SECTIONS 5775-5783

5775.  (a) Notwithstanding any other provision of state law, theState Department of Mental Health shall implement managed mentalhealth care for Medi-Cal beneficiaries through fee-for-service orcapitated rate contracts with mental health plans, includingindividual counties, counties acting jointly, any qualifiedindividual or organization, or a nongovernmental entity. A contractmay be exclusive and may be awarded on a geographic basis. (b) Two or more counties acting jointly may agree to deliver orsubcontract for the delivery of mental health services. The agreementmay encompass all or any portion of the mental health servicesprovided pursuant to this part. This agreement shall not relieve theindividual counties of financial responsibility for providing theseservices. Any agreement between counties shall delineate each county's responsibilities and fiscal liability. (c) The department shall offer to contract with each county forthe delivery of mental health services to that county's Medi-Calbeneficiary population prior to offering to contract with any otherentity, upon terms at least as favorable as any offered to anoncounty contract provider. If a county elects not to contract withthe department, does not renew its contract, or does not meet theminimum standards set by the department, the department may elect tocontract with any other governmental or nongovernmental entity forthe delivery of mental health services in that county and mayadminister the delivery of mental health services until a contractfor a mental health plan is implemented. The county may notsubsequently contract to provide mental health services under thispart unless the department elects to contract with the county. (d) If a county does not contract with the department to providemental health services, the county shall transfer the responsibilityfor community Medi-Cal reimbursable mental health services and theanticipated county matching funds needed for community Medi-Calmental health services in that county to the department. The amountof the anticipated county matching funds shall be determined by thedepartment in consultation with the county, and shall be adjustedannually. The amount transferred shall be based on historical cost,adjusted for changes in the number of Medi-Cal beneficiaries andother relevant factors. The anticipated county matching funds shallbe used by the department to contract with another entity for mentalhealth services, and shall not be expended for any other purpose butthe provision of those services and related administrative costs. Thecounty shall continue to deliver non-Medi-Cal reimbursable mentalhealth services in accordance with this division, and subject tosubdivision (i) of Section 5777. (e) Whenever the department determines that a mental health planhas failed to comply with this part or any regulations adoptedpursuant to this part that implement this part, the department mayimpose sanctions, including, but not limited to, fines, penalties,the withholding of payments, special requirements, probationary orcorrective actions, or any other actions deemed necessary to promptand ensure contract and performance compliance. If fines are imposedby the department, they may be withheld from the state matching fundsprovided to a mental health plan for Medi-Cal mental healthservices. (f) Notwithstanding any other provision of law, emergencyregulations adopted pursuant to Section 14680 to implement the secondphase of mental health managed care as provided in this part shallremain in effect until permanent regulations are adopted, or June 30,2006, whichever occurs first. (g) The department shall convene at least two public hearings toclarify new federal regulations recently enacted by the federalCenters for Medicare and Medicaid Services that affect the state'ssecond phase of mental health managed care and shall report to theLegislature on the results of these hearings through the 2005-06budget deliberations. (h) The department may adopt emergency regulations necessary toimplement Part 438 (commencing with Section 438.1) of Subpart A ofSubchapter C of Chapter IV of Title 42 of the Code of FederalRegulations, in accordance with Chapter 3.5 (commencing with Section11340) of Part 1 of Division 3 of Title 2 of the Government Code. Theadoption of emergency regulations to implement this part, that arefiled with the Office of Administrative Law within one year of thedate on which the act that amended this subdivision in 2003 tookeffect, shall be deemed to be an emergency and necessary for theimmediate preservation of the public peace, health, and safety, orgeneral welfare, and shall remain in effect for no more than 180days.5776.  (a) The department and its mental health plan contractorsshall comply with all applicable federal laws, regulations, andguidelines, and, except as provided in this part, all applicablestate statutes and regulations. (b) If federal requirements that affect the provisions of thispart are changed, it is the intent of the Legislature that staterequirements be revised to comply with those changes.5777.  (a) (1) Except as otherwise specified in this part, acontract entered into pursuant to this part shall include a provisionthat the mental health plan contractor shall bear the financial riskfor the cost of providing medically necessary mental health servicesto Medi-Cal beneficiaries irrespective of whether the cost of thoseservices exceeds the payment set forth in the contract. If theexpenditures for services do not exceed the payment set forth in thecontract, the mental health plan contractor shall report theunexpended amount to the department, but shall not be required toreturn the excess to the department. (2) If the mental health plan is not the county's, the mentalhealth plan may not transfer the obligation for any mental healthservices to Medi-Cal beneficiaries to the county. The mental healthplan may purchase services from the county. The mental health planshall establish mutually agreed-upon protocols with the county thatclearly establish conditions under which beneficiaries may obtainnon-Medi-Cal reimbursable services from the county. Additionally, theplan shall establish mutually agreed-upon protocols with the countyfor the conditions of transfer of beneficiaries who have lostMedi-Cal eligibility to the county for care under Part 2 (commencingwith Section 5600), Part 3 (commencing with Section 5800), and Part 4(commencing with Section 5850). (3) The mental health plan shall be financially responsible forensuring access and a minimum required scope of benefits, consistentwith state and federal requirements, to the services to the Medi-Calbeneficiaries of that county regardless of where the beneficiaryresides. The department shall require that the definition of medicalnecessity used, and the minimum scope of benefits offered, by eachmental health contractor be the same, except to the extent that anyvariations receive prior federal approval and are consistent withstate and federal statutes and regulations. (b) Any contract entered into pursuant to this part may be renewedif the plan continues to meet the requirements of this part,regulations promulgated pursuant thereto, and the terms andconditions of the contract. Failure to meet these requirements shallbe cause for nonrenewal of the contract. The department may base thedecision to renew on timely completion of a mutually