California Code, Welfare and Institutions Code - WIC § 14084

(a) Payments to the contractor may be either on a capitation or prepayment basis, or on a combination of both methods of payment, or such other methods as the negotiator determines to be feasible.  Hospitals may assume all or part of the risk of utilization of services, or costs of services, or both.

(b) The department shall insure that the system for reimbursing contracting hospitals is capable of making contract payments in the manner determined pursuant to subdivision (a).  At a minimum, the department shall insure that the reimbursement system is capable of making contract payments on a per diem and a per case basis.