal program and for other targeted
populations.  The contracts may be on an exclusive or nonexclusive
basis, and shall include payment provisions on any basis negotiated
between the state and health authority.  Prior to the commencement of
operations, the health authority shall be licensed as a health care
service plan pursuant to the Knox-Keene Health Care Services Plan Act
of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of
the Health and Safety Code).
   (d) The board of supervisors may transfer responsibility for
administration of county-provided health care services to the health
authority for the purpose of service of populations including
uninsured and indigent persons subject to the provisions of any
ordinances or resolutions passed by the board of supervisors.  The
transfer of administrative responsibility for those health care
services shall not relieve the county of its responsibility for
indigent care pursuant to Section 17000.  In addition, the services
and programs of the health authority may include, but are not limited
to, individuals covered under Title XVIII of the Social Security
Act, contained in Subchapter XVIII (commencing with Section 1395) of
Chapter 7 of Title 42 of the United States Code, and individuals and
groups employed by public agencies and private businesses.
   (e) As a legal entity separate and apart from the County of
Alameda, the health authority shall file the statement required by
Section 53051 of the Government Code.  The health authority shall
have the power to acquire, possess, and dispose of real or personal
property as may be necessary for the performance of its functions, to
sue or be sued, to employ personnel and contract for services
required to meet its obligations, and to enter into agreements under
Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of
the Government Code.
   (f) (1) The health authority shall be deemed to be a legal entity
separate and apart from the County of Alameda, and shall not be
considered to be an agency, division, department, or instrumentality
of the County of Alameda.
   (2) The health authority shall not be governed by, nor be subject
to, the Charter of the County of Alameda and shall not be subject to
county policies or operational rules, including, but not limited to,
those relating to personnel and procurement.
   (g) The health authority shall be considered a public entity, and
employees of the health authority shall be considered public
employees, for purposes of Division 3.6 (commencing with Section 810)
of Title 1 of the Government Code, relating to claims and actions
against public entities and public employees.  Members of the
governing board of the health authority shall not be vicariously
liable for injuries caused by the act or omission of the health
authority or advisory body to the extent that protection applies to
members of governing boards of local public entities generally under
Section 820.9 of the Government Code.
   (h) Upon the enactment of the ordinance, all rights, powers,
duties, privileges, and immunities vested in the County of Alameda
with respect to the subject matter of this section shall be vested in
the health authority.  Any obligation of the health authority,
statutory, contractual, or otherwise, shall be the obligation solely
of the health authority and shall not be the obligation of the County
of Alameda or the state.
   (i) The health authority shall not be a "person" subject to suit
under the Cartwright Act, Chapter 2 (commencing with Section 16700)
of Part 2 of Division 7 of the Business and Professions Code.
   (j) The health authority created pursuant to this section may
borrow from the county and the county may lend the health authority
funds, or issue revenue anticipation notes to obtain those funds
necessary to commence operations.
   (k) The health authority or the county, or both, may engage in
marketing, advertising, and promotion of the medical and health care
services made available to the target populations by the health
authority.
   (l) Provisions for the termination of the health authority's
activities with respect to the delivery of services to Medi-Cal
populations shall be contained in the appropriate contracts executed
by and between the health authority and the appropriate state
departments.
   (m) If the board of supervisors expands publicly assisted medical
and health care delivery by the health authority to other
populations, and the board of supervisors subsequently determines
that the health authority may no longer function for the purpose of
the expanded delivery, at the time as the health authority's existing
obligations with respect thereto have been satisfied, the board of
supervisors may, by ordinance, terminate the expanded delivery
activities of the health authority.
   (n) All assets of the health authority that are related to
Medi-Cal services shall be disposed of pursuant to the Medi-Cal
related contract entered into between the state and the health
authority.
   (o) All liabilities or obligations of the health authority with
respect to its activities pursuant to the state-mandated two-plan
managed care model for the delivery of medical care and services to
the Medi-Cal population shall be the liabilities or obligations of
the health authority, and shall not become the liabilities or
obligations of the county upon the termination of the health
authority or at any other time.  Any liabilities or obligations of
the health authority with respect to the liquidation or disposition
of the health authority's assets upon termination of the health
authority shall not become the liabilities or obligations of the
county, except that the county shall manage any remaining Medi-Cal
related assets of the health authority until superseded by a plan
approved by the department.
   (p) The Legislature finds and declares that Section 14105 provides
that the Director of Health Services prescribe the policies for the
administration of Medi-Cal managed care contracts.  The
state-mandated two-plan managed care model distributed by the
director sets forth that policy, expressly providing that local
stakeholders, including government officials, providers, and
community-based organizations, are afforded maximum flexibility and
control in designing a delivery system that reflects the needs and
priorities of the community that it serves.  The mandated model
requires that the governing board of the local initiative reflect an
effort to include representation of the perspectives of provider and
beneficiary groups.  To effectuate this policy, all of the following
shall apply:
   (1) Notwithstanding any provision of law to the contrary, a member
of the governing board of the health authority shall be deemed not
to be interested in a contract entered into by the health authority
within the meaning of Article 4 (commencing with Section 1090) of
Chapter 1 of Division 4 of Title 1 of the Government Code if all the
following apply:
   (A) The member was appointed to represent the interests of
physicians, health care practitioners, hospitals, pharmacies, or
other health care organizations.
   (B) The contract authorizes the member or the organization the
member represents to provide services to beneficiaries or
administrative services under the health authority's programs.
   (C) The contract contains substantially the same terms and
conditions as contracts entered into with other individuals or
organizations that the member was appointed to represent.
   (D) The member does not influence or attempt to influence the
health authority or another member of the health authority to enter
into the contract in which the member is interested.
   (E) The member discloses the interest to the health authority and
abstains from voting on the contract.
   (F) The health authority notes the member's disclosure and
abstention in its official records and authorizes the contract in
good faith by a vote of its membership sufficient for the purpose
without counting the vote of the interested member.
   (2) Notwithstanding Article 4.7 (commencing with Section 1125) of
Chapter 1 of Division 4 of Title 1 of the Government Code related to
incompatible activities, no member of the governing board, no
officer, and no member of the alliance staff shall be considered to
be engaged in activities inconsistent and incompatible with his or
her duties as a governing board member, officer, or staff person
solely as a result of employment or affiliation with the county,
private hospital, clinic, pharmacy, other provider group, employee
organization, or citizen's group.
   (q) (1) The health authority may use a computerized management
information system in connection with the administration of its
health delivery system, including the administration of the
state-mandated two-plan Medi-Cal managed care model.
   (2) Information maintained in the management information system
that pertains to persons who are Medi-Cal applicants or recipients
shall be confidential pursuant to Section 14100.2, and shall not be
open to examination other than for purposes directly connected with
the administration of the Medi-Cal program, including, but not
limited to, those set forth in subdivision (c) of Section 14100.2.
This safeguarded information includes, but is not limited to, names
and addresses, medical services provided, social and economic
conditions or circumstances, health authority evaluation of personal
information, and medical data, including diagnosis and past history
of disease or disability.
   (3) Information maintained in the management information system
that pertains to peer review-related activities shall be confidential
and subject to the full protections of the law with respect to the
confidentiality of activities related to peer review generally.
   (r) The records of the health authority, whether paper records,
records maintained in the management information system, or records
in any other form, that relate to rates of payment, including records
relating to rates of payment determination, allocation or
distribution methodologies, formulas or calculations, and records of
the health authority that relate to contract negotiations with
providers of health care for alternative rates, shall not be subject
to disclosure pursuant to the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).  The transmission of the records, or the
information contained therein in an alternative form, to the board of
supervisors shall not constitute a waiver of exemption from
disclosure, and the records and information once transmitted to the
board of supervisors shall be subject to this same exemption.
   (s) (1) (A) Notwithstanding the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5 of
the Government Code), the governing board of the health authority
may meet in closed session for the purpose of discussion of, or
taking action on matters involving, health authority trade secrets.
   (B) The requirement that the authority make a public report of
actions taken in closed session and the vote or abstention of every
member present may be limited to a brief general description of the
action taken and the vote so as to prevent the disclosure of a trade
secret.
   (C) For purposes of this subdivision, "health authority trade
secret" means a trade secret, as defined in subdivision (d) of
Section 3426.1 of the Civil Code, that also meets both of the
following criteria:
   (i) The secrecy of the information is necessary for the health
authority to initiate a new service, program, marketing strategy,
business plan, or technology, or to add a benefit or product.
   (ii) Premature disclosure of the trade secret would create a
substantial probability of depriving the health authority of a
substantial economic benefit or opportunity.
   (2) Those records of the health authority that reveal the health
authority's trade secrets are exempt from disclosure pursuant to the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code), or any
similar local law requiring the disclosure of public records.  This
exemption shall apply for a period of two years after the service,
program, marketing strategy, business plan, technology, benefit, or
product that is the subject of the trade secret is formally adopted
by the governing body of the health authority, provided that the
service, program, marketing strategy, business plan, technology,
benefit, or product continues to be a trade secret.  The governing
board may delete the portion or portions containing trade secrets
from any documents that were finally approved in the closed session
held pursuant to paragraph (1) that are provided to persons who have
made the timely or standing request.
   (3) Nothing in this section shall be construed as preventing the
governing board from meeting in closed session as otherwise provided
by law.
   (t) Open sessions of the health authority shall constitute
official proceedings authorized by law within the meaning of Section
47 of the Civil Code, and those privileges set forth in that section
with respect to official proceedings shall apply to open sessions of
the health authority.
   (u) The health authority shall be considered a public agency for
purposes of eligibility with respect to grants and other funding and
loan guarantee programs.  Contributions to the health authority shall
be tax deductible to the extent permitted by state and federal law.

