(a) (1) Once it is determined that a contract shall be renewed pursuant to this chapter with a prepaid health plan, by the state agency responsible for negotiating these contracts, the agency shall, no later than 25 working days prior to the expiration date of the existing contract or immediately, if that date has passed, draft an extension of the existing contract for a period not to exceed two calendar months. A contract extension shall contain the same terms as the prior existing contract except for the contract’s expiration date. The contract extension shall be for a period of time not to exceed two months from the termination date of the original contract.

(2) The state agency responsible for negotiating the contract shall simultaneously submit to each federal and state agency required to approve a contract extension, a draft of the contract for extension no later than 20 working days prior to the expiration date of the prior existing contract.

(3) Each state agency to which an extension for contract has been submitted shall approve or disapprove the extension no later than 10 working days after receipt of the contract.

(4) In the course of any contract negotiations, the responsible state agency shall encourage the participation of other involved state and federal agencies in the negotiation process and shall cooperate with those agencies and with the contractor, or proposed contractor, to seek the resolution of any obstacles to contractual agreement.

(5) No extension shall become effective until and unless federal approval is received indicating that federal funds will be available for services provided under the Medi-Cal program during the period of the contract extension.

(6) These contract extensions shall remain in force and effect until such time as:

(A) The contract expires because the extension date has been reached.

(B) The contract for renewal is entered into and is in force and effect.

(C) The state agency responsible for negotiating the contract determines not to contract or renew a contract with the provider and notifies the provider in writing to that effect.

(D) The state agency responsible for negotiating the contract terminates the contract in accordance with Section 14197.7.

(b) When contract renewals are entered into, the effective date of the contract shall be the termination date of the prior contract, not the ending date of any contract extension. The state agency responsible for negotiating the contract, once a new contract is finalized, shall retroactively make adjustments in any amounts paid under the contract extension to reflect the new terms and rates of reimbursements as provided in the new contract.

(c) It is the intent of the Legislature to provide for the payment of services provided for under this chapter in a timely and efficient manner. Nothing in this chapter shall be construed as to hinder, prohibit, or interfere with the negotiating and contract process of the responsible state agency and provider.

(d) This section shall apply only to those instances in which both parties have reason to believe that their contract renewal process will not be completed by the termination date of the contract.

(Amended by Stats. 2019, Ch. 465, Sec. 7. (AB 1642) Effective January 1, 2020.)