What Are Network Adequacy Rules?

Network adequacy rules help ensure that health insurance plans have enough healthcare providers so that people enrolled in the plan do not have to go out of the plan's healthcare provider network to get care.

This article will explain how network adequacy rules work, why they're important, and what qualified health plan enrollees can expect under the new regulations that take effect in 2023 and 2024.

Virtually all modern health insurance plans—including all plans sold in the health insurance exchanges/marketplaces—have healthcare provider networks. That means the health plan has contracted with a specific list of medical providers who have agreed to a certain fee schedule for the health plan's members.

Some health plans will only cover care received from healthcare providers in their network unless it's an emergency. Other health plans will cover out-of-network care but usually with much higher out-of-pocket costs.

The details will depend on whether the health plan is a health maintenance organization (HMO), exclusive provider organization (EPO), preferred provider organization (PPO), or point of service (POS) plan, and on the specific rules that the plan has.

A fairly small (narrow) healthcare provider network can help an insurer manage its costs. Insurers offering lower reimbursement rates will likely have fewer healthcare providers willing to join the network. This results in a smaller network but also lower overall costs for the health plan, which translates to lower monthly premiums for enrollees.

On the other hand, insurers that offer higher reimbursement rates to healthcare providers are more likely to attract a larger number of healthcare providers who want to join the network.

But there also have to be rules to ensure that plan members can access in-network healthcare providers when they need health care. If a network is too narrow, enrollees may be unable to continue with their primary healthcare provider and might have trouble accessing specialty care.

To address this, the Affordable Care Act requires qualified health plans (QHPs, which include all health insurance plans sold in the exchanges) to have adequate healthcare provider networks. But the regulatory oversight of this has been spotty and has varied from one state to another.

What Is the Affordable Care Act?

The Affordable Care Act (ACA) is a landmark piece of legislation that was enacted in 2010. Most of its provisions took effect by 2014, including the creation of a health insurance exchange in each state (most states use HealthCare.gov, which is the federally-run exchange).

In each state, private health insurance companies sell coverage through the exchange. These health plans, which are certified as QHPs, are purchased by people who don't have access to coverage from an employer or from a government-run program like Medicare or Medicaid.

Under the ACA, there are numerous requirements for QHPs (and in most cases, the ACA's rules also apply to plans sold outside the exchange, even though those plans do not have to be certified as QHPs). For example, they must cover the essential health benefits, limit out-of-pocket costs, and cover pre-existing conditions.

QHPs tend to have narrow healthcare provider networks, and most QHPs are HMOs or EPOs. This generally means they do not cover out-of-network care unless it's an emergency.

But the ACA (Section 1311) does require QHPs to "ensure a sufficient choice of providers...and provide information to enrollees and prospective enrollees on the availability of in-network and out-of-network providers."

The network adequacy rules for QHPs—stemming from the ACA and subsequent regulations—are outlined in the Code of Federal Regulations: 45 CFR § 156.230.

They include a requirement that QHPs maintain networks that are "sufficient in number 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."

They also include a requirement that essential community healthcare providers be included in the network and that healthcare provider network directories be kept up-to-date and readily available.

Network Adequacy Rules for Insurance Carriers

QHPs are regulated at the state level, even in states that use the federally-run exchange (HealthCare.gov).

Since 2018, states have been responsible for establishing and enforcing network adequacy rules for QHPs. There has been considerable variation from one state to another in terms of what constitutes an adequate network and for measuring network adequacy.

As of 2023, the federal government, through the Centers for Medicare and Medicaid Services (CMS), is resuming responsibility for ensuring that health plans sold in the federally-run exchange have adequate network healthcare providers. By 2024, network adequacy determinations include a measure to limit how long plan members have to wait for an appointment.

States that use the federal exchange will be able to impose stricter network adequacy standards but not more lenient standards.

It's important to note that QHPs represent only a small segment of the health plans in use in the United States. The vast majority of Americans have coverage from an employer, Medicare, or Medicaid, with only a small fraction of the population enrolling in QHPs through the exchange; 14.5 million enrolled as of January 2022.

There are no federal network adequacy standards for employer-sponsored plans. This makes sense, as employers tend to use their benefits package to attract and retain employees. They are less interested in plans that would cut corners by utilizing a very narrow healthcare provider network.

Narrow network plans account for only a small fraction of employer-sponsored plans, whereas they are much more common among QHPs (and there is thus a much greater need to regulate network adequacy at the QHP level).

And while QHP network adequacy standards do not require a minimum number of healthcare providers, network adequacy standards for Medicare Advantage plans include minimum provider-to-enrollee ratios for plans that serve large metropolitan areas.

And states that contract with Medicaid managed care insurers to service their Medicaid populations are responsible for ensuring that the Medicaid managed care plans have adequate networks. But the specific rules are not the same as those that apply to QHPs.

Take a look at the network adequacy standards that apply to QHPs sold in the federally-run exchange (note that state-run exchanges can adopt the same standards or create their own approach).

Time and Distance Standards

For QHPs sold via HealthCare.gov starting in the fall of 2022, CMS imposes network adequacy time and distance standards that vary depending on the type of medical provider and how populated the area is.

