[Federal Register: January 24, 2003 (Volume 68, Number 16)]
[Rules and Regulations]
[Page 3585-3638]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24ja03-22]
[[Page 3585]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 433 and 438
Medicaid Program; External Quality Review of Medicaid Managed Care
Organizations; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 433 and 438
[CMS-2015-F]
RIN 0938-AJ06
Medicaid Program; External Quality Review of Medicaid Managed
Care Organizations
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule establishes requirements and procedures for
external quality review (EQR) of Medicaid managed care organizations
(MCOs) and prepaid inpatient health plans (PIHPs). It defines who
qualifies to conduct EQR and what activities can be conducted as part
of EQR. In addition, under certain circumstances, this rule allows
State agencies to (1) use findings from particular Medicare or private
accreditation review activities to avoid duplicating review activities,
or (2) exempt certain Medicare MCOs and PIHPs from all EQR
requirements. Also, this rule allows the payment of enhanced Federal
financial participation (FFP) at the 75 percent rate for the
administrative costs of EQRs or EQR activities that are conducted by
approved entities.
EFFECTIVE DATE: These regulations are effective on March 25, 2003.
Provisions that must be implemented through contracts with MCOs, PIHPs,
and external quality review organizations (EQROs) are effective with
contracts entered into or revised on or after 60 days following the
publication date. States have up until March 25, 2004 to bring
contracts into compliance with the final rule provisions.
FOR FURTHER INFORMATION CONTACT: Kristin Fan, (410) 786-4581.
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.
I. Background
A. The Balanced Budget Act of 1997
The Balanced Budget Act of 1997 (BBA) added to the Social Security
Act (the Act) a new section 1932 that pertains to Medicaid managed
care. Most of the provisions of section 1932 of the Act will be
implemented in accordance with the Medicaid managed care final rule
that was published in the Federal Register on June 14, 2002 (67 FR
40988).
Section 1932(c) of the Act, added by section 4705 of the BBA,
describes how quality measurement and performance improvement methods
should be applied to Medicaid managed care programs through two
specific approaches:
[sbull] All State agencies must develop and implement a quality
assessment and improvement strategy that includes--(1) Standards for
access to care; (2) examination of other aspects of care and services
related to improving quality; and (3) monitoring procedures for regular
and periodic review of the strategy. (This requirement was addressed in
the Medicaid managed care final rule published June 14, 2002.)
[sbull] State agencies that contract with Medicaid managed care
organizations (MCOs) must provide for an annual external, independent
review of the quality outcomes, timeliness of, and access to the
services included in the contract between the State agency and the MCO.
(This requirement is addressed in this rule.)
Section 1932(c) of the Act also requires the Secretary--
In consultation with the States, to establish a method for
identifying entities qualified to conduct external quality review (EQR)
(section 1932(c)(2)(A)(ii) of the Act); and
In coordination with the National Governors Association (NGA), to
contract with an independent quality review organization to develop the
protocols to be used in EQRs (section 1932(c)(2)(A)(iii) of the Act).
Two other provisions of section 1932(c) of the Act are pertinent to
this rule. They are (1) the requirement that the results of EQRs be
made available to participating health care providers, enrollees and
potential enrollees (section 1932(c)(2)(A)(iv) of the Act), and (2) the
provision that a State agency may, at its option--
[sbull] Take steps to ensure that an EQR does not duplicate a
review conducted either by a private independent accrediting
organization or as part of an external review conducted under the
Medicare program (section 1932(c)(2)(B) of the Act); and
[sbull] Exempt an MCO from EQR under certain specified conditions
(section 1932(c)(2)(C) of the Act).
Section 4705(b) of the BBA amended section 1903(a)(3)(C) of the Act
to provide for increased Federal financial participation (FFP) (75
percent) for the administrative costs the State incurs for EQR or EQR
activities performed by specified entities under section 1932(c)(2)(A)
of the Act.
B. Proposed Rule
On December 1, 1999 we published a proposed rule in the Federal
Register (64 FR 67223) to implement the EQR statutory provisions. A
summary of the specific provisions of the proposed regulations precedes
each section of the comments and responses below. In the proposed rule,
we discussed the two major purposes we had in developing the rule: (1)
To provide flexibility for State agencies, and (2) to reflect the well-
accepted advances in the technology of quality measurement and
improvement. For a more detailed discussion of our basis and purpose
for the approach taken in the December 1, 1999 proposed rule, see the
preamble to that document at 64 FR 67223.
We received 29 comments from States, national and State
organizations, health plans, advocacy groups, and other individuals on
the December 1, 1999 proposed rule. The comments generally pertained to
the types of entities that can be EQROs, EQR activities, nonduplication
and exemption provisions, and dissemination of EQR rules. We carefully
reviewed and considered all the comments we received.
C. Agency Information Collection Activities
On November 23, 2001 we published a notice in the Federal Register
(66 FR 58741) to comply with the requirement of section 3506 (c)(2)(A)
of the Paperwork Reduction Act of 1995. We invited public comment
regarding the burden estimate or any other aspect of the EQR protocols
we developed in accordance with section 1932(c)(2)(A)(iii) of the Act.
This
[[Page 3587]]
provision required that we contract with an independent quality review
organization to develop protocols to be used with respect to EQRs
required by statute. In response to the requirement under section
1932(c)(2)(A)(iii) of the Act, we contracted with the Joint Commission
on Accreditation of Health Care Organizations (JCAHO) which developed
nine protocols and one appendix to several of the protocols in six
quality improvement areas. We received 13 comments on the November 23,
2001 Federal Register notice. We carefully reviewed and considered all
the comments we received.
II. Provisions of the Proposed Rule and Discussion of Public Comments
A. Basis, Scope and Applicability. (Formerly Sec. 438.1), (Now Sec.
438.310)
In this section we proposed to apply provisions to MCOs, prepaid
health plans (PHPs), and entities with comprehensive risk contracts
that are exempted by statute from the requirements in section 1903(m)
of the Act, health insuring organizations (HIOs).
Comment: Many commenters supported the application of this rule to
all three of the above types of entities. One commenter, though not
opposed to the inclusion of PHPs, expressed concern about the cost of
this requirement when applied to entities that provide services to
small populations. The commenter suggested that the regulation apply
only to entities to the extent feasible for the study being performed.
Another commenter did not agree that the provisions should apply to
PHPs and stated that there is no specific reference in Federal law to
these organizations and that we have gone beyond the explicit language
in section 1932(c) of the Act.
Response: We continue to believe these provisions should apply to
most capitated health plans that are not MCOs, but that provide
inpatient services. The Medicaid managed care final rule eliminated the
term PHP and replaced it with two types of entities--prepaid inpatient
health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). That
rule, under the authority of section 1902(a)(4) of the Act, which
authorizes the Secretary to establish requirements necessary ``for
proper and efficient operation of the plan,'' applies the provisions
related to a State's quality strategy to PIHPs but not to PAHPs. It
does not apply these quality provisions to PAHPs because these entities
provide a more limited array of services (for example, transportation
or dental), and we do not believe it appropriate to require States to
include these entities in their State quality strategies due to the
burden it would impose. We, therefore, are revising this rule to be
consistent with the Medicaid managed care final rule (Sec. 438.204(d))
and apply the EQR provisions to PIHPs as specified at Sec. 438.310. We
have also made changes to clarify the applicability of this rule to
HIOs to be consistent with the Medicaid managed care final rule.
We do not agree with the commenter that we should exempt entities
that have smaller enrolled populations from these requirements.
Sections 1932(c)(2)(B) and (C) of the Act specifically identify the
circumstances under which an entity may be fully or partially exempt
from EQR.
Comment: One commenter asked if we intend to hold Indian Health
Services (IHS) and 638 Tribal Facilities to the same standard as MCOs
to ensure the quality of care provided to Native Americans.
Response: If an IHS entity or 638 Tribal Facility meets the
definition of an MCO or PIHP, it would be subject to these provisions.
Comment: One commenter does not believe that primary care case
management (PCCM) programs should be subject to these requirements.
Another commenter believes that the activities in the December 1, 1999
proposed rule should be applied to PCCM programs.
Response: The statute does not extend the EQR requirement to PCCMs
and the Conference Report, pages 859-860, makes clear that PCCMs were
specifically excluded from the requirements. We have used the authority
of section 1902(a)(4) of the Act to extend the EQR provision to PIHPs
because, like MCOs, PIHPs provide inpatient services and are capitated.
If a PCCM meets the definition of a PIHP, then it would be subject to
the provisions of this rule. However, traditional PCCMs are reimbursed
on a fee-for-service (FFS) basis along with a case management fee.
Under that reimbursement arrangement, the PCCM would not be subject to
the EQR requirements.
Comment: Many commenters recommended that external review also
examine subcontracting managed care entities. One commenter suggested
that the definition of quality be expanded to include services provided
through subcontracts with MCOs.
Response: The MCO or PIHP is fully responsible (Sec. 438.230 of
the Medicaid managed care final rule) for all activities delegated to
another entity. Therefore, the EQR should include information on all
beneficiaries and the structure and operations of all entities that
provide Medicaid services under either the prime contract or
subcontract. At Sec. 438.320, we revised our definition of EQR to
clarify our intent that the EQR provisions apply to all services
received by Medicaid beneficiaries regardless of whether those services
are provided by the MCO or PIHP directly or through a subcontract.
Comment: One commenter is concerned that this rule applies the EQR
requirement to PHPs despite the BBA's statutory reference only to
organizations under section 1903(m) of the Act. The commenter asked us
to clarify whether we intend to apply these requirements to any entity
that is paid on a prepaid capitation basis for services furnished to
enrollees, even if the PHP is not at any financial risk for those
services.
Response: As noted in an earlier response, the EQR provisions will
apply to a PIHP defined in the Medicaid managed care final rule as an
entity that ``provides medical services to enrollees under contract
with the State agency, and on the basis of prepaid capitation payments,
or other payment arrangement that do not use State plan payment rates
and that provides, arranges, or otherwise has the responsibility for
the provision of any inpatient hospital or institutional services for
its enrollees * * *'' We do not apply these quality provisions to PAHPs
because these entities provide a more limited array of services (for
example, transportation or dental), and we do not require States to
include these entities in their State quality strategies due to the
burden it would impose. The application of this rule to PIHPs is not
based on section 1903(m) of the Act. It is based on section 1902(a)(4)
of the Act that authorizes the Secretary to establish requirements
necessary ``for the proper and efficient operation of the plan.'' We
believe this is consistent with congressional intent.
PIHP and PAHP designation is not based on whether an entity is at
financial risk for services provided. Designation is based on prepaid
capitation payments for a scope of services. Even though there will be
few PIHPs that are not at financial risk, due to the scope of services
these entities provide (for example, inpatient services), we believe
they should be subject to EQR provisions.
B. Definitions (Formerly Sec. 438.2), (Now Sec. 438.320)
This section of the proposed rule defined ``EQR'' and ``EQRO.'' It
also defined the terms ``quality'' and ``validation'' as they pertain
to EQR.
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Comment: One commenter concurred with our requirement that EQR be a
multipronged approach which recognizes that none of the activities
alone can ensure quality in the complex Medicaid population. One
commenter supported the definitions as proposed.
Response: We appreciate that the commenters agreed with our
approach to EQR and the proposed definitions. We have retained the
multipronged approach to EQR as proposed in the proposed rule.