   (v) Contracts by and between the health authority and the state,
and contracts by and between the health authority and providers of
health care, goods, or services may be let on a nonbid basis, and
shall be exempt from Chapter 2 (commencing with Section 10290) of
Part 2 of Division 2 of the Public Contract Code.
   (w) (1) Provisions of the Evidence Code, the Government Code,
including the California Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1 of the Government Code),
the Civil Code, the Business and Professions Code, and other
applicable law pertaining to the confidentiality of peer review
activities of peer review bodies shall apply to the peer review
activities of the health authority.  Peer review proceedings shall
constitute an official proceeding authorized by law within the
meaning of Section 47 of the Civil Code, and those privileges set
forth in that section with respect to official proceedings shall
apply to peer review proceedings of the health authority.  If the
health authority is required by law or contractual obligation to
submit to the state or federal government peer review information or
information relevant to the credentialing of a participating
provider, that submission shall not constitute a waiver of
confidentiality.  The laws pertaining to the confidentiality of peer
review activities shall be together construed as extending, to the
extent permitted by law, the maximum degree of protection of
confidentiality.
   (2) Notwithstanding any other provision of law, Section 1461 of
the Health and Safety Code shall apply to hearings on the reports of
hospital medical audit or quality assurance committees as they relate
to network providers or applicants.
   (x) The health authority shall carry general liability insurance
to the extent sufficient to cover its activities.
   (y) The establishment of a health authority under Article 2.8
(commencing with Section 14087.5) shall be valid as if established
pursuant to this section and this section shall apply to that health
authority.



