Health & Saf. Code, § 1374.12

No health care service plan contract issued, entered into, or renewed on or after July 1, 1984, shall be deemed to contain any provision restricting the liability of the plan with respect to expenses solely because the expenses were incurred while the member was in a state hospital, if the policy, contract, or agreement would have paid for the services but for the fact that they were provided in a state hospital. Nothing in this section shall be deemed to require a plan to pay a state hospital for covered expenses incurred by a member at a rate or charge higher than the plan would pay for such services to a hospital with which the plan has entered a contract providing for alternative rates of payment or limiting payments for services secured by members.