Comment: One commenter asked that the definition of quality include
assessments of structure and process as well as measurements of health
and functional outcomes. Several commenters recommended that the
definition of quality include both clinical and nonclinical measures of
consumer satisfaction and define quality in a way that would be
meaningful to people with disabilities. One commenter stated that this
definition should address the multifaceted needs of people who have
chronic and disabling conditions, for whom there is little likelihood
of demonstrable improvement. The commenter recommended that we convene
focus groups of consumers, including people with disabilities and
families of children with disabilities, to identify how quality should
be defined from the consumer's perspective and that the definition
should not focus solely on health outcomes. One commenter concurred
with the definition of quality as proposed.
Response: We agree with the commenter that the proposed definition
of quality did not address situations when beneficiaries have
conditions where maintenance or improvement of health outcomes is not
likely. We have, therefore, revised the definition to mean the degree
to which an MCO or PIHP increases the likelihood of desired health
outcomes through the provision of health services that are consistent
with current professional knowledge. The revision is consistent with
the Institute of Medicine's definition of quality. We do not agree with
the remaining recommendations by commenters on how to revise the
definition of quality because we think that the commenters' concerns
are addressed by other provisions of the regulation. Under Sec.
438.358, we identify three activities that must be conducted to provide
information for the EQR. These activities also are required in the
Medicaid managed care final rule. They include: (1) The review of
compliance with structural and operation standards; (2) the validation
of performance measures;\1\ and (3) the validation of performance
improvement projects. The optional EQR-related activities are
activities that some States currently conduct as part of EQR and we
believe are also appropriate to an assessment of quality (such as
consumer surveys). We are providing States with the flexibility to
determine which, if any, of these optional activities will be included
in the EQR and what types of performance measures and performance
improvement projects to require of their contracting MCOs and PIHPs. We
suggest in the performance improvement project protocol that projects
be conducted to address both clinical and nonclinical areas that cover
the various categories of beneficiaries and services provided. We also
note, as stated in the Medicaid managed care final rule, that EQR is a
part of the State's quality strategy, and therefore, States are to
provide for the input of Medicaid beneficiaries and other stakeholders
in this component of the strategy.
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\1\ In the Medicaid managed care final rule under Sec.
438.240(c)(2) we permit States to calculate performance measures on
the MCO's/PIHP's behalf in place of the MCO/PIHP calculating and
reporting performance measures to the State. Under this
circumstance, the validation of MCO/PIHP performance measures is not
required as a mandatory activity but the State must submit the
State-calculated performance measures to the EQRO for the EQR
function as specified under Sec. 438.358(b)(2). This issue is
addressed later in the preamble in response to a comment.
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Comment: One commenter suggested amending the definition of EQR to
read ``* * * quality of health care services furnished or contracted
for by each MCO * * *''
Response: We agree with this comment and, as stated previously,
have revised the final rule to clarify our intent that the EQR
provisions apply to all services received by Medicaid beneficiaries
regardless of whether those services are provided by the MCO or PIHP
directly or through a subcontract (Sec. 438.320).
Comment: Several commenters stated that the definition of EQR too
narrowly limits the scope of EQR because the definition implies that
EQR is primarily concerned with analysis and evaluation of data rather
than with collection of data. One of the commenters expressed concern
that this would limit the EQRO's ability to identify and bring to the
State's attention individual quality of care concerns revealed during
data abstraction, or to provide provider-specific feedback on
performance measures. The commenter recommended that the rule avoid any
reference to ``aggregate'' information in the definition of EQR. One
commenter recommended that the definition of EQR include the
development of aggregated data. Another commenter stated that external
review should not be limited to the review of information. The
commenter believes the external review of plans should include an on-
site review of provider practices and procedures and that data alone
are insufficient to evaluate performance.
Response: We do not agree that the definition of EQR limits the
scope of EQR. We define EQR as the analysis and evaluation of
aggregated information. That aggregated information, according to this
rule, must be obtained from activities that are consistent with
protocols, as defined in this rule, to ensure that data to be analyzed
are collected using sound methods widely used in the industry. For each
activity, as specified in Sec. 438.364, the entity conducting the
activity must report on the objectives, technical methods of data
collection and analysis, a description of the data obtained, and
conclusions drawn from each activity. Therefore, as part of these
activities, the entity conducting them will need to identify and assess
quality of care concerns revealed by the activities. The EQR analysis
will incorporate findings from all activities, including the evaluation
of MCO or PIHP structure and operations. The findings of the overall
analysis will need to include an assessment of the strengths and
weakness with respect to quality, timeliness, and access of care, and
make recommendations for MCO or PIHP improvement in the EQR results as
required under Sec. 438.364. Further, we note that under the BBA
statutory provisions, EQR is a review of a Medicaid MCO under contract
to the State. EQR of individual providers or provider practices is not
provided for in the BBA. We believe that the appropriate unit of
analysis of EQR is the MCO and PIHP, not individual practitioners.
C. State Responsibilities (Sec. 438.350)
This section of the proposed rule set forth the State's
responsibilities related to EQR. We proposed that each State agency
that contracts with MCOs, PHPs, or other entities that have
comprehensive risk contracts must, except as provided in Sec. 438.362,
ensure that (1) An annual EQR is performed for these contracting
entities by a qualified EQRO; (2) the EQRO has sufficient information
to use in performing the review; (3) the information that the State
agency provides to the EQRO is obtained through methods consistent with
protocols specified by CMS; and (4) the results of the EQR are made
[[Page 3589]]
available, upon request, to specified groups and to the general public.
Section 1932(c)(2)(A) of the Act requires that each contract with
an MCO ``provide for an annual (as appropriate) external independent
review, conducted by a qualified independent entity * * *'' In this
section we interpreted the parenthetical statement (for which there is
no explanation in the legislative history) to be a reference to those
MCOs that may be exempted from EQR under section 1932(c)(2)(C) of the
Act on the basis of ``deemed compliance.'' We invited comment on other
possible interpretations, which are discussed at the end of this
section.
Comment: One commenter noted they concurred with this section of
the rule.
Response: We appreciate the commenter's support for the provisions
in this section of the proposed rule and retain the provision that
requires the State to ensure that the EQRO has information obtained
from EQR-related activities and that the information provided is
obtained through methods consistent with the EQR protocols established
under Sec. 438.352 in this final rule.
Comment: Several commenters asked us for a definition, or the
criteria that we will use to determine if State-established protocols
are consistent with those developed by us. One of the commenters noted
that it would be difficult for all States to follow a single set of
protocols because State Medicaid programs vary as to structure,
capacity, funding, and governing laws. One commenter asked that we also
establish criteria for denominators, numerators, and units of
measurement for performance measures. Other commenters concurred with
the requirement to use protocols that are ``consistent with'' rather
than ``identical to'' those developed by us to accommodate the rapidly
changing field of quality assessment and improvement.
Response: Section 1932(c)(2)(A)(iii) of the Act required the
Secretary in coordination with the National Governors Association, to
contract with an independent quality review organization to develop
protocols to be used in EQR. In planning for the development of the
protocols, we had to determine the level of detail to be specified in
each of the protocols. Because States have flexibility to choose what
aspects of quality to measure and in order to accommodate different
methodological approaches to studying quality, we contracted for the
development of protocols that specified activities and steps of data
collection and analysis that would produce valid and reliable
information. These apply regardless of the data collected or the topics
that States choose. Protocols will be considered ``consistent'' with
ours to the extent that they affirmatively address each element
specified in Sec. 438.352, including the activities and steps for
collecting data. We have revised the regulations under Sec. 438.352(c)
to clarify that instead of following ``detailed procedures,'' the EQR-
related activities follow ``activities and steps'' specified for
accurate, valid, and reliable data collection.
Comment: One commenter recommended that external review be required
every 3 years rather than on an annual basis. The commenter noted that
the National Committee for Quality Assurance (NCQA) requires a standard
external review every 3 years and believes that this rule and the
protocols should not set a standard more stringent than the industry
standard.
Response: Section 1932(c)(2)(A)(i) of the Act clearly states that
contracts ``shall provide for an annual (as appropriate) external
independent review.'' We discuss later in this preamble why the
parenthetical was not intended to modify what is otherwise an explicit
requirement that EQR be conducted annually. An annual EQR has been a
statutory requirement since 1986 under section 1902(a)(30)(C) of the
Act. Pub. L. 106-113 made it clear that the provision was being
replaced by 1932(c)(2) of the Act. We further note that the EQR
described in this rule is very different from the accreditation review
performed by NCQA. However, in the monitoring for compliance with the
standards protocol that provides accreditation-like data, we only
provide that information from a review of compliance with standards be
generated every 3 years. This is consistent with the industry standard.
Comment: One commenter asked for confirmation that Sec. 438.356(a)
allows for EQR for a single MCO or PIHP to be performed by more than
one EQRO.
Response: We are revising proposed Sec. 438.356(a) to clarify that
while we allow a State to contract with different EQROs to conduct EQR
and EQR-related activities for a single MCO or PIHP, we believe and
continue to require that the final analysis of all the information, as
distinguished from the EQR-related activities, be performed by a single
EQRO. This provides State flexibility to use different contractors to
conduct different activities. Section 438.350 addresses the analysis
and evaluation of information derived from mandatory and any optional
activities. We believe that a single EQRO should perform this function
to ensure that one entity receives all the available information and
draws the overall conclusions about a particular MCO or PIHP. To
clarify our intent to require that one EQRO perform the overall
analysis (that is, conduct EQR) but that multiple EQROs may conduct
EQR-related activities, we revised the language from the proposed rule
to (1) remove the reference to ``other related activities'' in the
definition of EQR, (2) add the reference to EQR-related activities to
the definition of EQRO at Sec. 438.320, and (3) add the reference to
EQR-related activities to Sec. 438.370 which provides for the 75
percent enhanced match. We also revised Sec. 438.356(a) to clarify
that States may only contract with one entity for EQR but may contract
with multiple entities to conduct EQR-related activities.
Comment: One commenter recommended the addition of language
allowing States the option to employ alternative quality assessment and
improvement methods approved by CMS to substitute for the EQR
requirements. The revised language should emphasize the State's
responsibility under section 1932(c)(1)(A) of the Act to develop and
implement a quality assessment and performance improvement (QAPI)
strategy that includes, but is not restricted to, EQR-related
activities. If CMS seeks to define minimum specifications for a State's
QAPI strategy, those specifications should be set out in a proposed
rule and subject to public review and comment.
Response: Our Medicaid managed care final rule outlined the
elements of a State quality strategy, of which EQR is one element.
States have the flexibility to determine how to ensure the quality
strategy elements are designed and implemented. The public had the
opportunity to review and comment on the proposed elements in the
Medicaid managed care proposed rule published August 20, 2001 in the
Federal Register (66 FR 43614). The EQR proposed rule addresses EQR in
greater detail than does the managed care final rule, including what
activities can be funded under the EQR enhanced matching rate. In this
final rule, we describe optional EQR-related activities for which a
State can obtain the enhanced Federal match under Sec. 438.370. We
believe we have provided States with the flexibility to design their
EQR to best meet State needs while at the same time ensuring, through
the three mandatory activities, that essential quality activities are
conducted.
Comment: Several commenters recommended that we require that States
coordinate their EQR with the State's quality strategy established
[[Page 3590]]
under Sec. 438.200 through Sec. 438.204 of the Medicaid managed care
rule and that EQR evaluate compliance with standards for quality,
timeliness, and access in Sec. 438.206 through Sec. 438.242 of the
Medicaid managed care proposed rule.
Response: We agree with the commenter. The Medicaid managed care
final rule provides that an annual EQR be one element of a State's
quality strategy. The EQR rule provides that information from a review
of compliance with structural standards (including quality, timeliness,
and access) be used in the EQR. Because of this we believe that the two
rules together will require each State to coordinate its EQR with all
other components of its State strategy.
Comment: One commenter agreed with our interpretation of the
statutory provision requiring an external review annually ``as
appropriate'' as being a reference to the deemed compliance provision.