14087.36.  (a) The following definitions shall apply for purposes of
this section:
   (1) "County" means the City and County of San Francisco.
   (2) "Board" means the Board of Supervisors of the City and County
of San Francisco.
   (3) "Department" means the State Department of Health Services.
   (4) "Governing body" means the governing body of the health
authority.
   (5) "Health authority" means the separate public agency
established by the board of supervisors to operate a health care
system in the county and to engage in the other activities authorized
by this section.
   (b) The Legislature finds and declares that it is necessary that a
health authority be established in the county to arrange for the
provision of health care services in order to meet the problems of
the delivery of publicly assisted medical care in the county, to
enter into a contract with the department under Article 2.97
(commencing with Section 14093), or to contract with a health care
service plan on terms and conditions acceptable to the department,
and to demonstrate ways of promoting quality care and cost
efficiency.
   (c) The county may, by resolution or ordinance, establish a health
authority to act as and be the local initiative component of the
Medi-Cal state plan pursuant to regulations adopted by the
department.  If the board elects to establish a health authority, all
rights, powers, duties, privileges, and immunities vested in a
county under Article 2.8 (commencing with Section 14087.5) and
Article 2.97 (commencing with Section 14093) shall be vested in the
health authority.  The health authority shall have all power
necessary and appropriate to operate programs involving health care
services, including, but not limited to, the power to acquire,
possess, and dispose of real or personal property, to employ
personnel and contract for services required to meet its obligations,
to sue or be sued, to take all actions and engage in all public and
private business activities, subject to any applicable licensure, as
permitted a health care service plan pursuant to Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code, and to enter into agreements under Chapter 5 (commencing with
Section 6500) of Division 7 of Title 1 of the Government Code.
   (d) (1) (A) The health authority shall be considered a public
entity for purposes of Division 3.6 (commencing with Section 810) of
Title 1 of the Government Code, separate and distinct from the
county, and shall file the statement required by Section 53051 of the
Government Code.  The health authority shall have primary
responsibility to provide the defense and indemnification required
under Division 3.6 (commencing with Section 810) of Title 1 of the
Government Code for employees of the health authority who are
employees of the county.  The health authority shall provide
insurance under terms and conditions required by the county in order
to satisfy its obligations under this section.
   (B) For purposes of this paragraph, "employee" shall have the same
meaning as set forth in Section 810.2 of the Government Code.
   (2) The health authority shall not be considered to be an agency,
division, department, or instrumentality of the county and shall not
be subject to the personnel, procurement, or other operational rules
of the county.
   (3) Notwithstanding any other provision of law, any obligations of
the health authority, statutory, contractual, or otherwise, shall be
the obligations solely of the health authority and shall not be the
obligations of the county, unless expressly provided for in a
contract between the authority and the county, nor of the state.
   (4) Except as agreed to by contract with the county, no liability
of the health authority shall become an obligation of the county upon
either termination of the health authority or the liquidation or
disposition of the health authority's remaining assets.
   (e) (1) To the full extent permitted by federal law, the
department and the health authority may enter into contracts to
provide or arrange for health care services for any or all persons
who are eligible to receive benefits under the Medi-Cal program.  The
contracts may be on an exclusive or nonexclusive basis, and shall
include payment provisions on any basis negotiated between the
department and the health authority.  The health authority may also
enter into contracts for the provision of health care services to
individuals including, but not limited to, those covered under
Subchapter XVIII (commencing with Section 1395) of Chapter 7 of Title
42 of the United States Code, individuals employed by public
agencies and private businesses, and uninsured or indigent
individuals.
   (2) Notwithstanding paragraph (1), or subdivision (f), the health
authority may not operate health plans or programs for individuals
covered under Subchapter XVIII (commencing with Section 1395) of
Chapter 7 of Title 42 of the United States Code, or for private
businesses, until the health authority is in full compliance with all
of the requirements of the Knox-Keene Health Care Service Plan Act
of 1975 under Chapter 2.2 (commencing with Section 1340) of Division
2 of the Health and Safety Code, including tangible net equity
requirements applicable to a licensed health care service plan.  This
limitation shall not preclude the health authority from enrolling
persons pursuant to the county's obligations under Section 17000, or
from enrolling county employees.
   (f) The board of supervisors may transfer responsibility for
administration of county-provided health care services to the health
authority for the purpose of service of populations including
uninsured and indigent persons, subject to the provisions of any
ordinances or resolutions passed by the county board of supervisors.
The transfer of administrative responsibility for those health care
services shall not relieve the county of its responsibility for
indigent care pursuant to Section 17000.  The health authority may
also enter into contracts for the provision of health care services
to individuals including, but not limited to, those covered under
Subchapter XVIII (commencing with Section 1395) of Chapter 7 of Title
42 of the United States Code, and individuals employed by public
agencies and private businesses.
   (g) Upon creation, the health authority may borrow from the county
and the county may lend the authority funds, or issue revenue
anticipation notes to obtain those funds necessary to commence
operations or perform the activities of the health authority.
Notwithstanding any other provision of law, both the county and the
health authority shall be eligible to receive funding under
subdivision (p) of Section 14163.
   (h) The county may terminate the health authority, but only by an
ordinance approved by a two-thirds affirmative vote of the full
board.
   (i) Prior to the termination of the health authority, the county
shall notify the department of its intent to terminate the health
authority.  The department shall conduct an audit of the health
authority's records within 30 days of notification to determine the
liabilities and assets of the health authority.  The department shall
report its findings to the county and to the Department of Managed
Health Care within 10 days of completion of the audit.  The county
shall prepare a plan to liquidate or otherwise dispose of the assets
of the health authority and to pay the liabilities of the health
authority to the extent of the health authority's assets, and present
the plan to the department and the Department of Managed Health Care
within 30 days upon receipt of these findings.
   (j) Any assets of the health authority derived from the contract
entered into between the state and the authority pursuant to Article
2.97 (commencing with Section 14093), after payment of the
liabilities of the health authority, shall be disposed of pursuant to
the contract.
   (k) (1) The governing body shall consist of 18 voting members, 14
of whom shall be appointed by resolution or ordinance of the board as
follows:
   (A) One member shall be a member of the board or any other person
designated by the board.
   (B) One member shall be a person who is employed in the senior
management of a hospital not operated by the county or the University
of California and who is nominated by the San Francisco Section of
the Westbay Hospital Conference or any successor organization, or if
there is no successor organization, a person who shall be nominated
by the Hospital Council of Northern and Central California.
   (C) Two members, one of whom shall be a person employed in the
senior management of San Francisco General Hospital and one of whom
shall be a person employed in the senior management of St. Luke's
Hospital (San Francisco).  If San Francisco General Hospital or St.
Luke's Hospital, at the end of the term of the person appointed from
its senior management, is not designated as a disproportionate share
hospital, and if the governing body, after providing an opportunity
for comment by the Westbay Hospital Conference, or any successor
organization, determines that the hospital no longer serves an
equivalent patient population, the governing body may, by a
two-thirds vote of the full governing body, select an alternative
hospital to nominate a person employed in its senior management to
serve on the governing body.  Alternatively, the governing body may
approve a reduction in the number of positions on the governing body
as set forth in subdivision (p).
   (D) Two members shall be employees in the senior management of
either private nonprofit community clinics or a community clinic
consortium, nominated by the San Francisco Community Clinic
Consortium, or any successor organization.
   (E) Two members shall be physicians, nominated by the San
Francisco Medical Society, or any successor organization.
   (F) One member shall be nominated by the San Francisco Labor
Council, or any successor organization.
   (G) Two members shall be persons nominated by the beneficiary
committee of the health authority, at least one of whom shall, at the
time of appointment and during the person's term, be a Medi-Cal
beneficiary.
   (H) Two members shall be persons knowledgeable in matters relating
to either traditional safety net providers, health care
organizations, the Medi-Cal program, or the activities of the health
authority, nominated by the program committee of the health
authority.
   (I) One member shall be a person nominated by the San Francisco
Pharmacy Leadership Group, or any successor organization.
   (2) One member, selected to fulfill the appointments specified in
subparagraph (A), (G), or (H) shall, in addition to representing his
or her specified organization or employer, represent the discipline
of nursing, and shall possess or be qualified to possess a registered
nursing license.
   (3) The initial members appointed by the board under the
subdivision shall be, to the extent those individuals meet the
qualifications set forth in this subdivision and are willing to
serve, those persons who are members of the steering committee
created by the county to develop the local initiative component of
the Medi-Cal state plan in San Francisco.  Following the initial
staggering of terms, each of those members shall be appointed to a
term of three years, except the member appointed pursuant to
subparagraph (A) of paragraph (1), who shall serve at the pleasure of
the board.  At the first meeting of the governing body, the members
appointed pursuant to this subdivision shall draw lots to determine
seven members whose initial terms shall be for two years.  Each
member shall remain in office at the conclusion of that member's term
until a successor member has been nominated and appointed.
   (l) In addition to the requirements of subdivision (k), one member
of the governing body shall be appointed by the Mayor of the City of
San Francisco to serve at the pleasure of the mayor, one member
shall be the county's director of public health or designee, who
shall serve at the pleasure of that director, one member shall be the
Chancellor of the University of California at San Francisco or his
or her designee, who shall serve at the pleasure of the chancellor,
and one member shall be the county director of mental health or his
or her designee, who shall serve at the pleasure of that director.
   (m) There shall be one nonvoting member of the governing body who
shall be appointed by, and serve at the pleasure of, the health
commission of the county.
   (n) Each person appointed to the governing body shall, throughout
the member's term, either be a resident of the county or be employed
within the geographic boundaries of the county.
   (o) (1) The composition of the governing body and nomination
process for appointment of its members shall be subject to alteration
upon a two-thirds vote of the full membership of the governing body.
  This action shall be concurred in by a resolution or ordinance of
the county.
   (2) Notwithstanding paragraph (1), no alteration described in that
paragraph shall cause the removal of a member prior to the
expiration of that member's term.
   (p) A majority of the members of the governing body shall
constitute a quorum for the transaction of business, and all official
acts of the governing body shall require the affirmative vote of a
majority of the members present and voting.  However, no official
shall be approved with less than the affirmative vote of six members
of the governing body, unless the number of members prohibited from
voting because of conflicts of interest precludes adequate
participation in the vote.  The governing body may, by a two-thirds
vote adopt, amend, or repeal rules and procedures for the governing
body.  Those rules and procedures may require that certain decisions
be made by a vote that is greater than a majority vote.
   (q) For purposes of Section 87103 of the Government Code, members
appointed pursuant to subparagraphs (B) to (E), inclusive, of
paragraph (1) of subdivision (k) represent, and are appointed to
represent, respectively, the hospitals, private nonprofit community
clinics, and physicians that contract with the health authority, or
the health care service plan with which the health authority
contracts, to provide health care services to the enrollees of the
health authority or the health care service plan.  Members appointed
pursuant to subparagraphs (F) and (G) of paragraph (1) of subdivision
(k) represent, and are appointed to represent, respectively, the
health care workers and enrollees served by the health authority or
its contracted health care service plan, and traditional safety net
and ancillary providers and other organizations concerned with the
activities of the health authority.
   (r) A member of the governing body may be removed from office by
the board by resolution or ordinance, only upon the recommendation of
the health authority, and for any of the following reasons:
   (1) Failure to retain the qualifications for appointment specified
in subdivisions (k) and (n).
   (2) Death or a disability that substantially interferes with the
member's ability to carry out the duties of office.
   (3) Conviction of any felony or a crime involving corruption.
   (4) Failure of the member to discharge legal obligations as a
member of a public agency.
   (5) Substantial failure to perform the duties of office,
including, but not limited to, unreasonable absence from meetings.
The failure to attend three meetings in a row of the governing body,
or a majority of the meetings in the most recent calendar year, may
be deemed to be unreasonable absence.
   (s) Any vacancy on the governing body, however created, shall be
filled for the unexpired term by the board by resolution or
ordinance.  Each vacancy shall be filled by an individual having the
qualifications of his or her predecessor, nominated as set forth in
subdivision (k).
   (t) The chair of the authority shall be selected by, and serve at
the pleasure of, the governing body.
   (u) The health authority shall establish all of the following:
   (1) A beneficiary committee to advise the health authority on
issues of concern to the recipients of services.
   (2) A program committee to advise the health authority on matters
relating to traditional safety net providers, ancillary providers,
and other organizations concerned with the activities of the health
authority.
   (3) Any other committees determined to be advisable by the health
authority.
   (v) (1) Notwithstanding any provision of state or local law,
including, but not limited to, the county charter, a member of the
health authority shall not be deemed to be interested in a contract
entered into by the authority within the meaning of Article 4
(commencing with Section 1090) of Chapter 1 of Division 4 of Title 1
of the Government Code, or within the meaning of conflict-of-interest
restrictions in the county charter, if all of the following apply:
   (A) The member does not influence or attempt to influence the
health authority or another member of the health authority to enter
into the contract in which the member is interested.
   (B) The member discloses the interest to the health authority and
abstains from voting on the contract.
   (C) The health authority notes the member's disclosure and
abstention in its official records and authorizes the contract in
good faith by a vote of its membership sufficient for the purpose
without counting the vote of the interested member.
   (D) The member has an interest in or was appointed to represent
the interests of physicians, health care practitioners, hospitals,
pharmacies, or other health care organizations.
   (E) The contract authorizes the member or the organization the
member has an interest in or represents to provide services to
beneficiaries under the authority's program or administrative
services to the authority.
   (2) In addition, no person serving as a member of the governing
body shall, by virtue of that membership, be deemed to be engaged in
activities that are inconsistent, incompatible, or in conflict with
their duties as an officer or employee of the county or the
University of California, or as an officer or an employee of any
private hospital, clinic, or other health care organization.  The
membership shall not be deemed to be in violation of Section 1126 of
the Government Code.
   (w) Notwithstanding any other provision of law, those records of
the health authority and of the county that reveal the authority's
rates of payment for health care services or the health authority's
deliberative processes, discussions, communications, or any other
portion of the negotiations with providers of health care services
for rates of payment, or the health authority's peer review
proceedings shall not be required to be disclosed pursuant to the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code), or any
similar local law requiring the disclosure of public records.
However, three years after a contract or amendment to a contract is
fully executed, the portion of the contract or amendment containing
the rates of payment shall be open to inspection.
   (x) Notwithstanding any other provision of law, the health
authority may meet in closed session to consider and take action on
peer review proceedings and on matters pertaining to contracts and
contract negotiations by the health authority's staff with providers
of health care services concerning all matters relating to rates of
payment.  However, a decision as to whether to enter into, amend the
services provisions of, or terminate, other than for reasons based
upon peer review, a contract with a provider of health care services,
shall be made in open session.
   (y) (1) (A) Notwithstanding the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5 of
the Government Code), the governing board of the health authority
may meet in closed session for the purpose of discussion of, or
taking action on matters involving, health authority trade secrets.
   (B) The requirement that the authority make a public report of
actions taken in closed session and the vote or abstention of every
member present may be limited to a brief general description of the
action taken and the vote so as to prevent the disclosure of a trade
secret.
   (C) For purposes of this subdivision, "health authority trade
secret" means a trade secret, as defined in subdivision (d) of
Section 3426.1 of the Civil Code, that also meets both of the
following criteria:
   (i) The secrecy of the information is necessary for the health
authority to initiate a new service, program, marketing strategy,
business plan, or technology, or to add a benefit or product.
   (ii) Premature disclosure of the trade secret would create a
substantial probability of depriving the health authority of a
substantial economic benefit or opportunity.
   (2) Those records of the health authority that reveal the health
authority's trade secrets are exempt from disclosure pursuant to the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code), or any
similar local law requiring the disclosure of public records.  This
exemption shall apply for a period of two years after the service,
program, marketing strategy, business plan, technology, benefit, or
product that is the subject of the trade secret is formally adopted
by the governing body of the health authority, provided that the
service, program, marketing strategy, business plan, technology,
benefit, or product continues to be a trade secret.  The governing
board may delete the portion or portions containing trade secrets
from any documents that were finally approved in the closed session
held pursuant to this subdivision that are provided to persons who
have made the timely or standing request.
   (z) The health authority shall be deemed to be a public agency for
purposes of all grant programs and other funding and loan guarantee
programs.
   (aa) Contracts under this article between the State Department of
Health Services and the health authority shall be on a nonbid basis
and shall be exempt from Chapter 2 (commencing with Section 10290) of
Part 2 of Division 2 of the Public Contract Code.
   (ab) (1) The county controller or his or her designee, at
intervals the county controller deems appropriate, shall conduct a
review of the fiscal condition of the health authority, shall report
the findings to the health authority and the board, and shall provide
a copy of the findings to any public agency upon request.
   (2) Upon the written request of the county controller, the health
authority shall provide full access to the county controller all
health authority records and documents as necessary to allow the
county controller or designee to perform the activities authorized by
this subdivision.
   (ac) A Medi-Cal recipient receiving services through the health
authority shall be deemed to be a subscriber or enrollee for purposes
of Section 1379 of the Health and Safety Code.



