In California, which statement correctly describes how managed care health plans are regulated?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California divides regulatory jurisdiction over health coverage by plan structure. Health care service plans organized as HMOs, and point-of-service (POS) variants, are licensed and regulated by the Department of Managed Health Care under the Knox-Keene Act, while disability insurers offering PPO and EPO products are regulated by the California Department of Insurance. This split is expressly reflected in the A&H objectives under CIC Section 740 and in the plan-type material tied to AH-III.A.1a. An agent who understands which department governs a product can direct consumers to the correct complaint and enforcement channel, and can advise them accurately about which regulator oversees their coverage.
Why the other options are wrong
- B) The jurisdictional split is reversed: DMHC oversees HMO and POS service plans, while CDI oversees PPO and EPO disability insurers, so this option is incorrect.
- C) DMHC does not regulate PPO and EPO products, which fall under the Insurance Commissioner's jurisdiction, so exclusive DMHC control is wrong.
- D) CDI does not regulate HMO and POS health care service plans, which are licensed by the Department of Managed Health Care, so exclusive CDI control is wrong.
Memory hook
HMO and POS answer to DMHC; PPO and EPO answer to CDI.