The commenter also suggested that reasons for not conducting a review
be expanded to include (1) when the MCO is new and there are no
historical records and (2) when the population of the MCO is too small
to conduct a particular study.
Response: We disagree that newly contracting MCOs and PIHPs should
not be subject to EQR. New MCOs and PIHPs will be required to meet
structural standards, and we believe that information about MCO and
PIHP compliance with these standards should be subject to EQR. We
understand that the calculation of performance measures and the
implementation of performance improvement projects require time to
complete and may not be available at the time of the EQR. Therefore,
while we acknowledge there are mandatory activities for EQR that may
not be possible the first year of an MCO's or PIHP's operations, we do
not agree that the MCO or PIHP should be entirely exempt from EQR. We
also do not agree that small population size should be a reason to
exempt an MCO or PIHP from EQR. Rather, the State, or MCO or PIHP if
the State permits, should choose a performance improvement topic for
which the entity has a sufficient number of enrollees to conduct a
valid study.
Comment: Several commenters believe that the ``as appropriate''
parenthetical allows CMS the discretion to interpret EQR time frames
more broadly and to give States discretion to require EQRs less
frequently than annually. One commenter suggested that ``as
appropriate'' modifies the word ``annual,'' not ``review.''
Response: We do not believe that the Congress intended for us or
the States to have discretion to provide for reviews less frequently
than annually. As discussed above, section 1932(c)(2) of the Act
replaces a statutory requirement for annual review that has applied
since 1986. There is no indication in the legislative history that the
Congress intended to change this. To the contrary, there is a
persuasive alternative explanation for the Congress having inserted the
parenthetical language. Section 1932(c) of the Act, unlike section
1902(a)(30)(C) of the Act has exemptions from the EQR requirement.
Annual reviews for exempt entities are not appropriate.
Comment: One commenter interpreted the parenthetical to allow
States to conduct reviews more frequently, not less frequently. If the
EQR identified problems, the EQRO could be authorized to conduct
follow-up evaluations, as appropriate, to ensure progress toward
compliance.
Response: We do not agree with the commenter's interpretation
because we believe that if problems are identified in the reports that
the EQRO provides the States, the States can follow-up on any
corrective action. Because we were not persuaded by any of the comments
received for a different or additional interpretation of the
parenthetical ``as appropriate,'' we are retaining in the final rule
the interpretation that it refers to ``deemed compliance'' under
section 1932(c)(2)(C) of the Act.
D. External Quality Review Protocols (Sec. 438.352)
In this section, we proposed that EQR protocols must specify: (1)
The data to be gathered, that is, the substantive areas to be covered
by the protocol; (2) the sources of the data; (3) detailed procedures
to be followed in collecting the data to promote its accuracy,
validity, and reliability; (4) the proposed methods for valid analysis
and interpretation of the data; and (5) all instructions, guidelines,
worksheets and any other documents or tools necessary for implementing
the protocol. At the time the proposed rule was published, the
protocols were under development. The strategy and timeline for
protocol development were undertaken in response to BBA language that
directed the Secretary to ``contract with an independent quality review
organization'' to develop the protocols. The contract procurement
process and scope of work necessitated that the protocols be completed
after publication of the proposed rule. On November 23, 2001, we
published a notice in the Federal Register (66 FR 58741) announcing the
completion of the protocols and asking for comment on their burden or
any other aspect of the protocols. Comments received on the November
23, 2001 Federal Register notice are addressed later in this preamble.
In developing the protocols, we instructed our contractor to draw
from existing protocols that have been tested for reliability and
validity and that have been used in the public and private sectors to
conduct reviews of the quality of MCO and PHP services, consistent with
current industry practice. We also expressed a preference for protocols
that are in the public domain. The principle reason for not including
the protocols in our regulation is because quality measurement is a
rapidly changing field. The protocols must be revised regularly to
reflect the changing state-of-the-art in quality improvement. Protocols
developed in the private sector for validation of performance measures
and administration of consumer surveys are usually revised annually.
The delays inherent in revising regulations would make it difficult to
make frequent changes. In addition, the protocols are detailed and
lengthy, as they provide optional worksheets and recording documents in
addition to the required activities and steps.
We proposed that all activities that provide information for EQR
must be undertaken consistent with the protocols. Use of the CMS
protocols or others consistent with ours will ensure that the conduct
of the activities is methodologically sound, thereby maintaining a
standard of quality for the review. However, by requiring protocols
that are ``consistent,'' rather than ``identical,'' with those that we
specify, we leave the States free to improve their protocols
continuously, as the art and science of quality measurement improves.
Comment: One commenter asked that the protocols not pose an undue
burden on physicians, clinical, or nonclinical personnel, noting that
many physicians contract with more than one MCO and that duplicative
information gathering should be avoided.
Response: EQR focuses on the MCO's and PIHP's structure and
processes, and their ability to manage access to and provide quality
services to Medicaid beneficiaries. The review process is not directed
to individual physicians or other clinical or nonclinical personnel.
However, it will be necessary for MCOs and PIHPs to request information
from providers in order to conduct some of the activities required in
this regulation. In recognition of the potential for burden, our
request for proposal (RFP) to procure the development of the
[[Page 3591]]
protocols specified that, ``the protocols must be sensitive to the
effect the burden to produce or provide additional data and information
will have on organizations' ability to carry on their day-to-day
operations.'' We also specified that the protocols incorporate, as much
as feasible, the tools, techniques, and methods to assess and improve
health care quality already in place in the private sector. As a
result, we believe the protocols impose the minimal additional burden
necessary to carry out the statutory requirement.
Comment: In order to allow for parents to choose an MCO for their
child on the basis of pediatric care, one commenter stated that the
protocols should require that data on pediatric populations be analyzed
apart from data on the MCO's adult population. The commenter also
suggested that pediatricians and pediatric subspecialists have input
into the development of the protocols.
Response: As required by statute, the protocols were developed by
an independent quality review organization. In the scope of work for
that contract, we required that the organization convene a panel
composed of (1) current EQRO contractors; (2) CMS representatives; (3)
State Medicaid agency directors, (4) managed care directors and quality
system managers; (5) State licensure agencies; (6) advocacy groups; (7)
health plans; (8) accrediting agencies; and (9) other experts in the
area of quality improvement. A number of these panel members had
experience with child health issues. We published a notice in the
Federal Register on November 23, 2001 announcing the completion of the
protocols and asking for comment on their burden. At the same time, the
protocols were also made available on our website. The protocols are a
methodologically sound set of generic instructions that will guide the
reviewer in assessing quality. These instructions can be used for the
entire Medicaid population in the MCO or PIHP or, in some instances,
can be used for subpopulations such as children who receive Medicaid
services. Some protocols address how MCOs, PIHPs, and States can
stratify by specific populations, such as older adults or children with
special health care needs. In addition, we note that States currently
use many performance measures related to care for children. We,
therefore, do not believe it necessary for the protocols to address
pediatric populations apart from adult populations.
Comment: One commenter asked that we provide a definition for and
examples of performance measures and performance improvement projects.
One commenter agreed that we should not include the protocols in the
proposed rule, given the dynamic state of quality evaluation and
measurement. The commenter asked that we clarify what protocols for
``calculating performance measures'' means, that is to clarify whether
it refers to protocols for the development of measures, the calculation
of performance thresholds from reported measures, or some other EQR
function.
Response: The definition and explanations of performance
measurement and performance improvement projects are discussed in both
the Medicaid managed care final rule and, in detail, in the protocols
for calculating performance measures, validating performance measures,
conducting performance improvement projects and validating performance
improvement projects. In general, we refer to performance measurement
as the calculation of the rate at which a desired event occurs. Readers
are referred to the protocols available at http://www.cms.hhs.gov/medicaid/managedcare/mceqrhmp.asp
for further discussion.
Comment: Many commenters believed that the protocols should require
MCOs to report on Americans with Disabilities Act (ADA) compliance
issues for themselves and their providers to ensure that persons with
disabilities have an opportunity to benefit from covered services that
is equal to persons without disabilities.
Response: Compliance with the ADA provisions is addressed in the
Medicaid managed care final rule and in the EQR protocol entitled
Monitoring Medicaid Managed Care Organizations (MCOs) and Prepaid
Inpatient Health Plans (PIHPs)--a protocol for determining compliance
with the Medicaid managed care final rule provisions. It is the State's
responsibility to ensure that its MCOs and PIHPs comply with Federal
laws, including ADA.
Comment: Many commenters recommended that the sample for
calculating performance measures, including baseline and follow-up
measures for performance improvement projects, should be sufficient to
look at specific measures of clinical care; and that the protocols
should describe how reviewers will analyze the quality of care when
data are missing. The commenters also believed that the protocols
should require that MCOs use a common core of widely used, objective
performance measures that are issued annually and revised as needed to
reflect advances in performance measurement, that these measures and
their methods of calculation be publicly available, and that they
include measures for persons with special health care needs. The
commenters also recommended that MCOs be required to (1) collect
specified HEDIS measures; (2) conduct the Consumer Assessment of Health
Plan Study (CAHPS) survey; and (3) conduct a focus study annually of
specialized services to persons with special health care needs. The EQR
should evaluate these measures in making findings on the quality of
care. Finally, the commenters asked that instructions be provided on
how to adapt the measures to FFS and PCCM settings and for those
enrolled less than 12 months.
Response: As stated before, the protocols are a set of
methodologically sound generic instructions that will guide a reviewer
in assessing quality. The protocols include instructions on proper
sampling methodology, assessing missing data, and processes for
analyzing data. The protocols do not specify which performance measures
are to be used. Performance measures are chosen by the State or MCO or
PIHP and will vary over time. The Medicaid managed care final rule
gives us the authority to require specific performance measures and
levels if we decide to do so in the future. The results of the EQR,
however, will be made available to the public upon request and will
identify the specific measures collected, the technical methods of data
collection and analysis, and the conclusions drawn from the data.
The BBA placed the requirement for EQR on capitated managed care
programs, but not on FFS or PCCM settings. Therefore, we do not in this
rule provide an explanation of how to adapt these activities to the
FFS/PCCM environment. We do, however, encourage States to address the
quality of care provided in these service delivery systems. Through a
new partnership initiative with State Medicaid and State Children's
Health Insurance Programs (SCHIP), we will be discussing how best to
apply performance measures to these two delivery systems.
Comment: One commenter asked that we retain the ability of State
agencies to continue to improve the protocols as advancement occurs in
the art and science of quality measurement. Several commenters stated
that because the protocols may quickly become out of date because the
field of quality improvement is constantly changing, they should not be
promulgated as regulation. These commenters were concerned about CMS
developing
[[Page 3592]]
detailed and lengthy protocols instead of either guidelines for States
or streamlined protocols that specify only the basics for ensuring
statistically sound, reliable, and valid results. One of these
commenters stated that our intent appears to limit State flexibility
and suggested that CMS significantly simplify the protocols to ensure
feasibility for State agencies. This commenter also asked that CMS
obtain State input on the draft protocols.
Several commenters believed that CMS should require that States use
the protocols. One commenter felt that the proposed rule allows States
to develop their own external review protocols. This commenter asked
CMS to mandate the use of the protocols in order to comply with section
1932(c)(2)(A)(iii) of the Act which directs the Secretary to ``* * *
contract with an independent quality review organization to develop
protocols to be used in external reviews conducted * * *'' The
commenter asserted that mandating the protocols would promote
efficiency, lessen burden on the States, and promote the development of
standardized data and information about services provided in Medicaid
managed care.
