Cal. Welfare and Institutions Code § 14490

In providing benefits under this chapter and Chapter 7 (commencing with Section 14000), the director shall aggressively seek the development of alternative forms of financing and delivering health care services. In carrying out the intent of this article, the director shall contract with institutional providers, counties, or other organizations to establish pilot programs that demonstrate the value, or lack thereof, of such a program in delivering or financing health care services in such a manner. Each pilot program shall be for a specified duration not to exceed five years, and each pilot program shall be evaluated annually for its efficiency, effectiveness, and quality. Upon a finding by the director that a pilot program contributes substantially to the availability of high quality health services and that those services are cost-effective, the director shall enter into a contract for a period of up to five years. Where the director recommends implementation of a pilot program on a permanent basis, but finds that he or she is not able to implement on a permanent basis that program immediately upon conclusion of the program’s term, he or she may extend the duration of the pilot program until the evaluation or permanent implementation can be accomplished. The extension shall be for a term not in excess of one year, but may be renewed for additional one-year terms, provided that the director has completed an evaluation to include findings that would qualify an extension.