In California, which regulator oversees HMO and POS health plans, while the California Department of Insurance (CDI) regulates PPO and EPO plans?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California splits regulation of health plans and health insurers: HMO and point-of-service (POS) plans are licensed and regulated by the Department of Managed Health Care (DMHC) under the Knox-Keene Act, while preferred provider (PPO) and exclusive provider (EPO) insurance products are regulated by the California Department of Insurance (CDI). CIC §740 reflects the presumption that entities providing health coverage are subject to CDI jurisdiction unless they show they are governed by another agency, such as DMHC for health care service plans. Knowing which regulator governs which product is a CA-specific managed care fact (AH-I.C.1), so the question is marked state=CA.
Why the other options are wrong
- B) CMS administers federal Medicare and Medicaid programs and does not license or regulate California's private HMO or PPO health plans. The regulatory split for those products is a state matter between the DMHC and the CDI.
- C) The CPUC regulates utilities and certain categories of common carriers, not health care service plans or health insurers. Health plan oversight in California is assigned to the DMHC for HMO and POS products and to the CDI for PPO and EPO products.
- D) The DOL governs ERISA-covered employee benefit plans in many respects, including fiduciary rules. However, the licensing and solvency oversight of California's HMO and PPO health plans is a state matter split between the DMHC and the CDI.
Memory hook
DMHC runs HMOs and POS; CDI runs PPOs and EPOs.