(

a) The Legislature finds and declares all of the following:

(1) Costs within the Medi-Cal program continue to grow due to the rising cost of providing health care throughout the state and also due to increases in enrollment, which are more pronounced during difficult economic times.

(2) In order to minimize the need for drastically cutting enrollment standards or benefits during times of economic crisis, it is crucial to find areas within the Medi-Cal program that have reimbursement levels higher than required under the standard provided in

Section 1902(a)(30)(

A) of the federal Social Security Act and may be reduced in accordance with federal law.

(3) The Medi-Cal program delivers its services and benefits to Medi-Cal beneficiaries through a wide variety of health care providers, some of which deliver care via managed care or other contract models while others do so through fee-for-service arrangements.

(4) The setting of rates within the Medi-Cal program is complex and subject to close supervision by the United States Department of Health and Human Services.

(5) As the single state agency for the Medicaid program in California, the department has unique expertise that can inform decisions that set or adjust reimbursement methodologies and levels consistent with the requirements of federal law. (

b) Therefore, it is the intent of the Legislature for the department to analyze and identify where reimbursement levels can be reduced consistent with the standard provided in

Section 1902(a)(30)(

A) of the federal Social Security Act and consistent with federal and state law and policies, including exemptions contained in the act that added this section, provided that the reductions in reimbursement shall not exceed percent on an aggregate basis for all providers, services, and products. (

c) Notwithstanding any other law, the director shall adjust provider payments, as specified in this section. (d)

(1) Except as otherwise provided in this section, payments shall be reduced by percent for Medi-Cal fee-for-service benefits for dates of service on and after June 1, 2011.

(2) For managed health care plans that contract with the department pursuant to this

chapter or

Chapter 8 (commencing with

Section 14200), except contracts with Senior Care Action Network and AIDS Healthcare Foundation, payments shall be reduced by the actuarial equivalent amount of the payment reductions specified in this

section pursuant to contract amendments or change orders effective on July 1, 2011, or thereafter.

(3) Payments shall be reduced by percent for non-Medi-Cal programs described in

Article 6 (commencing with

Section 124025) of

Chapter of Part of Division of the Health and Safety Code, and

Section 14105.18, for dates of service on and after June 1, 2011. This paragraph shall not apply to inpatient hospital services provided in a hospital that is paid under contract pursuant to

Article 2.6 (commencing with

Section 14081). (4) (

A) Notwithstanding any other law, the director may adjust the payments specified in paragraphs (1) and (3) with respect to one or more categories of Medi-Cal providers, or for one or more products or services rendered, or any combination thereof, if the resulting reductions to any category of Medi-Cal providers, in the aggregate, total no more than percent. (

B) The adjustments authorized in subparagraph (

A) shall be implemented only if the director determines that, for each affected product, service, or provider category, the payments resulting from the adjustment comply with subdivision (m). (

e) Notwithstanding this section, payments to hospitals that are not under contract with the department pursuant to

Article 2.6 (commencing with

Section 14081) for inpatient hospital services provided to Medi-Cal beneficiaries and that are subject to former

Section 14166.245 shall be governed by that section. (

f) Notwithstanding this section, both of the following apply:

(1) Payments to providers that are paid pursuant to

Article 3.8 (commencing with

Section 14126) shall be governed by that article. (2) (

A) Subject to subparagraph (B), for dates of service on and after June 1, 2011, Medi-Cal reimbursement rates for intermediate care facilities for the developmentally disabled licensed pursuant to subdivision (e), (g), or (

h) of

Section of the Health and Safety Code, and facilities providing continuous skilled nursing care to developmentally disabled individuals pursuant to the pilot project established by

Section 14132.20, as determined by the applicable methodology for setting reimbursement rates for these facilities, shall not exceed the reimbursement rates that were applicable to providers in the 2008–09 rate year. (B) (

i) If

Section 14105.07 is added to the Welfare and Institutions Code during the 2011–12 Regular Session of the Legislature, subparagraph (

