(a) In consultation with participating entities, the department shall determine actuarially sound per enrollee capitation rates for LIHPs that are adequate and sufficient to ensure access to services for enrollees and to at least cover the projected cost of care. As part of the rate development process, each LIHP shall submit a detailed proposal to the department outlining proposed methodologies and rates that have been certified by county-employed or county-retained actuaries using state and federal Medicaid principles and the standards provided in this section.

(b) Rates determined under this section shall be based on utilization and cost data specific to the enrolled population or comparable data, including where available, project- and county- specific data. In setting actuarially sound rates, the department shall apply appropriate factors to ensure sufficient access to primary and specialty care, and shall take into account the cost of the services specified under the approved LIHP, administrative costs, graduate medical education costs, the utilization and intensity of services expected for LIHP enrollees, and an appropriate case management fee.

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(c) The department may include risk corridors to allow for adjustments to rates if the actual cost or utilization of a LIHP exceeds the projected cost.

(d) The department may develop additional payment mechanisms that provide for incentive payments to LIHPs that meet designated performance criteria for quality of and access to care.

(e) The rate shall be determined annually, and shall be effective either the first day of each LIHP year, or another date agreed upon by the participating entity and the department. Rates may be adjusted outside the annual determination process if there is a change in federal or state law or regulation that increases the cost of fulfilling the obligations of a LIHP.

(f) Notwithstanding any other provision of law, payments to LIHPs shall not be limited by an estimate of the reimbursement that would be available for program services if those services were provided to Medi-Cal beneficiaries under the Medi-Cal fee-for-service program.

(g) LIHPs shall be paid actuarially sound rates as determined under this section at the beginning of each quarter based on enrollment. If payments are based on estimated enrollment data, the payments shall be reconciled to actual enrollment on an annual basis.

(Amended by Stats. 2011, Ch. 86, Sec. 29. (AB 1066) Effective July 15, 2011.)