California Welfare and Institutions Code

Section 14087.96

The following definitions shall apply for purposes of this article:

(a) "County" means the County of Los Angeles.

(b) "Board of supervisors" means the Board of Supervisors of the County of Los Angeles.

(c) "Commission" means the separate public agency established by the board of supervisors to operate a local initiative for health care in the county.

(d) "Local initiative" means the health plan or plans and other health care programs owned or operated by the commission established under this article, and operated pursuant to the strategic plan.

(e) "Medi-Cal managed care programs" means all those components of the Medi-Cal program that involve the restriction of access for Medi-Cal patients to particular providers or health plans and that involve managed care principles, including, but not limited to, programs such as those described in Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Chapter 8 (commencing with Section 14200), including pilot programs under Article 7 (commencing with Section 14490) thereof.

(f) "Health care consumer" means a Medi-Cal beneficiary or any other person eligible to receive health care services under the local initiative, including parents, legal guardians, or conservators of Medi-Cal beneficiaries and people who will receive health care services under the local initiative.

(g) "Health care consumer advocate" means an individual who, whether in a paid or unpaid capacity, represents the interests of Medi-Cal beneficiaries or people who will receive health care under the local initiative.

(h) "Strategic plan" means the report issued on March 31, 1993, by the State Department of Health Services, entitled "The State Department of Health Services' Plan for Expanding Medi-Cal Managed Care: Protecting Vulnerable Populations" or the report, as subsequently revised or amended.

Section 14087.97

The commission shall be deemed to be a public agency that is a local unit of government for purposes of all grant programs and other funding and loan guarantee programs.

Section 14087.101

For administrative costs incurred after January 1, 2004, the director may recover any administrative costs incurred by a health plan authorized by this article deemed excessive pursuant to Section 1300.78 of Title 28 of the California Code of Regulations. Health plans that compensate their subcontractors on a capitated basis shall comply with Section 1300.78 of Title 28 of the California Code of Regulations, regarding administrative costs, considering the combined administrative cost for the Medi-Cal business of the health plan and its capitated subcontractors, that are Knox-Keene licensed health care service plans. The recovery of excess administrative cost shall be made in accordance with Sections 14087.103 and 14087.105.

Section 14087.103

The department shall notify the health plan of the director's decision to seek recovery of excess administrative costs pursuant to Section 14087.101 at least 30 days prior to initiating the recovery process. The department may recover excess administrative costs immediately after the 30-day notification period, if the health plan does not file an appeal. A health plan may dispute or appeal the director's decision in accordance with the disputes section of the health plan's contract with the department for services under this article. If a health plan elects to dispute or appeal the director's decision, the director may recover any administrative costs deemed excessive, but only after the health plan has had the opportunity to exhaust all appeal procedures provided for in the disputes section of the health plan's contract with the department.

Section 14087.105

When it has been determined that the director may recover any administrative costs deemed excessive pursuant to Section 14087.103, the director may recover any excess administrative costs through an offset against any amount currently due to the health plan under this chapter. The director may also recover any administrative costs deemed excessive by means of a repayment agreement executed between that health plan and the director, and by any other means available at law.

Section 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.

Section 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.

Section 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.

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.

Section 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.

(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.

Section 14087.961

Governance of the commission shall be vested in a governing body consisting of 13 members, each of whom shall have a fiduciary duty to act in the best interest of the commission and the local initiative, nominated by the following entities, and appointed by the board of supervisors:

(a) Four members shall be nominated by the board of supervisors to represent the County of Los Angeles. No more than one member nominated by the board of supervisors shall be a member of the board of supervisors and each remaining member nominated by the board of supervisors shall possess experience as a health care administrator or as a health care provider.

(b) One member shall be a representative of private hospitals that have Medi-Cal disproportionate share status, or if that status no longer exists, that serve an equivalent patient population, who shall be nominated by the Hospital Association of Southern California.

