Networks are a key feature of all insurance plans as every provider has a network. A network is a group of providers who have contracted with an insurer to get paid a certain set of rates for a certain set of services performed on the people who are insured by the company. Networks can be manipulated for positive public gains and for evil.
Networks are regulated at the state level for most insurance products and have some federal guidance for Medicare, Medicaid and Exchange products. The regulations are rather loose. In PPPACA, the networks for the Exchange must have significant concentration of providers in a wide variety of specialties so that residents of a county where a network is sold has “reasonable” access. This is a very soft definition because assembling a rule that makes sense for Loving County, Texas and Cook County in Illinois is extremely difficult. States will define network adequacy differently. Most states will have multiple standards depending on population density as urban areas will require more providers that are closer to the average resident while rural areas will allow long drives.
When networks are working for the public good, they provide a means of cost control as an insurance company will include in a network a provider who will take 120% of Medicare while it may exclude a provider who wants 220% of Medicare. This works because an insurance company can guarantee volume of patients at the lower rate. Networks are also a quality control metric. For instance, insurance companies may refuse to contract with providers who are not board certified or who have multiple large malpractice settlements against them in the past ten years. Contracts can be terminated for the loss of licensure or large malpractice settlements as well.
However, networks can be used against the public interest as well.