Cal. Welf. & Inst. Code § 14251

(a) (1) “Prepaid health plan” means a plan that meets all of the following criteria: (A) Is licensed as a health care service plan by the Director of the Department of Managed Health Care pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code), other than a plan organized and operating pursuant to Section 10810 of the Corporations Code that substantially indemnifies subscribers or enrollees for the cost of provided services, or has an application for licensure pending and was registered under the Knox-Mills Health Plan Act prior to its repeal. (B) Meets the requirements for participation in the Medicaid program (Title XIX of the Social Security Act) on an at-risk basis. (C) Agrees with the State Department of Health Care Services to furnish directly or indirectly health services to Medi-Cal beneficiaries on a predetermined periodic rate basis. (2) “Prepaid health plan” includes any organization that is licensed as a plan pursuant to the Knox-Keene Health Care Service Plan Act of 1975 and is subject to regulation by the Department of Managed Health Care pursuant to that act, and that contracts with the State Department of Health Care Services solely as a fiscal intermediary at risk.

(b) (1) Except for the requirement of licensure pursuant to the Knox-Keene Health Care Service Plan Act of 1975, the State Director of Health Care Services may waive any provision of this chapter that the director determines is inappropriate for a fiscal intermediary at risk. An exemption or waiver shall be set forth in the fiscal intermediary at-risk contract with the State Department of Health Care Services.

(2) “Fiscal intermediary at risk” means any entity that entered into a contract with the State Department of Health Care Services on a pilot basis pursuant to subdivision (f) of Section 14000, as in effect June 1, 1973, in accordance with which the entity received capitated payments from the state and reimbursed providers of health care services on a fee-for-service or other basis for at least the basic scope of health care services, as defined in Section 14256, provided to all beneficiaries covered by the contract residing within a specified geographic region of the state. The fiscal intermediary at risk shall be at risk for the cost of administration and utilization of services or the cost of services, or both, for at least the basic scope of health care services, as defined in Section 14256, provided to all beneficiaries covered by the contract residing within a specified geographic region of the state. The fiscal intermediary at risk may share the risk with providers or reinsuring agencies or both. Eligibility of beneficiaries shall be determined by the State Department of Health Care Services and capitation payments shall be based on the number of beneficiaries so determined.