(c) One member shall be a representative of private hospitals that do not have Medi-Cal disproportionate share status, who shall be nominated by the Hospital Association of Southern California.

(d) One member shall be a representative of free and community clinics, who shall be nominated by the Community Clinics Association of Los Angeles County.

(e) One member shall be a representative of federally qualified health centers, who shall be nominated by the Community Clinics Association of Los Angeles County, or if that status no longer exists, an equivalent group of health centers.

(f) One member shall be a physician representative, who shall be nominated by the Los Angeles County Medical Association, in consultation with other physician associations within the county.

(g) One member shall be a representative of Knox-Keene licensed prepaid health plans, who shall be nominated by the California Association of Health Plans.

(h) One member shall represent health care consumers, and at the time of being nominated, shall be a health care consumer. The initial nominee shall be nominated by the working group on the role of the consumer for the first nominee, and thereafter, by a process determined by the community advisory committee under which only health care consumers may nominate and vote for appointees.

(i) One member shall be a health care consumer advocate, who shall represent health care consumers. The initial nominee shall be nominated by the working group on the role of the consumer for the first nominee, and thereafter, by a process determined by the community advisory committee under which only health care consumers may nominate and vote for appointees.

(j) One member shall be a children's health care provider representative, who shall be nominated by the Children's Planning Council as the coordinating entity for organizations and agencies providing direct services to, or advocacy for, children and families within the county.

Section 14087.962

Members of the governing body shall either reside, be employed, or provide services in the geographic area served by the local initiative. Nominees shall be appointed to the governing body by the board of supervisors. The board of supervisors shall not deny appointment to a nominee described in subdivisions (b) to (j), inclusive, of Section 14087.961 without specific cause as set forth in Section 14087.964.

Section 14087.963

(a) The governing body of the commission shall establish rules for its proceedings. There shall be at least six meetings per year.

(b) (1) Each governing body member shall be entitled to one hundred dollars ($100) remuneration from commission funds for each governing body meeting attended, and may receive similar remuneration for attending meetings of committees of the governing body, except that the total remuneration for each governing body member for all meetings shall not exceed the sum of four hundred dollars ($400) per month, plus actual expenses incurred in attending these meetings at rates payable to county officers and employees.

(2) The per meeting rate and monthly limit of one hundred dollars ($100) and four hundred dollars ($400), respectively, may be increased by the governing body, subject to approval by the board of supervisors.

Section 14087.964

A member of the governing body shall be removed from office if a majority of the members present and voting find that one or more of the following causes for removal exists:

(a) The member neither lives in, nor is employed in, the geographic area served by the local initiative.

(b) The member has been convicted of a crime involving corruption or any felony.

(c) The member has failed to attend three consecutive governing body meetings or a majority of the meetings in the most recent calendar year.

(d) The member has failed to discharge legal obligations as a member of a public agency.

(e) A request for removal has been submitted by the appropriate nominating entity in accordance with Section 14087.9645.

Section 14087.965

(a) A request for removal under Section 14087.9645 shall be adopted by the nominating entity in the same manner as the nomination was adopted and shall be confirmed by a written request for removal delivered to the governing body, setting forth the grounds for removal.

(b) A removal under subdivision (a) shall be effective upon action by the governing body, that shall be taken at the first meeting following receipt of the written request.

(d) A nominating entity that requests removal of a governing body member shall nominate a successor within 60 days after the effective date of the removal.

Section 14087.966

(a) The governing body for each geographic region served by the local initiative shall establish a regional community advisory committee to ensure community involvement.

(b) Each regional community advisory committee shall have no more than 35 members, a majority of whom shall be consumers and consumer advocates, but may also include providers.

(c) (1) The chairpersons of the regional community advisory committees shall comprise an executive community advisory committee.

(2) It is the intent of the Legislature that a majority of the executive community advisory committee shall be consumers and consumer advocates, plus two at-large members.

