Network Adequacy Requirements and How to Close the Gaps

Network adequacy is the set of regulatory standards that determine whether a health plan has enough contracted providers, in the right specialties and locations, for members to get care within a reasonable time and distance. It sounds like a single test. It is not. Depending on the line of business, a plan can face separate adequacy requirements from Centers for Medicare & Medicaid Services (CMS), a state department of insurance, Affordable Care Act (ACA) marketplace rules and Medicare Advantage (MA) oversight, each measuring different things and each with its own filing schedule. For network and compliance leaders at health plans, TPAs and regional carriers, the practical challenge is not understanding that adequacy matters. It is keeping a network compliant across every rule set it touches, while the underlying provider landscape keeps shifting under them.

Network adequacy rules depend on which regulator is asking

There is no single federal network adequacy standard. What exists is a patchwork of overlapping requirements, and a plan operating across multiple markets or lines of business is usually subject to more than one at once.

For ACA marketplace plans, CMS has historically applied quantitative time and distance standards to Qualified Health Plans (QHP) sold on the federally facilitated exchange, evaluated at the county level by specialty. Starting with plan year 2026, state-based marketplaces must adopt the same quantitative time and distance approach, closing a gap where state exchanges previously had more latitude than the federal marketplace. CMS has also shifted its geographic methodology toward straight-line distance calculations that account for physical barriers like rivers and mountains, rather than estimated drive time, which changes how some rural and semi-rural counties score.

Medicaid managed care operates under a different framework. Under 42 CFR 438.68, states are not locked into time and distance measurement. They can use provider-to-enrollee ratios, maximum travel time or distance, minimum share of contracted providers accepting new patients, appointment wait-time maximums, or a mix and states may vary the standard by geography and provider type within their own borders. That flexibility means a network adequate under one state’s Medicaid contract can fall short under a neighboring state’s rules for the same specialty mix.

State departments of insurance layer on a third set of requirements for commercial and individual market plans, and these vary widely in specificity, documentation and enforcement posture from state to state. Medicare Advantage adds a fourth: CMS sets minimum provider counts and maximum time and distance by specialty and county for MA plans, audits directory accuracy directly and is now implementing the REAL Health Providers Act’s stricter provider directory verification requirements for MA organizations under the Consolidated Appropriations Act, 2026.

Appointment wait-time standards add a layer most network teams find harder to operationalize than geography. CMS has moved toward validating routine-visit wait times using secret shopper methodology rather than self-reported data, and several states already require it. Telehealth further complicates the picture: some regulators allow telehealth availability to count toward time and distance compliance, others do not, and plans increasingly need to track and report telehealth provider status as its own data point rather than folding it into general network counts.

Where networks pass on paper and fail in practice

Three situations account for most of the adequacy gaps that show up in filings and audits.

Entering a new market. A plan expanding into a new county, state, or line of business rarely has existing provider relationships there. Building contracted relationships from zero, specialty by specialty, takes time that a filing deadline or a new group’s effective date usually does not allow for.

Provider attrition. Networks are not static. Providers retire, relocate, stop accepting new patients or leave a network entirely, and directory updates often lag behind those changes. The result is what the industry calls a ghost network: providers listed as in-network and geographically available who are not actually taking patients. Directory accuracy audits of marketplace plans have found error rates on individual provider listings running as high as roughly half of sampled entries, which means a network that scores as adequate on paper can be materially thinner in practice.

Specialty gaps hidden inside aggregate numbers. A network can meet overall time and distance standards while being critically thin in one or two specialties, and aggregate compliance reporting often does not surface that. Behavioral health is the clearest example: a 2025 HHS Office of Inspector General review found that a number of Medicare Advantage plans had networks covering less than 10 percent of the available behavioral health workforce in their counties, with several showing no in-network behavioral health providers at all. A plan can be compliant on paper and still leave members without realistic access to a specific type of care.

