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The Department of Managed Health Care Regulates California Health Plans & Protects Consumers

by John Hansen

The Department of Managed Health Care (DMHC) was established in 2000 through consumer sponsored legislation. It regulates the health care and medical insurance for 25 million Californians including the majority of those on Obamacare California plans insured through Covered California.

The Mission: Protect Health Care Consumers

The mission of the DMHC is to “protect consumers’ health care rights and ensure a stable health care delivery system in California.” The department is funded by assessments on health plans, so they are not dependent on the state legislature for income.

Regulates California Health Plans

The DMHC regulates 121 California health insurance plans, including 72 full service plans and 49 specialized plans. They regulate all HMO plans in California and some PPO and EPO products as well as dental and vision plans. They oversee some large group, most small group, most Medi-Cal Managed Care plans and many individual and family products. The department gets its authority from the Knox Keene Health Care Service Plan Act of 1975.

It’s actually easier to talk about what products are not regulated by the DMHC. This government agency in California does not regulate California Department of Insurance (CDI) products, most Medicare coverage. They do not oversee some Medi-Cal coverage including fee-for-service and County Organized Health Systems (COHS). They do not regulate the Employee Retired Income Security Act of 1974 (ERISA) self-insured plans.

Mary Watanabe was asked, “Do you deal with Medicare Advantage [at the DMHC]?” She responded, “We review it, but don’t regulate it.” She added that for consumer issues with Medicare Advantage an agent or client can get help from ICAP.

Key Functions of the DMHC

The key functions of the Department of Managed Health Care include:

  • Review Plan Documents for Compliance with State Laws
  • Ensure Financial Stability
  • Review Proposed Premium Increases
  • Medical Surveys
  • Enforcement Action Against Plans that Violate the Law
  • Consumer Help Center

Growth of the DMHC

Since September 2011, the DMHC has experienced much growth. The total funding for the department in 2011 was $56 million and they had 334 employees. As of February 2016, the agency now has:

  • Funding: $74 million
  • Employees: 446 individuals

In 2002, the full service enrollment the DMHC oversaw was 75% commercial and 25% government. However, as of 2015, these numbers have shifted. See chart. Currently, the DMHC regulates around 12.5 million consumers on commercial products and about 12.5 million on government health insurance plans.