To have an adequate network, a QHP must ensure that at least 90% of its members have access to at least one of each provider type within the allowable time/distance requirements.

The requirements are strictest for primary care physicians, behavioral health professionals, and OB/GYNs: For all three of those healthcare provider types, at least 90% of a QHP's enrollees must have access to at least one healthcare provider that's located within 10 minutes or 5 miles of the person's home, if the person lives in a large metro area. But the time/distance standards can be up to 70 minutes and 60 miles if the person lives in an extremely rural area.

For other types of medical specialties, plan members can be required to travel longer distances to receive care. But for people in metro areas, it's generally not more than 60 minutes or 40 miles for most specialties.

Acute inpatient hospitals (with 24/7 emergency services) must be available to at least 90% of QHP enrollees within 20 minutes or 10 miles if they're in a large metro area. In extremely rural areas, the limit increases to 110 minutes or 100 miles.

Various other medical facilities must be included within a QHP's network, with varying time/distance standards. They include facilities that provide skilled nursing, inpatient behavioral health, critical care/ICU services, radiology/mammograms, etc.

The details are available in a letter CMS sent to health insurers in April 2022 (Tables 3.1 and 3.2). Those charts include the various specialty/facility types and maximum time/distance standards depending on how populated the area is.

Maximum Appointment Wait Times

As of 2024, QHPs sold through HealthCare.gov will also have to ensure that their plan members do not have to wait an unacceptably long time for an appointment with an in-network healthcare provider.

The requirements will vary depending on the type of healthcare provider, but health plans will be required to ensure that at least 90% of the time, their members can obtain an appointment within the following time frames:

• Behavioral health: Within 10 business days
• Primary care: Within 15 business days
• Specialty care: Within 30 business days

Network Breadth

Network breadth is a measure of how broad or narrow a QHP's provider network is. In other words, how many providers does it include? Network breadth is not a standard that QHP issuers are required to meet, but it can help consumers compare the various plans available for purchase.

In 2016, CMS debuted a network breadth pilot program, although it was limited to just four states (Maine, Ohio, Tennessee, and Texas). Note that Maine has since transitioned to running its own exchange and no longer uses HealthCare.gov.

For each of the three provider areas (adult primary care, pediatrics, and hospitals), the number of in-network providers for each QHP is compared with the number of in-network providers for other QHPs in the area.

The pilot program measures QHPs' network breadth relative to other QHPs in the area, which can be a potentially confusing metric.

For example, imagine there are 10 hospitals in your area but only four of them have agreed to be in the network of QHPs. A health insurance plan that includes three of these four hospitals (75%) in the network would be categorized as having a "broad" network. But, in reality, it only includes 30% of all the hospitals in the area—which a reasonable person would probably define as a "narrow" network.

This is because "available providers" is defined as the total number of providers who participate in any QHP network, as opposed to the total number of providers in the area.

The terminology used to describe network breadth has changed a bit over time, but the numerical parameters have remained the same. For 2023, the pilot program states a QHP's network breadth will be classified as follows:

• Basic: Fewer than 30% of the available providers are in the plan's network.
• Standard: 30% to 69% of the available providers are in the plan's network.
• Broad: At least 70% of the available providers are in the plan's network.

It's important to note that QHPs are not required to fall into any specific network breadth category. This is just meant to be an informative measure that consumers can use to help guide their decision-making when they're comparing the QHPs that are available in their area.

Minimum Number of Essential Community Providers (ECPs)

There is no specific minimum number of overall providers that a QHP's network must include. But, there are certain minimum standards for essential community providers (ECPs).

The rules for QHP network inclusion of ECPs are outlined in the Code of Federal Regulations at 45 CFR § 156.235. Although the rules were relaxed in 2018, they have been updated for 2023 to be more stringent.

Under federal guidelines, essential community providers fall into six general categories:

• Federally qualified health centers (FQHCs)
• Hospitals
• Ryan White HIV/AIDS program providers
• Family planning providers
• Indian health providers
• Other providers that serve mostly low-income, medically underserved populations (these include STI clinics, TB clinics, hemophilia treatment centers, black lung clinics, etc.).

States can include additional provider types in the ECP classification, and many do so (including some that run their own exchanges and some that use HealthCare.gov).

For 2023, QHPs sold via the federally-run exchange will need to maintain network contracts with at least 35% of the ECPs in their service area. This threshold had been set at 30% in 2017, but the Trump administration reduced it to 20% as of 2018. The Biden administration has increased it to 35% as of 2023.

Provider Directories Must be Accurate and Available Online

Under the ACA and subsequent implementation regulations, QHP issuers are required to maintain an up-to-date provider directory that must be available online to the general public (and in hard copy, by request).

The provider directory must be available through an easily accessible portal on the health plan's website. It cannot require the person to create an account or be logged into the system to view the provider network details.

Some QHP issuers have multiple provider networks (particularly if the insurer also offers plans in the employer group market or off-exchange plans). If that's the case, the health insurer must make it easy for people to identify which providers are part of which network and which networks apply to which plans.