14087.37.  Commencing on the date that a health authority
established pursuant to Section 14087.35 or 14087.36 first receives
Medi-Cal capitated payments for the provision of health care services
to Medi-Cal beneficiaries and until the time that the health
authority is in compliance with all the requirements regarding
tangible net equity applicable to a health care service plan licensed
under the Knox-Keene Health Care Service Plan Act of 1975, the
following provisions shall apply:
   (a) The health authority may select and design its automated
management information system, but the department, in cooperation
with the health authority, prior to making capitated payments shall
test the system to ensure that the system is capable of producing
detailed, accurate, and timely financial information on the financial
condition of the health authority and any other information
generally required by the department in its contracts with health
care service plans.
   (b) In addition to the reports required by the Department of
Managed Health Care under the Knox-Keene Health Care Service Plan Act
of 1975, and the rules of the Director of the Department of Managed
Health Care promulgated thereunder, the health authority shall
provide on a monthly basis to the department, the Department of
Managed Health Care, and the members of the health authority, a copy
of the automated report described in subdivision (a) and a projection
of assets and liabilities, including those that have been incurred
but not reported, with an explanation of material increases or
decreases in current or projected assets or liabilities.  The
explanation of increases and decreases in assets or liabilities shall
be provided, upon request, to a hospital, independent physicians'
practice association, or community clinic, that has contracted with
the health authority to provide health care services.
   (c) In addition to the reporting and notification obligations the
health authority has under the Knox-Keene Health Care Service Plan
Act of 1975, the chief executive officer or director of the health
authority shall immediately notify the department, the Department of
Managed Health Care, and the members of the health authority in
writing of any fact or facts that, in the chief executive officers'
or director's reasonable and prudent judgment, is likely to result in
the health authority being unable to meet its financial obligations
to health care providers or to other parties.  Written notice shall
describe the fact or facts, the anticipated fiscal consequences, and
the actions that will be taken to address the anticipated
consequences.
   (d) The Department of Managed Health Care shall not waive or vary,
nor shall the department request the Department of Managed Health
Care to waive or vary, the tangible net equity requirements for a
health authority under the Knox-Keene Health Care Service Plan Act of
1975 after three years from the date of commencement of capitated
payments to the health authority.  Until the time the health
authority is in compliance with all of the tangible net equity
requirements under the Knox-Keene Health Care Service Plan Act of
1975, and the rules of the Director of the Department of Managed
Health Care promulgated thereunder, the health authority shall
develop a stop-loss program appropriate to the risks of the health
authority.  The program shall be satisfactory to both the department
and the Department of Managed Health Care.
   (e) In the event that the health authority votes to file a
petition of bankruptcy, or the board of supervisors notifies the
department of its intent to terminate the health authority, the
department shall immediately convert the health authority's Medi-Cal
beneficiaries to either of the following:
   (1) To other managed care contractors when available, provided
those contractors are able to demonstrate that they can absorb the
increased enrollment without detriment to the provision of health
care services to their existing enrollees.
   (2) To the extent that other managed care contractors are
unavailable or the department determines that the action is otherwise
in the best interest of any particular beneficiary, to a
fee-for-service reimbursement system pending the availability of
managed care contractors, provided those contractors are able to
demonstrate that they can absorb the increased enrollment without
detriment to the provision of health care services to their existing
enrollees, or if the department determines that providing care to any
particular beneficiary pursuant to a fee-for-service reimbursement
system is no longer necessary to protect the continuity of care or
other interests of the beneficiary.  Beneficiary eligibility for
Medi-Cal shall not be affected by this action.  Beneficiaries who
have been or who are scheduled to be converted to a fee-for-service
reimbursement system or managed care contractor may make a choice to
be enrolled in another managed care system, if one is available, in
full compliance with the federal freedom-of-choice requirements.
   (f) The health authority shall submit to a review of financial
records when the department determines, based on data reported by the
health authority or otherwise, that the health authority will not be
able to meet its financial obligations to health care providers
contracting with the health authority.  Where the review of financial
records determines that the health authority will not be able to
meet its financial obligations to contracting health care providers
for the provision of health care services, the director shall
immediately terminate the contract between the health authority and
the state, and immediately convert the health authority Medi-Cal
beneficiaries in accordance with subdivision (e) in order to ensure
uninterrupted provision of health care services to the beneficiaries
and to minimize financial disruption to providers.  The action of the
director shall be the final administrative determination.
Beneficiary eligibility for Medi-Cal shall not be affected by this
action.  Beneficiaries who have been or who are scheduled to be
converted under subdivision (e) may make a choice to be enrolled in
another managed care plan, if one is available, in full compliance
with federal freedom-of-choice requirements.
   (g) It is the intent of the Legislature that the department shall
implement Medi-Cal capitated enrollments in a manner that ensures
that appropriate levels of health care services will be provided to
Medi-Cal beneficiaries and that appropriate levels of administrative
services will be furnished to health care providers.  The contract
between the department and the health authority shall authorize and
permit the department to administer the number of covered Medi-Cal
enrollments in such a manner that the health authority's provider
network and administrative structure are able to provide appropriate
and timely services to beneficiaries and to participating providers.

