42 C.F.R. Subpart E—External Quality Review
Title 42 - Public Health
Source: 68 FR 3635, Jan. 24, 2003, unless otherwise noted.
(a) Statutory basis. This subpart is based on sections 1932(c)(2), 1903(a)(3)(C)(ii), and 1902(a)(4) of the Act. (b) Scope. This subpart sets forth requirements for annual external quality reviews of each contracting managed care organization (MCO) and prepaid inpatient health plan (PIHP), including— (1) Criteria that States must use in selecting entities to perform the reviews; (2) Specifications for the activities related to external quality review; (3) Circumstances under which external quality review may use the results of Medicare quality reviews or private accreditation reviews; and (4) Standards for making available the results of the reviews. (c) Applicability. The provisions of this subpart apply to MCOs, PIHPs, and to health insuring organizations (HIOs) that began on or after January 1, 1986 that the statute does not explicitly exempt from requirements in section 1903(m) of the Act. As used in this subpart— EQR stands for external quality review. EQRO stands for external quality review organization. External quality review 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. External quality review organization means an organization that meets the competence and independence requirements set forth in §438.354, and performs external quality review, other EQR-related activities as set forth in §438.358, or both. Financial relationship means— (1) A direct or indirect ownership or investment interest (including an option or nonvested interest) in any entity. This direct or indirect interest may be in the form of equity, debt, or other means and includes any indirect ownership or investment interest no matter how many levels removed from a direct interest; or (2) A compensation arrangement with an entity. Quality, as it pertains to external quality review, means the degree to which an MCO or PIHP increases the likelihood of desired health outcomes of its enrollees through its structural and operational characteristics and through the provision of health services that are consistent with current professional knowledge. 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. Each State that contracts with MCOs or PIHPs must ensure that— (a) Except as provided in §438.362, a qualified EQRO performs an annual EQR for each contracting MCO or PIHP; (b) The EQRO has sufficient information to use in performing the review; (c) The information used to carry out the review must be obtained from the EQR-related activities described in §438.358. (d) For each EQR-related activity, the information must include the elements described in §438.364(a)(1)(i) through (a)(1)(iv); (e) The information provided to the EQRO in accordance with paragraph (c) of this section is obtained through methods consistent with the protocols established under §438.352; and (f) The results of the reviews are made available as specified in §438.364. Each protocol must specify— (a) The data to be gathered; (b) The sources of the data; (c) The activities and steps to be followed in collecting the data to promote its accuracy, validity, and reliability; (d) The proposed method or methods for validly analyzing and interpreting the data once obtained; and (e) Instructions, guidelines, worksheets, and other documents or tools necessary for implementing the protocol. (a) General rule. The State must ensure that an EQRO meets the requirements of this section. (b) Competence. The EQRO must have at a minimum the following: (1) Staff with demonstrated experience and knowledge of— (i) Medicaid recipients, policies, data systems, and processes; (ii) Managed care delivery systems, organizations, and financing; (iii) Quality assessment and improvement methods; and (iv) Research design and methodology, including statistical analysis. (2) Sufficient physical, technological, and financial resources to conduct EQR or EQR-related activities. (3) Other clinical and nonclinical skills necessary to carry out EQR or EQR-related activities and to oversee the work of any subcontractors. (c) Independence. The EQRO and its subcontractors are independent from the State Medicaid agency and from the MCOs or PIHPs that they review. To qualify as “independent”— (1) A State agency, department, university, or other State entity may not have Medicaid purchasing or managed care licensing authority; and (2) A State agency, department, university, or other State entity must be governed by a Board or similar body the majority of whose members are not government employees. (3) An EQRO may not— (i) Review a particular MCO or PIHP if either the EQRO or the MCO or PIHP exerts control over the other (as used in this paragraph, “control” has the meaning given the term in 48 CFR 19.101) through— (A) Stock ownership; (B) Stock options and convertible debentures; (C) Voting trusts; (D) Common management, including interlocking management; and (E) Contractual relationships. (ii) Deliver any health care services to Medicaid recipients; (iii) Conduct, on the State's behalf, ongoing Medicaid managed care program operations related to oversight of the quality of MCO or PIHP services, except for the related activities specified in §438.358; or (iv) Have a present, or known future, direct or indirect