Last Updated 6/1/2023

Issue: Network adequacy refers to a health plan's ability to deliver the benefits promised by providing reasonable access to enough in-network primary care and specialty physicians, and all health care services included under the terms of the contract. The federal Affordable Care Act (ACA) included many reforms intended to make quality health care more affordable and accessible. In addition, the ACA requires that health plans participating in Qualified Health Plans (QHPs) in the Marketplaces (also known as "Exchanges") meet network adequacy standards. These include ensuring consumers have access to needed care without unreasonable delay.

However, a trend in the health insurance industry toward “narrow network” health plans, which offer a limited choice of providers, caught the attention of state insurance regulators. The NAIC adopted revisions in November 2015 to its Managed Care Plan Network Adequacy Model (#74). The revisions renamed the model act to the Health Benefit Plan Network Access and Adequacy Model Act (#74) and made other changes in several important areas related to creating adequate provider networks. The model also includes key consumer provisions like protections against surprise out-of-network charges, strengthening protections for consumers while balancing the need for health insurance carriers to promote quality and reduce costs.

Background: Health insurance carriers are generally able to define and adjust the number, the qualifications, and the quality of providers in their networks. They also may limit the number of providers in their networks as a means of conserving costs or coordinating care. In so doing, networks may become so narrow that enrollees may have relatively or extremely limited options when choosing providers.

The ACA directs the U.S. Department of Health and Human Services (HHS) to develop criteria to certify health plans sold in Marketplaces. These criteria aim to ensure each plan:

• provides a sufficient choice of providers
• includes “essential community providers (ECPs)” to serve predominately lower-income and medically underserved individuals
• provides information to enrollees and prospective enrollees on the availability of in-network and out-of-network providers.

To help ensure that plans offered in the Marketplaces serve the needs of enrollees, the ACA requires that plans must maintain a provider network that is “sufficient in numbers and types of providers, including providers that specialize in mental health and substance abuse services, to assure that all services will be accessible without unreasonable delay.” In 2017 the administration proposed deferring to states’ interpretation on network adequacy standards and the oversight of it. 

In 2016, the Center for Medicate and Medicare Services (CMS) piloted a display of network breadth information for Qualified Health Plans on HealthCare.gov in four states: Maine, Ohio, Tennessee, and Texas. Consumers in these pilot states see information classifying the relative breadth of the plans’ provider networks as compared to other Exchange plans in the county.  Consumers are able to compare networks for three provider types, including adult primary care providers, pediatricians, and hospitals.  This network breadth pilot continues for plan year 2022, for the threshold used for network ratings by CMS are: Basic: <30% providers; Standard ≥30% to 70% providers; Broad: ≥70% providers.

NAIC Activity: In 2013, the Regulatory Framework (B) Task Force was charged to review existing NAIC model laws related to health insurance to determine whether they needed to be amended in consideration of all changes made by the ACA. Revising the original Managed Care Plan Network Adequacy Model Act (#74) became a priority for regulators, carriers, and consumers after the NAIC learned that the federal Center for Consumer Information and Insurance Oversight (CCIIO) was considering adopting regulations to establish federal network adequacy standards-a possible one-size-fits-all national standard. NAIC membership believed a federal one-size-fits-all national standard would not benefit consumers or health carriers and state insurance regulators are best positioned to balance cost, access and geographic considerations when developing network adequacy standards.

In March 2014, the Regulatory Framework (B) Task Force established the Network Adequacy Model Review (B) Subgroup. The full NAIC membership adopted the Subgroup’s revisions to Model #74, now called the Health Benefit Plan Network Access and Adequacy Model Act, at the 2015 Fall National Meeting.

The revisions to Model #74 include many enhancements such as more specific requirements in Section 5-Network Adequacy concerning network sufficiency, how network sufficiency is to be determined and who is to determine network sufficiency. The revisions also add a new section concerning provider directories. This section describes what information must be included in both print and electronic directories to help consumers select a health benefit plan. It also includes a requirement for health carriers to periodically audit their provider directories for accuracy.

The Model #74 revisions also added “Section 7-Requirements for Participating Facility Providers with Out-of-Network Facility-Based Providers”. This section addresses an aspect of the “surprise bill” issue by establishing a mechanism for consumers to deal with bills they received for services provided by out-of-network facility-based providers while receiving treatment at an in-network facility. It also includes a provider mediation process for payment of out-of-network facility-based provider remittances for those providers who object to the amount of the payment they received for the out-of-network services they provided using the established payment rate.

Final Federal Benefit and Payment Parameters Rule for 2019

Recognizing the efficacy of a state-based approach, the HHS Notice of Benefit and Payment Parameters for 2019 final rule includes CMS standards for issuers and Exchanges providing clear authority to the states to determine network adequacy in their QHP certification reviews. In its QHP certification standards, the CMS has returned important oversight authority back to the states by expanding their role in the QHP certification process for Federally-Facilitated Exchanges (FFEs). The CMS will continue to defer to the states' reviews of network adequacy provided the state has a sufficient network adequacy review process.

In addition, the CMS is eliminating requirements for State-Based Exchanges using the Federal Platform (SBE-FPs) to enforce FFE standards for network adequacy and essential community providers. Instead, the CMS is allowing SBE-FPs the flexibility to establish their own standards, which the CMS believes will further empower SBE-FPs to use their QHP certification authority to encourage issuers to stay in the Exchange, enter the Exchange for the first time, or expand into additional service areas.

The No Surprises Act 

In December 2020, Congress enacted a $900 billion COVID-19 relief package and government funding bill (H.R. 133). Included in the measure is the No Surprises Act  (H.R. 133, P.L. 116-260) – a federal legislation to end most of the surprise out-of-network billing. Starting January 1, 2022, both providers and health plans must treat out-of-network services as if they were in-network when calculating patient cost-sharing, with the notable exception of ground ambulance transport. The NAIC’s Health Insurance and Managed Care (B) Committee is working closely with the federal government and other stakeholders to implement the No Surprises Act.

Status: In January 2023, the NAIC submitted comments on the proposed Notice of Benefit and Payment Parameters for 2024 (Notice). The notice proposes to revise the network adequacy standards to state that all Stand-Alone Dental Plans (SADPs) across all exchanges must use a network of providers. Due to the challenges for SADPs to establish a network based on the availability of nearby dental providers, the NAIC supports HHS in establishing a limited exception to the network requirements for the SADPs that sell plans in areas where it is prohibitively difficult for the issuer to establish a network of dental provides.

In addition, the notice proposes to apply the network adequacy standard related to appointment wait times beginning with plan year 2024. HHS expects to rely on issuers’ attestations of compliance with the standard. However, state regulators urge more detailed developments of related measures before robust enforcement of this network adequacy standard.

In Notice for the 2024 final rule, CMS finalizes a limited exception to the network requirements for the SADPs that sell plans in areas where it is prohibitively difficult for the issuer to establish a network of dental provides and delays the application of the appointment wait time standards until plan year 2025.

The Health Insurance and Managed Care (B) Committee consider network adequacy as the most important topic to be focused on in 2023.