CA Health & Safety Code Section 124440

The department may enter into agreements with any clinic that is licensed under subdivision (a) of Section 1204 or exempt from licensure under subdivision (c) of Section 1206, and which requests the agreements, for up to three consecutive years. The contracts shall be limited to the provision of health services to persons authorized to receive health services under the programs specified in the Primary Care Services Act (Section 27). The department shall retain the right to terminate contracts under the general provisions of the contract language prior to the three years for failure to comply with the performance terms and conditions set forth in the contracts. The multiple-year contracts shall be modified to reflect any cost-of-living adjustments that are provided to the programs specified in this section, provided the cost-of-living adjustments are granted pursuant to the Budget Act. The contracts may also be amended to reflect changes in the base budget amount, scope of work, and other contract language changes as necessary. Nothing shall prohibit the department from establishing a three-year budget and annually amending the contract to change the budget amount, scope of work, and other contract language changes as necessary. Nothing shall prohibit the contract from being modified based on the mutual consent of the contractor and the department. Advance payments in the original contract and in each one-year extension are permitted, but shall not exceed 25 percent of the funds provided for each fiscal year. On or before January 1, 1990, the department at any time shall report to the Legislative Analyst as to the personnel-year and General Fund savings that have been associated with this authority.