In California, an HMO operated as a health care service plan under the Knox-Keene Act is regulated primarily by:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In California, HMOs and similar managed care products sold by health care service plans are regulated by the Department of Managed Health Care (DMHC) under the Knox-Keene Health Care Service Plan Act. The California Department of Insurance (CDI) regulates traditional health insurers and PPO and EPO disability policies. Insurance Code Section 740 establishes that entities providing health coverage are presumed subject to CDI jurisdiction unless they show they are regulated by another agency such as DMHC. The split means the regulator depends on the type of plan, not on federal law.
Why the other options are wrong
- B) CDI regulates PPO and EPO insurers and traditional disability policies, while DMHC regulates HMOs and POS plans.
- C) CMS regulates federal programs such as Medicare; state HMOs are licensed and supervised by DMHC.
- D) CalPERS is the public employees' retirement system, not the health plan regulator for HMOs.
Memory hook
HMOs answer to DMHC, PPOs answer to CDI. The regulator follows the plan type.