agreed-upon planof correction of any deficiencies, submissions of requiredinformation in a timely manner, or other conditions of the contract.At the discretion of the department, each contract may be renewed fora period not to exceed three years. (c) (1) The obligations of the mental health plan shall be changedonly by contract or contract amendment. (2) A change may be made during a contract term or at the time ofcontract renewal, where there is a change in obligations required byfederal or state law or when required by a change in theinterpretation or implementation of any law or regulation. To theextent permitted by federal law and except as provided underparagraph (10) of subdivision (c) of Section 5778, if any change inobligations occurs that affects the cost to the mental health plan ofperforming under the terms of its contract, the department mayreopen contracts to negotiate the state General Fund allocation tothe mental health plan under Section 5778, if the mental health planis reimbursed through a fee-for-service payment system, or thecapitation rate to the mental health plan under Section 5779, if themental health plan is reimbursed through a capitated rate paymentsystem. During the time period required to redetermine the allocationor rate, payment to the mental health plan of the allocation or ratein effect at the time the change occurred shall be consideredinterim payments and shall be subject to increase or decrease, as thecase may be, effective as of the date on which the change iseffective. (3) To the extent permitted by federal law, either the departmentor the mental health plan may request that contract negotiations bereopened during the course of a contract due to substantial changesin the cost of covered benefits that result from an unanticipatedevent. (d) The department shall immediately terminate a contract when thedirector finds that there is an immediate threat to the health andsafety of Medi-Cal beneficiaries. Termination of the contract forother reasons shall be subject to reasonable notice of the department's intent to take that action and notification of affectedbeneficiaries. The plan may request a public hearing by the Office ofAdministrative Hearings. (e) A plan may terminate its contract in accordance with theprovisions in the contract. The plan shall provide written notice tothe department at least 180 days prior to the termination ornonrenewal of the contract. (f) Upon the request of the Director of Mental Health, theDirector of Managed Health Care may exempt a mental health plancontractor or a capitated rate contract from the Knox-Keene HealthCare Service Plan Act of 1975 (Chapter 2.2 (commencing with Section1340) of Division 2 of the Health and Safety Code). These exemptionsmay be subject to conditions the director deems appropriate. Nothingin this part shall be construed to impair or diminish the authorityof the Director of Managed Health Care under the Knox-Keene HealthCare Service Plan Act of 1975, nor shall anything in this part beconstrued to reduce or otherwise limit the obligation of a mentalhealth plan contractor licensed as a health care service plan tocomply with the requirements of the Knox-Keene Health Care ServicePlan Act of 1975, and the rules of the Director of Managed HealthCare promulgated thereunder. The Director of Mental Health, inconsultation with the Director of Managed Health Care, shall analyzethe appropriateness of licensure or application of applicablestandards of the Knox-Keene Health Care Service Plan Act of 1975. (g) (1) The department, pursuant to an agreement with the StateDepartment of Health Care Services, shall provide oversight to themental health plans to ensure quality, access, and cost efficiency.At a minimum, the department shall, through a method independent ofany agency of the mental health plan contractor, monitor the leveland quality of services provided, expenditures pursuant to thecontract, and conformity with federal and state law. (2) (A) Commencing July 1, 2008, county mental health plans, incollaboration with the department, the federally required externalreview organization, providers, and other stakeholders, shallestablish an advisory statewide performance improvement project (PIP)to increase the coordination, quality, effectiveness, and efficiencyof service delivery to children who are either receiving at leastthree thousand dollars ($3,000) per month in the Early and PeriodicScreening, Diagnosis, and Treatment (EPSDT) Program services orchildren identified in the top 5 percent of the county EPSDT cost,whichever is lowest. The statewide PIP shall replace one of the tworequired PIPs that mental health plans must perform under federalregulations outlined in the mental health plan contract. (B) The federally required external quality review organizationshall provide independent oversight and reviews with recommendationsand findings or summaries of findings, as appropriate, from astatewide perspective. This information shall be accessible to countymental health plans, the department, county welfare directors,providers, and other interested stakeholders in a manner that bothfacilitates, and allows for, a comprehensive quality improvementprocess for the EPSDT Program. (C) Each July, the department, in consultation with the federallyrequired external quality review organization and the county mentalhealth plans, shall determine the average monthly cost threshold forcounties to use to identify children to be reviewed who are currentlyreceiving EPSDT services. The department shall consult withrepresentatives of county mental health directors, county welfaredirectors, providers, and the federally required external qualityreview organization in setting the annual average monthly costthreshold and in implementing the statewide PIP. The department shallprovide an annual update to the Legislature on the results of thisstatewide PIP by October 1 of each year for the prior fiscal year. (D) It is the intent of the Legislature for the EPSDT PIP toincrease the coordination, quality, effectiveness, and efficiency ofservice delivery to children receiving EPSDT services and tofacilitate evidence-based practices within the program, and otherhigh-quality practices consistent with the values of the publicmental health system within the program to ensure that children arereceiving appropriate mental health services for their mental healthwellness. (E) This paragraph shall become inoperative on September 1, 2011. (h) County employees implementing or administering a mental healthplan act in a discretionary capacity when they determine whether ornot to admit a person for care or to provide any level of carepursuant to this part. (i) If a county chooses to discontinue operations as the localmental health plan, the new plan shall give reasonable considerationto affiliation with nonprofit community mental health agencies thatwere under contract with the county and that meet the mental healthplan's quality and cost efficiency standards. (j) Nothing in this part shall be construed to modify, alter, orincrease the obligations of counties as otherwise limited and definedin Chapter 3 (commencing with Section 5700) of Part 2. The county'smaximum obligation for services to persons not eligible for Medi-Calshall be no more than the amount of funds remaining in the mentalhealth subaccount pursuant to Sections 17600, 17601, 17604, 17605,17606, and 17609 after fulfilling the Medi-Cal contract obligations.5777.5.  (a) (1) The department shall require any mental health planthat provides Medi-Cal services to enter into a memorandum ofunderstanding with any Medi-Cal managed care plan that providesMedi-Cal health services to some of the same Medi-Cal recipientsserved by the mental health plan. The memorandum of understandingshall comply with applicable regulations. (2) For purposes of this section, a "Medi-Cal managed care plan"means any prepaid health plan or Medi-Cal managed care plancontracting with the State Department of Health Services to provideservices to enrolled Medi-Cal beneficiaries under Chapter 7(commencing with Section 14000) or Chapter 8 (commencing with Section14200) of Part 3 of Division 9, or Part 4 (commencing with Section101525) of Division 101 of the Health and Safety Code. (b) The department shall require the memorandum of understandingto include all of the following: (1) A process or entity to be designated by the local mentalhealth plan to receive notice of actions, denials, or deferrals fromthe Medi-Cal managed care plan, and to provide any additionalinformation requested in the deferral notice as necessary for amedical necessity determination. (2) A requirement that the local mental health plan respond by theclose of the business day following the day the deferral notice isreceived. (c) The department may sanction a mental health plan pursuant toparagraph (1) of subdivision (e) of Section 5775 for failure tocomply with this section. (d) This section shall apply to any contracts entered into,amended, modified, extended, or renewed on or after January 1, 2001.5777.6.  (a) Each local mental health plan shall establish aprocedure to ensure access to outpatient mental health services, asrequired by the Early Periodic Screening and Diagnostic Treatmentprogram standards, for any child in foster care who has been placedoutside his or her county of adjudication. (b) The procedure required by subdivision (a) may be establishedthrough one or more of the following: (1) The establishment of, and federal approval, if required, of, astatewide system or procedure. (2) An arrangement between local mental health plans forreimbursement for services provided by a mental health plan otherthan the mental health plan in the county of adjudication anddesignation of an entity to provide additional information needed forapproval or reimbursement. This arrangement shall not requireproviders who are already credentialed or certified by the mentalhealth plan in the beneficiary's county of residence to becredentialed or certified by, or to contract with, the mental healthplan in the county of adjudication. (3) Arrangements between the mental health plan in the county ofadjudication and mental health providers in the beneficiary's countyof residence for authorization of, and reimbursement for, services.This arrangement shall not require providers credentialed orcertified by, and in good standing with, the mental health plan inthe beneficiary's county of residence to be credentialed or certifiedby the mental health plan in the county of adjudication. (c) The department shall collect and keep statistics that willenable the department to compare access to outpatient specialtymental health services by foster children placed in their county ofadjudication with access to outpatient specialty mental healthservices by foster children placed outside of their county ofadjudication.5777.7.  (a) In order to facilitate the receipt of medicallynecessary specialty mental health services by a foster child who isplaced outside his or her county of original jurisdiction, the StateDepartment of Mental Health shall take all of the following actions: (1) On or before July 1, 2008, create all of the following items,in consultation with stakeholders, including, but not limited to, theCalifornia Institute for Mental Health, the Child and Family PolicyInstitute, the California Mental Health Directors Association, andthe California Alliance of Child and Family Services: (A) A standardized contract for the purchase of medicallynecessary specialty mental health services from organizationalproviders, when a contract is required. (B) A standardized specialty mental health service authorizationprocedure. (C) A standardized set of documentation standards and forms,including, but not limited to, forms for treatment plans, annualtreatment plan updates, day treatment intensive and day treatmentrehabilitative progress notes, and treatment authorization requests. (2) On or before January 1, 2009, use the standardized items asdescribed in paragraph (1) to provide medically necessary specialtymental health services to a foster child who is placed outside his orher county of original jurisdiction, so that organizationalproviders who are already certified by a mental health plan are notrequired to be additionally certified by the mental health plan inthe county of original jurisdiction. (3) (A) On or before January 1, 2009, use the standardized itemsdescribed in paragraph (1) to provide medically necessary specialtymental health services to a foster child placed outside his or hercounty of original jurisdiction to constitute a complete contract,authorization procedure, and set of documentation standards andforms, so that no additional documents are required. (B) Authorize a county mental health plan to be exempt fromsubparagraph (A) and have an addendum to a contract, authorizationprocedure, or set of documentation standards and forms, if the countymental health plan has an externally placed requirement, such as arequirement from a federal integrity agreement, that would affect oneof these documents. (4) Following consultation with stakeholders, including, but notlimited to, the California Institute for Mental Health, the Child andFamily Policy Institute, the California Mental Health DirectorsAssociation, the California State Association of Counties, and theCalifornia Alliance of Child and Family Services, require the use ofthe standardized contracts, authorization procedures, anddocumentation standards and forms as specified in paragraph (1) inthe 2008-09 state-county mental health plan contract and eachstate-county mental health plan contract thereafter. (5) The mental health plan shall complete a standardized contract,as provided in paragraph (1), if a contract is required, or anothermechanism of payment if a contract is not required, with a provideror providers of the county's choice, to deliver approved specialtymental health services for a specified foster child, within 30 daysof an approved treatment authorization request. (b) The California Health and Human Services Agency shallcoordinate the efforts of the State Department of Mental Health andthe State Department of Social Services to do all of the following: (1) Participate with the stakeholders in the activities describedin this section. (2) During budget hearings in 2008 and 2009, report to theLegislature regarding the implementation of this section andsubdivision (c) of Section 5777.6. (3) On or before July 1, 2008, establish the following, inconsultation with stakeholders, including, but not limited to, theCalifornia Mental Health Directors Association, the CaliforniaAlliance of Child and Family Services, and the County WelfareDirectors Association of California: (A) Informational materials that explain to foster care providershow to arrange for mental health services on behalf of thebeneficiary in their care. (B) Informational materials that county child welfare agencies canaccess relevant to the provision of services to children in theircare from the out-of-county local mental health plan that isresponsible for providing those services, including, but not limitedto, receiving a copy of the child's treatment plan within 60 daysafter requesting services. (C) It is the intent of the Legislature to ensure that fosterchildren who are adopted or placed permanently with relativeguardians, and who move to a county outside their original county ofresidence, can access mental health services in a timely manner. Itis the intent of the Legislature to enact this section as a temporarymeans of ensuring access to these services, while the appropriatestakeholders pursue a long-term solution in the form of a change tothe Medi-Cal Eligibility Data System that will allow these childrento receive mental health services through their new county ofresidence.5778.  (a) This section shall be limited to specialty mental healthservices reimbursed through a fee-for-service payment system. (b) The following provisions shall apply to matters related tospecialty mental health services provided under the Medi-Calspecialty mental health services waiver, including, but not limitedto, reimbursement and claiming procedures, reviews and oversight, andappeal processes for mental health plans (MHPs) and MHPsubcontractors. (1) During the initial phases of the implementation of this part,as determined by the department, the MHP contractor andsubcontractors shall submit claims under the Medi-Cal program foreligible services on a fee-for-service basis. (2) A qualifying county may elect, with the approval of thedepartment, to operate under the requirements of a capitated,integrated service system field test pursuant to Section 5719.5rather than this part, in the event the requirements of the twoprograms conflict. A county that elects to operate under that sectionshall comply with all other provisions of this part that do notconflict with that section. (3) (A) No sooner than October 1, 1994, state matching funds forMedi-Cal fee-for-service acute psychiatric inpatient services, andassociated administrative days, shall be transferred to thedepartment. No later than July 1, 1997, upon agreement between thedepartment and the State Department of Health Care Services, statematching funds for the remaining Medi-Cal fee-for-service mentalhealth services and the state matching funds associated with fieldtest counties under Section 5719.5 shall be transferred to thedepartment. (B) The department, in consultation with the State Department ofHealth Care Services, a statewide organization representing counties,and a statewide organization representing health maintenanceorganizations shall develop a timeline for the transfer of fundingand responsibility for fee-for-service mental health services fromMedi-Cal managed care plans to MHPs. In developing the timeline, thedepartment shall develop screening, referral, and coordinationguidelines to be used by Medi-Cal managed care plans and MHPs. (4) (A) (i) A MHP subcontractor providing specialty mental healthservices shall be financially responsible for federal auditexceptions or disallowances to the extent that these exceptions ordisallowances are based on the MHP subcontractor's conduct ordeterminations. (ii) The state shall be financially responsible for federal auditexceptions or disallowances to the extent that these exceptions ordisallowances are based on the state's conduct or determinations. Thestate shall not withhold payment from a MHP for exceptions ordisallowances that the state is financially responsible for pursuantto this clause. (iii) A MHP shall be financially responsible for state auditexceptions or disallowances to the extent that these exceptions ordisallowances are based on the MHP's conduct or determinations. A MHPshall not withhold payment from a MHP subcontractor for exceptionsor disallowances for which the MHP is financially responsiblepursuant to this clause. (B) For purposes of subparagraph (A), a "determination" shall beshown by a written document expressly stating the determination,while "conduct" shall be shown by any credible, legally admissibleevidence. (C) The department and the State Department of Health CareServices shall work jointly with MHPs in initiating any necessaryappeals. The department may invoice or offset the amount of anyfederal disallowance or audit exception against subsequent claimsfrom the MHP or MHP subcontractor. This offset may be done at anytime, after the audit exception or disallowance has been withheldfrom the federal financial participation claim made by the StateDepartment of Health Care Services. The maximum amount that may bewithheld shall be 25 percent of each payment to the plan orsubcontractor. (5) (A) Oversight by the department of the MHPs and MHPsubcontractors may include client record reviews of Early PeriodicScreening Diagnosis and Treatment (EPSDT) specialty mental healthservices under the Medi-Cal specialty mental health services waiverin addition to other audits or reviews that are conducted. (B) The department may contract with an independent,nongovernmental entity to conduct client record reviews. The contractawarded in connection with this section shall be on a competitivebid basis, pursuant to the Department of General Services contractingrequirements, and shall meet both of the following additionalrequirements: (i) Require the entity awarded the contract to comply with allfederal and state privacy laws, including, but not limited to, thefederal Health Insurance Portability and Accountability Act (HIPAA;42 U.S.C. Sec. 1320d et seq.) and its implementing regulations, theConfidentiality of Medical Information Act (Part 2.6 (commencing withSection 56) of Division 1 of the Civil Code), and Section 1798.81.5of the Civil Code. The entity shall be subject to existing penaltiesfor violation of these laws. (ii) Prohibit the entity awarded the contract from using, selling,or disclosing client records for a purpose other than the one forwhich the record was given. (C) For purposes of this paragraph, the following terms shall havethe following meanings: (i) "Client record" means a medical record, chart, or similarfile, as well as other documents containing information regarding anindividual recipient of services, including, but not limited to,clinical information, dates and times of services, and otherinformation relevant to the individual and services provided and thatevidences compliance with legal requirements for Medi-Calreimbursement. (ii) "Client record review" means examination of the client recordfor a selected individual recipient for the purpose of confirmingthe existence of documents that verify compliance with legalrequirements for claims submitted for Medi-Cal reimbursement. (D) The department shall recover overpayments of federal financialparticipation from MHPs within the timeframes required by federallaw and regulation and return those funds to the State Department ofHealth Care Services for repayment to the federal Centers forMedicare and Medicaid Services. The department shall recoveroverpayments of General Fund moneys utilizing the recoupment methodsand timeframes required by the State Administrative Manual. (6) (A) The department, in consultation with mental