(d) The executive community advisory committee shall make recommendations, and shall report on its activities, to the governing body and shall be able to place matters of the governing body's agenda for consideration.

Section 14087.967

To the full extent permitted by federal law, the department and the commission 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 commission. In addition, health plans or programs operated by the commission as part of the local initiative may also include, but are not limited to, individuals covered under Title 18 of the Social Security Act (Subchapter 18 (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 patients.

Section 14087.968

Notwithstanding any other provision of law, the county shall not be liable for any damages or losses, whether financial or in any other form, that may result from the reliance of any person, entity, or agency on the actions or omissions of, or the findings made by, the auditor-controller under this section.

Section 14087.969

(a) Notwithstanding any other provision of law, neither a member of the governing body of the commission nor a member of any advisory panel to the governing body shall be deemed to be interested in a contract or amendment to 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 conditions are satisfied:

(1) The board of supervisors or the governing body appointed the member to represent the interests of the county, physicians, health care practitioners, hospitals, pharmacies, other health care organizations, consumers, or consumer advocates. For purposes of this section, each group whose interests are described in this paragraph shall be referred to as a stakeholder.

(2) The contract or the contract as amended authorizes individuals or organizations in the same stakeholder group that the member was appointed to represent to provide services under the local initiative.

(3) The contract or the contract as amended contains substantially the same terms and conditions as contracts entered into with other individuals or organizations in the same stakeholder group that the member was appointed to represent.

(4) The contract or the contract as amended does not specifically authorize the member or the member's organization, as defined in paragraph (1) of subdivision (e), to provide services under the local initiative.

(b) If paragraphs (1) to (3), inclusive, of subdivision (a) are satisfied but the contract or the contract as amended would specifically authorize the member or the member's organization to provide services under the local initiative, the contract approved by the governing body of the commission shall be deemed to comply with Section 1090 of the Government Code if the member abstains from voting on the contract or amendment to the contract, the member discloses the interest to the governing body or the advisory panel, whichever is applicable, the governing body or advisory panel notes the disclosure and the abstention in its official records, the member does not influence or attempt to influence the governing body, the advisory panel, or any member of the governing body or advisory panel to enter into the particular contract or the contract as amended, and the governing body or advisory panel authorizes the contract or amendment to the contract in good faith only by a vote of its membership sufficient for the purpose without counting the vote of the member.

(c) Notwithstanding any other provision of law, income from a contractor under the local initiative to a member or to a member's organization, as defined in paragraph (1) of subdivision (e), which is unrelated income, as defined in paragraph (2) of subdivision (e), shall not cause the member of the governing body of the commission or the member of the advisory panel to the governing body to be deemed to be interested in the contract or amendment to the contract for purposes of Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code, if the contract or the contract as amended contains substantially the same terms and conditions as contracts entered into with other contractors in the same stakeholder group that is the source of the unrelated income.

(d) If the particular contract or the contract as amended does not contain substantially the same terms and conditions as contracts entered into with other contractors in the same stakeholder group that is the source of the unrelated income, the contract approved by the governing body of the commission shall be deemed to comply with Section 1090 of the Government Code if the member abstains from voting on the contract or amendment to the contract, the member discloses the interest to the governing body or the advisory panel, whichever is applicable, the governing body or advisory panel notes the disclosure and abstention in its official records, the member does not influence or attempt to influence the governing body to enter into the particular contract or the contract as amended, and the governing body or advisory panel authorizes the contract or amendment to the contract in good faith only by a vote of its membership sufficient for that purpose without counting the vote of the member.

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

(1) "Member's organization" means an entity for which the member serves as an employee, officer, board member, or consultant, or in which the member has any other financial interest for purposes of Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code.

(2) "Unrelated income" means income that is not related to, or is not for providing services under, the local initiative.

Section 14087.971

(a) Contracts under this article 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.

(b) It is the intent of the Legislature that 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 commission for contracts to provide health care services.

