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State Quality Strategies

Federal regulations at 42 CFR 438.340(b) lay the groundwork for the development and maintenance of a quality strategy to assess and improve the quality of managed care services offered within a state.  This quality strategy is intended to serve as a blueprint or road map for states and their contracted health plans in assessing the quality of care that beneficiaries receive, as well as for setting forth measurable goals and targets for improvement.

State Responsibilities

Each state contracting with a managed care organization (MCO) and/or prepaid inpatient health plan (PIHP) must obtain input from beneficiaries and other key stakeholders in the development of the quality strategy and make the quality strategy available for public comment before adopting it in final.  

Per 42 CFR 438.340(c)(1), each state is responsible for submitting to CMS a copy of their initial quality strategy, as well as any revised quality strategies for CMS review and feedback. In addition, states must submit regular reports on the implementation and effectiveness of the quality strategy. This reporting requirement may be satisfied in one of two ways:

  1. By means of the state's annual external quality review (EQR) technical report. If a state chooses to use this method, the state must ensure that its EQR technical report includes a section that addresses the effectiveness of the state's quality strategy and determine whether any updates to the quality strategy are necessary based on the results of the EQR.  
  2. By means of a separate report on the implementation and effectiveness of the quality strategy. The state must submit this separate report to CMS on at least an annual basis.

Developing a Managed Care Quality Strategy

CMS developed the Medicaid and CHIP Managed Care Quality Strategy Toolkit to support states in implementing managed care quality strategy requirements.

In accordance with 42 CFR 438.340, at a minimum, all quality strategies must include:

  • The MCO and PIHP contract provisions that incorporate the standards of Part 438, subpart E;
  • Procedures that assess the quality and appropriateness of care and services furnished to all Medicaid enrollees under the MCO and PIHP contracts, and to individuals with special health care needs;
  • Procedures that identify the race, ethnicity, and primary language spoken of each Medicaid enrollee;
  • Procedures that regularly monitor and evaluate the MCO and PIHP compliance with the standards of Part 438, subpart D
  • Arrangements for annual, external independent reviews of the quality outcomes and timeliness of, and access to, the services covered under each MCO and PIHP contract;
  • For MCOs, appropriate use of intermediate sanctions that, at a minimum, meet the requirements of subpart I of this Part 438;
  • An information system that supports initial and ongoing operation and review of the State's quality strategy; and
  • Standards, at least as stringent as those in Part 438, subpart D, for access to care, structure and operations, and quality measurement and improvement.

CMS is available to provide technical assistance to states as they develop and draft their managed care quality strategy.  

Federal Quality Strategy Alignment

CMS encourages states, as appropriate, to consider aligning their quality strategies with the following national quality strategies: 

  1. The HHS National Quality Strategy is a national plan to improve the delivery of health care services, patient health outcomes, and population health. Three goals are used to guide and assess local, state, and national efforts to improve health and the health care delivery system:
    • Better Care
    • Healthy People/Healthy Communities
    • Affordable Care
  2. The CMS Quality Strategy is built on the foundation of the HHS National Quality Strategy. Like the HHS National Quality Strategy, the CMS Quality Strategy was developed through a participatory, transparent, and collaborative process that included the input of a wide array of stakeholders.

Technical Assistance Resources

Medicaid and CHIP Managed Care Monitoring and Oversight Initiative

Please submit requests for technical assistance related State Quality Strategies to: ManagedCareQualityTA@cms.hhs.gov.