(b)

1. (1) In conjunction with the implementation of Section 14182, a public entity may elect to transfer public funds to the state to be used solely as the nonfederal share of Medi-Cal payments to managed care health plans for the provision of services to Medi-Cal beneficiaries.
2. (2) For purposes of this section, “public entity” means a designated public hospital as defined in subdivision (d) of Section 14166.1, the University of California, or a county or city and county or local hospital authority that is licensed to operate one or more of the designated public hospitals.

(c) If a public entity elects to make intergovernmental transfers pursuant to this section, all of the following shall apply:

1. (1) To ensure that the implementation of Section 14182 does not jeopardize the ability of designated public hospitals and their affiliated public providers to continue serving Medi-Cal beneficiaries, to the extent permitted under federal law, the department shall require managed care health plans to pay the designated public hospital and other governmental providers affiliated with the transferring public entity for services rendered to Medi-Cal beneficiaries, amounts that are no less than the amount to which the providers would have otherwise been entitled, including the federal and nonfederal share, on a fee-for-service basis, for the full scope of Medi-Cal services, including supplemental payments and any additional federally permissible amount. The payment amounts required by this paragraph shall be based upon the volume of Medi-Cal services provided by the designated public hospitals and other governmental providers affiliated with the transferring public entity.
2. (2) Except as provided in Section 14105.24, to the extent that the payments described in paragraph (1) result in increased payments by the managed care health plans to the designated public hospitals and other governmental providers affiliated with the transferring public entity that are the basis of increased rates paid by the department to the managed care health plans above the amount that would have been paid in the absence of paragraph (1), the nonfederal share of the increased rates shall be borne by the transferring entity as described in subdivision (d) and there shall be no additional impact on state General Fund expenditures. Additionally, the payment rates shall only be paid to the extent they can be certified as actuarially sound and as permitted under federal law.

(d) The department shall meet and confer with the public entities regarding their election to contribute to the nonfederal share of federal Medicaid expenditures under this section and to determine each public entity’s intergovernmental transfer amount, which shall be comprised of the following:

1. (1) An amount that is equivalent to the nonfederal share of the rates of compensation the public entity’s designated public hospital would receive from managed care health plans, without regard to the requirement of paragraph (1) of subdivision (c), for Medi-Cal inpatient days of service that otherwise would have been rendered on a fee-for-service basis in the absence of the implementation of Section 14182 to Medi-Cal enrollees who are seniors and persons with disabilities.
2. (2) An amount that is equivalent to the nonfederal share of the amount which the designated public hospital and other governmental providers affiliated with the transferring entity would have otherwise incurred on a fee-for-service basis for providing Medi-Cal services to the Medi-Cal managed care health plan enrollees they serve, including supplemental payments, excluding the nonfederal share of those amounts the plan will pay for the services without regard to the requirement of paragraph (1) of subdivision (c), and consistent with Section 14105.24, to the extent otherwise applicable.
3. (3) Amounts equivalent to the nonfederal share of additional federally permissible payments.