What Is a Restricted Knox-Keene License, Anyway?

Canopy Health has acquired a restricted Knox Keene license from the DMHC, but what does that mean and how will it impact your clients?
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The Canopy Health alliance is a physician- and hospital-owned organization that has received a restricted Knox-Keene license from the Department of Managed Health Care (DMHC). This allows us to accept responsibility for the full medical costs and quality management of enrollees in the insurance products offered by our affiliate health plans. Canopy Health is owned by UCSF Health, John Muir Health, Muir Medical Group IPA, Hill Physicians Medical Group, and Meritage Medical Network, and our robust alliance includes 4,000 physicians, dozens of care centers, and numerous renowned local hospitals.

But what is a restricted Knox-Keene license, and how does this licensure impact the way we provide service to our members?

Understanding the Knox-Keene Health Care Service Plan Act of 1975

The Knox-Keene Health Care Service Plan Act of 1975 was passed by the California State Legislature to regulate California health maintenance organizations (HMOs) and is currently administered by the Department of Managed Healthcare (DMHC).

By participating in specific provisions of the Affordable Care Act, California is an active purchaser of insurance plans, which means that the state alone can authorize which companies are allowed to sell insurance products. The one condition is that only those organizations with a Knox-Keene license are authorized to offer these plans.

Licenses are divided into two categories:

  • Full-Service Knox-Keene Licenses are issued to entities providing at least six basic care services, such as inpatient and home health services.
  • Specialized Knox- Keene Licenses are issued to entities providing only a single health care service, such as dental or mental health.

In addition, both of these license categories can fall under the “restricted” subcategory, although this is not explicitly stated in the Knox-Keene Act or in any DMHC regulations. Organizations granted these restricted licenses are limited to contracting with providers and are not allowed to contract with employer groups or individuals. Therefore, Canopy Health (or any other organization operating under a restricted Knox-Keene license) does not create its own insurance products and does not participate in the marketing of plans. However, we do subcontract with several reputable local carriers that have already developed their own diverse and accessible insurance products.

Benefits of Knox-Keene Licensure

There are several benefits to Knox-Keene licensure, including:

  • Quality Improvement: Program requirements and other aspects of clinical integration are explicitly outlined in a Knox-Keene license. This means a provider’s track record is more detailed, which allows providers the chance to showcase their skills and experience to eventually contract with high-tier health plan networks and increase their reimbursement rates in the future.
  • Streamlined Referrals: Licensure allows health plans to implement easy and effective patient referrals within the network, as well as to develop plan-to-plan contracts.
  • Product Development: In some cases, Knox-Keene licensed organizations can create their own insurance products, which allows for increased flexibility for providers.
  • Delegated Tasks: Larger health plans can delegate tasks, which can lead to increased reimbursement for providers and additional operational control.
  • Cost Alignment: Knox-Keene licenses help streamline risk-sharing arrangements between providers and health plans to create sound financial efficiencies.
  • Data Storage and Sharing: Knox-Keene health plans can help providers gather, report, and share information by providing staffing, evidence-based management services, and other management services.

Supplemental Information and Review Processes

Supplemental information (also referred to as an exhibit) is exempt from restricted Knox-Keene licensing, and Canopy Health is not required to include this in our license filing. Generally speaking, these exhibits relate to marketing and group and individual contracts, and requirements vary depending on whether the product offered is commercial, Medicare, or Medi-Cal.

As regulation of Medi-Cal and commercial insurance products is primarily the responsibility of the State of California, both offering types undergo a rigorous review process, including network adequacy, quality of care, grievance and complaint protocols, and several other benchmarks. Conversely, as Medicare is a federal program, the DMHC has little influence in the oversight and regulation of those products. Therefore, more time is generally spent reviewing applicants’ financial situation rather than network adequacy or quality of care.

Contact Canopy Health to Learn More

Canopy Health is owned by UCSF Health, John Muir Health, Muir Medical Group IPA, Hill Physicians Medical Group, and Meritage Medical Network, and our robust alliance includes nearly 5,000 physicians, dozens of care centers, and numerous renowned local hospitals. We also partner with several local, reputable insurance providers to offer flexible offerings that benefit consumers and employers alike!

If you would like more information regarding our alliance and how we are reinventing healthcare in the Bay Area, please contact us today by calling 888-8-CANOPY or complete the brief form on this page.

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