Section 14087.972

Neither the commission nor its local initiative shall be considered to be an agency, division, department, or instrumentality of the county, and neither the commission nor its local initiative shall be subject to the personnel, procurement, or other operational rules of the county.

Section 14087.9605

(a) The board of supervisors may, by ordinance, resolution, or other action, establish a commission in order to meet the problems of delivery of publicly assisted medical care in the county and demonstrate ways of promoting quality care and cost efficiency. The health care services provided by the commission shall include, but are not limited to, services covered under this chapter provided on a coordinated managed care basis. The commission shall operate the local initiative that provides or arranges for the delivery of health care services in all or part of the geographic area of the county, in a manner that is consistent with managed care principles, techniques, and practices directed at ensuring cost-effective and adequate access to quality care, without discrimination on the basis of medical condition, diagnosis, or illness, in an amount, duration, and scope that is sufficient to reasonably achieve its purpose for enrollees in the local initiative.

If the board of supervisors establishes a commission, all rights, powers, duties, privileges, and immunities vested in the county pursuant to the contract with the department under this article shall be vested in the commission.

(b) (1) The commission shall be considered a public entity that is a local unit of government and that is separate from the county, shall file the statement required by Section 53051 of the Government Code, and shall be considered a public entity for purposes of Division 3.6 (commencing with Section 810) of Title 1 of the Government Code. The commission, members of the commission, and employees of the commission shall be protected by the immunities applicable to public entities and public employees governed by 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 commission.

(2) The commission shall have all power necessary and appropriate to do all of the following:

(A) Operate programs involving health care services, including, but not limited to, the power to own and operate one or more health plans.

(B) To enter into agreements with any public or private entity or entities to provide or arrange for health care services on a capitated or noncapitated basis.

(D) To employ personnel and contract for services required to meet its obligations.

(E) To sue or be sued.

(F) To enter into agreements under Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the Government Code.

(3) The commission may enter into contracts with public and private health care providers to provide health care and related services to individuals enrolled in any health plan or health program operated as part of the local initiative.

(c) Nothing in this section shall be construed to authorize the commission to operate any health care program other than the local initiative described in the strategic plan as it currently exists or as it may be amended by the department.

Section 14087.9615

(a) The composition of the 13-member governing body of the commission, as prescribed in Section 14087.961, shall be subject to alteration upon a two-thirds vote of the full membership of the governing body, if the action is also concurred in by an affirmative vote of at least four members of the board of supervisors; provided, however, no change in the composition of the governing board shall result in the elimination of representation by the county, private physicians, hospitals, and other providers, clinics, or consumers and consumer advocates.

(b) Notwithstanding subdivision (a), no governing body member shall be removed except as provided in Section 14087.964.

Section 14087.9625

(a) Members of the governing body of the commission shall serve four-year terms.

(b) Individuals shall be limited to serving on the governing body for two consecutive four-year terms or a maximum of 10 years.

Section 14087.9635

(a) 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.

(b) No official act shall be approved with less than the affirmative vote of four members of the governing body, unless the number of members prohibited from voting because of conflicts of interest precludes adequate participation in the vote.

Section 14087.9645

A member of the governing body may be removed at the request of the entity that nominated the member. The entity that nominated a member may request removal of that member for any of the following reasons:

(a) Any of the causes listed in Section 14087.964.

(b) The member no longer meets the qualifications for office or the criteria applied by the nominating entity in selecting the member as its nominee.

Section 14087.9655

(a) The governing body shall establish a technical advisory committee to provide technical expertise to the governing body.

(b) Members of the committee shall include a medical school representative, an epidemiologist, a pharmacist, a representative of a nursing association, a home health care representative, a long-term care provider, a mental health care provider, a medical rehabilitation provider, and an expert on health care quality, or, in the alternative, other persons with health care expertise.

(c) The technical advisory committee shall meet on a regular basis, and shall make recommendations and reports to the governing body.