What’s at stake when a network falls short

The consequences of an adequacy gap depend on when it surfaces. Caught during a certification cycle, a gap can delay or block QHP certification, MA bid approval or a state Medicaid contract renewal. Plans can request an exception when provider supply genuinely does not exist in a market, but CMS and state regulators increasingly expect structured, timestamped documentation of recruitment efforts before granting one, which puts real operational weight on compliance teams to build a defensible record, not just identify the gap.

Caught after certification, the exposure shifts toward audit and reporting risk. Medicaid managed care plans face annual External Quality Review technical reporting that now includes a mandatory network adequacy validation component. Medicare Advantage plans face increasing CMS audit activity focused specifically on behavioral health access, telehealth accounting and directory accuracy, consistent with longstanding Government Accountability Office recommendations that oversight in this area needs to be tightened.

And there is a member-facing cost that shows up before any regulator does. In MagnaCare’s own survey research on network access, three out of four respondents said they did not believe their network was tailored to their local needs, and only 14 percent believed their network had enough capacity to handle demand in their area. Members do not wait for an audit finding to notice a network is thin. They notice when they cannot get an appointment, and that experience shapes retention and satisfaction long before a compliance filing does.

Frequently asked questions

Does telehealth count toward network adequacy standards?

In some cases, but not consistently. A number of states and CMS programs allow telehealth availability to count toward time and distance compliance for certain specialties, while others limit or exclude it. Plans should treat telehealth provider status as a distinct, trackable data point rather than assuming it automatically offsets a geographic gap, since the rules differ by state and by line of business.

Can a health plan request an exception if it cannot meet adequacy standards?

Yes, most regulators allow exception requests where a genuine provider shortage exists in a market. Approval typically depends on documented, good-faith recruitment efforts, so plans that keep ongoing records of contract offers, provider responses and alternative access arrangements are in a stronger position than plans that assemble documentation only after a gap is flagged.

Does network adequacy work differently for Medicare Advantage than for ACA marketplace plans?

Yes. Medicare Advantage adequacy is evaluated against CMS-set minimum provider counts and time and distance standards by specialty and county, with its own audit process and, as of the Consolidated Appropriations Act, 2026, tightening directory accuracy requirements. ACA marketplace plans are evaluated under CMS’s QHP certification standards, which are now extending the same quantitative time and distance approach to state-based marketplaces starting in plan year 2026. The underlying data a plan needs often overlaps, but the filings, deadlines and enforcement bodies are separate.

How quickly can a leased or wrap network close an adequacy gap?

Timelines vary by geography and specialty mix, but leasing into an established network is typically measured in weeks rather than the months or years it takes to credential and contract a comparable network from scratch. Because the provider relationships, rates and credentialing already exist, the work shifts from recruitment to integration — confirming geographic overlap with the gap, aligning claims repricing and coordinating effective dates.

Closing gaps without building a network from scratch

Recruiting and credentialing providers county by county, specialty by specialty, is the slowest way to close an adequacy gap, and it is rarely fast enough to meet a filing deadline or a new group’s effective date. Leasing into an established network is the faster path: the provider relationships, contracted rates and credentialing are already in place, so the work shifts from building a network to plugging into one.

MagnaCare’s provider network is built for exactly this kind of gap-filling, whether the need is a handful of counties in a new market, a thin specialty pocket, or broader geographic reach beyond a plan’s core footprint. Health plans, TPAs and regional carriers can lease a portion of the network locally or nationally, credentialed to National Committee for Quality Assurance standards, without taking on the multi-year work of building comparable provider relationships independently. For a closer look at how leased network arrangements are typically structured, MagnaCare’s guide for TPAs and smaller carriers walks through what to evaluate before signing an agreement, and this overview of nationwide network access covers how carriers extend reach beyond a single region.

If a specific market or specialty gap is putting a certification or audit at risk, talk to MagnaCare’s network solutions team about leasing access to a network that already meets the standard.