County Selection Strategy: How to Choose Your Service Area for Maximum Adequacy

Geography Is the Wrong Starting Point

Most health plan market expansion decisions start with geography: which metropolitan statistical areas align with our growth strategy, where do we have broker relationships, where is the competition weakest? These are reasonable business considerations. But when they drive county selection without an adequacy pre-flight, they set up network ops teams for problems that emerge 9–12 months later when the submission deadline is imminent.

The right starting point is an adequacy analysis of every candidate county before the service area is finalized. Counties that will require multiple exception filings and extensive outreach campaigns should be priced into the growth plan — or deferred to a later year.

What to Analyze for Each Candidate County

Before including a county in your service area, you need a clear picture of:

• Provider density by specialty: How many actively enrolled Medicare providers of each type are in the county and within the time-distance radius? CMS provider enrollment data (available via PECOS and the Provider Data Catalog) gives you the supply picture.
• Historical adequacy pass rates: Some counties have chronic adequacy problems — the same specialties in the same counties fail adequacy review year after year because the structural supply is insufficient. CMS publishes deficiency data that reveals these patterns.
• Non-participation rates: Not every enrolled provider will contract with your plan. In some markets, independent cardiologists or neurologists are systematically opposed to managed care contracting. Local intelligence from your contracting team is invaluable here.
• Population-to-provider ratios: A county with 5 PCPs serving 40,000 people has a structural access problem that no contracting effort will solve — those providers can't take new patients regardless of how attractive your rates are.
• Dual-eligible density (for D-SNPs): High dual-eligible populations indicate member opportunity, but they also correlate with higher LTSS and behavioral health utilization — specialties that are often the hardest to adequately network.

Risk-Weighting Your Service Area

Once you have adequacy data for each candidate county, classify them into three tiers:

• Green counties: Provider supply is sufficient to meet adequacy threshold with a 20%+ buffer. Standard contracting approach.
• Yellow counties: Provider supply is sufficient to meet threshold but will require active outreach and possibly exception filings in 1–2 specialties. Include in Year 1 service area with dedicated outreach resources.
• Red counties: Structural adequacy problems in multiple specialties. Exception filings will be required. Include in Year 1 only if strategic business reasons are compelling and leadership is prepared to invest in the outreach and exception filing effort.

A service area with too many Red counties will overwhelm your network ops team and risk a cascading adequacy review failure. A practical rule of thumb: no more than 20% of your service area counties should be in the Red tier in your first year of operation in a market.

Exception Filing Strategy for Tough Counties

When you do include Red counties, the exception filing process needs to begin at the same time as provider outreach — not after outreach fails. Document every outreach contact from day one: dates, contact names, method (phone, mail, email), and responses. CMS reviewers want to see an extensive, good-faith effort to fill the gap before they'll approve an exception.

For exception filings to be approved, you also need a member access plan — specifically, how will members in the county access the specialty if there is no contracted in-network provider? Telehealth arrangements, out-of-area authorization policies, and formal care coordination protocols all strengthen exception filing applications.