Section 14087.9657

(a) The governing body shall establish a children's health consultant advisory committee to provide to the governing body expertise on child, adolescent, and maternal health issues.

(b) Members of the committee shall include representatives of government health departments and school districts in the geographic area served by the local initiative, as well as medical professionals with background in pediatrics and obstetric care, or, in the alternative, other persons with health care expertise.

(c) The children's health consultant advisory committee shall meet on a regular basis, and shall make recommendations and reports to the governing body.

Section 14087.9665

(a) The commission may borrow or receive funds from any person or entity as necessary to cover development costs and other actual or projected obligations of the local initiative.

(b) The county may lend funds to the commission upon such terms as the board of supervisors may establish.

(c) 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 local initiative shall be considered for all purposes to satisfy the requirements of subdivision (p) of Section 14163.

Section 14087.9675

(a) The auditor-controller of the county, at those intervals the auditor-controller deems appropriate, but no less frequently than annually, shall conduct a review of the fiscal condition of the commission, report the findings to the commission and the board of supervisors, and provide a copy of the findings to any public agency upon request.

(b) At the county auditor-controller's discretion, other operational or financial audits of the commission may be conducted.

(c) Upon the written request of the county auditor-controller, the commission shall provide full access to all commission records and documents as necessary to allow the county auditor-controller to perform the activities authorized by this section.

Section 14087.9685

(a) Notwithstanding any other provision of law, any obligation of the commission and its local initiative, statutory, contractual, or otherwise, shall be an obligation solely of the commission and shall not be an obligation of the county or of the state. Except as otherwise provided in this article, neither the county nor the state shall be liable for any act or omission of the commission.

(b) Except as agreed to by contract with the county, no liability of the commission shall become an obligation of the county upon either termination of the commission and its local initiative or the liquidation or disposition of the commission's remaining assets.

(c) All claims for money 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 otherwise provided by other statutes or regulations that expressly apply to the commission.

Section 14087.9695

The department, if at no state General Fund expense, may take all appropriate steps, in cooperation with the county and the commission, to obtain approval for a demonstration or pilot project under applicable federal laws, including, but not limited to, Section 1315 of Title 42 of the United States Code, in connection with the local initiative in the county. The project may include Medi-Cal coverage for enrollees in the local initiative who otherwise would not be covered under the Medi-Cal program. The project shall not be used to curtail existing rights with respect to eligibility and services for the Medi-Cal population, nor to obtain federal waivers of the payment provisions applicable to federally qualified health centers or noninstitutional providers under paragraphs (10), (13), (30), and (37) of subsection (a) of Section 1396a of Title 42 of the United States Code.

Section 14087.9697

In any transfer of functions from county employees to the commission, the commission shall continue to recognize the employee organization that represented the employees performing those functions at the time of the transfer of duties. The commission shall also 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 thereof, or until replaced by a subsequent memorandum of understanding.

Section 14087.9705

(a) The commission shall obtain licensure as a health care service plan under Chapter 2.2 (commencing with Section 1340) of Division 3 of the Health and Safety Code.

(b) Commencing on the date that the commission first receives Medi-Cal capitated payments for the provision of health care services to Medi-Cal beneficiaries and the commission is in full compliance with all of the requirements regarding tangible net equity applicable to a health care service plan licensed under Chapter 2.2 (commencing with Section 1340) of Division 3 of the Health and Safety Code, all of the following provisions shall apply:

(1) The commission is authorized to select and design its automated management information system, subject to the requirement that the department, in cooperation with the commission, prior to making capitated payments, approve the system. The department 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 local initiatives and with health care service plans.

(2) In addition to the reports required by the Department of Managed Health Care under Chapter 2.2 (commencing with Section 1340) of Division 3 of the Health and Safety Code and the rules of the Director of the Department of Managed Health Care adopted and promulgated thereunder, the commission 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 and 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 commission to provide health care services.

