Market Conduct Exams Can Overwhelm an Unprepared Plan

ATTAC Consulting Group will help you prepare for an exam to avoid potential findings and penalties


Most plans have a well-defined process for responding to common state and federal audits. However, insurers and plans may be new to a particular state or are not as familiar with or prepared for wide-ranging but the less frequent Market Conduct Examination.

Many commercial insurers and Marketplace plans are challenged when preparing for state Market Conduct Examinations and audits. Specific state focus areas may be new to insurers recently entering a new market; for other insurers, it may have been years since their last audit, or they may have only been tested a handful of areas 

The most recent NAIC model Market Conduct audit guide is diving into new areas such as the No Surprises Act, Mental Health Parity and network adequacy, as well as the traditional marketing, enrollment and claims areas.

Commercial insurers and Marketplace plans can achieve better audit outcomes and minimize risk of findings and fines by testing their audit readiness and addressing readiness or compliance gaps.

Market Conduct Exams vary in size and complexity:

  • Broad examinations typically look across many focus areas and may not go deep into specific content. Generally, broad examinations may result in fewer findings and less costly penalties 
  • Targeted examinations are usually geared toward high-risk focus areas and often result in increased risk of findings and assessment of penalties 

What triggers a Market Conduct Exam?

  • Concerns about the performance, including a high volume of complaints and substantial market changes, such as drastic changes in premiums or market growth
  • Testing compliance with new or complex regulatory requirements
  • Evidence that a specific entity may be in violation of a Public Health Service Act requirement

How are Market Conduct Exams initiated? 

CMS has the authority to initiate exams when states believe they don’t have the statutory authority, or if CMS determines that a state is not substantially enforcing the requirements.

Some states conduct exams on a regular basis, while others initiate exams on an as-required basis.

What’s included in a Market Conduct Exam?

Market Conduct Exams include examination of compliance with applicable federal and state laws and can target or include all of the following areas:

  • Operations/management
  • Complaint handling
  • Marketing & sales
  • Producer licensing
  • Policyholder service
  • Underwriting & rating
  • Claims
  • Appeal & grievance procedures
  • Network adequacy
  • Provider credentialing
  • Quality assessment & improvement
  • Utilization review
  • External appeal review
  • ACA requirements
  • Mental Health Parity

Preparing for a Market Conduct Exam

The key to being prepared for a Market Conduct Examination is assessing risk and addressing operational concerns in exam focus areas, and proactively developing a plan to respond to an examination notice.

ATTAC Consulting Group can help your organization:

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Market Conduct Examination: How to Prepare for an Unpredictable Audit That Can Result in Major Fines