(a) For the 1990–91 fiscal year and subsequent fiscal years, each county that is eligible to participate in the CMSP pursuant to Section 16809 may enter into a contract with the department in which the department agrees to assume the responsibility to pay for the cost of treatment service provided on or after July 1, 1990, to children pursuant to Section 16934. If a county that is eligible to participate in the CMSP pursuant to Section 16809 does not apply for or rescinds its application for funds under this chapter, the department may use all or part of that county’s allocation, as calculated pursuant to paragraph (3), to pay for the costs of treatment services to children pursuant to Section 16934.

1. (1) Each county intending to contract with the department shall submit to the department a notice of intent to contract adopted by the board of supervisors no later than June 1, 1990. For each fiscal year thereafter a notice adopted by the board of supervisors shall be submitted no later than April 1 of the fiscal year preceding the fiscal year for which the agreement will be in effect, in accordance with procedures established by the department. As a condition of contracting with the department, the department may establish uniform standards, forms, and procedures for the processing and payment of claims for treatment services.

2. (2)

   1. (A) Each county contracting with the department pursuant to this subdivision for the 1991–92 fiscal year that has previously contracted with the department pursuant to this section shall agree that the department shall retain 10 percent of the allocation it would otherwise have received under this chapter. The department shall transfer amounts retained on a monthly basis to the CHDP Treatment Account established in subdivision (b).
   2. (B) Any county that contracts with the department pursuant to this subdivision during the 1991–92 fiscal year that has not previously contracted with the department pursuant to this section shall agree that the department shall retain 20 percent of the allocation the county would otherwise have received under this chapter for that portion of the year for which it contracts under this section.
3. (3) In future fiscal years the percentage retained by the department may be adjusted to reflect actual payments, projected expenditures, funds appropriated by the Legislature for treatment services, and the overall status of the account established in subdivision (b).

(b) Beginning with the 1990–91 fiscal year, the department shall establish a separate Child Health and Disability Prevention Treatment Account. For purposes of this chapter “CHDP Treatment Account” means the account established pursuant to this subdivision.

1. (1) The following funds shall be deposited into the CHDP Treatment Account:

   1. (A) Funds appropriated by the Legislature to fund the reinsurance account established in subdivision (b) of Section 16934.2 which are not expended or encumbered for that purpose.
   2. (B) Any funds recouped from those counties electing to establish a 15 percent reserve pursuant to subdivision (a) of Section 16934.2.
   3. (C) Funds retained by the department pursuant to subdivision (a).
   4. (D) Interest earnings on funds.
   5. (E) Any additional funds appropriated by the Legislature.
2. (2) Funds deposited in the CHDP Treatment Account shall be administered on an accrual basis and notwithstanding any other provision of law, except as provided in this chapter, shall not be transferred to any other fund or account except for purposes of investment as provided in Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code.

3. (3) Moneys deposited into the account shall constitute a risk pool which shall be used for any or all of the following purposes:

   1. (A) Payment for services provided pursuant to Section 16934 in counties which have contracted with the department pursuant to subdivision (a).
   2. (B) State administrative costs, including any costs associated with a contract for processing claims.
   3. (C) If the projected expenditure of funds from the CHDP Treatment Account for any fiscal year exceeds available revenues, the department may adjust payments for the remainder of the fiscal year to providers on a pro rata basis in order to ensure that expenditures do not exceed available revenues.