Welf. & Inst. Code, § 14131.15

(a) In geographic areas in which Medi-Cal managed care plans contracting under this chapter or Chapter 8 (commencing with Section 14200) are operating with capacity to enroll additional qualifying Medi-Cal beneficiaries, the director may, in the interest of bringing managed care principles to bear on the quality, costs, or utilization levels of the Medi-Cal program, designate any benefit or service included in the Medi-Cal program, at state option under federal medicaid rules, as a covered Medi-Cal benefit only when provided by a Medi-Cal managed care plan to a Medi-Cal enrollee of the plan.

(b) Where benefits and services have been designated by the director under subdivision (a), beneficiaries who are eligible to enroll in and reside in the service area of a managed care plan, and who desire coverage for such benefits and services, must enroll in a Medi-Cal managed care plan to receive them and shall, to the maximum extent permitted under federal law, remain enrolled in the plan.

(c) When managed care capacity is reached in an area in which Medi-Cal benefits have been designated under this section, the director may provide for the delivery of designated benefits or services to beneficiaries by contract to the extent permitted under this chapter, on a fee-for-service basis or a combination of both.

(d) Exercise of the director’s discretion under this section shall not preclude Medi-Cal managed care contractors from applying their established medical necessity criteria, utilization control standards and policies and utilization review procedures in delivering designated services as permitted and controlled by Medi-Cal contract and other state and federal regulatory standards.

(e) Enactment of this section shall not impose any requirement on a Medi-Cal managed care plan to negotiate or enter into a contract or any other participation arrangement with any provider of a Medi-Cal benefit or service designated under subdivision (a).

(f) The department shall seek all federal waivers necessary to allow for federal financial participation in expenditures under this section.