   (h) In the event a health authority is terminated, files for
bankruptcy, or otherwise no longer functions for the purpose for
which it was established, the county shall, with respect to
compensation for provision of health care services to beneficiaries,
occupy no greater or lesser status than any other health care
provider in the disbursement of assets of the health authority.
   (i) Nothing in this subdivision shall be construed to impair or
diminish the authority of the Director of the Department of Managed
Health Care under the Knox-Keene Health Care Service Plan Act of
1975, nor shall anything in the section be construed to reduce or
otherwise limit the obligation of a health authority licensed as a
health care service plan to comply with the requirements of the
Knox-Keene Health Care Service Plan Act of 1975, and the rules of the
Director of the Department of Managed Health Care promulgated
thereunder.



14087.38.  (a) (1) In counties selected by the director with the
concurrence of the county, a special county health authority may be
established in order to meet the problems of delivery of publicly
assisted medical care in each county, and to demonstrate ways of
promoting quality care and cost efficiency.  Nothing in this section
shall be construed to preclude the department from expanding Medi-Cal
managed care in ways other than those provided for in this section,
including, but not limited to, the establishment of a public benefit
corporation as set forth in Section 5110 of the Corporations Code.
   (2) For purposes of this section, "health authority" means an
entity separate from the county that meets the requirements of state
and federal law and the quality, cost, and access criteria
established by the department.
   (b) The board of supervisors of a county described in subdivision
(a) may, by ordinance, establish a health authority to negotiate and
enter into contracts authorized by Section 14087.3, and to arrange
for the provision of health care services provided pursuant to this
chapter.  If the board of supervisors elects to enact this ordinance,
all rights, powers, duties, privileges, and immunities vested in a
county contracting with the department under this article shall be
vested in the health authority.  The health authority may also enter
into contracts for the provision of health care services to
individuals including, but not limited to, those covered under
Subchapter XVIII (commencing with Section 1395) of Chapter 7 of Title
42 of the United States Code, those entitled to coverage under other
publicly supported programs, those employed by public agencies or
private businesses, and uninsured or indigent individuals.
   (c) The enabling ordinance shall specify the membership of the
governing board of the health authority, the qualifications for
individual members, the manner of appointment, selection, or removal
of board members, and how long they shall serve, and any other
matters the board of supervisors deems necessary or convenient for
the conduct of the health authority's activities.  Members of the
governing board shall be appointed by the board of supervisors to
represent the interests of the county, the general public,
beneficiaries, physicians, hospitals, clinics, and other nonphysician
health care providers.  The health authority so established shall be
considered an entity separate from the county and shall file a
statement required by Section 53051 of the Government Code.  The
health authority shall have the power to acquire, possess, and
dispose of real or personal property, as necessary for the
performance of its functions, to employ personnel and contract for
services required to meet its obligations, to sue or be sued, and to
enter into agreements under Chapter 5 (commencing with Section 6500)
of Division 7 of Title 1 of the Government Code.  Any obligations of
a health authority, statutory, contractual, or otherwise, shall be
obligations solely of the health authority and shall not be the
obligations of the county or of the state.
   (d) Upon creation, the health authority may borrow from the
county, and the county may lend the health authority funds or issue
revenue anticipation notes to obtain those funds necessary to
commence operations.
   (e) Notwithstanding any other provision of law, both the county
and the health authority shall be eligible to receive funding under
subdivision (p) of Section 14163, and the health authority shall be
considered to have satisfied the requirements of that subdivision.
   (f) The health authority shall be deemed to be a public agency
that is a unit of local government for purposes of all grant programs
and other funding and loan guarantee programs.
   (g) It is the intent of the Legislature that if a health authority
is formed pursuant to this section, the county shall, with respect
to its medical facilities and programs, occupy no greater or lesser
status than any other health care provider in negotiating with the
health authority for contracts to provide health care services.
Nothing in this subdivision shall be construed to interfere with or
limit the health authority in giving preference in negotiating to
disproportionate share hospitals or other providers of health care to
medically indigent or uninsured individuals.
   (h) Notwithstanding any other provision of law, a member of the
governing board of the health authority shall not be deemed to be
interested in a contract entered into by the health authority within
the meaning of Article 4 (commencing with Section 1090) of Chapter 1
of Division 4 of Title 1 of the Government Code if all the following
apply:
   (1) The member was appointed to represent the interests of
physicians, health care practitioners, hospitals, pharmacies, or
other health care organizations, or beneficiaries.
   (2) The contract authorizes the member or the organization the
member represents to provide services to beneficiaries under the
health authority's programs.
   (3) The contract contains substantially the same terms and
conditions as contracts entered into with other individuals or
organizations that the member was appointed to represent.
   (4) The member does not influence or attempt to influence the
health authority or another member of the health authority to enter
into the contract in which the member is interested.
   (5) The member discloses the interest to the health authority and
abstains from voting on the contract.
   (6) The governing board notes the member's disclosure and
abstention in its official records and authorizes the contract in
good faith by a vote of its membership sufficient for the purpose
without counting the vote of the interested member.
   (i) All claims for money or damages against the health authority
shall be governed by Part 3 (commencing with Section 900) and Part 4
(commencing with Section 940) of Division 3.6 of Title 1 of the
Government Code, except as provided by other statutes or regulations
that expressly apply to the health authority.
   (j) (1) The health authority shall be considered a public entity
for purposes of Division 3.6 (commencing with Section 810) of Title 1
of the Government Code.
   (2) The health authority, members of its governing board, and its
employees, are protected by the immunities applicable to public
entities and public employees governed by Part 1 (commencing with
Section 810) and Part 2 (commencing with Section 814) of Division 3.6
of Title 1 of the Government Code, except as provided by other
statutes or regulations that apply expressly to the health authority.