A) shall become inoperative. (ii) If

Section 14105.07 is added to the Welfare and Institutions Code during the 2011–12 Regular Session of the Legislature, then for dates of service on and after June 1, 2011, payments to intermediate care facilities for the developmentally disabled licensed pursuant to subdivision (e), (g), or (

h) of

Section of the Health and Safety Code, and facilities providing continuous skilled nursing care to developmentally disabled individuals pursuant to the pilot project established by

Section 14132.20, shall be governed by the applicable methodology for setting reimbursement rates for these facilities and by

Section 14105.07. (

g) The department may enter into contracts with a vendor for the purposes of implementing this

section on a bid or nonbid basis. In order to achieve maximum cost savings, the Legislature declares that an expedited process for contracts under this subdivision is necessary. Therefore, contracts entered into to implement this

section and all contract amendments and change orders shall be exempt from

Chapter 2 (commencing with

Section 10290) of Part Division of the Public Contract Code. (

h) To the extent applicable, all of the following services, facilities, and payments shall be exempt from the payment reductions specified in subdivision (d):

(1) Acute hospital inpatient services that are paid under contracts pursuant to

Article 2.6 (commencing with

Section 14081).

(2) Federally qualified health center services, including those facilities deemed to have federally qualified health center status pursuant to a waiver pursuant to subsection (

a) of

Section of the federal Social Security Act (42 U.S.C.

Sec. 1315(a)).

(3) Rural health clinic services.

(4) Payments to facilities owned or operated by the State Department of State Hospitals or the State Department of Developmental Services.

(5) Hospice services.

(6) Contract services, as designated by the director pursuant to subdivision (k).

(7) Payments to providers to the extent that the payments are funded by means of a certified public expenditure or an intergovernmental transfer pursuant to

Section 433.51 of Title of the Code of Federal Regulations. This paragraph shall apply to payments described in paragraph (3) of subdivision (

d) only to the extent that they are also exempt from reduction pursuant to subdivision (l).

(8) Services pursuant to local assistance contracts and interagency agreements to the extent the funding is not included in the funds appropriated to the department in the annual Budget Act.

(9) Breast and cervical cancer treatment provided pursuant to

Section 14007.71 and as described in paragraph (3) of subdivision (

a) of

Section 14105.18 or

Article 1.5 (commencing with

Section 104160) of

Chapter of Part of Division of the Health and Safety Code.

(10) The Family Planning, Access, Care, and Treatment (Family PACT) Program pursuant to subdivision (aa) of

Section 14132. (11) (

A) Effective for dates of service on or after July 1, 2015, or the effective date of any necessary federal approvals as required by subdivisions (

n) and (o), whichever is later, dental services and applicable ancillary services. (

B) For dental managed care plans that contract with the department pursuant to this

chapter or

Chapter 8 (commencing with

Section 14200), payments pursuant to contract amendments or change orders effective on or after July 1, 2015, or the effective date of any necessary federal approvals as required by subdivisions (

n) and (o), whichever is later.

(12) For dates of service on and after January 1, 2022, or the effective date of any necessary federal approvals as required by subdivisions (

n) and (o), whichever is later, providers of complex rehabilitation technology and complex rehabilitation technology services, as described in

Section 14132.85.

(13) For dates of service on and after July 1, 2022, or the effective date of any necessary federal approvals as required by subdivisions (

n) and (o), whichever is later, all of the following services and providers: (

A) Nurses, including certified nurse-midwives, nurse anesthetists, certified pediatric nurse practitioners, certified family nurse practitioners, and group certified pediatric nurse practitioners. (

B) Alternative birth centers as described in

Section 14148.8. (

C) Audiologists and hearing aid dispensers as described in

Section 14105.49 of this code and

Section of Title of the California Code of Regulations. (

D) Respiratory care providers as described in

Section of Title of the California Code of Regulations. (

E) Durable medical equipment, as described in

Section of Title of the California Code of Regulations. (

F) Chronic dialysis clinics. (

G) Emergency medical air transportation services as described in

Section 76000.10 of the Government Code. (

H) Nonemergency medical transportation services as described in

Section of Title of the California Code of Regulations. (

I) Doula services as described in

Section 14132.24. (

J) Community health worker services as described in the approved Medi-Cal State Plan. (