(3) In addition to the reporting and notification requirements to which the commission is subject under Chapter 2.2 (commencing with Section 1340) of Division 3 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. The written notice shall describe the fact or facts, the anticipated financial consequences, and the actions that will be taken to address the anticipated consequences.

(4) In no event shall the Department of Managed Health Care 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 3 of the Health and Safety Code after three years after the date of the 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 3 of the Health and Safety Code and the rules of the Director of the Department of Managed Health Care adopted and promulgated thereunder, the commission shall develop a stop-loss program that is appropriate to the risks of the commission. The stop-loss program shall be subject to the approval of the department and the Department of Managed Health Care.

(5) In the event the commission votes to file a petition of bankruptcy, or the board of supervisors notifies the department that it intends to terminate the commission, the department shall immediately transfer the commission's Medi-Cal beneficiaries to other managed care contractors, when the contractors are available, and the 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. To the extent that other managed care providers are unavailable or the department determines that the transfer to the other contractors to a fee-for-service reimbursement system is in the best interest of any particular beneficiary, the department shall make that transfer to the fee-for-service system, pending the availability of managed care contractors that can demonstrate that they can absorb the increased enrollment without detriment to the provision of health care services to their existing enrollees, or until 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.

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 federal freedom-of-choice requirements.

(6) The commission shall submit to a review of financial records when the department determines, based on data reported by the commission or other data received by the department, that the commission will not be able to meet its financial obligations to health care providers contracting with the commission. If the department, pursuant to a review of financial records under this paragraph, determines that the commission will not be able to meet its financial obligation 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 department and shall immediately transfer the commission's Medi-Cal beneficiaries in accordance with paragraph (5) in order to ensure uninterrupted provision of health care services to beneficiaries and to minimize financial disruption. Beneficiary eligibility for Medi-Cal shall not be affected by this action. Beneficiaries who have been or who are scheduled to be transferred 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 commission shall authorize the department to administer the number of covered Medi-Cal enrollments in a manner that ensures that the commission'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 commission is terminated, files for bankruptcy, or otherwise no longer functions for the purposes 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.

(9) 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 3 of the Health and Safety Code, nor shall any thing in this section be construed to reduce or otherwise limit the obligation of a commission licensed as a health care plan under Chapter 2.2 (commencing with Section 1340) of Division 3 of the Health and Safety Code to comply with the requirements of that chapter, and the rules of the Director of the Department of Managed Health Care adopted thereunder.

Section 14087.9715

The Legislature intends that implementation of this article shall involve consultation and cooperative activities among various agencies of the state and county, and the commission. The Legislature finds and declares that those activities are in furtherance of the state's goals and efforts. The activities of the commission and its local initiative shall be recognized as state action for purposes of all statutes and regulations relating to business competition.

Section 14087.9722

(a) If the commission established pursuant to this article no longer functions for the purposes for which it was established, when the commission's existing obligations have been satisfied or the commission's assets have been exhausted, the board of supervisors may, by ordinance, resolution, or other action, terminate the commission.

(b) Prior to the termination of the commission, the board of supervisors shall notify the department of its intent to terminate the commission. Within 30 days of the notification, the department shall conduct an audit of the records of the commission to determine the liabilities and assets of the commission. The department shall report its findings to the board of supervisors within 10 days of the completion of the audit. The board of supervisors 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 shall present the plan to the department within 30 days after receiving the department's audit findings.

(c) Upon termination of the commission by the board of supervisors, the county shall manage any remaining assets of the commission until superseded by a plan approved by the department.

(d) All assets of the commission remaining after the payment of the liabilities of the commission pursuant to subdivision (b) shall be disposed of pursuant to the contract entered into between the state and the commission pursuant to Section 14087.

Section 14087.9725

(a) Nothing in this article shall be construed as amending the requirements of Section 17000.

(b) Nothing in this article shall be construed to preclude the department from expanding Medi-Cal managed care in ways other than those expressly provided in this article.