   (k) Notwithstanding any other provision of law, except as
otherwise provided in this section, a county shall not be liable for
any act or omission of the health authority.
   (l) The transfer of responsibility for health care services to the
health authority shall not relieve the county of its responsibility
for indigent care pursuant to Section 17000.
   (m) Notwithstanding any other provision of law, the governing
board of the health authority may meet in closed session to consider
and take action on matters pertaining to contracts, and to contract
negotiations by health authority staff with providers of health care
services concerning all matters related to rates of payment.
   (n) (1) (A) Notwithstanding the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5 of
the Government Code), the governing board of the health authority
may meet in closed session for the purpose of discussion of, or
taking action on matters involving, health authority trade secrets.
   (B) The requirement that the authority make a public report of
actions taken in closed session and the vote or abstention of every
member present may be limited to a brief general description of the
action taken and the vote so as to prevent the disclosure of a trade
secret.
   (C) For purposes of this section, "health authority trade secret"
means a trade secret, as defined in subdivision (d) of Section 3426.1
of the Civil Code, that also meets both of the following criteria:
   (i) The secrecy of the information is necessary for the health
authority to initiate a new service, program, marketing strategy,
business plan, or technology, or to add a benefit or product.
   (ii) Premature disclosure of the trade secret would create a
substantial probability of depriving the health authority of a
substantial economic benefit or opportunity.
   (2) Those records of the health authority that reveal the health
authority's trade secrets are exempt from disclosure pursuant to the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code), or any
similar local law requiring the disclosure of public records.  This
exemption shall apply for a period of two years after the service,
program, marketing strategy, business plan, technology, benefit, or
product that is the subject of the trade secret is formally adopted
by the governing body of the health authority, provided that the
service, program, marketing strategy, business plan, technology,
benefit, or product continues to be a trade secret.  The governing
board may delete the portion or portions containing trade secrets
from any documents that were finally approved in closed session held
pursuant to this subdivision that are provided to persons who have
made the timely or standing request.
   (o) Notwithstanding Article 9 (commencing with Section 11120) of
Chapter 1 of Part 1 of Division 3 of Title 2 of, and Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5
of, the Government Code, or any other provision of law, any peer
review body, as defined in paragraph (1) of subdivision (a) of
Section 805 of the Business and Professions Code, formed pursuant to
the powers granted to the health authority authorized by this
section, may, at its discretion and without notice to the public,
meet in closed session, so long as the purpose of the meeting is the
peer review body's discharge of its responsibility to evaluate and
improve the quality of care rendered by health facilities and health
practitioners, pursuant to the powers granted to the health
authority.  The peer review body and its members shall receive, to
the fullest extent, all immunities, privileges, and protections
available to those peer review bodies, their individual members, and
persons or entities assisting in the peer review process, including
those afforded by Section 1157 of the Evidence Code and Section 1370
of the Health and Safety Code.
   (p) Notwithstanding any other provision of law, those records of
the health authority and of the county that reveal the health
authority's rates of payment for health care services or the health
authority's deliberative processes, discussions, communications, or
any other portion of the negotiations with providers of health care
services for rates of payment, shall not be required to be disclosed
pursuant to the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), or any similar local law requiring the disclosure
of public records.  However, three years after a contract or
amendment to a contract is fully executed, the portion of the
contract or amendment containing the rates of payment shall be open
to inspection.
   (q) Notwithstanding the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), or Article 9 (commencing with Section 11120) of
Chapter 1 of Part 1 of Division 3 of Title 2 of, and Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5
of, the Government Code, or any other provision of state or local law
requiring disclosure of public records, those records of a peer
review body, as defined in paragraph (1) of subdivision (a) of
Section 805 of the Business and Professions Code, formed pursuant to
the powers granted to the health authority authorized by this
section, shall not be required to be disclosed.  The records and
proceedings of the peer review body and its individual members shall
receive, to the fullest extent, all immunities, privileges, and
protections available to those records and proceedings, including
those afforded by Section 1157 of the Evidence Code and Section 1370
of the Health and Safety Code.
   (r) Except as expressly provided by other provisions of this
section, all exemptions and exclusions from disclosure as public
records pursuant to the California Public Records Act, including, but
not limited to, those pertaining to trade secrets and information
withheld in the public interest, shall be fully applicable for all
state agencies and local agencies with respect to all writings that
the health authority is required to prepare, produce, or submit
pursuant to this section.
   (s) (1) Any health authority formed pursuant to this section shall
obtain licensure as a health care service plan under the Knox-Keene
Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with
Section 1340) of Division 3 of the Health and Safety Code).
   (2) Notwithstanding subdivisions (b) and (t), a health authority
may not operate health plans or programs for individuals covered
under Subchapter XVIII (commencing with Section 1395) of Chapter 7 of
Title 42 of the United States Code, or for private businesses, until
the health authority is in full compliance with all of the
requirements of the Knox-Keene Health Care Service Plan Act of 1975,
including tangible net equity requirements applicable to a licensed
health care service plan.
   (t) Commencing on the date that the health authority first
receives Medi-Cal capitated payments for the provision of health care
services to Medi-Cal beneficiaries and until the time that the
health authority is in compliance with all the requirements regarding
tangible net equity applicable to a health care service plan
licensed under the Knox-Keene Health Care Service Plan Act of 1975,
the following provisions shall apply:
   (1) The health authority may select and design its automated
management information system, but the department, in cooperation
with the health authority, prior to making capitated payments, shall
test the system to ensure that the system is capable of producing
detailed, accurate, and timely financial information on the financial
condition of the health authority and any other information
generally required by the department in its contracts with health
care service plans.
   (2) In addition to the reports required by the Department of
Managed Health Care under the Knox-Keene Health Care Service Plan Act
of 1975, and the rules of the Director of the Department of Managed
Health Care promulgated thereunder, the health authority shall
provide on a monthly basis to the department, the Department of
Managed Health Care, and the members of the health authority, a copy
of the automated report described in paragraph (1) and a projection
of assets and liabilities, including those that have been incurred
but not reported, with an explanation of material increases or
decreases in current or projected assets or liabilities.  The
explanation of increases and decreases in assets or liabilities shall
be provided, upon request, to a hospital, independent physicians'
practice association, or community clinic, that has contracted with
the health authority to provide health care services.
   (3) In addition to the reporting and notification obligations the
health authority has under the Knox-Keene Health Care Service Plan
Act of 1975, the chief executive officer or director of the health
authority shall immediately notify the department, the Department of
Managed Health Care, and the members of the governing board of the
health authority in writing of any fact or facts that, in the chief
executive officer's or director's reasonable and prudent judgment, is
likely to result in the health authority being unable to meet its
financial obligations to health care providers or to other parties.
Written notice shall describe the fact or facts, the anticipated
fiscal consequences, and the actions that will be taken to address
the anticipated consequences.
   (4) The Department of Managed Health Care shall not waive or vary,
nor shall the department request the Department of Managed Health
Care to waive or vary, the tangible net equity requirements for a
health authority under the Knox-Keene Health Care Service Plan Act of
1975 after three years from the date of commencement of capitated
payments to the health authority.  Until the time the health
authority is in compliance with all of the tangible net equity
requirements under the Knox-Keene Health Care Service Plan Act of
1975, and the rules of the Director of the Department of Managed
Health Care promulgated thereunder, the health authority shall
develop a stop-loss program appropriate to the risks of the health
authority.  The program shall be satisfactory to both the department
and the Department of Managed Health Care.
   (5) In the event that the health authority votes to file a
petition of bankruptcy, or the board of supervisors notifies the
department of its intent to terminate the health authority, the
department shall immediately convert the authority's Medi-Cal
beneficiaries to either of the following:
   (A) To other managed care contractors when available, provided
those contractors are able to demonstrate that they can absorb the
increased enrollment without detriment to the provision of health
care services to their existing enrollees.
   (B) To the extent that other managed care contractors are
unavailable or the department determines that the action is otherwise
in the best interest of any particular beneficiary, to a
fee-for-service reimbursement system pending the availability of
managed care contractors, provided those contractors are able to
demonstrate that they can absorb the increased enrollment without
detriment to the provision of health care services to their existing
enrollees, or if the department determines that providing care to any
particular beneficiary pursuant to a fee-for-service reimbursement
system is no longer necessary to protect the continuity of care or
other interests of the beneficiary.  Beneficiary eligibility for
Medi-Cal shall not be affected by this action.  Beneficiaries who
have been or who are scheduled to be converted to a fee-for-service
reimbursement system or managed care contractor may make a choice to
be enrolled in another managed care system, if one is available, in
full compliance with the federal freedom-of-choice requirements.
   (6) The health authority shall submit to a review of financial
records when the department determines, based on data reported by the
health authority or otherwise, that the health authority will not be
able to meet its financial obligations to health care providers
contracting with the health authority.  Where the review of financial
records determines that the health authority will not be able to
meet its financial obligations to contracting health care providers
for the provision of health care services, the director shall
immediately terminate the contract between the health authority and
the state, and immediately convert the health authority Medi-Cal
beneficiaries in accordance with paragraph (5) in order to ensure
uninterrupted provision of health care services to the beneficiaries
and to minimize financial disruption to providers.  The action of the
director shall be the final administrative determination.
Beneficiary eligibility for Medi-Cal shall not be affected by this
action.  Beneficiaries who have been or who are scheduled to be
converted under paragraph (5) may make a choice to be enrolled in
another managed care plan, if one is available, in full compliance
with federal freedom-of-choice requirements.
   (7) It is the intent of the Legislature that the department shall
implement Medi-Cal capitated enrollments in a manner that ensures
that appropriate levels of health care services will be provided to
Medi-Cal beneficiaries and that appropriate levels of administrative
services will be furnished to health care providers.  The contract
between the department and the health authority shall authorize and
permit the department to administer the number of covered Medi-Cal
enrollments in such a manner that the health authority's provider
network and administrative structure are able to provide appropriate
and timely services to beneficiaries and to participating providers.