healthstakeholders, the California Mental Health Directors Association, andMHP subcontractor representatives, shall provide an appeals processthat specifies a progressive process for resolution of disputes aboutclaims or recoupments relating to specialty mental health servicesunder the Medi-Cal specialty mental health services waiver. (B) The department shall provide MHPs and MHP subcontractors theopportunity to directly appeal findings in accordance with proceduresthat are similar to those described in Article 1.5 (commencing withSection 51016) of Chapter 3 of Subdivision 1 of Division 3 of Title22 of the California Code of Regulations, until new regulations for aprogressive appeals process are promulgated. When an MHPsubcontractor initiates an appeal, it shall give notice to the MHP.The department shall propose a rulemaking package by no later thanthe end of the 2008-09 fiscal year to amend the existing appealsprocess. The reference in this subparagraph to the proceduresdescribed in Article 1.5 (commencing with Section 51016) of Chapter 3of Subdivision 1 of Division 3 of Title 22 of the California Code ofRegulations, shall only apply to those appeals addressed in thissubparagraph. (C) The department shall develop regulations as necessary toimplement this paragraph. (7) The department shall assume the applicable program oversightauthority formerly provided by the State Department of Health CareServices, including, but not limited to, the oversight of utilizationcontrols as specified in Section 14133. The MHP shall include arequirement in any subcontracts that all inpatient subcontractorsmaintain necessary licensing and certification. MHPs shall requirethat services delivered by licensed staff are within their scope ofpractice. Nothing in this part shall prohibit the MHPs fromestablishing standards that are in addition to the minimum federaland state requirements, provided that these standards do not violatefederal and state Medi-Cal requirements and guidelines. (8) Subject to federal approval and consistent with staterequirements, the MHP may negotiate rates with providers of mentalhealth services. (9) Under the fee-for-service payment system, any excess in thepayment set forth in the contract over the expenditures for servicesby the plan shall be spent for the provision of specialty mentalhealth services under the Medi-Cal specialty mental health servicewaiver and related administrative costs. (10) Nothing in this part shall limit the MHP from beingreimbursed appropriate federal financial participation for anyqualified services even if the total expenditures for service exceedsthe contract amount with the department. Matching nonfederal publicfunds shall be provided by the plan for the federal financialparticipation matching requirement. (c) This subdivision shall apply to managed mental health carefunding allocations and risk-sharing determinations and arrangements. (1) The department shall allocate and distribute annually the fullappropriated amount to each MHP for the managed mental health careprogram, exclusive of the EPSDT specialty mental health servicesprogram, provided under the mental health services waiver. Theallocated funds shall be considered to be funds of the plan to beused as specified in this part. (2) Each fiscal year the state matching funds for Medi-Calspecialty mental health services shall be included in the annualbudget for the department. The amount included shall be based onhistorical cost, adjusted for changes in the number of Medi-Calbeneficiaries and other relevant factors. The appropriation forfunding the state share of the costs for EPSDT specialty mentalhealth services provided under the Medi-Cal specialty mental healthservices waiver shall only be used for reimbursement payments ofclaims for those services. (3) Initially, the MHP shall use the fiscal intermediary of theMedi-Cal program of the State Department of Health Care Services forthe processing of claims for inpatient psychiatric hospital servicesand may be required to use that fiscal intermediary for the remainingmental health services. The providers for other Short-Doyle Medi-Calservices shall not be initially required to use the fiscalintermediary but may be required to do so on a date to be determinedby the department. The department and its MHPs shall be responsiblefor the initial incremental increased matching costs of the fiscalintermediary for claims processing and information retrievalassociated with the operation of the services funded by thetransferred funds. (4) The goal for funding of the future capitated system shall beto develop statewide rates for beneficiary, by aid category and withregional price differentiation, within a reasonable time period. Theformula for distributing the state matching funds transferred to thedepartment for acute inpatient psychiatric services to theparticipating counties shall be based on the following principles: (A) Medi-Cal state General Fund matching dollars shall bedistributed to counties based on historic Medi-Cal acute inpatientpsychiatric costs for the county's beneficiaries and on the number ofpersons eligible for Medi-Cal in that county. (B) All counties shall receive a baseline based on historic andprojected expenditures up to October 1, 1994. (C) Projected inpatient growth for the period October 1, 1994, toJune 30, 1995, inclusive, shall be distributed to counties below thestatewide average per eligible person on a proportional basis. Theaverage shall be determined by the relative standing of the aggregateof each county's expenditures of mental health Medi-Cal dollars perbeneficiary. Total Medi-Cal dollars shall include bothfee-for-service Medi-Cal and Short-Doyle Medi-Cal dollars for bothacute inpatient psychiatric services, outpatient mental healthservices, and psychiatric nursing facility services, both infacilities that are not designated as institutions for mental diseaseand for beneficiaries who are under 22 years of age andbeneficiaries who are over 64 years of age in facilities that aredesignated as institutions for mental disease. (D) There shall be funds set aside for a self-insurance risk poolfor small counties. The department may provide these funds directlyto the administering entity designated in writing by all countiesparticipating in the self-insurance risk pool. The small countiesshall assume all responsibility and liability for appropriateadministration of these funds. For purposes of this subdivision,"small counties" means counties with less than 200,000 population.Nothing in this paragraph shall in any way obligate the state or thedepartment to provide or make available any additional funds beyondthe amount initially appropriated and set aside for each particularfiscal year, unless otherwise authorized in statute or regulations,nor shall the state or the department be liable in any way formismanagement of loss of funds by the entity designated by thecounties under this paragraph. (5) The allocation method for state funds transferred for acuteinpatient psychiatric services shall be as follows: (A) For the 1994-95 fiscal year, an amount equal to 0.6965 percentof the total shall be transferred to a fund established by smallcounties. This fund shall be used to reimburse MHPs in small countiesfor the cost of acute inpatient psychiatric services in excess ofthe funding provided to the MHP for risk reinsurance, acute inpatientpsychiatric services and associated administrative days,alternatives to hospital services as approved by participating smallcounties, or for costs associated with the administration of thesemoneys. The methodology for use of these moneys shall be determinedby the small counties, through a statewide organization representingcounties, in consultation with the department. (B) The balance of the transfer amount for the 1994-95 fiscal yearshall be allocated to counties based on the following formula:  County Percentage  Alameda.............................. 