CMS Finalizes CY2027 Medicare Advantage Rule The Impact on Your Network Adequacy Initiatives

CMS published the final Contract Year 2027 Medicare Advantage rule, and for most payers, the headline is stability. Of the three network adequacy-related provisions we flagged when the proposed rule came out in November, only one was finalized. The others were either dropped or left open for future action.

Finalized: D-SNP Passive Enrollment

CMS replaced the "substantially similar networks" standard with a 120-day continuity of care requirement for receiving D-SNPs. Receiving plans must operate as Applicable Integrated Plans and demonstrate adequate care coordinator staffing. Network adequacy standards continue to apply independently. If your plan is involved in D-SNP passive enrollment, this is the primary compliance area to focus on heading into 2027.

Not Finalized: Special Enrollment Period for Provider Terminations

CMS pulled this provision entirely and did not address stakeholder comments in the final rule. They indicated potential interest in revisiting it through future rulemaking. For now, this is one fewer compliance change on your plate for 2027.

No Regulatory Action: Network Adequacy Reporting and Data Collection

CMS collected feedback on simplifying the network review process, streamlining exceptions, improving submission workflows, and exploring a potential "pattern of care" exception. These topics remain open and Quest continues to engage directly with MA leadership on these priorities.

What This Means for Health Plans

The absence of changes to the current network adequacy review process is good news. Plans are operating under the same requirements they know today, and your existing compliance workflows remain fully relevant.

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California Finalizes Rule That Details How Network Adequacy Is Measured

The Department of Managed Health Care (DMHC) in

California has finalized a Rule that specifies how commercial plans are required to demonstrate network adequacy. The rule incorporates the Mental Health Utilization Standards and Methodology and Geographic Access Measurement Methodology, specifies the time and distance calculation method, and emphasizes real-world access.

Encounters Data for Provider Access

Under this rule, if a provider has had no clinical encounters with enrollees in the past year, the DMHC may treat that provider as not readily available for network adequacy purposes, unless there is a valid reason, such as the provider being highly specialized or located in an area with little or no enrollment.

Plans should identify inactive providers and ensure network submissions reflect actual member access.

Tightened Oversight of Provider Address Accuracy

Plans will now be required to demonstrate network adequacy using only verifiable provider addresses. The DMHC can request supporting evidence when multiple secondary locations are reported for a single provider. Questionable or unverified addresses may be excluded from network adequacy reviews, with plans subject to corrective action if accuracy cannot be demonstrated.

Enrollment Patterns May Drive Service Area Expansion

If a plan reports significant enrollment outside of its approved network service area, but within CA, the DMHC may require the plan to file a Notice of Material Modification to formally expand its licensed service area.

This means that enrollment drift now has direct network adequacy implications. Plans should monitor where members reside and proactively assess whether network expansion or licensure updates may be required.

These updates signal CA’s continued move toward data-driven, enforceable oversight. Ongoing provider validation, encounter monitoring, and alignment between enrollment and network design will be critical for maintaining compliance.

Proposed 2026 Interoperability Rule: Strengthening Data Transparency

CMS’s 2026 Interoperability Proposed Rule builds on prior federal efforts to improve data exchange and administrative efficiency, with a new focus on electronic prior authorization for drugs, API transparency, and standardized data sharing across Medicare Advantage, Medicaid, CHIP, and Qualified Health Plans on the Federally Facilitated Exchanges. While a primary focus of the rule is interoperability and administrative efficiency, it could have downstream implications for network adequacy oversight.

Notably, the rule would:

• Add small group market QHP issuers offering plans on the Federally Facilitated Small Business Health Options Program as an impacted payer subject to the interoperability requirements of previous rules and these proposals.

• Require impacted payers to maintain and report standardized API endpoints and related information for all interoperability APIs, including Provider Directory and Provider Access APIs, along with submitting usage metrics to CMS. (CMS is also requiring Provider Directory API endpoints for Medicare Advantage plans with the Health Plan Finder guidance.)

As provider directory data becomes more structured, transparent, and measurable, regulators may increasingly rely on this data to assess whether provider networks accurately reflect real-world provider accessibility, rather than contracted providers in name only.