   (8) In the event a health authority is terminated, files for
bankruptcy, or otherwise no longer functions for the purpose for
which it was established, the county shall, with respect to
compensation for provision of health care services to beneficiaries,
occupy no greater or lesser status than any other health care
provider in the disbursement of assets of the health authority.
   (9) Nothing in this subdivision shall be construed to impair or
diminish the authority of the Director of the Department of Managed
Health Care under the Knox-Keene Health Care Service Plan Act of
1975, nor shall anything in this section be construed to reduce or
otherwise limit the obligation of a health authority licensed as a
health care service plan to comply with the requirements of the
Knox-Keene Health Care Service Plan Act of 1975, and the rules of the
Director of the Department of Managed Health Care promulgated
thereunder.
   (u) In the event a health authority may no longer function for the
purposes for which it is established, at the time the health
authority's then-existing obligations have been satisfied or the
health authority's assets have been exhausted, the board of
supervisors may, by ordinance, terminate the health authority.
   (v) (1) Prior to the termination of the health authority, the
board of supervisors shall notify the department of its intent to
terminate the health authority.  The department shall conduct an
audit of the health authority's records within 30 days of the
notification to determine the liabilities and assets of the health
authority.
   (2) The department shall report its findings to the board within
10 days of completion of the audit.  The board shall prepare a plan
to liquidate or otherwise dispose of the assets of the health
authority and to pay the liabilities of the health authority to the
extent of the health authority's assets, and present the plan to the
department within 30 days upon receipt of these findings.
   (w) Any assets of the health authority shall be disposed of
pursuant to provisions contained in the contract entered into between
the state and the health authority pursuant to this section.
   (x) Upon termination of a health authority by the board, the
county shall manage any remaining assets of the health authority
until superseded by a department-approved plan.  Any liabilities of
the health authority shall not become obligations of the county upon
either the termination of the health authority or the liquidation or
disposition of the health authority's remaining assets.
   (y) This section shall apply to any county health authority or any
county special commission operating under this article or Article
2.81 (commencing with Section 14087.96), except to the extent that
this section conflicts with Sections 14087.31, 14087.35, and 14087.36
or Article 2.81 (commencing with Section 14087.96).



14087.39.  (a) In any transfer of functions from county employees to
a health authority established pursuant to Section 14087.35,
14087.36, or 14087.38, the health authority shall continue to
recognize the employee organization that represented the employees
performing those functions at the time of the transfer of duties.
   (b) Any health authority to which this section applies shall be
bound by the terms of any memorandum of understanding that is in
effect as of the date of the transfer of functions for the duration
of the transfer of functions, or until replaced by a subsequent
memorandum of understanding between the health authority and the
employee organization.
   (c) Subdivision (b) shall not apply to administrative functions
performed by the authority that are directly related to the operation
of a health care service plan licensed under Chapter 2.2 (commencing
with Section 1340) of Division 3 of the Health and Safety Code,
unless the functions were transferred  from county employees to the
authority.
   (d) In order to further the statewide interest in the development
of an effective managed care delivery system to Medi-Cal
beneficiaries in the county, it is necessary to ensure that the
public health and hospital facilities of the county are financially
viable so that the county may participate in that delivery system
through the use of those facilities.  Accordingly, notwithstanding
any provision of the county charter to the contrary, the county shall
be fully authorized to offer and provide medical care to members of
the health service system of the county at the public health and
hospital facilities of the county.



14087.4.  (a) Any contract made pursuant to this article may be
renewed if the provider continues to meet the requirements of this
chapter, regulations promulgated pursuant thereto, and the contract.
Failure to meet these requirements shall be cause for nonrenewal of
the contract.  The department may condition renewal on timely
completion of a mutually agreed upon plan of correction of any
deficiencies.
   (b) The department may terminate or decline to renew a contract,
in whole or in part, when the director determines that such action is
necessary to protect the health of the beneficiaries or the funds
appropriated to carry out the Medi-Cal program.  Nonrenewal or
termination under this article shall not qualify the applicant for an
administrative hearing including a hearing pursuant to Section
14123.
   (c) In order to achieve maximum cost savings the Legislature
hereby determines that an expedited contract process for contracts
under this article is necessary.  Therefore contracts under this
article shall be exempt from the provisions of Chapter 2 (commencing
with Section 10290) of Part 2 of Division 2 of the Public Contract
Code.
   (d) For any contract entered into pursuant to this article, the
Director of the Department of Managed Health Care shall, at the
director's request and with all due haste, grant an exemption from
the provisions of Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code for purposes of carrying out
the contract.


14087.41.  The department shall develop a simple form, consistent
with the notice requirements of Sections 51014.1 and 51014.2 of Title
22 of the California Code of Regulations, for Medi-Cal managed care
plans to use to notify a Medi-Cal enrollee of a denial, termination,
delay, or modification in benefits.  The department shall require all
Medi-Cal managed care plans to use the form as a condition of
participation in Medi-Cal managed care pursuant to any contract
negotiated after the effective date of this section.



14087.45.  The provisions of this article shall not become operative
until July 1, 1983, the date upon which the California Medical
Assistance Commission, created pursuant to Assembly Bill 3480,
assumes its full responsibilities.


14087.46.  (a) The department shall implement a dental managed care
program for Medi-Cal beneficiaries to achieve major cost savings,
while ensuring access and quality of care, pursuant to this section.

   (b) The department shall issue a request for proposals and award
contracts on a competitive basis to one or more dental health care
service contractors licensed pursuant to the Knox-Keene Health Care
Service Act of 1975 (Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code) in each county or region
that the department determines to be feasible.  The department may
contract with county organized health systems.
   (c) To ensure access and continuity of care, the department shall
award contracts only to plans that agree to negotiate in good faith
and subcontract with any provider who agrees to provide dental
services to Medi-Cal beneficiaries at a reimbursement rate comparable
to that paid by the plan to other participating providers.  Plans
shall contract whenever feasible with traditional and safety net
providers of dental services to Medi-Cal beneficiaries.  In
evaluating the plans, the department shall assign favorable weighting
to contractors that include traditional and safety net providers.
   (d) The department shall implement a process to inform all
Medi-Cal beneficiaries of their choices of participating dentists and
to allow a beneficiary to chose or change his or her participating
dentist.
   (e) The department shall make every effort to achieve operational
contracts to place all Medi-Cal beneficiaries in dental managed care
by October 1, 1995.  The department may determine which counties or
categories of Medi-Cal beneficiaries are to be included in the dental
managed care program.  If the department has achieved one or more
operational managed care contracts in a county or region,
fee-for-service dental services shall not be an option for selection
by a beneficiary, except that the department may provide for
fee-for-service dental care if needed to ensure adequate access in
rural or underserved areas, or for unique populations.
   (f) The department shall require all participating plans to
provide, at a minimum, the full scope of dental benefits pursuant to
state and federal law.
   (g) In order to achieve maximum cost savings, the Legislature
hereby determines that an expedited contract process for contracts
under this section is necessary.  Therefore, contracts under this
section shall be exempt from the Public Contract Code.
   (h) Medi-Cal beneficiaries shall be able to receive their dental
care from federally qualified health centers and rural health clinics
certified pursuant to Public Law 95-210 that provide dental care in
their service area.  At the time of informing the Medi-Cal
beneficiary of his or her choices of participating dentists, the
beneficiary shall be informed of this option.  Federally qualified
health centers and rural health clinics shall continue to be
reimbursed for dental services through the medical payment system in
accordance with federal regulations.
   (i) The department shall monitor the implementation of dental
managed care, and for each of the first three years of
implementation, shall annually evaluate the program on a
county-by-county basis in terms of access, quality of care, and cost
savings.  The evaluation shall be provided to the Legislature within
120 days of the close of each of the three fiscal years.
   (j) The department shall seek all federal waivers necessary to
allow for federal financial participation in the program implemented
pursuant to this section.  This article shall not be implemented
unless and until the director has executed a declaration, to be
retained by the director, that approval of all necessary federal
waivers have been obtained by the department.