Response: This regulation provides States with the option to use
the protocols developed by us or protocols that are consistent with our
protocols. We believe that by allowing States to use ``consistent''
protocols, States will be able to improve the protocols over time as
the state-of-the-art advances and at the same time ensure that reliable
and valid methods are used when conducting EQR-related activities.
The protocol documents include a discussion of the activities and
steps necessary to soundly conduct the quality assessment function
addressed by each protocol. In addition, each protocol includes
guidance on how to implement the essential elements of the protocol as
well as optional worksheets and appendices that States may use at their
discretion. The activities and steps contained in the protocols are
generic, relatively brief, but contain the essential components for a
methodologically sound review that the statute envisions. Therefore, we
believe that the protocols allow for State flexibility while ensuring
the methodologically sound and valid EQR.
Comment: Several commenters noted that it is difficult to determine
the full extent of the impact of the protocols on EQR activities until
they are published. These commenters stated that they hope the
protocols will respect States' individuality and provide flexibility
whenever possible to allow for tailoring of EQR activities to local
conditions and circumstances. One commenter further stated that there
are many clinical guidelines and protocols that are already published,
easily available, and in current use (for example, those developed by
the Agency for Health Care Policy and Research (AHCPR) now the Agency
for Health Care Research and Quality (AHRQ), American Heart
Association, etc * * *) that are not mentioned in the proposed rule.
Another commenter stated that the protocols should be subject to
full public scrutiny because they carry the full weight of the
regulation. The commenter believes the protocols significantly exceed
both the intent of the Congress in the BBA and the proper role of this
regulation. Specifically, the commenter noted that the statute does not
specify the activities that the protocols should address or other
details included. The commenter was also concerned that States will
find the 75 percent match for EQR activities a strong incentive to
outsource this function, which the commenter believes appropriately
rests with the government. As a result, this commenter believes that
activities now done by the State according to locally developed
protocols will be shifted to contract staff to be performed using
externally derived standard protocols.
Another commenter asked that current State practices not be totally
dismissed and that consideration be given to the quality improvement
system for managed care (QISMC) standards and how they can be
incorporated into the EQR process.
Response: We published a notice in the Federal Register on November
23, 2001 (64 FR 58741) announcing the completion of the protocols and
asking for comment on their burden. At that time, the protocols were
also made available on our website. Comments on the protocols and our
responses are incorporated in this preamble. We believe the protocols
are generic and can be used by all States. They are not clinical
protocols like those published by AHCPR (now AHRQ), the American Heart
Association, and other organizations. We believe that the protocols are
consistent with the intent of the Congress in the BBA. We also note
that we have provided States with great flexibility to conduct all EQR-
related activities, allowing States to perform EQR-related activities
either themselves or through the use of contractors, as long as they
are performed consistent with our protocols. While the enhanced Federal
financial match for EQR-related activities is not available under the
statute if conducted by State personnel, other provisions of Medicaid
law provide for enhanced Federal financial match for qualified medical
activities when conducted by State staff who qualify as skilled and
professional medical personnel.
The protocols are based on existing protocols already in use in the
public and private sector. The contractor used QISMC guidelines as well
as other public and private sector protocols in developing all the
protocols. With respect to the QISMC standards (as opposed to their
interpretive guidelines) we note, for Medicaid, that the QISMC
standards were superceded by the Medicaid managed care final rule.
QISMC standards are no longer current for the Medicaid program. For
each protocol developed, specific information can be found in the
protocol regarding which public and private sector protocols were
reviewed and the extent to which they were incorporated.
Comment: One commenter was concerned that the JCAHO does not have a
traditional background in this area and may take a different approach
than NCQA.
Response: The BBA specified that the protocols be developed by an
``independent quality review organization.'' The JCAHO was selected
through an open competitive procurement process, which required them to
provide evidence of their experience in protocol development. In
addition, they developed the EQR protocols using existing protocols
widely used in the public and private sector, including protocols used
by national accrediting organizations, and national consulting firms
which have developed quality measurement tools for us in the past.
Comment: One commenter asked if health plans will have to create an
entirely different audit response to the protocols in addition to
responding to the existing standards of NCQA and of other State
entities.
Response: Because the protocols were based on quality assessment
approaches already in use by public and private quality oversight
organizations, we believe that the methods MCOs and PIHPs use to
respond to existing private and public sector audits will be able to be
used to respond to EQR. In addition, the nonduplication provisions
under Sec. 438.360 are revised in the final rule to allow States in
certain circumstances to exempt both Medicare+Choice (M+C)
organizations and MCOs and PIHPs meeting standards of national
accrediting organizations approved and recognized by CMS for M+C
deeming
[[Page 3593]]
from compliance with some structural standards.
Comment: One commenter stated that the protocols being developed
are, in fact, EQR-related activity protocols and that there does not
appear to be any protocol that will guide the analysis and evaluation
of the data and information provided by these EQR-related activities.
This may cause the analysis and evaluation to vary due to lack of
equivalent specifications for these processes. The commenter
recommended that the rule more clearly define requirements for EQR and
distinguish between EQR and EQR-related activities.
Response: The commenter is correct that we do not provide a
protocol for the analysis and evaluation of information provided as a
result of the EQR activities in the aggregate. We do not believe that
we should develop a protocol for the analysis and evaluation of all EQR
information. The information derived from EQR activities will vary
enormously. For instance, the variation in the types of services
provided and the populations covered under the MCO and PIHP contract
will impact the performance measures chosen and performance improvement
projects to be conducted. Other activities are optional for States. The
approach to analysis depends upon the findings of the individual EQR-
related activities and we expect these findings to be as individual as
the MCOs and PIHPs being reviewed. Therefore, we do not believe that we
can adequately predict all the possible variations of information that
will be provided to an EQRO and, therefore, we do not provide for a
protocol on how to conduct an analysis and evaluation of this
information. We believe it is more appropriate for us to require that
the activities that provide information for the analysis and evaluation
be done in a methodologically sound manner. We do specify
qualifications for EQROs and thereby believe that EQROs will have the
skills necessary to perform qualitative and quantitative analysis of
EQR-related information and draw proper conclusions. In addition, each
EQRO must provide results as specified in Sec. 438.364 that include a
technical report specifying the objectives of, methods used,
description of data obtained, and conclusions drawn from the EQR.
Comment: Many commenters were concerned that there has been no
public review process for the protocols and that the meetings of the
expert panel have been closed to the public. The commenters recommended
that the public have the opportunity to review and comment on the draft
protocols, that the protocols be issued annually, and the public have
the opportunity to comment on any changes to the protocols. The
commenters also stated that the protocols should be made publicly
available on the CMS website. Several commenters asked that we provide
an opportunity for interested parties and the public to comment on the
protocols. They noted that providing the opportunity for all affected
entities to review and provide comment on the protocols before they are
finalized will allow for a better quality product and lend credibility
to the protocols. One of the commenters further noted that even though
CMS convened an expert panel to review the protocols as they were being
developed, consumer participation was very limited.
Response: As stated earlier, on November 23, 2001, we published a
notice in the Federal Register announcing the completion of the
protocols and requesting comment on their burden or on any other aspect
of the protocols. Comments on that notice and our responses to those
comments are incorporated into this preamble. We will be publishing a
notice in the Federal Register every 3 years on the protocols as
required by the Paperwork Reduction Act. This notice will provide the
opportunity for the public to comment on the burden or any other aspect
of the protocols. The protocols are available to the public on the CMS
Web site at http://www.cms.hhs.gov/medicaid/managedcare/mceqrhmp.asp.
Comment: One commenter requested that in developing the protocols,
JCAHO take into consideration that some factors that affect MCO
performance are not within the control of the MCO, such as instability
in eligibility status and changes in the characteristics of the
enrolled Medicaid population.
Response: We agree that measuring performance on the Medicaid
population needs to take into account issues such as changes in
eligibility status. The protocol on performance measures recognizes
those issues.
Comment: Because of the length of the protocols and the need to
change them on an ongoing basis, one commenter requested that we
clarify that the protocols be issued as guidelines rather than
requirements and that we clarify the flexibility States will have in
implementing them.
Response: Section 1932(c)(2)(A)(ii) of the BBA requires that
protocols be used in the conduct of EQR activities. We provide States
the option to use our protocols or protocols consistent with those we
develop.
E. Qualifications of External Quality Review Organizations (Sec.
438.354)
Section 438.354 of the proposed rule set forth the requirements
that an entity would be required to meet in order to qualify as an EQRO
under the new BBA external review provisions in section 1932(c)(2) of
the Act. The proposed rule did not specify categories of entities that
would be qualified to perform EQR under section 1932(c)(2) of the Act.
This is a departure from the existing external review requirement in
section 1902(a)(30)(C) of the Act (which will no longer be in effect
when these final regulations are implemented), under which only certain
entities could perform external review. (These entities were: (1) A
``quality improvement organization'' (QIO) that contracts with Medicare
to perform review (QIOs were formerly known as quality control peer
review organizations, or ``PROs''); (2) an entity that meets the
requirements to contract with Medicare as a QIO; and (3) a private
accreditation body. Only contracts with the first two categories were
eligible for a 75 percent matching rate under the pre-BBA rules.)
Under proposed Sec. 438.354, in order to qualify, entities would
be required to meet specified competence and independence standards. We
proposed two tests of independence. Under the first proposed test, the
EQRO and any subcontractors would have to be independent from the State
Medicaid agency and from any MCO or PHP they review. Second, the
relationship between the MCO/PHP and the EQRO could not involve any
potential conflicts of interest. We specifically requested comments on
(1) how better to identify situations that create conflict of interest;
(2) the proposal to allow State entities to qualify as EQROs; and (3)
our decision in the proposed rule to apply the ``independence''
requirement to subcontractors as well as contractors.
We also proposed that EQROs be selected by State agencies through
an open, competitive procurement process. As noted in the preamble to
the proposed rule, CMS would not, under our proposal, approve EQR
contracts. However, contracts entered into by the States would be
subject to review to ensure that, as a condition for FFP at the 75
percent rate, the State agency followed all applicable procedures and
criteria. This proposed procedure is consistent with current practice,
which is for State agencies to use competitive procurements to select
EQROs that perform review under section 1902(a)(30)(C) of the Act. It
is also standard practice for our regional office staff to monitor
implementation of
[[Page 3594]]
Medicaid managed care initiatives. For EQR, regional office staff may
review the State's most recent RFP for external review services, the
EQR contract, or the EQR reports.
Comment: One commenter asked that a review of the current EQR
process under section 1902(a)(30)(C) of the Act be performed by an
independent review body to assist the Secretary in deciding whether
current contractors are performing adequately.
Response: Section 1932(c)(2)(A)(ii) of the Act clearly instructed
us, in consultation with States, to establish a method to identify
entities qualified to conduct EQR. We chose to pursue a method that
would allow States to have access to the greatest number of entities
with the qualifications necessary to perform EQR and EQR-related
activities. Therefore, we did not limit ourselves to a review of
current contractors permitted to perform review under section
1902(a)(30)(C) of the Act, but attempted to discern all types of
contractors that States have found capable of performing EQR-related
activities. We believe this will provide States with much needed
flexibility to promote greater competition and improvement among
potential EQR contractors.
Comment: One commenter supported the provisions in the proposed
rule that allowed for a variety of organizations to serve as an EQRO,
but cautioned that EQRO criteria should include an unbiased approach to
managed care. The commenter expressed concern that an anti-managed care
organization could be awarded the contract, and that this would
adversely affect the organization's ability to objectively make an
assessment of MCO strengths and weaknesses and making recommendations
for improvement.
Response: A State may contract with any entity to conduct EQR as
long as the entity meets the competency and independence criteria. EQR
is an important component of a State's quality strategy, and we trust
that States will select entities to conduct EQR that will perform
objective reviews.
