Network Adequacy in a Nutshell

Requirements and Regulations


This third installment of Network Adequacy in a Nutshell addresses how the Measurements referenced in the second installment are written into the Requirements for different federal healthcare programs, including QHPs being issued under the Affordable Care Act, Medicare Advantage and Medicaid Managed Care.  Where relevant, this installment also includes the requirements specified in the NAIC Health Benefit Plan Network Access and Adequacy Model Act (“NAIC Model Act”). The notable requirements for each program are summarized below. 

Overview of Regulatory Requirements

Quantitative/Qualitative Access Standards

Below are some recent developments in QHP access standards proposed by CMS in 2019.

QHP Issuers on the Federally Facilitated Exchanges

  • CMS will use the same approach to review network adequacy that it used for 2018 in FFEs, including in States performing plan management functions. In recognition of the traditional role States have in developing and enforcing network adequacy standards, CMS will defer to States that have a sufficient network adequacy process. (2019 Letter to Issuers in the Federally-facilitated Marketplaces, p.13)

  • For 2019 and beyond, CMS will defer to States’ reviews in States with authority to enforce standards that are at least equal to the “reasonable access standard” identified in §156.230 and means to assess issuer network adequacy. (2019 Letter to Issuers in the Federally-facilitated Marketplaces, p.13)

  • In States that do not have the authority and means to conduct sufficient network adequacy reviews, CMS will apply a standard similar to the one used for the 2014 benefit year. (2019 Letter to Issuers in the Federally-facilitated Mark etplaces, p.13)

    • For 2019, CMS will continue using a general ECP enforcement standard used in 2018:

      • Contracts with at least 30 percent of available ECPs in each plan’s service area to participate in the plan’s provider network;

      • Offers contracts in good faith to all available Indian health care providers in the service area, to include the Indian Health Service (IHS), Indian Tribes, Tribal organizations, and urban Indian organizations, applying the special terms and conditions necessitated by Federal law and regulations as referenced in the recommended model QHP Addendum for Indian health care providers developed by CMS; and

      • Offers contracts in good faith to at least one ECP in each ECP category (see Table 2.2) in each county in the service area, where an ECP in that category is available and provides medical or dental services that are covered by the issuer plan type. (2019 Letter to Issuers in the Federally-facilitated Marketplaces, p.14; 2018 Letter to Issuers in the Federally-facilitated Marketplaces, p.28-29)

  • As with 2018, in 2019 CMS will continue the network breadth pilot on and will:

    • Display network breadth information in Maine, Ohio, Tennessee, and Texas

    • Composite rating based on hospitals, adult PCPs, and pediatric PCPs

    • Classify the relative breadth of the plans’ provider networks, as compared to other Exchange plans in the county

    • Basic, Standard, and Broad rating

  • In April 2017, CMS released the final Market Stabilization Rule, which relaxed the network adequacy requirements for QHPs. Starting in 2018, CMS will:

    • Rely on state reviews where possible

    • Absent an acceptable state review, rely on accreditation

    • Absent accreditation or state review, require a network access plan consistent with the NAIC Model Act

Medicare Advantage

  • In December 2017 OMB approved the Triennial Network Adequacy Review for Medicare Advantage Organizations and 1876 Cost Plans. CMS will now:

    • Review network compliance every three years unless a triggering even occurs, including certain:

      • Initial Applications

      • Service Area Expansions

      • Significant Provider/Facility Contract Terminations

      • Access Complaints

      • Change-of-Ownership

      • Disclosed Network Deficiencies

    • Provide at least 60 days notice and MAOs must upload its network into the Network Management Module.

    • Network adequacy will be an operational requirement.

    • Failing to meet NA requirements may lead to compliance or enforcement actions.