14087.47.  (a) The department may contract under this article with
the Counties of Sonoma, Placer, and San Luis Obispo, which have been
selected by the department through a request for proposal process,
for the operation of a fee-for-service managed care program
administered by the county through which primary care, specialty
care, and case management are provided to residents of the county who
are Medi-Cal eligible persons designated by the director.
   (b) (1) Upon receipt of the necessary federal medicaid freedom of
choice waivers, the department may, consistent with the federal
waivers, assign to a fee-for-service managed care program residents
of the county who are Medi-Cal eligible persons with Medi-Cal aid
codes designated by the director.  The department may require that
assigned beneficiaries receive their Medi-Cal services and case
management through the program.
   (2) Medi-Cal eligible county residents who are dually eligible for
Medi-Cal and Medicare benefits shall not, however, be assigned to a
fee-for-service managed care program.
   (3) Medi-Cal beneficiaries eligible for benefits through age,
blindness, or disability, as defined in Title XVI of the Social
Security Act (42 U.S.C.  Sec. 1381 et. seq.) shall be assigned to a
fee-for-service managed care program.  However, each county
participating in the program authorized by this section shall allow
these beneficiaries to select a provider or providers of their choice
and shall ensure that existing provider-patient relationships are
permitted to continue.
   (4) Services covered by the California Children's Services program
shall not be incorporated into a fee-for-service managed care
program in a manner that is inconsistent with Article 2.98
(commencing with Section 14094).
   (5) A foster child may be enrolled voluntarily in a
fee-for-service managed care program if the county director of social
services, or his or her delegated representative, makes an
individual determination that enrollment in a fee-for-service managed
care program is in the best interest of the child.  In determining
what is in the best interest of the foster child, the county director
of social services, or his or her delegated representative, shall
consult with the child's caretaker, and shall include the decision of
whether or not to enroll the child in a fee-for-service managed care
program in the child's case plan provided for pursuant to
subdivision (b) of Section 11400.
   (c) Each contract entered into by the department under this
section may have an initial term of up to three years.  Contracts may
be renewed for periods of up to three years upon a determination by
the department that a contract is successful.
   (d) The department shall periodically evaluate each
fee-for-service managed care program through an independent
assessment as required under the department's approved federal waiver
request to determine if the program is successfully providing
quality health care while not placing the Medi-Cal program or
counties at additional financial risk.  The assessment shall evaluate
quality of care, access, the provision of preventive health care,
and costs.  The department shall terminate a contract when the
department finds that the fee-for-service managed care program is
unsuccessful.
   (e) In order to ensure maximum cost effectiveness, the Legislature
hereby determines that an expedited contract process for contracts
entered into under this section between the department and the
counties is necessary.  Therefore, contracts under this article shall
be exempt from Chapter 2 (commencing with Section 10290) of Part 2
of Division 2 of the Public Contract Code.
   (f) Fee-for-service managed care program contractors shall ensure
broad participation of primary care and other providers, including
specialists, safety net and traditional Medi-Cal providers, in the
program and shall contract with any primary care provider that agrees
to provide services in accord with the same terms and conditions
that the fee-for-service managed care program contractor requires of
other primary care providers.  To the extent possible, the
fee-for-service managed care program contractor shall contract with
primary care providers in a manner that minimizes the disruption of
existing relationships between Medi-Cal eligible residents and their
primary care providers.
   (g) Medi-Cal eligible county residents in the aid codes designated
by the director shall be informed about the fee-for-service managed
care program through the health care options process established by
the department in each county in which the program is operated
consistent with the health care options process authorized in other
Medi-Cal managed care counties designated by the director.
   (h) Designated Medi-Cal residents shall have the right to select a
primary care provider from among the primary care providers
contracting with the fee-for-service managed care program contractor
and to change primary care providers.  Covered Medi-Cal residents
shall be informed of this right and the selection and change
processes through the health care options process established in the
county by the department consistent with the health care options
process authorized in other Medi-Cal managed care counties designated
by the director.  The fee-for-service managed care program
contractor shall also include this information in its membership
materials.
   (i) The board of supervisors of each county participating in the
project authorized by this section shall establish or cause to be
established an advisory committee comprised of county, physician,
hospital, clinic, and beneficiary representatives to advise the
county on the implementation and operation of the project provided
for under this section.
   (j) The department may adopt regulations to implement this section
in accordance with the Administrative Procedure Act, Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code.  The initial adoption of any emergency
regulations implementing this section shall be deemed to be an
emergency and necessary for the immediate preservation of the public
peace, health and safety, or general welfare.  Initial emergency
regulations adopted pursuant to this subdivision shall remain in
effect for no more than 120 days.



14087.10.  Any contract hospital that provides the services required
by a Medi-Cal beneficiary and has a physician with staff privileges
who is willing to accept the Medi-Cal beneficiary and has the
appropriate bed, personnel, and equipment necessary to treat the
Medi-Cal beneficiary shall accept the transfer of the Medi-Cal
beneficiary from a noncontract hospital.



14087.48.  (a) For purposes of this section "Medi-Cal managed care
plan" means any individual, organization, or entity that enters into
a contract with the department pursuant to Article 2.7 (commencing
with Section 14087.3), Article 2.8 (commencing with Section 14087.5),
Article 2.81 (commencing with Section 14087.96), Article 2.9
(commencing with Section 14088), or Article 2.91 (commencing with
Section 14089), or pursuant to Article 1 (commencing with Section
14200), or Article 7 (commencing with Section 14490) of Chapter 8.
   (b) Before a Medi-Cal managed care plan commences operations based
upon an action of the director that expands the geographic area of
Medi-Cal managed care, the department shall perform an evaluation to
determine the readiness of any affected Medi-Cal managed care plan to
commence operations. The evaluation shall include, at a minimum, all
of the following:
   (1) The extent to which the Medi-Cal managed care plan
demonstrates the ability to provide reliable service utilization and
cost data, including, but not limited to, quarterly financial
reports, audited annual reports, utilization reports of medical
services, and encounter data.
   (2) The extent to which the Medi-Cal managed care plan has an
adequate provider network, including, but not limited to, the
location, office hours, and language capabilities of primary care
physicians, specialists, pharmacies, and hospitals, that the types of
specialists in the provider network are based on the population
makeup and particular geographic needs, and that whether requirements
will be met for availability of services and travel distance
standards, as set forth in Sections 53852 and 53885, respectively, of
Title 22 of the California Code of Regulations.
   (3) The extent to which the Medi-Cal managed care plan has
developed procedures for the monitoring and improvement of quality of
care, including, but not limited to, procedures for retrospective
reviews which include patterns of practice reviews and drug
prescribing practice reviews, utilization management mechanisms to
detect both under- and over-utilization of health care services, and
procedures that specify timeframes for medical authorization.
   (4) The extent to which the Medi-Cal managed care plan has
demonstrated the ability to meet accessibility standards in
accordance with Section 1300.67.2 of Title 28 of the California Code
of Regulations, including, but not limited to, procedures for
appointments, waiting times, telephone procedures, after hours calls,
urgent care, and arrangement for the provision of unusual specialty
services.
   (5) The extent to which the Medi-Cal managed care plan has met all
standards and guidelines established by the department that
demonstrate readiness to provide services to enrollees.
   (6) The extent to which the Medi-Cal managed care plan has
submitted all required contract deliverables to the department,
including, but not limited to, quality improvement systems,
utilization management, access and availability, member services,
member grievance systems, and enrollment and disenrollments.
   (7) The extent to which the Medi-Cal managed care plan's Evidence
of Coverage, Member Services Guide, or both, conforms to federal and
state statutes and regulations, is accurate, and is easily
understood.
   (8) The extent to which the Medi-Cal managed care plan's primary
care and facility sites have been reviewed and evaluated by the
department.