What Is the Department of Managed Health Care and What Do They Do?

Learn more about the Department of Managed Health Care and Canopy Health’s restricted Knox-Keene license.

As a managed care plan with a restricted Knox-Keene license, Canopy Health works closely with California’s Department of Managed Health Care (DMHC). This agency provides important services to consumers and medical providers and monitors the operations of hundreds of managed care plans that operate within the state. 

What Is the Department of Managed Health Care?

Created in 2000, the California Department of Managed Health Care is a consumer protection agency that oversees the operations of managed care organizations. Its mission is to protect consumer healthcare rights and ensure “a stable health care delivery system.” 

According to its strategic plan, the DMHC has four primary goals:

  1. Educating and assisting the state’s healthcare consumers
  2. Cultivating a coordinated, sustainable healthcare marketplace
  3. Regulating health plan’s operations and stability
  4. Fostering a culture of excellence

Today, the agency protects about 25 million Californians’ healthcare rights and regulates more than 120 health plans. It provides oversight of employer-funded, individual, and Medi-Cal managed care plans.

Many Americans Don’t Understand Their Health Plans and Can’t Effectively Navigate the Healthcare System

Studies suggest 36% of Americans are unable to calculate their out-of-pocket medical costs or pick a cost-effective health plan for their families. As the healthcare system becomes increasingly complex, California realized it needed an agency that helps consumers understand their healthcare rights and enforces the state’s laws and regulations. 

The DMHC performs a wide variety of consumer protection activities, including:

  • Monitoring health plans’ operational policies and financial stability
  • Licensing health plans
  • Reviewing and approving new products and service area expansions
  • Enforcement of California’s healthcare laws and regulations
  • Resolving consumer and provider disputes with managed care health plans

In 2016 alone, the agency assisted two million consumers with their health plan questions and concerns.

Educating Healthcare Consumers About Healthcare and Health Plans

The Department’s website offers comprehensive information about basic healthcare literacy, including information about choosing a health plan, accessing services, and healthcare consumer rights. Additionally, consumers can review specific data about licensed health plans via the DMHC’s plan dashboards. Each plan’s dashboard provides information about its enrollment, service area, number of consumer complaints and enforcement actions, financial stability, and medical survey reports.

Resolving Disputes Between Consumers and Health Plans

The Department’s Help Center provides free assistance to consumers, investigates complaints, and makes independent medical reviews after a plan denies a requested healthcare service. If consumers are dissatisfied with a health plan’s response to a  grievance or it’s been more than 30 days since they filed their internal complaint, they can file a complaint directly with the DMHC by calling its Help Center or completing an online complaint form

The DHMC typically resolves disputes in one of four ways:

  • Standard Complaints: It investigates non-emergency complaints, such as those involving balance billing or access to care and tries to resolve disputes.
  • Quick Resolutions: In cases where a consumer needs urgent medical care, the agency can attempt to resolve the complaint through a conference call.
  • Independent Medical Reviews: A neutral panel of independent doctors reviews a consumer’s records and determines whether requested medical treatment is necessary. If the panel agrees with the consumer, the health plan must authorize the treatment.
  • Referrals to Other Jurisdictions: When the consumer’s dispute does not involve a managed care organization, the DHMC will refer the person to the correct administrative agency.

The agency can also impose fines on health plans that violate the law. 

What Is a Restricted Knox-Keene License?

A managed care health plan cannot legally operate in California without a license. The Knox-Keene Health Care Service Plan Act of 1975 governs this process. 

There are three primary types of Knox-Keene licenses:

  • Full: The health plan can contract with providers, employers, individuals, and other entities. These plans sell and market their own insurance products and offer six basic health services.
  • Restricted: While the health plan delivers a full array of healthcare services, it does not contract with employer groups or individuals. Instead, they partner with fully-licensed plans that administer and market insurance products. A restricted Knox-Keene license allows an HMO to implement innovative, risk-based payment models for its providers — incentivizing high-quality care and reducing overall health costs.
  • Specialized: The health plan only provides one type of healthcare service, such as dental, chiropractic, or vision coverage.

Canopy Health has a restricted Knox-Keene license that allows us to serve all or parts of eight Bay Area counties, accept responsibility for the full medical costs of our members, and ensure quality management of their care. We partner with three respected health plan carriers, Health Net and UnitedHealthcare.


Department of Managed Health Care (2017, May). Annual report, 2016. DHMC. Retrieved from https://www.dmhc.ca.gov/Portals/0/FileAComplaint/DMHCDecisionsAndReports/AnnualComplaintAndIMRDecisions/2016.pdf

Department of Managed Health Care (n.d.). Strategic plan, 2015-2019. DMHC. Retrieved from https://www.dmhc.ca.gov/aboutthedmhc/strategicplan2015-2019.aspx 

Kutner, M., Greenberg, E., Jin, & Y., Paulsen, C. (2006, September). The health literacy of America’s adults: Result from the 2003 National Assessment of Adult Literacy. U.S. Department of Education. Retrieved from  https://nces.ed.gov/pubs2006/2006483.pdf