California Code, Welfare and Institutions Code - WIC § 14613

(a) The department shall develop at least three alternative methods of reimbursing hospitals for providing inpatient and outpatient hospital services to Medi-Cal beneficiaries on a prospectively negotiated rate basis.  Each method shall provide for prospectively negotiating rates for such care.  Each method shall require the hospital to agree to provide a minimal number of units of service at the negotiated rate.

(b) The department shall consult with associations and other appropriate representatives of the hospital industry.  The department shall make every reasonable effort to develop at least one alternative for prospectively negotiating hospital rates which is supported by such representatives of the hospital industry.

(c) The department shall consult with the commission regarding the development of at least one alternative for prospectively negotiating hospital rates.  The department may enter into an interagency agreement with the commission for the development of such an alternative.