Network Adequacy 101: An Explainer

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What is network adequacy?

A provider network is a group of health care providers—such as primary care providers, specialists, hospitals, and labs—that have contracted with a health plan to provide care to its enrollees at negotiated rates, resulting in lower costs to the health plan. Using contracted providers to deliver care to enrollees lets the plan hold down its premium costs for consumers. To be adequate, a health plan’s network must provide consumers with the right care, at the right time, without having to travel unreasonably far. It’s also important that consumers be able to obtain care through their network in a language they can understand. In most health plans, patients who want to avoid extra fees besides the standard deductible, copayment, or coinsurance must see the providers in that plan’s network. But if the network is not adequate, patients will end up either forgoing care or paying more money to see doctors outside of the network.

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Why is network adequacy important right now?

Health coverage alone does not guarantee access to timely, affordable, high-quality care. The network adequacy problems that consumers have always faced (long before the passage of the Affordable Care Act) —such as finding the right health care providers in their plan’s network or obtaining accurate information about which providers are in their network—remain. Now, however, the law forbids plans from charging people more for coverage based on their health conditions or from relying on other discriminatory practices to control costs. As a result, plans may be looking more toward network designs (like narrow networks, tiered networks, and value-based networks) to keep premiums down. It is important in the context of these new network designs that network adequacy is still a top priority. Fortunately, the health law puts the first-ever federal network adequacy standards in place for the private insurance market and policy makers can do more to make sure these standards are made real for consumers.

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Essential elements of an adequate network: The right care

Patients have a variety of health care needs, and an adequate network includes providers that can address all of those needs and deliver all of the services that the plan covers under its benefits package. It must have the right balance of primary care providers, specialists, and quality medical facilities such as hospitals, labs, and clinics. And it must have them in sufficient number relative to the number of enrollees in the plan. Enrollees with specific medical needs should be able to see the type of provider best-suited for their condition, whether that provider is a certain type of specialist or a non-physician provider. Plans should also consider information about the quality of providers and facilities when forming their networks. Composition, size, and quality matter.

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Essential elements of an adequate network: Care at the right time

To be adequate, a network must enable enrollees to receive care in a timely manner based on their medical needs. For example, patients with emergent health care needs should be able to see a provider right away, and patients who are referred to a specialist within a given timeframe should not struggle to get an appointment. Thus it’s important that networks not only have the right providers, but also enough of them to meet patient needs for timely care.

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Essential elements of an adequate network: Geographic accessibility

In addition to having access to the right providers in a timely manner, it is critical that health plan enrollees be able to see providers and facilities without having to travel unreasonably far. Sufficient numbers of providers and facilities should be located in or within a reasonable distance from enrollee communities to meet needs for timely, quality care. In communities where large portions of the population rely on public transportation, many in-network providers and facilities should be accessible that way. In areas where there are provider shortages, plans can innovate with telemedicine and other unique ways of delivering care to supplement more traditional ways of meeting enrollee needs.

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Network adequacy requirements at the federal level

The Affordable Care Act established the first-ever federal rights guaranteeing private insurance consumers access to adequate networks. The law requires that consumers in marketplace plans have a “sufficient choice of providers,” defined in rules as a right to networks that are sufficient in the “number and types of providers, including providers that specialize in mental health and substance abuse services, to assure all services will be accessible without unreasonable delay.” Under the law, marketplace plans must also include in their networks essential community providers that serve predominantly low-income, medically underserved individuals, such as federally qualified health centers, Ryan White HIV/AIDS providers, and sole community hospitals. The law also mandates that insurers create provider directories for consumers. Marketplace plans are required to post accurate information about which providers are in-network and which providers are accepting new patients.

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Accurate provider network directories matter

If a health plan’s provider directories are inaccurate, consumers will have a hard time finding a provider when they need one. Inaccurate provider directories can also misrepresent the adequacy of a plan’s network by making it appear much larger and more robust than it really is. Because problems with health plan provider directory accuracy have persisted for years, health plans, states, and the federal government should look for innovative ways to address this issue. For example, in 2013, the state of New Jersey enacted a regulation (N.J.A.C. 11:24C-4.6) requiring plans to confirm that any provider who hasn’t submitted a claim for 12 months still intends to participate in the plan’s network. Plans can also help address the problem by posting an email address or phone number on their provider directories where consumers can report inaccurate directory information to the plan so that the plan can correct the error.

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Strengthening network adequacy requirements: State and federal standards

The Affordable Care Act created essential new federal network adequacy protections for plans in the marketplaces. Many states also have laws and/or regulations to help ensure that networks are adequate to meet consumers’ needs. However, many of these need to be strengthened, and in states that don’t already have laws and/or regulations, policymakers should consider enacting standards. In addition, federal policymakers should consider how to strengthen network adequacy requirements for marketplace plans under Affordable Care Act regulations and guidance. Network adequacy laws passed in California and New York can serve as models for other states and the federal government, as can standards from Medicare Advantage. In addition, the National Association of Insurance Commissioners (NAIC) is currently updating its model law on network adequacy. (We describe these and other model standards in our recent issue brief, Improving Private Health Insurance Provider Networks for Communities of Color.)