(a)

(1) For dates of service commencing no later than January 1, 2026, the department shall establish a Medi-Cal managed care directed payment reimbursement methodology in accordance with

Section 438.6(

c) of Title of the Code of Federal Regulations applicable to the hospital.

(2) The directed payment reimbursement methodology shall, at minimum: (

A) Provide reimbursement for contracted hospital inpatient services such that aggregate managed care reimbursement to the hospital for hospital inpatient services, exclusive of any payments pursuant to

Article 5.230 (commencing with

Section 14169.50), is projected by the department to be at least equal to percent of the hospital’s projected Medi-Cal costs for hospital inpatient services associated with the implementation of

Section 14182, and other mandatory managed care enrollment provisions implemented subsequent to January 1, 2011. (

B) Provide additional reimbursements to the hospital for contracted hospital inpatient and hospital outpatient services in a form and manner that is projected by the department to total twenty-five million dollars ($25,000,000) annually in addition to the amount described in subparagraph (A). (

C) Align with the goals and objectives of the department’s comprehensive quality strategy. (

D) To the extent appropriate, link payments to value and outcomes, consistent with measures selected by the department consistent with subparagraph (C), in addition to access to and utilization of services. (

E) Be developed with consideration of the stability of the hospital’s cash flow. (

F) Be developed in consultation with the hospital. (3) (

A) The department shall, annually on a prospective basis, make the projections pursuant to subparagraphs (

A) and (

B) of paragraph (2), and may develop the projections on either an aggregate or individual service level, or both. (

B) The department may require Medi-Cal managed care plans and the hospital to submit information regarding contract rates and expected or actual utilization of services, at the times and in the form and manner specified by the department. (

C) In the event payments to the hospital at the level set forth in paragraph (2), in combination with any other reimbursement, exceed any federal statutory or regulatory limits on Medicaid reimbursement, the amount of payments that the Medi-Cal managed care plans make shall be reduced to comply with the applicable federal limitation. (

D) In establishing the reimbursement methodology pursuant to paragraph (1) and the parameters for Medi-Cal managed care plans in the County of Los Angeles to make increased payments to the hospital pursuant to subdivision (b), the department shall consider strategies that are designed to result in the hospital receiving the payments pursuant to this

section as quickly as practicable and on an ongoing or periodic basis that supports the stability of the hospital’s cash flow.

(4) To the extent necessary to meet the objectives identified in paragraph (2) or to comply with federal requirements, the department may, in consultation with the hospital, adjust or modify the directed payment reimbursement methodology to meet applicable federal requirements and be consistent with actuarial rate development principles and standards. (b)

(1) Medi-Cal managed care plans in the County of Los Angeles shall increase payments to the hospital in accordance with the requirements of the directed payment methodology established by the department pursuant to this

section and guidance issued pursuant to subdivision (c).

(2) Except as provided in paragraph (3), this

section shall not be construed to preclude the hospital from receiving any other payment for which it is eligible in addition to the payments provided for by this section.

(3) For any dates of service for which this

section is implemented, in whole or in part, and notwithstanding any other law, a Medi-Cal managed care plan shall not be required to make any payments pursuant to

Section 14165.50. (

c) Notwithstanding the rulemaking provisions of

Chapter 3.5 (commencing with

Section 11340) of Part of Division of Title of the Government Code, the department may implement, interpret, or make specific this section, in whole or in part, by means of all-county letters, plan letters, provider bulletins, information notices, or similar instructions, without taking any further regulatory action. (d)

(1) The department shall seek any federal approvals it deems necessary to implement this section.

(2) This

section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized. (e)

(1) The nonfederal share of increases to Medi-Cal managed care plan capitation rates made in accordance with this

section shall be funded using General Fund moneys or other state funds appropriated to the department as the state share in the annual Budget Act.

(2) Implementation of this

section in each applicable fiscal year is subject to an appropriation in the annual Budget Act or another statute for the express purpose of this section.