Network Adequacy Rules by State

Historically, states have taken varying approaches to ensuring network adequacy for individual/family health plans—and some states have taken a very hands-off approach. The Trump administration stopped overseeing QHP network adequacy in 2018, opting instead to defer to the states on that issue.

(If the federal government had determined that a state didn't have the authority and means to assess and regulate network adequacy, CMS could still step in. But the federal government had determined that all states had "adequate network review authority.")

In 2021, a federal district court judge overturned the "defer to the state" policy that the federal government had been using with regard to network adequacy oversight.

Numerous public comments (in reply to a 2019 proposed federal rule to continue to defer to the states) had pointed out that accreditation procedures and state network adequacy reviews were insufficient in many cases and left consumers without access to adequate provider networks.

The judge noted that the federal government did not "attempt to refute, mitigate, or explain away any of these significant concerns."

As a result, the judge vacated the rule that had been in effect since 2018 (deferring to states for network adequacy oversight). The previous approach—in which CMS regulates network adequacy for health plans sold in the federally-run exchange—was reimplemented.

But that court ruling came in March of 2021, which was too late for CMS to enact federal standards for the 2022 plan year. Instead, the new federal oversight of QHP network adequacy takes effect for the 2023 plan year for health plans available for sale as of November 2022.

So, as of the 2023 plan year, the federal government is imposing network adequacy standards (and overseeing compliance) for QHPs sold via HealthCare.gov.

(Note that a state that uses HealthCare.gov can impose additional network adequacy requirements and enforce them via the state department of insurance's rate/plan review process. But more lenient requirements will not be allowed as of 2023.)

Although most states use HealthCare.gov, DC and 17 states run their own health insurance exchanges. These states are responsible for ensuring that the health plans sold in their exchanges have adequate networks.

QHPs sold in the state-run exchanges must conform to the ACA's basic standards (i.e., that essential community providers are in-network, that the network has sufficient providers to service the plan's enrollees, and that an up-to-date provider directory is maintained and readily available to consumers).

But state-run exchanges can also set their own requirements for network adequacy, and they use a variety of different approaches. Some state-run exchanges conduct their own network adequacy review for QHPs, while others rely on the state insurance department to analyze QHP networks and ensure that they're adequate.

Some state-run exchanges simply use the federal rules that CMS applies to QHPs sold in the federally-run exchange (Nevada's approach is an example of this.) But state rules can include more network adequacy provisions than the federal government uses.

For example, New York (which operates its own exchange at New York State of Health), imposes a requirement that QHPs include at least one hospital in each county (and at least three in some heavily-populated counties) and a minimum number of primary care physicians and specialists in each county.

For metropolitan areas, New York's time/distance standards for network adequacy require QHPs to ensure that enrollees can access primary care without having to travel more than 30 minutes via public transportation.

Washington HealthPlanFinder is another example of a state-run exchange that imposes its own network adequacy standards. Washington has an extensive statute in place that defines QHP network adequacy.

For example, Washington already has appointment wait time standards in place: 10 business days for primary care, and 15 business days for specialty care. Note that this exceeds the requirements that will take effect in the federally-run exchange as of 2024.

New Jersey, which operates a state-run exchange called GetCoveredNJ, also has some state-specific network adequacy requirements.

For example, health plans in New Jersey must have enough in-network PCP-eligible physicians to ensure that at least 90% of enrollees have access to at least two PCP-eligible physicians who are within 10 miles or 30 minutes of the enrollee's location.

New Jersey also requires health plans to have enough in-network primary care providers that every enrollee could average four primary care visits per year without overwhelming the network of primary care providers.

Summary

Health plans that are sold in the health insurance exchange/marketplace are required to comply with various ACA regulations. These include network adequacy standards designed to ensure that plan members can access healthcare providers when needed.

The ACA itself provides only a rough framework for this, so additional regulations were necessary to spell out the details.

As of 2018, federal oversight of network adequacy was relaxed, and responsibility was delegated to each state. But a judge overturned that regulation in 2021, and the federal government is resuming network adequacy rules and oversight for health plans sold via HealthCare.gov as of 2023.

Federal network adequacy rules include maximum standards for time/distance and the percentage of essential community healthcare providers included in a QHP's network. As of 2024, the federal government will also impose limits on how long a plan member must wait for a medical appointment, with the maximums set at 10 to 30 days, depending on the type of care that's needed.

States can impose stricter network adequacy requirements. And states that run their own exchanges are responsible for enforcing network adequacy rules for QHPs, with the oversight conducted either by the exchange or by the state insurance department.

A Word From Verywell

If you're buying your own health insurance via the exchange in your state, you can rest assured that network adequacy requirements will be enforced as of 2023 and in future years.

However, it's important to understand that one plan's network (and plan management structure) might be a much better fit for your needs than another, despite the fact that both of them have networks that have been deemed adequate.

When you're comparing health plans, you'll want to make sure you understand the plan management rules in terms of whether out-of-network care is covered and, if so, at what cost. You'll also want to carefully check the provider directory for each plan you're considering to see which healthcare providers are in-network.

For example, certain healthcare providers may be much more conveniently located to you but aren't included in all of the plans' networks. This might end up being more of a factor for you than the overall size and scope of the network.