Published in January 2003, CMS regulations require that states which contract with Medicaid Managed Care Organizations (MCO) or Prepaid Inpatient Health Plans (PIHP) conduct an External Quality Review (EQR) of each entity.  States may perform EQR tasks directly, or may contract with independent entities called External Quality Review Organizations (EQRO) to conduct the external quality review.  The level of Federal financial participation in these activities will vary depending upon the entity conducting them.

CMS provides states with federal matching funds for review expenditures, including the production of results. Federal regulations require certain mandatory activities and deliverables and offer the choice to require some optional activities.  
 

Important Definitions

• An EQRO is an organization that meets the competence and independence requirements set forth in 42 C.F.R. §438.354, and performs external quality review, other EQR-related activities as set forth in 42 C.F.R. §438.358, or both.
• EQR means the analysis and evaluation by an EQRO, of aggregated information on quality, timeliness, and access to the health care services that an MCO or PIHP, or their contractors furnish to Medicaid recipients.
• Validation means the review of information, data, and procedures to determine the extent to which they are accurate, reliable, free from bias, and in accord with standards for data collection and analysis.

Qualifications of EQROs

In accordance with 42 C.F.R. §438.354, states must contract with EQROs that have, at a minimum, the following:

• Staff with demonstrated experience and knowledge of Medicaid recipients, policies, data systems, and processes; managed care delivery systems, organizations, and financing; quality assessment and improvement methods; and research design and methodology, including statistical analysis;
• Sufficient physical, technological, and financial resources to conduct EQR or EQR-related activities; and
• Other clinical and nonclinical skills necessary to carry out EQR or EQR-related activities and to oversee the work of any subcontractors.
• The EQRO and its subcontractors must be independent from the State Medicaid agency and from the MCOs or PIHPs that they review.  An “independent” entity is one that is free of organizational or financial control over the State Medicaid agency and the MCOs/PIHPs it reviews.
• An EQRO may not review an MCO or PIHP if either the EQRO or MCO or PIHP exerts control over the other, the EQRO delivers any health care services to Medicaid beneficiaries, conducts ongoing Medicaid managed care program operations, or has a present or known future direct or indirect financial relationship.

State Responsibilities

Each State contract for EQR must include three mandatory activities and may address five optional activities, all of which are described in the CMS EQR Protocols (available under technical assistance documents).  

EQR Results

In accordance with 42 C.F.R. §438.364, the EQRO must produce for the State at least the following information:

• A detailed technical report that describes the manner in which the data from all activities conducted were aggregated and analyzed and the way in which conclusions were drawn as to the timeliness, quality, and access to the care furnished by the MCO or PIHP.  For each EQR activity conducted, the report must also include objectives, technical methods of data collection and analysis, description of data obtained, and conclusions drawn from the data;
• An assessment of each MCO’s or PIHP’s strengths and weaknesses with respect to quality, timeliness, and access to health care services furnished to Medicaid beneficiaries;
• Recommendations for improving the quality of health care services furnished by each MCO or PIHP;
• Methodologically appropriate, comparative information about all MCOs and PIHPs;
• An assessment of the degree to which each MCO or PIHP has addressed effectively the quality improvement recommendations made by the EQRO during the prior year’s review.  

States must provide copies of this information upon request, through print or electronic media, to interested parties. Annually, CMS will review the detailed technical reports for evaluation and follow-up.

Technical Assistance Documents

External Quality Review Protocols (2012 Update)
External Quality Review Toolkit (2012 Update)
OIG External Quality Reviews in Medicaid Managed Care (June 2008)

External Links

NCQA Medicaid Managed Care Toolkit
URAC Guide to Medicaid Managed Care External Quality Review
AAAHC Managed Care Accreditation

CMS Contacts

Tonya Davis, Division of Quality, Evaluation & Health Outcomes, Tonya.Davis@cms.hhs.gov
TJ Shumard, Division of Quality, Evaluation & Health Outcomes, Thomas.Shumard@cms.hhs.gov
Kristin Younger, Division of Quality, Evaluation & Health Outcomes, Kristin.Younger@cms.hhs.gov