health insurance iStock_000028383644_FullThe impact of these rules will be felt widely among the provider community as it struggles to face increasing pressures resulting from the plans’ continually narrowing networks

The Centers for Medicare and Medicaid Services (CMS) recently issued the final 2017 Benefit and Payment Parameters Rule (Final Rule) and concurrently released a final 2017 Letter to Issuers (Letter to Issuers) in the Federally Facilitated Marketplaces (commonly referred to as Exchanges) setting out the benefit and payment policies applicable to qualified health plans (QHPs) for the 2017 benefit year. The Final Rule and Letter to Issuers address a broad range of topics including risk adjustment, reinsurance and risk corridors, stand-alone dental plans, rate review and medical loss ratios. In this article, we focus on the issues relating to network adequacy and the inclusion of essential community providers, areas that have caused difficulty and concern for a number of clients. Although many were hoping this Final Rule would offer substantive relief for these concerns, CMS failed to move forward with some of the more meaningful measures presented in the proposed rule.

Network Adequacy – Minimum Threshold

The biggest disappointment for provider advocates is the failure by CMS to meaningfully address concerns surrounding the increasing use of narrow networks. The evolution of the narrow network has thrust adequacy standards into the spotlight. Although the proposed rule originally offered a minimum network adequacy standard, CMS failed to adopt this provision in the Final Rule.

In the proposed rule, CMS called on the states to select a quantifiable network adequacy standard, subject to certain minimum criteria established by CMS. If a state with an Exchange did not select such a standard, CMS would apply time and distance standards, calculated at the county level, similar to those used for evaluating Medicare Advantage plans. However, CMS apparently heard insurers’ arguments that such standards would take away the flexibility they needed in negotiating with providers for their networks.

Instead, the Final Rule defers to the insurance industry through the development of the National Association of Insurance Commissioners (NAIC) Model Act, which will surely require time for the states to adopt. CMS advises that it will utilize current network adequacy standards in reviewing QHPs, including quantitative time and distance standards, but will not require the states to do so at this time.

The sense from CMS in the commentary was that the NAIC Model Act would address the issues presented by many specialty providers in the U.S., including freestanding cancer centers, children’s hospitals, women’s health providers, and transplant providers. Is the NAIC Model Act the answer?

Network Adequacy – Continuity of Care

The Final Rule addressed issues relating to continuity of care when providers are removed from the network. CMS will compel insurers to give patients being seen on a regular basis by a provider 30 days’ notice (or as soon as practicable) of such provider’s termination from the network. Additionally, insurers must, in cases where a provider is terminated without cause, continue to offer coverage for the shorter of completion of the patient’s active treatment or 90 days, at in-network cost-sharing rates.

Network Adequacy – Cost Sharing

Beginning in 2018, plans will be required to count enrollee cost sharing for an essential health benefit provided by an out-of-network ancillary provider (such as anesthesiologists or radiologists) at an in-network facility toward the enrollee’s annual limitation on cost sharing. Although this does not go as far as some would have liked, enrollees consider it a step in the right direction.

CMS allows for an exception if the issuer provides enrollees with written notice in advance of receiving the service advising the enrollee that an out-of-network provider may be providing the services and that the enrollee may incur additional costs. This provision does not preempt more protective state laws and does not apply to balance bills, if the provider charges in excess of the in-network payments. This is an area in which consumer education and information relating to surprise costs is fraught with confusion and in which state laws have been particularly focused on around the country.

Network Adequacy – Transparency and Consumer Choice

Recently, McKinsey Center for U.S. Health System Reform released a report indicating that while the proportion of narrowed networks has remained relatively constant, the overall number of networks has declined. Moreover, consumer choice has also declined as an increasing number of consumers had access to only narrow networks in 2016.

CMS has committed to developing a ratings classification system providing consumers access to each QHP’s network coverage on The ratings will be based on comparisons on the plan level with other plans in the same county and allow consumers to view and compare networks in their respective markets.

Essential Community Providers

Insurers that wish to provide products on the Exchange are bound by regulation to include in their networks a sufficient number and geographic distribution of Essential Community Providers (ECPs) that serve predominately low-income, medically underserved individuals. The Letter to Issuers and Final Rule identify how providers may petition/apply to become an ECP. The requirements to qualify include meeting several parameters that ensure the provider, in fact, serves the population for which the ECP distinction was designed. The current list of providers that qualify as ECPs in 2017 was recently posted to the CMS website. Beginning in 2018, CMS will credit issuers for multiple-contracted, full-time equivalent (FTE) ECP practitioners at a single location, up to the number of available FTE practitioners reported by the ECP facility through the ECP petition process.

For specialty providers, again, in the Final Rule, CMS refused to disaggregate certain ECP categories. For example, CMS will not evaluate access to children’s hospitals or free-standing cancer centers as separate from general acute care hospitals. CMS explained that “there are too few ECPs within each of these additional ECP categories appearing on our ECP list to afford issuers sufficient flexibility in their contracting.” As such, these specialized providers are grouped among all the hospitals, generally.

Standardized Options

CMS established standardized plan options for 2017 at the bronze, silver and gold levels and for each of the cost-sharing tiers within the silver level. Insurers are not required to offer standardized plans and may offer additional options. However, CMS believes that by displaying the standardized plans on it can provide consumers with an easy way to compare and choose among the available standardized plans. The plans would have (1) four tier drug formularies, (2) one in-network provider tier, and (3) standardized copayments and coinsurance for certain essential health benefit services. Certain routine services would also be exempt from the deductible.

Third-Party Payments

The Final Rule restates that insurers must accept premium payment from local government grantees that are funded by state and local governments; federal and state government programs that provide premium and cost-sharing support for specific individuals; and Indian tribes, tribal organizations and urban Indian organizations; but it fails to extend this directive to non-profit charitable organizations.

Patient Safety Standards

The Final Rule requires insurers to verify that contracted hospitals of more than 50 beds, if not working with a patient safety organization, implement an evidence-based initiative to improve healthcare quality through the collection, management, and analysis of patient safety events that reduces all cause preventable harm, prevents hospital readmission, or improves care coordination. CMS noted this option “would allow flexibility and promote alignment for hospitals that already engage in effective national, State, public and private patient safety programs.”


Unfortunately, the Final Rule and Letter to Issuers failed to meaningfully provide strict standards that would ensure consumers have access to specialized providers on the Exchange. The tendency appears to ensure that issuers have the requisite flexibility to craft their networks, financially, in a manner that will promote success on the Exchange, despite consumer complaints. The challenge is now at the state level to adopt NAIC Model Act provisions. For states that refuse to play in the Affordable Care Act sandbox, providers may have a heavier lift with their insurance commissioners and legislators.