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State Quality Strategies

Federal regulations at 42 CFR 438.340 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 any of the four types of managed care entities - managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), prepaid ambulatory health plans (PAHPs) and/or primary care case management entities (PCCM-Es) described in § 438.310(c)(2) - 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)(3), 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 review and update their quality strategy at least every 3 years. This triennial review must include an evaluation of the effectiveness of the quality strategy. The results of the evaluation must be posted on the state’s website. This evaluation 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.

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:

  • Provider access information: The standards the State defines for network adequacy and availability of services for their managed care plans, and examples of evidence-based clinical practice guidelines required by the states to be used by plans.
  • Continuous quality improvement: The State must include its goals and objectives for continuous quality improvement. These goals and objectives must be measurable and take into consideration the health status of all populations served in the state through their managed care plans.
  • The quality metrics and performance targets used to measure the performance and improvement of MCOs with which the State contracts, including but not limited to, the performance measure outcomes reported and published at least annually on the State website as required under § 438.10(c)(3).
  • The performance improvement projects implemented by the managed care plan, including a description of any interventions the State proposes to improve access, quality, or timeliness of care for beneficiaries enrolled in a managed care plan.
  • External Quality Review (EQR): The State’s arrangements for annual EQR of the quality outcomes and timeliness of, and access to, the services covered under each managed care plan.
  • Transition of Care: A description of the State's transition of care policy, as required under § 438.62(b)(3).
  • Addressing health disparities: A description of the State’s plan to identify, evaluate, and reduce, to the extent practicable, health disparities based on age, race, ethnicity, sex, primary language, and disability status,  including (1) A definition of disability status; (2) How the State will make the determination that a Medicaid enrollee meets this standard; and (3) Identify the data source(s) used by the State to identify disability status.
  • Intermediate sanctions:  For MCOs, the appropriate use of intermediate sanctions that meet the requirements of 42 CFR 438 Subpart I. 
  • Long Term Services and Supports (LTSS): Mechanisms used by the State to identify persons who need LTSS or persons with special health care needs.  These specifications must be followed by managed care plans.
  • Nonduplication of services: Information from a Medicare or private accreditation review of a managed care plan for EQR under the nonduplication provisions at  § 438.360, with the State’s rationale for determining the review is comparable to EQR activities and consistent with EQR protocols under  § 438.352.
  • Significant change: The State must include their definition of “significant change” to their quality strategy, which the state will use to determine whether a revised quality strategy must be submitted to CMS.

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, to consider aligning their quality strategies with the CMS National Quality Strategy: The CMS National Quality Strategy builds on previous efforts to improve quality across the health care system, incorporates lessons learned from the COVID-19 Public Health Emergency (PHE), and addresses the urgent need for transformative action to advance towards a more equitable, safe, and outcomes-based health care system for all individuals.

Technical Assistance Resources

Medicaid and CHIP Managed Care Monitoring and Oversight Initiative

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