For health plans, this proposal reinforces the growing alignment between interoperability, provider directory accuracy, and network adequacy compliance. Plans may want to evaluate how their provider data governance, API performance, and encounter activity support not only interoperability requirements, but also emerging expectations around access, accuracy, and accountability during network adequacy reviews.

Recently Finalized State Network Adequacy Legislation

Finalized Rules

Oregon SB 822 RAC: This rule establishes CCIIO-aligned quantitative measures for geographic access and appointment wait times. The rule applies to all fully insured commercial plans.

Finalized Bills

Washington SB 5124: This bill directs the Washington Health Care Authority to establish and adopt network adequacy standards for post-acute care (including nursing homes and inpatient rehab) under Medicaid by January 1, 2028. The bill requires a structured stakeholder feedback process that includes managed care organizations and three rounds of feedback.

Virginia HB 184: This bill requires the Virginia Department of Health to evaluate the All-Payer Claims Database and submit a report that includes network adequacy policy recommendations and additional data collection needs by December 1, 2026.

Virginia HB 656: This bill requires the Virginia Department of Health to adopt network adequacy standards that are at least as stringent as those imposed by the Virginia Health Benefits Exchange (which uses CCIIO standards).

Proposed State Network Adequacy Regulation to Know About

California AB 1629: This bill requires the Department of Managed Health Care and the Department of Insurance to assess dental provider network adequacy and establishes travel time and distance standards for commercial dental plans.

Minnesota SF 5046: This bill streamlines commercial network adequacy reporting by eliminating the Department of Health's role and consolidating oversight and reporting responsibilities under the Department of Commerce and the Department of Human Services. It also eliminates the Prescription Drug Affordability Council.

Arizona SB 1629: This bill requires Medicaid Managed Care Organizations to submit network adequacy reports to the Arizona Health Care Cost Containment System (AHCCCS) 90 days before a high-volume provider termination proving that network adequacy will still be met.

CMS Issues 2027 NBPP Final Rule

Network Adequacy Requirements Remain Unchanged and States

Granted New Flexibilities

CMS finalized its 2027 Notice of Benefit and Payment Parameters (NBPP) on May 15th, preserving the existing network adequacy framework for Qualified Health Plans (QHPs) in the Federally Facilitated Marketplace (FFM) with no substantive changes to current oversight or review processes.

Core Network Adequacy Requirements Remain Unchanged

CMS confirmed it will continue conducting network adequacy reviews for QHPs in FFM states, maintaining time and distance standards and requiring submission of the ECP/NA template. Health plans that fall short of quantitative standards may still submit a justification demonstrating adequate access, consistent with prior practice.

New Effective Provider Access Review Program

The finalized NBPP reflects CMS's continued position that states play a critical role in network adequacy oversight and are often best positioned to evaluate local access conditions and network performance. The Effective Provider Access Review Program creates a pathway for FFM states to apply to assume network adequacy review authority. To qualify, states must satisfy a six-part test covering state regulations, data collection, oversight, compliance, and enforcement capacity. CMS is offering technical assistance including data analytics support to interested states.

Non-Network QHPs Allowed, But Delayed to 2028

CMS finalized the return of non-network QHPs by removing the requirement that all QHPs maintain a provider network. However, the effective date has been pushed to plan year 2028. For these plans, CMS will require some types of network adequacy review to demonstrate sufficient access to providers and Essential Community Providers (ECPs) willing to accept the plan's benefit amount as payment in full.

The delay reflects the broad opposition CMS received from health plans, hospitals, providers, and state regulators.

ECP Threshold Retained at 35%

CMS did not finalize its proposed reduction of the ECP contracting threshold. The proposed rule would have lowered the required threshold from 35% to 20%, but CMS chose to retain the existing 35% standard.

New Essential Community Provider Review Program

Parallel to the Effective Provider Access Review Program, CMS finalized a new Essential Community Provider Review Program, which would allow FFM states to assume ECP certification authority under a similar framework.

What's Next

Additional implementation details will become clearer when CMS finalizes the 2027 Draft Letter to Issuers (LTI) and accompanying filing guidance in the coming weeks.

PY 2027 QHP Certification and Network Adequacy Review Timeline

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