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Regulating Provider Networks: A Changing Landscape

January 15, 2016

As state legislatures around the country begin to tackle their 2016 health care agendas, network adequacy will be a key point of debate.  Many policymakers will be evaluating whether current network adequacy standards are sufficiently protecting consumers in a changing health care market where limited networks are on the rise, most notably on exchanges.

I am pleased to be a co-author on a recent report published by the Colorado Health Institute (CHI) titled “Regulating Provider Networks: A Changing Landscape.” This second in a series of reports highlights the state and federal legislative and regulatory framework impacting networks in Colorado and provides insights for policymakers considering changes.

The report finds that Colorado, like many states, does not have quantitative network adequacy standards and enforcement largely relies on reviewing consumer complaints. The Division of Insurance (DOI) has required carriers to add providers in underserved geographic areas in some cases.  The existing policy framework (C.R.S. 10-16-704) gives insurers flexibility in how they interpret the state’s standards but the DOI has signaled this may be changing in the near future.

And while much attention was paid in 2015 to deliberations by the National Association of Insurance Commissioners (NAICs) over networks, the final model legislation provides limited guidance to Colorado and other states considering whether or not more prescriptive network adequacy standards are needed. 

The Center for Medicare and Medicaid Services (CMS) made a strong statement in its November draft rule on the subject by setting minimum network adequacy standards for plans available on the federally-facilitated marketplace starting in 2017. While these standards will not apply to Colorado, which has a state-based exchange, many stakeholders have expressed concern that the agency’s proposed rule discounted the NAIC’s year-long effort to provide guidance to states.   

In Colorado, it remains to be seen whether stakeholders will work to advance a network adequacy bill this session. The DOI has indicated it will begin soliciting input very soon.  The state does not need legislation to advance prescriptive network standards and most states with these rules establish them in regulation. 

No matter the route, Colorado’s policymakers should expect consumer organizations to push for measurable standards for network adequacy while insurers will try to protect their ability to design a variety of network design options at different price points.

Ultimately, this debate will come down to addressing the tension between offering consumers access to timely health care and the ability of carriers to develop affordable insurance options. 

Mara Baer is founder and president of AgoHealth, a Denver-based health policy and strategic consulting company. She has a deep expertise in private health care market issues, most recently serving as a member of the Blue Cross Blue Shield Association government affairs team. In that role, she helped to develop policy proposals related to the implementation of health reform at the federal level. She may be reached at mara@agohealth.com.