Comment: Many commenters supported this provision because it
provides States with more flexibility to contract with a range of
organizations while still obtaining the 75 percent matching rate
currently limited to contracts with QIOs, and entities that meet the
requirements to contract as QIOs. Several of these commenters
specifically supported the competence and independence standards
proposed. One commenter agreed that the regulation should require
organizational qualifications.
One commenter, however, found the requirements vaguely defined, and
recommended that we stipulate additional requirements, such as proper
licensure or certification from accrediting organizations for
performance of validation of performance measures and surveys. Another
commenter expressed concern that the proposed competency criteria would
encourage the use of entities that are less qualified than the QIOs
with which most States currently contract. The commenter believed that
QIOs as nonprofit organizations, were independent, objective, and had
access to needed physicians and experience in quality improvement. The
commenter recommended that Sec. 438.354(b)(1) be revised to read,
``require an organization to have staff with appropriate credentials
and demonstrated experience.''
Response: The BBA required us to work in consultation with States
to establish a method for the identification of entities qualified to
conduct EQR. We believe that had the Congress desired to retain the
three categories of entities allowed to perform EQR under section
1902(a)(30)(C) of the Act, it would have done so. Similarly, the
Congress could have easily stated that only QIOs should perform EQR.
The Congress chose neither of these approaches, but instead asked us to
establish a method to identify qualified entities. We believe that the
Congress chose to respond to States' frequently stated desires to have
a greater range of organizations with which to contract. Therefore,
under the auspices of the National Academy for State Health Policy
(NASHP), we worked with States, consumer advocates, and other
stakeholders to provide us with their recommendations on a methodology
to identify qualified entities. Many commenters strongly supported the
competency provisions we proposed under Sec. 438.354(b). Therefore,
the final rule retains these requirements from the proposed rule. We
leave it up to States to determine if they would like to impose
additional requirements such as certified vendors. We agree that
demonstrated experience should be required of an EQRO, and in response
to this comment, we have changed Sec. 438.354 (b)(1) to require staff
with demonstrated experience.
We also made some revisions to proposed Sec. 438.354(a) to clarify
that these provisions apply to those entities a State contracts with as
an ``EQRO,'' regardless of whether the EQRO performs EQR or specific
EQR-related activities.
Comment: One commenter felt that the proposed conflict of interest
requirements failed to recognize that since the State contracts with
the EQRO, the EQRO would be reluctant to tell the State what it may not
want to hear. The commenter recommended having the EQRO funded by an
external Federal agency, such as AHRQ (formerly AHCPR), or to require
or create financial incentives to have the State report on comparable
performance measures for all MCOs licensed in the State.
Response: Section 1932(c)(2) of the Act explicitly requires States
that contract with Medicaid MCOs to provide for an EQR of each MCO, and
provides for an enhanced Federal match rate for this review. We believe
that it is clear that the Congress intended that States share the costs
of EQR, and be the contracting party. We do not agree with the
commenter's assumption that the State will not want to be informed if
an MCO or PIHP is not performing adequately. We believe the provisions
in this rule will encourage States to use EQROs to conduct numerous
quality activities, both because of the flexibility that the rule
provides to States, and because of the availability of the 75 percent
enhanced match for these activities without regard to whether the
entity performing review is a QIO or meets the requirements to contract
as a QIO.
Comment: One commenter requested that EQROs be required to include
clinical staff with pediatric training in order to be qualified to
review a Medicaid MCO. One commenter recommended that the entity be
required to have staff with knowledge of section 504 of the
Rehabilitation Act of 1973, and of titles II and III of the ADA, based
on the commenter's research suggesting that individuals who have
mobility impairments routinely encounter physical barriers to care. The
commenter's research also indicated that access to preventive care was
significantly lower for individuals who use wheelchairs, and few PHPs
know which of their clinicians are accessible to patients with mobility
or sensory impairments.
Response: We do not agree that it is necessary to include specific
requirements for EQROs to have clinical staff with pediatric training
in order to qualify to review an MCO or PIHP. Section 438.354(b)(3)
requires that the organization have the clinical skills necessary to
carry out the EQR activity, which we believe requires that the EQRO or
its subcontractor have the necessary training. We also do not agree
with the commenter's suggestion that we specifically require an entity
to have staff with knowledge of the Rehabilitation Act or the ADA.
While
[[Page 3595]]
MCOs and PIPHs are required to comply with these laws, there are
separate enforcement mechanisms for ensuring compliance with their
provisions. We note that it is the responsibility of an EQRO to assess
the MCO's or PIHP's ability to provide access to services in a timely
manner. If this is accomplished for all enrollees, this would, in
effect, constitute compliance with these laws. Through its review of
compliance with State-established structural standards, as required in
Sec. 438.358(b)(3) of the final rule, the EQRO must ensure that
Medicaid beneficiaries, including those who are disabled, do not
encounter barriers to care.
Comment: One commenter suggested modifying proposed Sec.
438.354(b)(1)(iii) to read ``* * * include quality assessment and
improvement technologies and methods.''
Response: We agree with the commenter's suggestion that the word
``methods'' be used and believe that this term already encompasses
technologies that may be employed by the State as a method for
assessing and improving quality. Accordingly, in response to this
comment, we are revising Sec. 438.354(b)(1)(iii) to use the word
``methods.''
Comment: One commenter supported our proposal to allow State
agencies to qualify as EQROs in certain situations. Another commenter
believed it would also be appropriate for the State HMO licensing
organization to be eligible to be an EQRO. Conversely, one commenter
felt that EQROs should be independent of most State agencies,
particularly Medicaid purchasing or managed care licensing authorities.
Another commenter believed that it was extremely important that the
definition of independence be explicit for State Medicaid agencies, and
that CMS's regional offices should review determinations as to the
independence to make sure that true independence is obtained. This was
based on concern over what the commenter saw as an inherent conflict of
interest permitted under our proposed rule. In the commenter's view,
this conflict arises from the fact that State agencies, departments,
and universities are ultimately accountable to State legislatures and
the Governor who act on purchasing decisions made by the State Medicaid
agency, and who appoint members to boards of these entities. One
commenter expressed the view that no State agency is truly independent
and recommended prohibiting State entities from serving as EQROs.
Response: Section 1932(c)(2) of the Act requires that a State
contract with an independent organization in order to get the enhanced
75 percent FFP for EQR. The expert panel composed of State
representatives, advocacy organizations, and other stakeholders that
was convened under the auspices of the NASHP recommended that we allow
State agencies to qualify under certain circumstances as EQROs. Because
we agree with this recommendation and believe it to be reasonable with
the safeguards on independence we have in place, the final rule retains
the independence requirements that permit State Agencies under certain
circumstances to qualify as EQROs. We note that we have received only a
few comments opposing our proposal to let State entities qualify as
EQROs. CMS regional office staff will assess the EQRO contracts to
ensure compliance with the provisions of this rule as part of regular
monitoring reviews.
Comment: One commenter did not agree with the requirement that a
State entity be governed by a board or similar body, the majority of
whose members are not government employees, in order to qualify as an
EQRO. The commenter believed that State universities should be
permitted to be EQROs because they can produce high quality work for
significantly less cost than QIOs.
Response: We understand that the requirement will limit the number
of State entities that can qualify as EQROs, including some State
universities. We took this recommendation from the expert panel
convened under the auspices of the NASHP. This panel included State
licensure and Medicaid representatives. We are aware that several
States have State entities that meet the criteria set forth in the
proposed rule. We have received minimal comments opposing this
provision. We conclude that this is a feasible arrangement, and think
that the provisions related to the governing board are appropriate and
necessary in order to fulfill a requirement for meaningful
independence. We also believe it represents a reasonable compromise
between banning State entities altogether, and allowing any entity to
serve as an EQRO. Therefore, the final rule retains the governing board
provision.
Comment: One commenter representing a Medicaid program not
operating in the continental United States felt that the proposed
independence criteria would have the effect of precluding all of its
governmental procurement possibilities related to EQR. The commenter
recommended that the independence criteria be waived, or that
implementation be postponed, due to the financial burden the commenter
believed that the rule would impose on it because it would have to
contract with EQROs in the continental USA.
Response: The statute requires that the EQRO be an independent
entity. Consistent with the interpretation of ``independence'' under
the existing external review requirement in section 1902(a)(30)(C) of
the Act, we interpret this to mean independent from both the MCO/PIHP
and from the State. Thus, it is not clear how this final rule would
create a financial burden by referring a contract with an outside
entity, since this is already required. We do not agree that exceptions
should be made based on a Medicaid program's ability to contract with
an EQRO locally. We recognize that many State agencies, departments,
and universities do not meet these criteria. However, as noted above,
several States do have State entities that meet the independence
criteria. We also note that this regulation provides more flexibility
than in the past for a variety of organizations to qualify as EQROs.
Comment: One commenter disagreed with our proposal to apply the
independence requirement to subcontracts, suggesting that this would
result in States being unable to take advantage of the experience of
nationally renowned experts affiliated with academic health centers
that have ownership interests in MCOs that serve Medicaid
beneficiaries. In contrast, one commenter endorsed applying
independence criteria to EQRO subcontractors as balanced and
reasonable.
Response: The independence provisions are broad enough to allow for
a variety of organizations to qualify as EQROs and a variety of experts
to subcontract with EQROs. In formulating the provisions, we sought
balance between providing flexibility to States to choose from numerous
qualified entities, and ensuring that entities were sufficiently
independent from the State and the MCOs and PIHPs. We realize these
requirements will limit some contracting opportunities when experts or
the organizations for which they work do not meet the independence
criteria.
Comment: Many commenters agreed with the expert panel
recommendation that the EQRO should not share management or corporate
board membership with the MCO it reviews. The commenters also suggested
that the individuals employed by the EQRO or subcontracting with the
EQRO should be free of any potential conflicts of interest with the MCO
that they review.
[[Page 3596]]
Response: In the preamble of the proposed rule, we explained that
we did not solely rely upon the recommendation that an EQRO should not
share management or corporate board membership with the MCO it reviews,
because we do not think this criterion is stringent enough to ensure
against conflict of interest. Therefore, we incorporated in Sec.
438.354(c)(3)(i), the concepts of ``control'' in 48 CFR 19.101, which
effectively preclude affiliation between the EQRO and the MCO/PIHP
under review. Specifically, this means that there can be no control
through common management (which includes interlocking management,
common facilities, and newly organized concerns) as well as through
stock ownership, stock options and convertible debentures, voting
trusts, and contractual relationships (which includes joint ventures,
that is, procurement and property sale assistance and franchise and
license agreements). We retain this provision in our final rule. In
order to provide further clarification in Sec. 438.354(c)(3)(i) of the
final rule (Sec. 438.354(c)(3) of the proposed rule), we now specify
the different types of control addressed in Sec. 19.101. In
determining whether this type of control exists, the details in Sec.
19.101 under each category would apply.
Comment: Several commenters recommended strengthening the
requirements for EQRO independence from MCOs by revising Sec.
438.354(c)(3) to read as follows: ``A private entity may not (1) have
managed care licensing authority, including the authority to certify
managed care plans in compliance with standards that serve as the basis
for deemed certification with Federal or State regulatory standards;
(2) deliver any health care or related services to Medicaid recipients
for which it is paid by the Medicaid State agency or by a managed care
plan. Related services include enrollment services, grievance
resolution, external review of health care coverage decisions, or other
similar activities; (3) conduct, on the State's behalf, any other
ongoing Medicaid program operations related to oversight of the quality
of MCO services; and (4) have financial interest that would prevent it
from exercising independent judgement when engaging in EQRO
activities.'' The commenters also suggested adding a new Sec.
