Welf. & Inst. Code, § 14133.25

(a) The director shall identify those surgical and medical procedures capable of outpatient performance and establish conditions for assuring performance in an outpatient rather than inpatient setting when medically appropriate.

(b) The director shall identify and apply appropriate utilization controls to review outpatient and office medical and surgical procedures for medical necessity and program coverage. The director may under this section identify and require prior authorization for any specified outpatient or office medical or surgical procedure performed during a month without regard to the provisions of Section 14133.1, provided that, with respect to outpatient or office medical procedures, those medical procedures which remain not subject to prior authorization are sufficient in number and scope as to achieve the general purpose of Section 14133. 1.

(c) The director may establish a schedule of differential reimbursement rates to the operating surgeon for surgery procedures. Those surgery procedures which can safely be performed on an outpatient basis may be reimbursed at a higher level when performed in an outpatient setting than the same procedures performed on an inpatient basis.

(d) Provisions of this section shall not be applied to mental health services as defined under Division 5 (commencing with Section 5000) or Section 14021, or any other mental health services funded by the Medi-Cal program.