K) Durable medical equipment and related supplies or accessories, as described in

Section 14105.48 and

Section of Title of the California Code of Regulations, that is a continuous glucose monitoring system or continuous glucose monitoring system supplies and accessories, as determined by the department. (

L) Health care services delivered via remote patient monitoring, authorized pursuant to subparagraph (

B) of paragraph (1) of subdivision (

f) of

Section 14124.12. (

M) Asthma prevention services as described in the approved Medi-Cal State Plan. (

N) Dyadic services as described in

Section 14132.755. (

O) Medication therapy management services as described in

Section 14132.969. (

P) Clinical laboratory services, as defined in

Section 51137.2 of Title of the California Code of Regulations, that are Novel Coronavirus (COVID-19) diagnostic testing or specimen collection services, as determined by the department. (

Q) Blood banks, as described in

Section of Title of the California Code of Regulations. (

R) Occupational therapy, as described in

Section of the California Code of Regulations. (

S) Orthotists, as described in

Section of Title of the California Code of Regulations. (

T) Psychologists, as described in

Section of Title of the California Code of Regulations. (

U) Medical social work or medical social services, as described in

Section of Title of the California Code of Regulations. (

V) Speech pathologists, as described in

Section of Title of the California Code of Regulations. (

W) Outpatient heroin detoxification services, as described in

Section of Title of the California Code of Regulations. (

X) Dispensing opticians, as described in

Section of Title of the California Code of Regulations. (

Y) Optometrists, including optometry groups, as described in

Section of Title of the California Code of Regulations. (

Z) Acupuncturists, as described in

Section of Title of the California Code of Regulations. (AA) Portable imaging services, as described in

Section 51193.1 of Title of the California Code of Regulations. (AB) The following primary care or specialty clinics, as determined by the department: (

i) Community clinics, as defined in

Section of the Health and Safety Code. (ii) Free clinics, as defined in

Section of the Health and Safety Code. (iii) Surgical clinics, as defined in

Section of the Health and Safety Code. (iv) Rehabilitation clinics, as defined in

Section of the Health and Safety Code. (

v) Clinics exempt from licensure under

Section of the Health and Safety Code, including nonhospital county-operated community clinics. (AC) Services provided under the California Children’s Services Program, established pursuant to

Article 5 (commencing with

Section 123845) of

Chapter of Part of Division of the Health and Safety Code, and under the Genetically Handicapped Persons Program, established pursuant to

Article 1 (commencing with

Section 125125) of

Chapter of Part of Division of the Health and Safety Code, as determined by the department. (AD) Community-Based Adult Services (CBAS), as described in

Section 14186.3 and as covered pursuant to subdivision (

e) of

Section 14184.201.

(14) For dates of service on and after January 1, 2023, or the effective date of any necessary federal approvals as required by subdivisions (

n) and (o), whichever is later, both of the following providers: (

A) Podiatrists, as described in

Section of Title of the California Code of Regulations. (

B) Prosthetists, as described in

Section of Title of the California Code of Regulations.

(15) For dates of service on and after January 1, 2024, or the effective date of the payments implemented pursuant to subdivision (

a) of

Section 14105.201, whichever is later, all of the following services and providers: (

A) Primary care services, including those provided by physicians or nonphysician health professionals, as defined in

Section 51170.5 of Title of the California Code of Regulations. (

B) Obstetric care services and doula services as described in

Section 14132.24. (

C) Outpatient mental health services that are not the financial responsibility of county mental health plans operating pursuant to