438.354(c)(4) providing that ``a private entity must be governed by a
board or similar body, the majority of whose members are not MCO
employees.'' Another commenter did not agree with the provision that
prohibits an organization from performing EQR if it also conducts
ongoing Medicaid program operations related to quality, arguing it
could be less expensive to use a single contractor to perform multiple
functions. One of the commenters found the definition of control in 48
CFR 19.101 a useful concept, but felt that it has little relevance to
the potential organizational relationships between EQROs and MCOs in
the Medicaid program.
Response: The independence criteria set forth in the proposed rule
did not address those private organizations that provide health care
services to Medicaid beneficiaries or that conduct ongoing Medicaid
program operations related to quality. We agree with the commenters
that organizations performing these functions have a conflict of
interest. Therefore, in response to this comment, we are revising Sec.
438.354(c)(3)(ii) in this final rule to preclude private organizations,
as well as State entities, that provide health care services to
Medicaid beneficiaries from qualifying as EQROs. We also are revising
Sec. 438.354(c)(3)(iii) to preclude private organizations as well as
State entities, that conduct ongoing Medicaid managed care operations
related to quality from qualifying as EQROs. We narrow the scope of
this provision from entities that conduct program operations to
entities that conduct managed care related operations in order to allow
States to contract with entities that conduct quality activities for
the States such as FFS medical and utilization review activities. We
agree with the last commenter who agrees that it will be more efficient
for States to use a single contractor to perform multiple functions;
therefore, we intend to allow entities that conduct limited quality
activities such as providing technical assistance to States in the
collection of encounter data or who assist the State in other quality
improvement areas to qualify as an EQRO. These activities would not be
considered ongoing operations conducted on behalf of the State.
We do not permit an entity to qualify as an EQRO if that entity
conducts activities that State staff would otherwise conduct in
Medicaid managed care program operations related to quality oversight.
As an example, a State university or consulting firm that designs and
implements or has significant responsibility for the State's Medicaid
managed care program operations would not qualify as independent.
We do not agree with the commenter who recommended that the
independence provisions should preclude any organization from being an
EQRO that has the authority to certify managed care plans in compliance
with standards that serve as the basis for deemed certification with
Federal or State regulatory standards. These organizations, while they
may provide services under contract to a State, follow their own
independently set standards and procedures. We believe that States
should be permitted to contract with these organizations to consolidate
review processes. This is consistent with congressional intent as
indicated by the nonduplication and deemed compliance provisions in
sections 1932(c)(2)(B) and (C) of the Act.
As stated above, we agree with the commenters' suggestions to
revise the independence criteria as it applies to private organizations
that deliver health care services to Medicaid beneficiaries or who, on
behalf of the State, conduct Medicaid managed care program operations
related to quality. However, we do not agree with the commenters'
suggestions to add to this provision health care-related services such
as enrollment services, grievance resolution, and review of health care
coverage decisions. We leave it to the States to determine if health
care-related services are Medicaid managed care program operations
related to quality, in which case the organizations would be precluded
from qualifying as an EQRO. In addition, States have the flexibility to
adopt a more strict standard for ``independence'' if they wish and to
deny entities that provide any health care-related services from
contracting as an EQRO.
We agree with the commenters' suggestions that the final regulation
include a provision to prohibit an EQRO from having a financial
interest that would prevent it from exercising independent judgement
when engaging in EQRO activities. The types of ``control'' addressed in
48 CFR 19.101 address financial relationships involving such things as
stock options and convertible debentures. To be consistent with other
CMS regulations, however, and in order to respond to this comment, we
believe the financial relationship between organizations must be
addressed in the conflict of interest requirements. Therefore, we
revised Sec. 438.354(c)(3)(iv) to address direct and indirect
financial relationships. We also have added a definition for financial
relationships under Sec. 438.320.
We believe the language in proposed Sec. 438.354(c)(2) addresses
the suggestion by one commenter that we add a provision requiring a
private entity to be governed by a board or similar body, the majority
of whose members are not
[[Page 3597]]
MCO employees. By referencing 48 CFR 19.101, specifically Sec.
19.101(f)(1), a concern is considered controlling through interlocking
management if officers, directors, employees, or principal stockholders
serve as a working majority of the board of directors or officers of
another concern. As noted above, to provide clarification, the final
rule under Sec. 438.354(c)(3)(i) (Sec. 438.354(c)(3) of the proposed
rule) specifies the elements that constitute control of one entity over
another as those in 48 CFR 19.101.
Comment: Several commenters expressed support for our independence
requirements. One commenter supported our proposal to allow States to
contract with entities that possess the necessary skill and expertise
to conduct the mandatory and optional EQR activities, but suggested
that we query State agencies for specific citations or contract
language that they have used to define independence, or for concrete
examples of situations that may create conflicts of interest. The
commenter also suggested that we consider delineating specific
competence standards for each of the mandatory activities. One
commenter agreed that it is critical for CMS to establish a set of
criteria to which States must adhere when selecting EQROs.
Response: At the expert panel meeting convened under the auspices
of the NASHP, we asked the panel for recommendations on how to define
conflict of interest. This panel included State representatives as well
as representatives from advocacy organizations and other stakeholders.
The expert panel recommended that independence be established by
requiring the disclosure of any ownership interest of greater than 5
percent of the entity seeking to become an EQRO. As was discussed in
the proposed rule, we believe this ``disclosure of ownership''
requirement is inadequate to ensure independence, first, because is
does not preclude an entity from being an EQRO but only requires
disclosure of the financial interest, and second, because there may be
other types of conflicts such as interlocking management, common
facilities, and so forth. Moreover, in the proposed rule, we requested
comments on how better to identify situations that create conflict of
interest. As noted above, we made some changes based on comments we
received.
We do not believe that it is necessary for us to revise the
competency requirements to address each EQR activity. The criteria
outlined in the proposed rule were intentionally broad to provide
States with the flexibility to contract with one or multiple entities
that have the skills necessary to conduct the particular activity/
activities under contract. For example, if a State wants to have one of
its EQROs conduct only encounter data validation, to meet the
requirement under Sec. 438.354(b)(3), the EQRO would not need to
possess the clinical skills but would need the ``nonclinical skills''
in its organization (or through a subcontract) to conduct encounter
validation.
Comment: A commenter believed that the proposed rule did not make
clear who, specifically, would be responsible for designating an entity
as an EQRO. The commenter recommended that this responsibility rest in
our Office of Clinical Standards and Quality, as it already has
oversight responsibility for Medicare's Health Care Quality Program.
Response: Under this rule, States are required to select and
thereby designate EQROs through an open, competitive procurement
process. CMS will not be designating EQROs, as it currently does in the
case of QIOs and entities claiming that they meet the standards to
contract as a QIO. When monitoring State Medicaid managed care
programs, CMS regional office staff have the opportunity to review
RFPs, contracts, and EQR results to ensure compliance with the EQR
provisions.
F. State Contract Options (Sec. 438.356)
This section set forth proposed requirements State agencies would
be required to follow, and options that they would have selecting
EQROs. We proposed that State agencies may contract with more than one
EQRO. The final rule in Sec. 438.356 (a)(1) and (a)(2) reflects
clarifications made to the provisions based on comments discussed in an
earlier section of the preamble.
We also proposed that each EQRO be permitted to use subcontractors.
EQROs that use subcontractors are accountable for, and required to
oversee, all EQR activities performed by the subcontractors. In
addition, we proposed that each EQRO be required to meet the competency
requirements, and each EQRO and EQRO subcontractor be required to meet
the independence requirement. We also proposed that State agencies
follow an open competitive procurement process that is in accordance
with State law and regulation and consistent with 45 CFR part 74, as it
applies to State procurement of Medicaid services.
Comment: Several commenters supported the language in Sec. 438.356
as proposed. One commenter specifically agreed that all subcontractors
should be required to meet the test of independence, and that the
contract must be procured through a competitive bid process.
Response: We appreciate the commenter's support for the provisions,
and have retained them in the final rule.
Comment: One commenter believed that a competitive bidding process
was the most appropriate way for States to secure efficient cost-
effective reviews.
Response: We agree that competitive bidding provides the best means
to select a qualified contractor at the best price, and we retain the
requirement for competitive procurement of EQROs in the final rule.
Comment: One commenter asked us to clarify whether the State
Medicaid agency could contract directly with a State organization
without using a competitive procurement process if the State
organization otherwise meets the standard of being ``independent,'' and
meets the requirements of a qualified EQR.
Response: The Department of Health and Human Services has
regulations governing the extent to which States are required to
competitively procure contracts. Those regulations apply to EQRO
contract as cited under Sec. 438.356(e).
G. Activities Related to External Quality Review (Sec. 438.358)
Section 438.358 proposed a requirement that EQR utilize information
obtained from specified mandatory activities that must be performed by
the State agency, a State agent, or the EQRO. Proposed Sec. 438.358
also identified optional activities that the State agency or its agent
may perform, or have the EQRO perform, to produce additional
information for use in EQR. The mandatory activities are consistent
with the requirements set forth in the Medicaid managed care final
rule. The optional activities were not included in that rule. They are,
however, activities that States have had their EQR contractors perform
in the past.
We proposed that each year, the EQRO must use information obtained
from the validation of performance improvement projects performed that
year, and the validation of performance measures reported that year, by
the MCO. To be consistent with the private sector, however, we proposed
that information used by the EQRO from a review of MCO and PHP
compliance with State structural and operational standards be from the
most recent review performed within the previous 3 years.
[[Page 3598]]
Proposed Sec. 438.358 also would allow States to have their EQROs
provide technical guidance to groups of MCOs and PHPs to assist them in
conducting the mandatory and optional EQR-related activities.
Comment: One commenter requested that States be required to provide
technical support to MCOs to ensure that pediatric measures are
implemented. The commenter also expressed a concern that the proposed
EQR regulations did not separately address children with special health
care needs, noting that it was critical that CMS require State Medicaid
managed care programs to provide adequate protections and
considerations for these children.
Response: States have the flexibility to provide technical support
to MCOs and PIHPs on pediatric measures as well as generic measures,
preventive care measures, measures for disabled adults, or any other
measures. This rule does not require this technical support, however,
because we do not believe that it would be necessary in all cases.
With respect to special needs children, this regulation implements
the BBA EQR provisions by specifying who is qualified to conduct EQR
and what information should be included in such a review. The Medicaid
managed care final rule requires States to have quality strategies that
must include procedures that assess the quality and appropriateness of
services provided to all Medicaid enrollees under MCO and PIHP
contracts. This includes children with special health care needs. The
EQR will evaluate activities undertaken by MCOs and PIHPs in accordance
with the State strategies. States can elect to have their MCOs and
PIHPs determine what measures to collect or States can require MCOs and
PIHPs to collect specified measures appropriate to the populations
served.
Comment: One commenter strongly recommended that these regulations
mandate that States require MCOs to develop and administer a provider
satisfaction survey. The commenter thought this would allow the MCOs to
use the results of the surveys to identify additional approaches to
enhance quality of care. It also would allow States to identify MCOs
that may be poised to experience a rapid withdrawal of providers, which
could place beneficiaries at risk of having difficulty accessing care,
or otherwise disrupt their medical home. Another commenter felt that
the validation of consumer or provider surveys would be difficult. This
commenter asked whether we were proposing that EQROs contact
respondents to ask them if the answers that were recorded were the
answers given.
Response: This rule does not require that States have their MCOs
and PIHPs develop or administer consumer or provider surveys. It does,
however, allow States to have their EQRO administer or validate a
consumer or provider survey, and receive the 75 percent enhanced match
for this activity as long as the EQR survey protocol or a consistent
protocol to the one we developed is used. The EQR survey protocol does
not require that respondents be contacted to validate survey responses.
