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Quality of Care External Quality Review (EQR)

Federal 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.

Important Definitions

  • An EQRO is an organization that meets the competence and independence requirements set forth in 42 CFR §438.354, and performs external quality review, other EQR-related activities as set forth in 42 CFR §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 CFR §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).  

Mandatory EQR Activities Optional EQR Activities
  1. Validation of Performance Improvement Projects (PIPs)
  2. Validation of Performance Measures
  3. Review, within the previous three-year period, to determine MCO/PIHP compliance with State standards for access to care, structure and operations, and quality measurement and improvement
  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 PIPs 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

EQR Results

CMS has created a web-page for accessing links to annual State EQR Technical Reports.  Please see the External Quality Review Technical Reports page for more information.

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)
CMCS Managed Care Bulletin (November 2012)

CMS has released new guidance for interpreting and applying the existing CMS EQR Protocols for the Managed Long Term Services and Support (MLTSS) population.  

Technical Assistance Webinars

  • External Quality Review of Medicaid Managed Care: Building Partnerships for Meaningful Quality Improvement -- February 20, 2013

Please submit any questions or requests for technical assistance related to EQR to: ManagedCareQualityTA@cms.hhs.gov.

External Links

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