3.5991  Alpine............................... .0050  Amador............................... .0490  Butte................................ .8724  Calaveras............................ .0683  Colusa............................... .0294  Contra Costa......................... 1.5544  Del Norte............................ .1359  El Dorado............................ .2272  Fresno............................... 2.5612  Glenn................................ .0597  Humboldt............................. .1987  Imperial............................. .6269  Inyo................................. .0802  Kern................................. 2.6309  Kings................................ .4371  Lake................................. .2955  Lassen............................... .1236  Los Angeles.......................... 31.3239  Madera............................... .3882  Marin................................ 1.0290  Mariposa............................. .0501  Mendocino............................ .3038  Merced............................... .5077  Modoc................................ .0176  Mono................................. .0096  Monterey............................. .7351  Napa................................. .2909  Nevada............................... .1489  Orange............................... 8.0627  Placer............................... .2366  Plumas............................... .0491  Riverside............................ 4.4955  Sacramento........................... 3.3506  San Benito........................... .1171  San Bernardino....................... 6.4790  San Diego............................ 12.3128  San Francisco........................ 3.5473  San Joaquin.......................... 1.4813  San Luis Obispo...................... .2660  San Mateo............................ .0000  Santa Barbara........................ .0000  Santa Clara.......................... 1.9284  Santa Cruz........................... 1.7571  Shasta............................... .3997  Sierra............................... .0105  Siskiyou............................. .1695  Solano............................... .0000  Sonoma............................... .5766  Stanislaus........................... 1.7855  Sutter/Yuba.......................... .7980  Tehama............................... .1842  Trinity.............................. .0271  Tulare............................... 2.1314  Tuolumne............................. .2646  Ventura.............................. .8058  Yolo................................. .4043 (6) The allocation method for the state funds transferred forsubsequent years for acute inpatient psychiatric and other specialtymental health services shall be determined by the department inconsultation with a statewide organization representing counties. (7) The allocation methodologies described in this section shallonly be in effect while federal financial participation is receivedon a fee-for-service reimbursement basis. When federal funds arecapitated, the department, in consultation with a statewideorganization representing counties, shall determine the methodologyfor capitation consistent with federal requirements. The share ofcost ratio arrangement for EPSDT specialty mental health servicesprovided under the Medi-Cal specialty mental health services waiverbetween the state and the counties in existence during the 2007-08fiscal year shall remain as the share of cost ratio arrangement forthese services unless changed by statute. (8) The formula that specifies the amount of state matching fundstransferred for the remaining Medi-Cal fee-for-service mental healthservices shall be determined by the department in consultation with astatewide organization representing counties. This formula shallonly be in effect while federal financial participation is receivedon a fee-for-service reimbursement basis. (9) (A) For the managed mental health care program, exclusive ofEPSDT specialty mental health services provided under the Medi-Calspecialty mental health services waiver, the department shallestablish, by regulation, a risk-sharing arrangement between thedepartment and counties that contract with the department as MHPs toprovide an increase in the state General Fund allocation, subject tothe availability of funds, to the MHP under this section, where thereis a change in the obligations of the MHP required by federal orstate law or regulation, or required by a change in theinterpretation or implementation of any such law or regulation whichsignificantly increases the cost to the MHP of performing under theterms of its contract. (B) During the time period required to redetermine the allocation,payment to the MHP of the allocation in effect at the time thechange occurred shall be considered an interim payment, and shall besubject to increase effective as of the date on which the change iseffective. (C) In order to be eligible to participate in the risk-sharingarrangement, the county shall demonstrate, to the satisfaction of thedepartment, its commitment or plan of commitment of all annualfunding identified in the total mental health resource base, fromwhatever source, but not including county funds beyond the requiredmaintenance of effort, to be spent on specialty mental healthservices. This determination of eligibility shall be made annually.The department may limit the participation in a risk-sharingarrangement of any county that transfers funds from the mental healthaccount to the social services account or the health servicesaccount, in accordance with Section 17600.20 during the year to whichthe transfers apply to MHP expenditures for the new obligation thatexceed the total mental health resource base, as measured before thetransfer of funds out of the mental health account and not includingcounty funds beyond the required maintenance of effort. The StateDepartment of Mental Health shall participate in a risk-sharingarrangement only after a county has expended its total annual mentalhealth resource base. (d) The following provisions govern the administrativeresponsibilities of the department and the State Department of HealthCare Services: (1) It is the intent of the Legislature that the department andthe State Department of Health Care Services consult and collaborateclosely regarding administrative functions related to and supportingthe managed mental health care program in general, and the deliveryand provision of EPSDT specialty mental health services providedunder the Medi-Cal specialty mental health services waiver, inparticular. To this end, the following provisions shall apply: (A) Commencing in the 2009-10 fiscal year, and each fiscal yearthereafter, the department shall consult with the State Department ofHealth Care Services and amend the interagency agreement between thetwo departments as necessary to include improvements or updates toprocedures for the accurate and timely processing