We agree that this would be costly and burdensome. The survey protocols
outlines generic steps that must be followed to ensure reliable and
valid methodological approaches to administer and validate surveys.
Comment: One commenter recommended that we require that EQROs
measure and report the participation of pediatricians, pediatric
medical subspecialists, and pediatric surgical specialists when
conducting activities related to the establishment of provider
networks.
Response: EQRO reviews for compliance with structural and
operational standards will include a review of the delivery network.
The review will ensure, consistent with the Medicaid managed care final
rule, that MCOs and PIHPs maintain and monitor a network of appropriate
providers to furnish services covered under the contract and that they
consider the anticipated Medicaid enrollment with particular attention
to the needs of enrolled children; the expected utilization of
services; and the geographic location of providers and enrollees. When
developing and maintaining their provider network, MCOs and PIHPs will
also need to consider the characteristics and health care needs of
enrollees.
Comment: One commenter believed that while it arguably was
reasonable to require external auditing of broad, publicly disclosed
quality performance measures, the same mandate should not be imposed on
other quality improvement data such as the findings of focused clinical
studies. In this commenter's view, these types of data are intended to
promote MCO self-assessment and stimulate quality improvement
activities, and should not be subject to an external audit.
Response: We do not agree with the commenter that the findings of
focused studies or other quality improvement projects should not be
subject to an EQR. Our Medicaid managed care final rule requires MCOs
and PIHPs that contract with States to provide Medicaid services to
conduct performance improvement projects, calculate performance
measures, and comply with structural and operational standards. In
order to ensure compliance with these requirements, we believe a review
of all these activities is essential to determine the quality,
timeliness, and access to services provided to Medicaid beneficiaries.
However, Sec. 438.364 requires that only the aggregated findings of
the EQRO analysis of all information derived from the EQR activities be
produced, and it is only this summary information that is to be made
available to the public upon request.
Comment: One commenter believed that it was vital to include in EQR
a range of activities beyond ``focused studies'' and medical record
review. This commenter felt that the mandatory activities proposed
would require the collection and use of data from multiple sources, and
that we may want to consider mandating the validation of primary data
sources such as encounter data and survey data. Another commenter asked
that focused studies be a mandatory activity, and that MCOs be required
to show measurable improvement in them. One commenter supported our
establishing mandatory activities as well as the optional activities
that are eligible for the 75 percent matching rate.
Response: We are aware of the importance of the integrity of the
MCO's and PIHP's underlying information systems for the conduct of some
EQR activities, and we address this issue in the protocols for review
for compliance with structural and operational standards, performance
measures, and encounter data. We do not include focused studies as one
of the mandatory activities in this regulation because the Medicaid
managed care final rule requires that MCOs and PIHPs conduct
performance improvement projects. A performance improvement project
begins with a focused study to select a clinical or nonclinical topic
and measure performance in that area, but takes steps beyond a focused
study to implement activities to improve performance. This regulation
requires that the State include information regarding the validation of
these studies as part of EQR.
Comment: Several commenters were concerned that this rule
potentially would permit EQROs to analyze and evaluate data collected
by a party not subject to the same conflict of interest requirements as
the EQRO. These commenters were concerned that the EQRO would be held
accountable for the validity, accuracy, and reliability of
[[Page 3599]]
the MCOs' projects without necessarily having access to the raw data.
One of the commenters suggested that there be continued discussions
with the QIO community about the need for raw data files from MCOs in
order to evaluate the performance improvement projects and performance
measures. The commenter also felt that EQR performance measures should
be standardized and consistent to allow comparisons among the States,
and among the MCOs operating in more than one State. Another commenter
recommended that the final rule require that EQR activities be carried
out by the EQRO. If the information provided for the EQR is collected
by the State or another agency, the commenter suggested that the EQRO
be required to validate the data or information before analyzing it or
forming conclusions about quality, timeliness, and access.
Response: In order to receive the enhanced 75 percent Federal match
provided for in section 1903(a)(3)(C)(ii) of the Act, we believe most
States will use an EQRO to conduct the mandatory EQR-related
activities. However, in order to provide flexibility to States to
coordinate their quality oversight activities, we permit States or
their agents to perform the mandatory EQR activities, and only require
that States use an EQRO for the conduct of EQR (as defined under Sec.
438.320) and for the production of the EQR results as specified under
Sec. 438.364. If a State chooses not to have an EQRO conduct the
mandatory activities, the State still needs to use, or have its
contractor use, our protocols or protocols that are consistent with
ours when conducting these activities. The State will also need to
provide the EQRO with the information specified under Sec.
438.364(a)(1)(i) through paragraph (iv) for each of the EQR-related
activities as required in Sec. 438.350(b). We believe this last
requirement may not have been clear in our proposed rule, and we have
therefore provided a cross-reference to Sec. 438.364(a)(1)(i) through
paragraph (iv) in Sec. 438.350(d) in this final rule. This
clarification addresses the comments above by identifying the types of
information we expect to be provided to an EQRO if the State or a
contractor other than the EQRO is conducting the EQR-related activity.
We also provide clarifying language in a new Sec. 438.358(a) of this
final rule, which sets forth a general rule making clear that a State
can conduct, or have another State contractor or the EQRO conduct, the
mandatory and optional EQR-related activities that provide information
for the EQR function.
We do not agree that the EQRO must revalidate activities already
validated by the State or another State contractor that uses our
protocols. We believe the use of the protocols will ensure that each of
the activities, including an assessment of the underlying data systems,
is conducted using reliable and valid methods.
We are not requiring standardized performance measures. In our
Medicaid managed care final rule, we require States to require MCOs and
PIHPs to use standard measures. The Medicaid managed care final rule
also gives CMS the authority to prescribe standard measures in
consultation with States and other stakeholders. Currently, States have
the flexibility to determine which measures they will require of their
MCOs and PIHPs. The CMS protocol for performance measures sets out a
standard method to validate performance measures. We have also
developed a protocol for calculating performance measures, as this is
an optional EQR-related activity.
Comment: One commenter believed that allowing the use of
information obtained by the State or its agent for EQR means the
information is not truly independent. The commenter further contended
that the methods used by the State or its agent do not have to be
consistent with the EQR protocols, since the State or its agent is not
an EQRO.
Response: Consistent with provisions at Sec. 438.350(b) and (c),
whoever conducts the mandatory or optional EQR-related activities must
use the protocols or methods consistent with the protocols. We have
made this clear in the final rule.
Comment: Several commenters noted that the activities under Sec.
438.358 are currently in some cases conducted by the State, the county,
or both. They added that having the EQRO perform this same activity, or
even review these activities would be redundant and costly. One of
these commenters suggested that we allow these activities to be done
directly through the State or county survey process.
Response: EQR-related activities may be conducted by the State or
by any State contractor other than the MCO or PIHP as long as the
activities are conducted consistent with our protocols. However, if a
State chooses to have its EQRO conduct these activities it can obtain
the enhanced 75 percent Federal match under section 1903(a)(3)(C)(ii)
of the Act.
Comment: One commenter asked that we clarify whether information
derived from optional activities performed by other fiscal government
agencies could be used by the EQRO.
Response: As long as the other agency uses our protocols or methods
consistent with the protocols, the information derived from EQR-related
activities performed by other State agencies can be used as part of
EQR. The State, however, would not be able to receive the enhanced 75
percent Federal match unless the other government agency qualified as
an EQRO, and the contract to conduct the activities was procured
consistent with Sec. 438.356(e). We clarify in this final rule that
the information obtained from optional EQR-related activities must be
from information derived from optional activities conducted within the
preceding 12 months.
Comment: Several commenters believed that MCOs should be required
to report on standardized performance measures for specific conditions.
One of these commenters also recommended that MCOs be required to
report on aggregate measures of changes in health status for all people
who meet a definition of disability. The commenter further urged that
the development of these measures be a priority for both quality
assurance and reimbursement purposes.
Response: As stated previously, the Medicaid managed care final
rule provides States with the authority to specify what performance
measures to require their MCOs and PIHPs to calculate and report. We
are allowing this flexibility because State Medicaid managed care
programs differ in the services they contract for and the populations
served by MCOs and PIHPs. We think it is important that States be able
to make comparisons across their contracting MCOs and PIHPs and, where
this information is available, we require that it be provided as part
of the EQR results as specified in Sec. 438.364(a)(4). However, while
the Medicaid managed care final rule provides CMS with the ability to
prescribe performance measures in consultation with States and other
stakeholders, at this time we are not requiring the collection of
comparative data nationwide.
We are also not requiring that States collect health status
information from their MCOs and PIHPs. States are free to do this if
they choose, and an increasing number of States are assessing the
health status of MCO and PIHP enrollees for purposes of risk adjusting
payments, or for quality activities. This rule also allows States to
have their EQRO administer consumer surveys and obtain an enhanced
Federal match of 75 percent. Approximately 30 States currently
administer consumer surveys, primarily the CAHPS survey, which collects
health status information from the perspective of consumers.
[[Page 3600]]
Comment: One commenter felt that the EQR-related activities were
not clearly defined, and were limited in scope. The proposed language
did not appear to the commenter to require the State to provide actual
data to the EQRO, only information on the validation of the data. The
commenter was concerned that the State could report to the EQRO that
the data are valid, without actually providing the data itself.
Response: We do not agree with the commenter that the EQR-related
activities are limited in scope. The activities reflect those that
States have used existing EQR contractors to conduct in the past. These
activities are more fully explained in the protocols that we reference
in this final rule. On November 23, 2001, we published a notice in the
Federal Register announcing the completion of these protocols noting
their availability on our website and asking for comment on the extent
to which they impose a burden, as well as any other issues the
commenters wished to raise. Our protocols clearly define EQR
activities, and the steps needed to conduct these activities in a valid
and reliable manner. As noted in the preamble of our proposed rule, the
full content of the protocols themselves was not included in the
proposed rule, and is not included in this final rule because the
protocols are more detailed than appropriate for Federal regulations,
will need to be revised as the state-of-the-art of quality improvement
changes, and States may use other protocols as long as they are
consistent with those we developed. The need for the EQRO to have raw
data will depend on the activities a State chooses to have its EQRO
perform. For the actual conduct of EQR as defined in Sec. 438.320, as
well as the mandatory activities, access to raw data will not be
needed. If the EQRO conducts all of the mandatory activities, it will
be responsible for validating the methodological approach used by the
MCO and PIHP for the conduct of performance improvement projects, and
the calculation of performance measures. Regardless of who conducts the
EQR-related activities, the CMS protocols, or a method consistent with
the CMS protocols, must be used, and the information derived from the
activity, as specified in Sec. 438.364(a)(1)(i) through paragraph
(iv), must then be provided to the EQRO.
Comment: One commenter did not support our decision to make
performance improvement projects a mandatory activity, while focused
studies are an optional activity. The commenter expressed concern that
performance measures tend to focus on things that are easy to fix, and
do not always provide a reliable picture of quality across a broad
range of concerns.
Response: As the state-of-the-art of quality assessment and
improvement has changed, we have found it more suitable to implement
performance improvement projects than focused studies. Focused studies
aim to assess the quality of care provided at a point in time, whereas
performance improvement projects, in addition to assessing a focused
area of care at a point in time, aim to initiate an intervention to
improve care over time. In our proposed rule, we discussed the
limitations of solely using focused studies, without information from
other quality activities, to assess the care provided to all enrollees
of a State Medicaid managed care program. It is for these reasons that
improvement projects are mandatory while focused studies are optional.
