As a general rule of thumb, health plan provider networks must be large enough to deliver the benefits promised to the consumer under their plan. For example, the network must have enough OB-GYNs to meet the needs of the women enrolled in the plan. As private health plans pursue narrow networks to rein in premium increases, specifying and enforcing this standard becomes particularly important.
States and the federal government share responsibility for network adequacy oversight. For the private, fully-insured plans, the ACA established federal minimum network adequacy standards for all marketplace plans, but states may adopt network adequacy requirements more stringent than federal standards.1 The federal Centers for Medicare and Medicaid services sets the standards that Medicaid plans and Medicare advantage plans must meet.
Unfortunately, comprehensive network adequacy standards are missing in many states and many existing policies are outdated, having been developed years ago to regulate managed care networks (primarily Health Maintenance Organizations or HMOs).2 Network adequacy standards can and should reflect important consumer protection principles that balance the goals of reduced costs and accessible, quality care, and apply these to all types of plans. Strong network adequacy standards need to be customized for local conditions but generally include:3
Some care needs can be met through telemedicine. Regulators will need to develop clear guidance for insurers on the appropriate use of telemedicine to meet state network adequacy standards.
In light of the tremendous variation in provider networks, regulators must begin to provide actionable information about networks at the point of health plan shopping.5 We are aware of no states have summary indicators signaling the narrowness or breadth of the provider network even though researchers have developed methodologies for doing this.6 Moreover, no states inform shoppers about how likely they are to get an out-of-network bill while getting care at an in-network hospital or other facility. Again, researchers have developed claims data analyses that tease out this information, proving feasibility.7 Only Texas has a law that requires health plans to report how often in-network hospitals don’t feature in-network ER docs but this information is only actionable when a Texas Advocacy group created a summary table for consumers.8
Surprise balance billing—unexpected charges from out-of-network providers—is an issue closely related network adequacy and provider directory problems.
1. National Association of Insurance Commissioners, "Network Adequacy," (April 18, 2019).
2. Consumer Reports, "Network Adequacy Standards and Transparency Needed to Protect Consumers," (April 2015).
4. Furthermore, a nationally representative survey shows that when consumers experience a problem related to inadequate networks, they do not know where to complain. Regulators are therefore not seeing many of these consumer problems.
5. NYS Health Foundation, "Network Adequacy 2.0 for Consumers: A Review of Hospital Network Variation in New York," (June 19, 2019).
6. Polsky, Daniel, Janet Weiner and Yuehan Zhang, "Narrow Networks on the Individual Marketplace in 2017," University of Pennsylvania Leonard Davis Institute of Health Economics, Philadelphia, P.A.(September 2017).
7. Kacik, Alex, "Surprise Medical Bills Burden 1 in 7 Patients," Modern Healthcare (March 28, 2019).
8. Pogue, Stacey, "A Texas-Sized Problem: How to Limit Out-of-Control Surprise Medical Billing," Center for Public Policy Priorities, Austin, T.X. (February 2017).