of Medi-Cal claimsfor specialty mental health services provided under the Medi-Calspecialty mental health services waiver. The interagency agreementshall ensure that there are consistent and adequate time limits,consistent with federal and state law, for claims submitted and theneed to correct errors. (B) Commencing in the 2009-10 fiscal year, and each fiscal yearthereafter, upon a determination by the department and the StateDepartment of Health Care Services that it is necessary to amend theinteragency agreement, the department and the State Department ofHealth Care Services shall process the interagency agreement toensure final approval by January 1, for the following fiscal year,and as adjusted by the budgetary process. (C) The interagency agreement shall include, at a minimum, all ofthe following: (i) A process for ensuring the completeness, validity, and timelyprocessing of Medi-Cal claims as mandated by the federal Centers forMedicare and Medicaid Services. (ii) Procedures and timeframes by which the department shallsubmit complete, valid, and timely invoices to the State Departmentof Health Care Services, which shall notify the department ofinconsistencies in invoices that may delay payments. (iii) Procedures and timeframes by which the department shallnotify MHPs of inconsistencies that may delay payment. (2) (A) The department shall consult with the State Department ofHealth Care Services and the California Mental Health DirectorsAssociation in February and September of each year to review themethodology used to forecast future trends in the provision of EPSDTspecialty mental health services provided under the Medi-Calspecialty mental health services waiver, to estimate these yearlyEPSDT specialty mental health services related costs, and to estimatethe annual amount of funding required for reimbursements for EPSDTspecialty mental health services to ensure relevant factors areincorporated in the methodology. The estimates of costs andreimbursements shall include both federal financial participationamounts and any state General Fund amounts for EPSDT specialty mentalhealth services provided under the State Medi-Cal specialty mentalhealth services waiver. The department shall provide the StateDepartment of Health Care Services the estimate adjusted to a cashbasis. (B) The estimate of annual funding described in subparagraph (A)shall, include, but not be limited to, the following factors: (i) The impacts of interactions among caseload, type of services,amount or number of services provided, and billing unit cost ofservices provided. (ii) A systematic review of federal and state policies, trendsover time, and other causes of change. (C) The forecasting and estimates performed under this paragraphare primarily for the purpose of providing the Legislature and theDepartment of Finance with projections that are as accurate aspossible for the state budget process, but will also be informativeand useful for other purposes. Therefore, it is the intent of theLegislature that the information produced under this paragraph shallbe taken into consideration under paragraph (10) of subdivision (c).5778.3.  Notwithstanding any other law, including subdivision (b) ofSection 16310 of the Government Code, the Controller may use themoneys in the Mental Health Managed Care Deposit Fund for loans tothe General Fund as provided in Sections 16310 and 16381 of theGovernment Code. Interest shall be paid on all moneys loaned to theGeneral Fund from the Mental Health Managed Care Deposit Fund.Interest payable shall be computed at a rate determined by the PooledMoney Investment Board to be the current earning rate of the fundfrom which loaned. This subdivision does not authorize any transferthat will interfere with the carrying out of the object for which theMental Health Managed Care Deposit Fund was created.5779.  (a) This section shall be limited to mental health servicesreimbursed through a capitated rate payment system. (b) Upon mutual agreement, the department and the State Departmentof Health Services may combine the funds transferred under thispart, other funds available pursuant to Chapter 5 (commencing withSection 17600) of Part 5 of Division 9, and federal financialparticipation funds to establish a contract for the delivery ofmental health services to Medi-Cal beneficiaries under a capitatedrate payment system. The combining of funds shall be done inconsultation with a statewide organization representing counties. Thecombined funding shall be the budget responsibility of thedepartment. (c) The department, in consultation with a statewide organizationrepresenting counties, shall establish a methodology for a capitatedrate payment system that is consistent with federal requirements. (d) Capitated rate payments shall be made on a schedule specifiedin the contract with the mental health plan. (e) The department may levy any necessary fines and auditdisallowances to mental health plans relative to operations underthis part. The mental health plans shall be liable for all federalaudit exceptions or disallowances based on the plan's conduct ordeterminations. The mental health plan shall not be liable forfederal audit exceptions or disallowances based on the state'sconduct or determinations. The department shall work jointly with themental health plan in initiating any necessary appeals. Thedepartment may offset the amount of any federal disallowance or auditexception against subsequent payment to the mental health plan atany time. The maximum amount that may be withheld shall be 25 percentof each payment to the mental health plan.5780.  (a) This part shall only be implemented to the extent thatthe necessary federal waivers are obtained. The director shallexecute a declaration, to be retained by the director, that a waivernecessary to implement any provision of this part has been obtained. (b) This part shall become inoperative on the date that, and onlyif, the director executes a declaration, to be retained by thedirector, that more than 10 percent of all counties fail to becomemental health plan contractors, and no acceptable alternativecontractors are available, or if more than 10 percent of all fundsallocated for Medi-Cal mental health services must be administered bythe department because no acceptable plan is available.5781.  (a) Notwithstanding any other provision of law, a mentalhealth plan may enter into a contract for the provision of mentalhealth services for Medi-Cal beneficiaries with a hospital thatprovides for a per diem reimbursement rate for services that includeroom and board, routine hospital services, and all hospital-basedancillary services and that provides separately for the attendingmental health professional's daily visit fee. The payment of thesenegotiated reimbursement rates to the hospital by the mental healthplan shall be considered payment in full for each day of inpatientpsychiatric and hospital care rendered to a Medi-Cal beneficiary,subject to third-party liability and patient share of costs, if any. (b) This section shall not be construed to allow a hospital tointerfere with, control, or otherwise direct the professionaljudgment of a physician and surgeon in a manner prohibited by Section2400 of the Business and Professions Code or any other provision oflaw. (c) For purposes of this section, "hospital" means a hospital thatsubmits reimbursement claims for Medi-Cal psychiatric inpatienthospital services through the Medi-Cal fiscal intermediary aspermitted by subdivision (g) of Section 5778.5782.  