  • CMS also alluded to “wide scale monitoring efforts are underway with respect to network adequacy and provider directory” and reminded MAOs of its ability to enforce civil monetary penalties and/or enrollment sanctions based on compliance. (Medicare Advantage 2017 Final Call Letter, p. 152)

Medicaid Managed Care Final Rule

  • The general rule in the regulation specifies that a “State that contracts with an MCO, PIHP or PAHP to deliver Medicaid services must develop and enforce network adequacy standards.” (42 CFR § 438.68(a))

Provider Directory Accuracy

Provider directories are the most “public-facing” representation of a health plan’s provider network. Regulators (and plaintiffs’ counsel) are increasingly viewing them as a proxy for network adequacy. The requirements vary, but generally, provider directories should be: easily accessible, complete and accurate. The interactive chart below shows the data elements required by each federal program, as well as the NAIC model act. Move your mouse over each of the fields to see the fields that are required by more than one program.

Recent guidance also includes requirements on how often health plans are supposed to communicate with their network providers and how quickly their provider directories are to be updated after learning of a change to a provider’s information.  CMS has also begun to harmonize the requirements around making provider directories available in a machine readable format. The chart below summarizes these requirements:

Several states have set their own requirements around how often provider directories are to be updated. The map below demonstrates the variability in the requirements being developed at the state level:

Provider Directories: Requirements Vary by State (Commercial Market)


CMS recently completed its second round of review of Online Provider Directories for 64 Medicare Advantage Organizations and released this report. Some of the results are discussed here.

In 2017, CMS completed its second review round of online MAO provider directories

Balance Billing

Most of the activity around balance billing is being seen at the state level, as CMS’s ability to prohibit an out-of-network provider from balance billing a patient is limited. Some notable developments in balance billing requirements are summarized below:


  • Plan may disclose to member or include out-of-network cost-sharing in OOP limit

  • Applies only to out-of-network ancillary providers at in-network facilities


  • Facility must provide disclosure

  • Out-of-network emergency services

  • Balance billing restrictions

  • Reasonable cost benchmark

  • Provider may request mediation process (mediation standard not established)

States are already starting to address the issue.

6 states with comprehensive protection:

  • California

  • Connecticut

  • Florida

  • Illinois

  • Maryland

  • New York

21 states have direct protections laid out in statute or regulations for consumers.15 of which have partial protections:

  • Colorado

  • Delaware

  • Indiana

  • Iowa

  • Massachusetts

  • Mississippi

  • New Hampshire

  • New Jersey

  • New Mexico

  • North Carolina

  • Pennsylvania

  • Rhode Island

  • Texas

  • Vermont

  • West Virginia


See examples of regulations by state here.

Provider Termination

Health plans potentially put themselves at risk for network adequacy when terminating providers – especially large numbers of providers. The following summarizes the requirements for providing notice and providing continuity of care:

  • Medicare Advantage Organizations potentially put themselves at risk when terminating providers – especially large numbers of providers – as this may cause CMS to take another look at whether they meet network adequacy standards or not.

    • MAOs need to provide notice of “significant changes” to their network

      • CMS defers to MAO to deem “significant”

      • BUT CMS can enforce penalties on MAOs for failure to notify CMS

    • Notifications

    • Enrollees affected by change may get SEP

    • Provider transition must account for continuity of care


  • QHP Issuers

    • Per2018, in 2019:

      • Provider termination

        • Notice to enrollees at least 30 days prior to termination if seen “on a regular basis”

      • Provider Transition must provide for continuity of care

        • For a without cause termination, continuity of care must be preserved for up to 90 days

Network Tiering Criteria

Tiered networks are really nothing new and they provide health plans with an opportunity to cut costs. However, these products are an increasingly important issue for health plans, given the level of scrutiny they are suddenly receiving from various stakeholders. 

NAIC Model Act

  • Tiering criteria must be established in advance and disclosed

  • Also must be disclosed on health plan provider directory

Federal regulators have so far declined to place access standards on preferred tiers

  • 2018 Notice of Benefit and Payment Parameters Preamble: “We will consider whether a tiered approach would improve model prediction and better compensate issuers for high-cost enrollees than the current approach for future benefit years. We are continuing to assess the market impact of tiered approaches nationally on the model’s risk prediction and issuers’ risk differences, and whether such an approach would meaningfully improve the model in accounting for high-cost enrollees’ risk.


How can I address these requirements?