Chapter 8.9 (commencing with

Section 14700). (16) (

A) For dates of service on and after January 1, 2025, or the effective dates of the payments implemented pursuant to Sections 14124.163 and 14124.165, whichever is later, as applicable, all of the following services and providers: (

i) Physician and professional services subject to reimbursement pursuant to

Section 14124.163. (ii) Abortion services, as defined in subdivision (

d) of

Section 14124.161, subject to reimbursement pursuant to

Section 14124.165. (

B) If the voters approve the addition of

Chapter 7.5 (commencing with

Section 14199.100) to this part at the November 5, 2024, statewide general election, this paragraph shall be inoperative as of January 1, 2025. (

i) Subject to the exception for services listed in subdivision (h), the payment reductions required by subdivision (

d) shall apply to the benefits rendered by any provider who may be authorized to bill for the service, including, but not limited to, physicians, podiatrists, nurse practitioners, certified nurse-midwives, nurse anesthetists, and organized outpatient clinics. (

j) Notwithstanding any other law, for dates of service on and after June 1, 2011, Medi-Cal reimbursement rates applicable to the following classes of providers shall not exceed the reimbursement rates that were applicable to those classes of providers in the 2008–09 rate year, as described in subdivision (

f) of

Section 14105.191, reduced by percent:

(1) Intermediate care facilities, excluding those facilities identified in paragraph (2) of subdivision (f). For purposes of this section, “intermediate care facility” has the same meaning as defined in

Section of Title of the California Code of Regulations.

(2) Skilled nursing facilities that are distinct parts of general acute care hospitals. For purposes of this section, “distinct part” has the same meaning as defined in

Section of Title of the California Code of Regulations.

(3) Rural swing-bed facilities.

(4) Subacute care units that are, or are parts of, distinct parts of general acute care hospitals. For purposes of this paragraph, “subacute care unit” has the same meaning as defined in

Section 51215.5 of Title of the California Code of Regulations.

(5) Pediatric subacute care units that are, or are parts of, distinct parts of general acute care hospitals. For purposes of this paragraph, “pediatric subacute care unit” has the same meaning as defined in

Section 51215.8 of Title of the California Code of Regulations.

(6) Adult day health care centers.

(7) Freestanding pediatric subacute care units, as defined in

Section 51215.8 of Title of the California Code of Regulations. (

k) Notwithstanding

Chapter 3.5 (commencing with

Section 11340) of Part of Division of Title of the Government Code, the department may implement and administer this

section by means of provider bulletins or similar instructions, without taking regulatory action. (

l) The reductions described in this

section shall apply only to payments for services when the General Fund share of the payment is paid with funds directly appropriated to the department in the annual Budget Act and shall not apply to payments for services paid with funds appropriated to other departments or agencies. (

m) Notwithstanding this section, the payment reductions and adjustments provided for in subdivision (

d) shall be implemented only if the director determines that the payments that result from the application of this

section comply with applicable federal Medicaid program requirements and that federal financial participation will be available.

(1) In determining whether federal financial participation is available, the director shall determine whether the payments comply with applicable federal Medicaid program requirements, including those set forth in

Section 1396a(a)(30)(

A) of Title of the United States Code.

(2) To the extent that the director determines that the payments do not comply with the federal Medicaid program requirements or that federal financial participation is not available with respect to any payment that is reduced pursuant to this section, the director shall retain the discretion to not implement the particular payment reduction or adjustment and may adjust the payment as necessary to comply with federal Medicaid program requirements. (

n) The department shall seek any necessary federal approvals for the implementation of this section. (o)

(1) The payment reductions and adjustments set forth in this

section shall not be implemented until federal approval is obtained.

(2) To the extent that federal approval is obtained for one or more of the payment reductions and adjustments in this

section and

Section 14105.07, the payment reductions and adjustments set forth in

Section 14105.191 shall cease to be implemented for the same services provided by the same class of providers. If there is a conflict between this

section and

Section 14105.191, other than the provisions setting forth a payment reduction or adjustment, this

section shall govern.

(3) When federal approval is obtained, the payments resulting from the application of this

section shall be implemented retroactively to June 1, 2011, or on any other date or dates, as may be applicable.

(4) The director may clarify the application of this subdivision by means of provider bulletins or similar instructions, pursuant to subdivision (k). (

p) Adjustments to pharmacy drug product payment pursuant to this

section shall no longer apply when the department determines that the average acquisition cost methodology pursuant to

Section 14105.45 has been fully implemented and the department’s pharmacy budget reduction targets, consistent with payment reduction levels pursuant to this section, have been met.