(a) Subject to subdivision (e), Medi-Cal managed care plans serving newly eligible beneficiaries, as defined in subdivision (s) of Section 17612.2, shall pay county public hospital health systems, as defined in subdivision (f) of Section 17612.2, for services provided to newly eligible beneficiaries in amounts that are no less than the cost of providing those services, including the cost of network and out-of-network services that are charged to or paid for by county public hospital health systems. For purposes of this requirement, the cost of providing services shall mean the amounts, including the federal and nonfederal share of all allowable costs, determined in a manner consistent with the cost claiming protocols developed for the federal Medicaid demonstration project authorized under Section 1115 of the Social Security Act entitled the “Bridge to Health Care Reform” (waiver number 11-W-00193/9), including protocols pending federal approval, and under Section 14166.8.

(b) Consistent with federal law, the capitation rates paid to Medi-Cal managed care plans for newly eligible beneficiaries shall be determined to reflect the obligations imposed by subdivision (a).

(c) (1) Prior to the execution of a change order or contract amendment between the department and a Medi-Cal managed care plan providing for coverage of newly eligible beneficiaries, the Medi-Cal managed care plan shall demonstrate and certify that it has contracts or other arrangements in place with county public hospital health systems that provide for payments for services meeting the requirements of subdivision (a).

(2) Each year, each Medi-Cal managed care plan shall provide to the department an accounting of the payments made to demonstrate compliance with subdivision (a). To the extent a Medi-Cal managed care plan is not compliant with any of the requirements of this section, the department shall reduce the default assignment into the Medi-Cal managed care plan with respect to all Medi-Cal beneficiaries by 25 percent, as long as the other Medi-Cal managed care plan or plans in the county have the capacity to receive the additional default membership.

(d) A Medi-Cal managed care plan shall not impose a fee or retention amount, or reduce other payments to a county public hospital health system, that would result in a direct or indirect reduction to the amounts required to be paid under subdivision (a).

(e) (1) If a nonfederal share is necessary with respect to the capitation rates described in subdivision (b), a county public hospital health system or affiliated governmental entity shall have the right to voluntarily provide intergovernmental transfers for the nonfederal share of expenditures for the capitation rates described in subdivision (b) with respect to the requirements in subdivision (a). Only if the county public hospital health system or affiliated governmental entity so chooses, the requirements in this section shall apply. Notwithstanding any other law, the state shall not assess the fee described in subdivision (d) of Section 14301.4, or any other similar fee. Nothing in this section shall be construed to require a county public hospital health system to provide the nonfederal share for expenditures for purposes other than those described in subdivision (a), or for expenditures that are otherwise for Medi-Cal managed care beneficiaries who do not receive services in the county public hospital health system.

(2) Within 12 months following the end of each fiscal year, a county public hospital system shall submit data to the department demonstrating the payments received from Medi-Cal managed care plans as required under subdivision (a). If the amount of the applicable intergovernmental transfer provided by a county public hospital system does not equal the nonfederal share of those payments, the county hospital system and the department shall adjust the amount of the intergovernmental transfer accordingly.

(Added by Stats. 2013, Ch. 24, Sec. 2. (AB 85) Effective June 27, 2013.)