California Code, Welfare and Institutions Code - WIC § 14104

(a) The department may, to the extent feasible, and to the extent permitted or required by applicable provisions of federal law, enter into agreements with organizations of licensed professional persons known as Professional Standards Review Organizations, as the same are defined in, and authorized by, federal law, for the review of inpatient and other health services provided to beneficiaries in accordance with the provisions of this part, to determine whether such services may be approved for payment.

(b) Where such agreements are entered, the department may also enter into agreements for review of services provided to beneficiaries whose health care is funded solely from state or local sources without federal participation under Title XIX of the Social Security Act.  1

(c) Agreements entered into under this section shall be awarded on a nonbid basis.