The provisions of this part are subject to and shall be readas incorporating the authority and oversight responsibilities of theState Department of Health Care Services in its role as the singlestate agency for the Medicaid program in California. The provisionsof this part shall be implemented only to the extent that federalfinancial participation is available.5783.  (a) Each eligible public agency, as described in subdivision(b), may, in addition to reimbursement or other payments that theagency would otherwise receive for Medi-Cal specialty mental healthservices, receive supplemental Medi-Cal reimbursement to the extentprovided for in this section. (b) A public agency shall be eligible for supplementalreimbursement only if it is a county, city, city and county, or theUniversity of California and if, consistent with Section 5778, itmeets either or both of the following characteristics continuouslyduring a state fiscal year: (1) Provides, pursuant to the Medi-Cal Specialty Mental HealthServices Consolidation Waiver (Number CA.17), as approved by thefederal Centers for Medicare and Medicaid Services, specialty mentalhealth services to Medi-Cal beneficiaries in one or more of itspublically owned and operated facilities. (2) Provides or subcontracts for specialty mental health servicesto Medi-Cal beneficiaries as a mental health plan (MHP) pursuant tothis part. (c) (1) Subject to paragraph (2), an eligible public agency'ssupplemental reimbursement pursuant to this section shall be equal tothe amount of federal financial participation received as a resultof the claims submitted pursuant to paragraph (2) of subdivision (f). (2) Notwithstanding paragraph (1), in computing an eligible publicagency's reimbursement, in no instance shall the expenditurescertified pursuant to paragraph (1) of subdivision (e), when combinedwith the amount received from other sources of payment and withreimbursement from the Medi-Cal program, including expendituresotherwise certified for purposes of claiming federal financialparticipation, exceed 100 percent of actual, allowable costs, asdetermined pursuant to California's Medicaid State Plan, for thespecialty mental health services to which the expenditure relates.Supplemental payment may be made on an interim basis until the timewhen actual, allowable costs are finally determined. (3) The supplemental Medi-Cal reimbursement provided by thissection shall be distributed under a payment methodology based onspecialty mental health services provided to Medi-Cal patients byeach eligible public agency, on a per-visit basis, a per-procedurebasis, a time basis, in one or more lump sums, or on any otherfederally permissible basis. The State Department of Health CareServices shall seek approval from the federal Centers for Medicareand Medicaid Services for the payment methodology to be utilized, andshall not make any payment pursuant to this section prior toobtaining that federal approval. (d) (1) It is the intent of the Legislature in enacting thissection to provide the supplemental reimbursement described in thissection without any expenditure from the General Fund. The departmentor the State Department of Health Care Services may require aneligible public agency, as a condition of receiving supplementalreimbursement pursuant to this section, to enter into, and maintain,an agreement with the department for the purposes of implementingthis section and reimbursing the department and the State Departmentof Health Care Services for the costs of administering this section. (2) Expenditures submitted to the department and to the StateDepartment of Health Care Services for purposes of claiming federalfinancial participation under this section shall have been paid onlywith funds from the public agencies described in subdivision (b) andcertified to the state as provided in subdivision (e). (e) An eligible public agency shall do all of the following: (1) Certify, in conformity with the requirements of Section 433.51of Title 42 of the Code of Federal Regulations, that the claimedexpenditures for the specialty mental health services are eligiblefor federal financial participation. (2) Provide evidence supporting the certification as specified bythe department or by the State Department of Health Care Services. (3) Submit data as specified by the department to determine theappropriate amounts to claim as expenditures qualifying for federalfinancial participation. (4) Keep, maintain, and have readily retrievable, any recordsspecified by the department or by the State Department of Health CareServices to fully disclose reimbursement amounts to which theeligible public agency is entitled, and any other records required bythe federal Centers for Medicare and Medicaid Services. (f) (1) The State Department of Health Care Services shallpromptly seek any necessary federal approvals for the implementationof this section. If necessary to obtain federal approval, the programshall be limited to those costs that the federal Centers forMedicare and Medicaid Services determines to be allowableexpenditures under Title XIX of the federal Social Security Act(Subchapter 19 (commencing with Section 1396) of Chapter 7 of Title42 of the United States Code). If federal approval is not obtainedfor implementation of this section, this section shall not beimplemented. (2) The State Department of Health Care Services shall submitclaims for federal financial participation for the expendituresdescribed in subdivision (e) related to specialty mental healthservices that are allowable expenditures under federal law. (3) The State Department of Health Care Services shall, on anannual basis, submit any necessary materials to the federal Centersfor Medicare and Medicaid Services to provide assurances that claimsfor federal financial participation will include only thoseexpenditures that are allowable under federal law. (4) The department shall collaborate with the State Department ofHealth Care Services to ensure that the department's policies,procedures, data, and other relevant materials are available to theState Department of Health Care Services as may be required for theimplementation and administration of this section and for theclaiming of federal financial participation. (g) (1) The director may adopt regulations as are necessary toimplement this section. The adoption, amendment, repeal, orreadoption of a regulation authorized by this subdivision shall bedeemed to be necessary for the immediate preservation of the publicpeace, health and safety, or general welfare, for purposes ofSections 11346.1 and 11349.6 of the Government Code, and thedepartment is hereby exempted from the requirement that it describespecific facts showing the need for immediate action. (2) As an alternative to the adoption of regulations pursuant toparagraph (1), and notwithstanding Chapter 3.5 (commencing withSection 11340) of Part 1 of Division 3 of Title 2 of the GovernmentCode, the director may implement and administer this article, inwhole or in part, by means of provider bulletins or similarinstructions, without taking regulatory action, provided that nobulletin or similar instruction shall remain in effect after June 30,2011. It is the intent that regulations adopted pursuant toparagraph (1) shall be in place on or before June 30, 2011.