financial relationship with an MCO or PIHP that it will review as an EQRO. (a) The State— (1) Must contract with one EQRO to conduct either EQR alone or EQR and other EQR-related activities; and (2) May contract with additional EQROs to conduct EQR-related activities as set forth in §438.358. (b) Each EQRO must meet the competence requirements as specified in §438.354(b). (c) Each EQRO is permitted to use subcontractors. The EQRO is accountable for, and must oversee, all subcontractor functions. (d) Each EQRO and its subcontractors performing EQR or EQR-related activities must meet the requirements for independence, as specified in §438.354(c). (e) For each contract, the State must follow an open, competitive procurement process that is in accordance with State law and regulations and consistent with 45 CFR part 74 as it applies to State procurement of Medicaid services. (a) General rule. The State, its agent that is not an MCO or PIHP, or an EQRO may perform the mandatory and optional EQR-related activities in this section. (b) Mandatory activities. For each MCO and PIHP, the EQR must use information from the following activities: (1) Validation of performance improvement projects required by the State to comply with requirements set forth in §438.240(b)(1) and that were underway during the preceding 12 months. (2) Validation of MCO or PIHP performance measures reported (as required by the State) or MCO or PIHP performance measure calculated by the State during the preceding 12 months to comply with requirements set forth in §438.240(b)(2). (3) A review, conducted within the previous 3-year period, to determine the MCO's or PIHP's compliance with standards (except with respect to standards under §§438.240(b)(1) and (2), for the conduct of performance improvement projects and calculation of performance measures respectively) established by the State to comply with the requirements of §438.204(g). (c) Optional activities. The EQR may also use information derived during the preceding 12 months from the following optional activities: (1) Validation of encounter data reported by an MCO or PIHP. (2) Administration or validation of consumer or provider surveys of quality of care. (3) Calculation of performance measures in addition to those reported by an MCO or PIHP and validated by an EQRO. (4) Conduct of performance improvement projects in addition to those conducted by an MCO or PIHP and validated by an EQRO. (5) Conduct of studies on quality that focus on a particular aspect of clinical or nonclinical services at a point in time. (d) Technical assistance. The EQRO may, at the State's direction, provide technical guidance to groups of MCOs or PIHPs to assist them in conducting activities related to the mandatory and optional activities that provide information for the EQR. (a) General rule. To avoid duplication, the State may use, in place of a Medicaid review by the State, its agent, or EQRO, information about the MCO or PIHP obtained from a Medicare or private accreditation review to provide information otherwise obtained from the mandatory activities specified in §438.358 if the conditions of paragraph (b) or paragraph (c) of this section are met. (b) MCOs or PIHPs reviewed by Medicare or private accrediting organizations. For information about an MCO's or PIHP's compliance with one or more standards required under §438.204(g), (except with respect to standards under §§438.240(b)(1) and (2), for the conduct of performance improvement projects and calculation of performance measures respectively) the following conditions must be met: (1) The MCO or PIHP is in compliance with standards established by CMS for Medicare+Choice or a national accrediting organization. The CMS or national accreditation standards are comparable to standards established by the State to comply with §438.204(g) and the EQR-related activity under §438.358(b)(3). (2) Compliance with the standards is determined either by— (i) CMS or its contractor for Medicare; or (ii) A private national accrediting organization that CMS has approved as applying standards at least as stringent as Medicare under the procedures in §422.158. (3) The MCO or PIHP provides to the State all the reports, findings, and other results of the Medicare or private accreditation review applicable to the standards provided for in §438.204(g); and the State provides the information to the EQRO. (4) In its quality strategy, the State identifies the standards for which the EQR will use information from Medicare or private accreditation reviews, and explains its rationale for why the standards are duplicative. (c) Additional provisions for MCOs or PIHPs serving only dually eligibles. The State may use information obtained from the Medicare program in place of information produced by the State, its agent, or EQRO with respect to the mandatory activities specified in §438.358 (b)(1) and (b)(2) if the following conditions are met: (1) The MCO or PIHP serves only individuals who receive both Medicare and Medicaid benefits. (2) The Medicare review activities are substantially comparable to the State-specified mandatory activities in §438.358(b)(1) and (b)(2). (3) The MCO or PIHP provides to the State all the reports, findings, and other results of the Medicare review from the activities specified under §438.358(b)(1) and (b)(2) and the State provides the information to the EQRO. (4) In its quality strategy, the State identifies the mandatory activities for which it has exercised this option and explains its rationale for why these activities are duplicative. (a) Basis for exemption. The State may exempt an MCO or PIHP from EQR if the following conditions are met: (1) The MCO or PIHP has a current Medicare contract under part C of title XVIII or under section 1876 of the Act, and a current Medicaid contract under section 1903(m) of the Act. (2) The two contracts cover all or part of the same geographic area within the State. (3) The Medicaid contract has been in effect for at least 2 consecutive years before the effective date of the exemption and during those 2 years the MCO or PIHP has been subject to EQR under this part, and found to be performing acceptably with respect to the quality, timeliness, and access to health care services it provides to Medicaid recipients. (b) Information on exempted MCOs or PIHPs. When the State exercises this option, the State must obtain either of the following: (1) Information on Medicare review findings. Each year, the State must obtain from each MCO or PIHP that it exempts from EQR the most recent Medicare review findings reported on the MCO or PIHP including— (i) All data, correspondence, information, and findings pertaining to the MCO's or PIHP's compliance with Medicare standards for access, quality assessment and performance improvement, health services, or delegation of these activities; (ii) All measures of the MCO's or PIHP's performance; and (iii) The findings and results of all performance improvement projects pertaining to Medicare enrollees. (2) Medicare information from a private, national accrediting organization that CMS approves and recognizes for Medicare+Choice deeming. (i) If an exempted MCO or PIHP has been reviewed by a private accrediting organization, the State must require the MCO or PIHP to provide the State with a copy of all findings pertaining to its most recent accreditation review if that review has been used for either of the following purposes: (A) To fulfill certain requirements for Medicare external review under subpart D of part 422 of this chapter. (B) To deem compliance with Medicare requirements, as provided in §422.156 of this chapter. (ii) These findings must include, but need not be limited to, accreditation review results of evaluation of compliance with individual accreditation standards, noted deficiencies, corrective action plans, and summaries of unmet accreditation requirements. (a) Information that must be produced. The State must ensure that the EQR produces at least the following information: (1) A detailed technical report that describes the manner in which the data from all activities conducted in accordance with §438.358 were aggregated and analyzed, and conclusions were drawn as to the quality, timeliness, and access to the care furnished by the MCO or PIHP. The report must also include the following for each activity conducted in accordance with §438.358: (i) Objectives. (ii) Technical methods of data collection and analysis. (iii) Description of data obtained. (iv) Conclusions drawn from the data. (2) An assessment of each MCO's or PIHP's strengths and weaknesses with respect to the quality, timeliness, and access to health care services furnished to Medicaid recipients. (3) Recommendations for improving the quality of health care services furnished by each MCO or PIHP. (4) As the State determines, methodologically appropriate, comparative information about all MCOs and PIHPs. (5) An assessment of the degree to which each MCO or PIHP has addressed effectively the recommendations for quality improvement made by the EQRO during the previous year's EQR. (b) Availability of information. The State must provide copies of the information specified in paragraph (a) of this section, upon request, through print or electronic media, to interested parties such as participating health care providers, enrollees and potential enrollees of the MCO or PIHP, recipient advocacy groups, and members of the general public. The State must make this information available in alternative formats for persons with sensory impairments, when requested. (c) Safeguarding patient identity. The information released under paragraph (b) of this section may not disclose the identity of any patient. (a) FFP at the 75 percent rate is available in expenditures for EQR (including the production of EQR results) and EQR-related activities set forth in §438.358 conducted by EQROs and their subcontractors. (b) FFP at the 50 percent rate is available in expenditures for EQR-related activities conducted by any entity that does not qualify as an EQRO.
Title 42: Public Health
PART 438—MANAGED CARE
Subpart E—External Quality Review
§ 438.310 Basis, scope, and applicability.
§ 438.320 Definitions.
§ 438.350 State responsibilities.
§ 438.352 External quality review protocols.
§ 438.354 Qualifications of external quality review organizations.
§ 438.356 State contract options.
§ 438.358 Activities related to external quality review.
§ 438.360 Nonduplication of mandatory activities.
§ 438.362 Exemption from external quality review.
§ 438.364 External quality review results.
§ 438.370 Federal financial participation.
