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Network Adequacy

Last Updated 6/23/2020

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 includes 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 The NAIC adopted revisions in November 2015 to its outdated Managed Care Plan Network Adequacy Model (Model # 74). The revisions renamed the model act to the Health Benefit Plan Network Access and Adequacy Model Act and made other changes to Model #74 in a number of important areas related to creating adequate provider networks. It 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.

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; and 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 sold on the Exchanges 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.”

NAIC Activity
In 2013, the Regulatory Framework (B) Task Force was charged to review NAIC existing models 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.

Committees Active on This Topic

Additional Resources

Roadmap to the Future – Changes in Health Insurance Markets
CIPR Newsletter, March 2016

Plan Management Function: Network Adequacy White Paper

NAIC Comments on the Proposed Notice of Benefit and Payment Parameters for 2017 

Ensuring Consumers’ Access to Care
Network Adequacy State Insurance Survey Findings and Recommendations for Regulatory Reforms in a Changing Insurance Market
November 2014

Testimony by MT Commissioner Lindeen on Network Adequacy

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Media queries should be directed to the NAIC Communications Division at 816-783-8909 or

Jolie H. Matthews
Senior Health Policy Advisor and Counsel
Phone: 202-471-3982
Fax: 816-460-7818

NAIC Center for Insurance Policy and Research (CIPR)

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