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<ns0:Id>20250AB__232799INT</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-19</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Lowenthal</ns0:AuthorText>
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<ns0:Name>Lowenthal</ns0:Name>
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<ns0:Title> An act to add Section 14301.12 to the Welfare and Institutions Code, relating to Medi-Cal.</ns0:Title>
<ns0:RelatingClause>Medi-Cal</ns0:RelatingClause>
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<ns0:Subject>Medi-Cal: subcontractors: rates.</ns0:Subject>
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<html:p>Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services under fee-for-service or managed care delivery systems. The Medi-Cal program is in part governed by, and funded pursuant to, federal Medicaid program provisions.</html:p>
<html:p>Existing law sets forth various provisions relating to the department determining capitation rates for Medi-Cal managed care plans using actuarial methods and a certain methodology that considers, among other factors, utilization and cost data.</html:p>
<html:p>This bill would require the department, for rates effective on or after January 1, 2027, to require that a Medi-Cal managed care plan operating as a downstream fully or partially delegated subcontractor, as
defined, be paid actuarially sound rates developed in accordance with generally accepted actuarial rate development principles and practices. Under the bill, failure to pay the subcontractor in a manner consistent with these provisions would be deemed a violation, constituting an unlawful and unfair business practice, as specified. The bill would afford the contractor the opportunity to enforce these requirements by filing a notice of dispute with the department.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 14301.12 is added to the
<ns0:DocName>Welfare and Institutions Code</ns0:DocName>
,
<ns0:Positioning>immediately following Section 14301.11</ns0:Positioning>
, to read:
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<ns0:Num>14301.12.</ns0:Num>
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(a)
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It is the intent of the Legislature that all downstream fully delegated subcontractor and partially delegated subcontractor managed care plans arranging for or providing Medi-Cal services be paid in an actuarially sound manner.
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(b)
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For rates effective on or after January 1, 2027, the department shall require that a Medi-Cal managed care plan operating as a downstream fully delegated subcontractor or a partially delegated subcontractor pursuant to the state Medi-Cal managed care contract be paid actuarially sound rates developed in accordance with generally accepted actuarial rate development principles and practices.
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(c)
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(1)
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Failure to pay a Medi-Cal
managed care plan operating as a downstream fully delegated subcontractor or partially delegated subcontractor in a manner consistent with this section shall be deemed a violation of this section, which shall constitute an unlawful and unfair business practice pursuant to Section 17200 of the Business and Professions Code by the Medi-Cal managed care plan that has delegated services to the downstream fully or partially delegated subcontractor managed care plan.
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(2)
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Notwithstanding any contractual rights that the downstream fully delegated subcontractor or partially delegated subcontractor managed care plan has, the downstream fully delegated subcontractor or partially delegated subcontractor managed care plan shall be afforded the opportunity to enforce the requirements of this section by filing a notice of dispute with the department pursuant to Section 100171 of the Health and Safety Code.
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(d)
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Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department shall implement, interpret, or make specific this section by means of all-county letters, plan letters, plan bulletins, amendment to the state Medi-Cal managed care contract, or similar instructions, without taking any further regulatory action.
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(e)
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For purposes of this section, the following definitions apply:
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(1)
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“Downstream fully delegated subcontractor” means a downstream subcontractor of a Medi-Cal managed care plan that is contracted with the department and that contractually assumes all duties and obligations of the Medi-Cal managed care plan contracted with the department, except for those contractual duties and obligations where delegation is legally prohibited.
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(2)
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“Downstream partially delegated subcontractor” means a downstream subcontractor of a Medi-Cal managed care plan that is contracted with the department and that contractually assumes some, but not all, duties and obligations of the Medi-Cal managed care plan contracted with the department.
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