Welf. & Inst. Code, § 14708

(a) For purposes of federal reimbursement to counties that have certified to the state that they have incurred certified public expenditures, the reimbursement amounts shall be consistent with federal Medicaid requirements for calculating federal upper payment limits, as specified in the approved Medicaid state plan and waivers.

(b) If the reimbursement methodology utilizes federal upper payment limits and the total cost of services exceeds the state maximum rates in effect for the 2011–12 fiscal year, a county may use certified public expenditures to claim the costs of services that exceed the state maximum rates, up to the federal upper payment limits. If a county chooses to claim costs that exceed the state maximum rates with certified public expenditures, the county shall use only local funds, and not state funds, to claim the portion of the costs over the state maximum rates. As a condition of receiving reimbursement up to the federal upper payment limits, a county shall enter into and maintain an agreement with the department implementing this subdivision.

(c) Notwithstanding this section, in the event that a health facility has entered into a negotiated rate agreement pursuant to Article 2.6 (commencing with Section 14081) of Chapter 7 of Part 4 of Division 9, the facility’s rates shall be governed by that agreement.

(d) This section shall become operative on July 1, 2012.