Texas Tried to Enforce Basic Network Standards — The Industry Ran to Court to Stop It

A 2023 law gave regulators new authority to curb widespread network failures after more than 90% of plans fell short.

Readers of HEALTH CARE un-covered know we focus a lot on the barriers health insurance companies have erected that make it harder for their enrollees to get the care they need, including unnecessary and excessive prior authorization requirements, unaffordable out-of-pocket costs and inadequate provider networks.

That third barrier has gotten less attention than the other two, but networks without a sufficient number of clinicians within a reasonable distance of a health plan’s enrollees can be lethal, as ProPublica’s Max Blau reported so poignantly in a story that was dramatized on a New York stage last year.

A number of states – including Texas – have considered or passed legislation to require insurers to meet network adequacy standards. Three years ago, Texas lawmakers passed a bill with unanimous support that gave the state’s department of insurance more authority to bring insurers into compliance.

The Texas Department of Insurance (TDI) testified in 2023, prior to the passage of the bill, that more than 90% of insurers’ health plan networks in the state did not meet the statutorily mandated network adequacy standards. You wouldn’t think those standards should have been so hard for a health plan to meet. Plans in Texas that serve urban areas couldn’t make patients travel more than 30 miles for primary or general hospital care or more than 75 miles to see a specialist or receive specialty hospital care. Rural patients had a 60-mile limit for primary and general hospital care.

Nevertheless, health plans were constantly filing waiver requests with the TDI claiming that for various reasons they couldn’t meet those requirements, and the TDI routinely approved the waivers – until the 2023 law went into effect. Among other things, the law limited the number of times a health plan could be issued a waiver, and it required the TDI to ensure that health plans comply with the state’s network adequacy standards before allowing them to enroll people in their plans.

As a result, the TDI began denying some of the waiver requests from the state’s insurers – and that has upset the insurance industry so much that the Texas Association of Health Plans (TAHP) filed a lawsuit to stop TDI from doing what the 2023 law requires.

TAHP claims that some Texas counties don’t have enough specialists and hospitals to meet the requirements. But in many cases, insurers are taking actions to “narrow” their networks to meet their investors’ profit expectations. UnitedHealthcare’s executives told its shareholders during a recent earnings call that it would be doing exactly that (in addition to reducing benefits) – and other insurers have also begun implementing policies to cull their provider networks.

At the end of January, a state court in Austin granted TAHP temporary injunctive relief, saying that it agreed that some insurers could be “unable to continue providing access to their PPO plans.” It enjoined the TDI from enforcing its rules “to preserve the status quo pending a final adjudication of TAHP’s claims for declaratory and permanent relief.”

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The court said the TDI cannot deny any waiver applications on the basis of a PPO plan’s failure to demonstrate “multiple good faith attempts” to comply with state law. The court order also said TDI had agreed to initiate new rulemaking regarding the implementation of the law. A trial on the merits of the litigation is set for October 19, 2026.

I reached out to the Texas Medical Association, which worked with TAHD on the network adequacy legislation, for a reaction to the litigation and got this from TMA President Jayish “Jay” Shah, MD:

The Texas Medical Association has always advocated for robust network adequacy requirements, as they are imperative to promoting patient access to care and providing consumers value for their premium dollars. In that vein, (the Texas network adequacy law) was an important step forward for patients in our state. Notably, it was an agreed-to bill by both the TMA and the Texas Association of Health Plans that set forth a reasonable standard in generally requiring insurers offering PPOs and EPOs to make multiple good faith attempts to satisfy a network adequacy standard in order to be granted repeated [more than two consecutive] waivers from that standard. TMA will stay engaged in the rulemaking on the law as it is revisited. If consumers are paying for these plans, there must be accountability on the side of the health plans to ensure adequate networks in Texas.

The court’s decision to grant temporary relief to insurers may preserve the “status quo” — but that status quo is one in which more than nine out of ten health plans in Texas were already failing to meet the state’s network adequacy standards. For patients in rural communities especially, that isn’t a status quo worth preserving. It’s a crisis hiding in plain sight.

What’s happening in Texas is a preview of what happens when insurers are held to account for promises they’ve made to their enrollees — and respond not by building adequate networks, but by running to court to avoid compliance. The 2023 law passed with unanimous support precisely because lawmakers understood that waiver after waiver was becoming a permanent workaround, not a temporary accommodation.

Network adequacy rules exist for a reason: because when a patient can’t reach a specialist within a reasonable distance, the consequences aren’t administrative — they’re medical. They can be fatal.

The question Texas courts will ultimately have to answer isn’t whether insurers find network adequacy standards inconvenient. It’s whether health plans that accept Texans’ premiums — and in many cases, taxpayer dollars through Medicaid and ACA subsidies — have an obligation to actually provide the care they’re paid to deliver.