(a) The department may, to the extent feasible, enter into nonexclusive contracts providing arrangements under which funds available for health care under this chapter shall be administered and disbursed to providers of health care or to their designated agents in consideration for services rendered and supplies furnished by them in accordance with the provisions of the applicable contract and any schedule of charges or formula for determining payments established pursuant to the contract. The contract shall provide that the contractor:

(1) Will take any action as may be necessary to assure that payment for services to hospitals and other facilities and professional services shall be based on standards determined by the director. The formula for the payments shall be determined in accordance with regulations establishing the methods to be used and the items to be included.

(2) Will take any action which may be necessary to assure that charges by providers will be reasonable and not higher than the charge for a comparable service and under comparable circumstances made to other payors.

(3) Bills for service under this chapter shall be reviewed and rejected or processed for payment within an average of 18 days from receipt of evidence establishing validity of the bill for payment in the office of the contractor. Ninety percent of all bills submitted to the contractor and under the contractor’s control, as set forth in the request for proposal, shall be processed and paid in 30 days and 99 percent of all claims submitted to the contractor and under the contractor’s control, as set forth in the request for proposal, shall be processed and paid in 90 days. If it is determined by the contractor that additional evidence of validity is required, the evidence shall be requested within 18 days from the date the bill is received by the contractor. In any event, notice shall be given within 30 days from the date the bill is received concerning the status of the bill submitted if the bill is held for peer review by the contractor beyond 18 days. In no event, shall the number of bills not processed for payment within 30 days of receipt exceed 9 percent of the total bills inventory.

(b) Contracts awarded under this section shall be awarded on a bid basis, and before entering into any contract, the director shall publish notice soliciting bids.

(c) Contracts awarded under this section may provide all of the following:

(1) Payments to the contractor may be on a capitation or prepayment basis, or on a combination of both methods of payment.

(2) Providers may assume all or part of the risk of utilization of services, or costs of services, or both, and that providers who agree to assume that risk may be separately classified for purposes of applicable rates of payment or administrative requirements.

(3) Any other provisions which have previously been incorporated into pilot programs established pursuant to Chapter 8 (commencing with Section 14200) and determined by the director to be desirable and feasible.

(Amended by Stats. 2001, Ch. 745, Sec. 250. Effective October 12, 2001.)