H. Regulation of Providers

The Department of Insurance has jurisdiction over entities that provide coverages designed to pay for health care providers' services and expenses, unless the health care providers are appropriately licensed or certified by other governmental agencies.

The Department of Insurance has primary jurisdiction over the regulation of the activities of persons transacting insurance in California — this includes all insurers, agents, and others, regardless of whether they are licensed or admitted. However, the Insurance Code also makes a unique provision for "any person or other entity that provides coverage" for a variety of medically related expenses, including medical, surgical, chiropractic, physical therapy, speech pathology, audiology, mental health, dental, hospital, or optometry services.

This special provision places the Department of Insurance in a secondary regulatory position over such "persons" whenever they can demonstrate that another regulatory agency has primary responsibility for their activities. That other regulator could be an agency of the federal government, of another state, or another agency of California. If a provider of such insurance plans cannot show that it is regulated by another agency, it will be regulated by the Department of Insurance.

The Insurance Code specifically states that a health care services plan, as defined in the Health and Safety Code, will still fall under the jurisdiction of the Department of Insurance when operated by:

• Nonprofit agencies (unless they are both the provider of the insurance and the owner-operator of the facilities providing care under the contract of insurance);
• Schools, colleges, or universities;
• Public agencies providing care or coverage for employees, students, or faculty; and
• Self-funded plans operated by other employers.

The California Department of Insurance is the primary regulator of issuers of most PPO and EPO plans and other disability insurance companies. However, the Department of Managed Health Care is the primary regulator of the activities, management, and operations of HMOs and other providers of managed health care services, such as Point of Service plans and some PPO and EPO plans. Because this agency has primary responsibility for enforcing the Insurance Code and other laws concerning the managed health care industry, the Department of Insurance exercises only limited oversight over providers in this area.