We note, however, that States may employ focused studies and use an
EQRO to conduct this activity, thus accessing the enhanced 75 percent
Federal match under section 1903(a)(3)(C)(ii) of the Act.
In this rule, we provide for a multipronged approach to quality
improvement that uses information from three sources: (1) Determination
of compliance with standards, (2) validation of performance improvement
projects, and (3) validation of performance measures. We believe that
this approach will provide for a reliable assessment of the quality,
timeliness, and access to care provided to Medicaid beneficiaries by an
MCO/PIHP.
Comment: One commenter interpreted the proposed rule to prohibit
States and EQROs from conducting focused studies, and to instead
require States to perform comprehensive reviews of all areas of the MCO
contracts every year. This commenter recommended that we reconsider the
scope of annual review, suggesting that a 1 year cycle does not allow
sufficient time to procure an EQR contract, conduct and complete EQR
activities, and report results on the EQR as specified in this rule.
The commenter also recommended that we allow for a multiyear rotational
approach to quality measurement and improvement (for example, rotate
specified performance measures, focused clinical topic reviews). One
commenter similarly believed that 1 year was too short a period of time
in which to conduct the activities under Sec. 438.358 (a)(1)(i) and
(ii) of the proposed rule. This commenter suggested that this time
period instead be left up to the State agency. Another commenter
recommended that we require only that the information used by the EQRO
for validation of performance improvement projects be from the most
recent review performed within the previous 3 years, rather than
requiring a yearly review.
Response: Section 1932(c)(2) of the Act requires an annual external
review. In the final rule, we require that there be three sources of
information used in this review. First, for performance improvement
projects, this final rule requires that there be performance
improvement projects underway during the previous 12 months. We
understand that an MCO or PIHP may have multiple projects underway at a
given time, and these projects may be at various stages of
implementation. In response to this comment, we have revised the
language under proposed Sec. 438.358(a)(1)(i) (now Sec.
438.358(b)(1)) to clarify that performance improvement projects need to
be underway during the preceding 12 months, instead of having been
completely performed during the preceding 12 months. Consistent with
private sector practices, we therefore would allow States to use a
multiyear rotational approach when conducting performance improvement
projects and calculating performance measures. Second, for performance
measures, the rule requires that one or more measures be reported
annually. Finally, as was indicated in our proposed rule, EQR also
needs to employ information from a review of structural and operational
standards, conducted within the previous 3-year period.
Comment: Many commenters suggested that the list of mandatory
activities include an examination of reasons for disenrollment and
termination.
Response: Under Sec. 438.358(b)(3) of this final rule, we require
a review of MCO and PIHP compliance with State standards, in accordance
with the Medicaid managed care final rule. This includes standards for
enrollment and disenrollment. The Medicaid managed care final rule
includes standards for disenrollments requested by the beneficiary, as
well as those requested by the MCO or PIHP. In addition, the Medicaid
managed care final rule requires MCO and PIHP compliance with State
standards for health information systems. As part of the health system
provisions, we require that the State ensure that the MCO or PIHP
information system provides information including, but not limited to,
utilization rates, grievances, and numbers of appeals and
disenrollments. We believe these provisions adequately address the
commenter's concern, and
[[Page 3601]]
that no additional requirements are necessary.
Comment: One commenter noted that there was no cross-reference in
the proposed EQR rule to the requirements in the then proposed Medicaid
managed care rule that required MCOs to measure performance and conduct
performance projects, and to comply with State-mandated standards. The
commenter suggested that we make this cross-reference to the applicable
sections in the Medicaid managed care rule.
Response: We have in this final rule added cross-references to the
appropriate citations in the Medicaid managed care final rule.
Comment: One commenter recommended that we establish a core set of
State standards for MCOs and evaluate these during the EQR process. The
commenter was concerned that allowing States to determine the measures
to be collected would provide little or no comparable plan or State
level data.
Response: We do not agree that this rule should specify
standardized performance measures for States or their contracting MCOs
and PIHPs. The Medicaid managed care final rule specifies that States,
through their contracts, must require their MCOs and PIHPs to calculate
performance measures or submit data to the State that enables the State
to measure MCO's or PIHP's performance. Many States currently require
that standard performance measures be collected across MCOs. In
addition, we believe that States will require that specified measures
be calculated over time to enable the State to evaluate MCO and PIHP
performance. In Sec. 438.364(a)(4), we require that the EQR results
include comparative information, as determined appropriate by the
State. Furthermore, Sec. 438.10(i)(2)(ii) of the Medicaid managed care
final rule requires, for those States that provide for mandatory
managed care under section 1932(a)(1)(A) of the Act, that the State
provide comparative information annually. This must include, to the
extent available, quality and performance indicators as required under
Sec. 438.10(i)(3)(iv). In addition, the Medicaid managed care final
rule provides that CMS may, in collaboration with States and other
stakeholders, prescribe standard performance measures.
Comment: One commenter asked us to clarify how proposed Sec.
438.358(a)(1) fulfills the statutory requirement of EQR, and
specifically how this information relates to a review of ``the quality
outcomes and timeliness of, and access to, the items and services for
which the managed care organization is responsible under the
contract.''
Response: In order to make an assessment about the quality,
timeliness, and access to services provided by MCOs and PIHPs, there
must be information from which an assessment can be made. Section
1932(c)(A)(iii) of the Act required us, in coordination with the NGA,
to contract with an independent quality review organization to develop
protocols to be used in EQR. In order to develop protocols, we first
needed to define EQR, as it was not defined under section
1902(a)(30)(C) of the Act. We also needed to determine what activities
we consider necessary or appropriate to provide information for a
quality review. The EQR activities in Sec. 438.358(b) and (c) are
activities that (1) the expert panel convened under the auspices of the
NASHP recommended be included as part of EQR; (2) a survey of States by
the Department of Health and Human Services' Office of Inspector
General identified as quality review activities used by States; and (3)
a survey of States by NASHP confirmed as activities most frequently
used by States for EQR. The EQRO must develop a report, based on the
information provided, as specified in Sec. 438.364, that includes a
detailed assessment of each MCO's and PIHP's strength and weaknesses
with respect to the quality, timeliness, and access to health care
services furnished to Medicaid beneficiaries.
Comment: A commenter noted that the rule does not clearly identify
which entities are qualified and competent to undertake the validation
of performance measures and performance improvement projects. In the
commenter's view, as drafted, the rule could be interpreted as allowing
entities other than EQROs, including the State or the MCO itself, to
undertake these tasks. The commenter recommended that we clarify what
types of entities can engage in validation activities and at a minimum
require those entities to be competent and independent.
Response: The State, an EQRO, or other State contractor can
undertake any of the EQR-related activities. However, it is only when
an EQRO, that meets the competency and independence criteria, conducts
any of these activities that a State can obtain the enhanced 75 percent
Federal match under section 1903(a)(3)(C)(ii) of the Act. Regardless of
who conducts the activity, the CMS protocols (or other protocols
consistent with ours) must be used to gather information for the
mandatory and optional activities used in EQR. We did not intend to
allow the MCO or PIHP itself to be able to conduct any EQR-related
activities and in response to this comment we have revised Sec.
438.358 so that it is clear that ``the agent'' must be an entity other
than an MCO or PIHP.
Comment: One commenter recommended that we modify the regulation to
grant State agencies the discretion to adapt these requirements to more
appropriately address the circumstances of small or new MCOs and PHPs.
The commenter suggested that enrollment in some MCOs and PHPs may be
too small for an EQRO to validate the data for performance improvement
projects or performance measures. Similarly, for an MCO that is not yet
operational or which has only been operating for a short amount of
time, there may be insufficient experience to use to evaluate for
compliance with standards.
Response: We do not agree that we should modify the regulation to
allow States to adapt the requirements to address small or new MCOs and
PIHPs. If enrollment in an MCO or PIHP is small, the entire applicable
population, as opposed to a sample, can be used when conducting
performance improvement projects, calculating performance measures, or
validating these activities. Regarding compliance with State standards,
all MCOs and PIHPs that contract with a State to provide Medicaid
services must be in compliance with the contracting requirements in the
Medicaid managed care final rule. Regardless of when the EQR is
conducted, MCOs and PIHPs should have procedures in place to be
compliant with these provisions. Therefore, an assessment of compliance
with these standards must be conducted and the findings provided to the
EQRO to make its assessment regarding quality, timeliness, and access
to services provided by the MCO or PIHP to Medicaid beneficiaries.
Comment: One commenter felt that State Medicaid agency staff should
conduct the review of MCO compliance with structural and operational
standards, as the review requires extensive knowledge of the State
Medicaid program, its regulations, and the MCO contract. This commenter
believed that this requirement was duplicative of current practice and
unnecessarily burdensome, and did not provide States needed flexibility
to choose which activities it wants to have its EQRO conduct. The
commenter suggested deleting this provision. Another commenter urged
that the review of compliance with standards be an optional instead of
mandatory activity. The commenter noted that States conduct this
activity through
[[Page 3602]]
various means, and that mandating this be done through EQR would mean
an increase in Federal and State funding for the EQR contract. One
commenter believed that the proposed requirement for review of
structural and operational standards went beyond the statute's
reference to ``quality outcomes, and timeliness of, and access to items
and services for which the organization is responsible under
contract.'' This commenter recommended that we reevaluate the extent of
this review to ensure that it is consistent with the intent of the
statute. The commenter further noted that this review was so broad that
it would encompass most of the areas currently reviewed by States under
their general contract responsibilities.
Response: States are not required to contract with an EQRO to
conduct a review of the MCO's or PIHP's compliance with State
structural and operational standards. A State can conduct this activity
using the CMS protocols or protocols consistent with ours and provide
the results of the review to the EQRO. The regular 50 percent
administrative FFP match would be available to the State for this
activity if it is not conducted by the EQRO. The EQRO will use this
information in conjunction with information derived from the other two
mandatory activities and any optional EQR-related activities conducted
to determine quality of, timeliness of, and access to the quality of
care provided by the MCO or PIHP. This final rule provides States with
the flexibility to determine which activities it wants to have its EQRO
conduct. Although we prescribe mandatory activities, which are
consistent with the requirements set forth in the Medicaid managed care
final rule, the State does not have to have its EQRO conduct these
activities. A State is only required to have an EQRO conduct the
analysis and evaluation of the information derived from the activities
to determine if an MCO or PIHP is providing access to quality services.
We do not believe that the scope of the mandatory activities goes
beyond the statutory provisions under section 1932(c) of the Act which
require States to have a quality assessment and improvement strategy
which includes access standards, and measures to assess care, including
grievance procedures and marketing and information standards.
Furthermore, the statute requires that States implement monitoring
strategies that address the quality and appropriateness of care. We,
therefore, retain the review of MCO and PIHP compliance with State
standards as a mandatory activity in our final rule.
Comment: One commenter believed that the intent and usefulness of
the proposed language in Sec. 438.358 requiring the EQR to ``use
information'' obtained from the mandatory and optional EQR-related
activities was unclear. The commenter recommended changing the language
to read ``The State or the EQRO shall/must conduct'' the EQR-related
activities.
Response: Sections 1932(c)(2)(A)(ii) and (iii) of the Act required
us to (1) in consultation with States, develop a method to identify
qualified entities for the conduct of EQR, and (2) in coordination with
the NGA, develop protocols to be used in EQR. In order for us to
determine who was qualified to conduct EQR and for us to develop
protocols to be used in an EQR we first needed to define EQR. Based on
the advice of an expert panel convened under the auspices of the NASHP,
the proposed rule, and this final rule, define EQR as the analysis and
evaluation by an EQRO of aggregated information. Based on this
definition, the expert panel confirmed the types of activities that
would produce information as it relates to the quality, timeliness of,
and access to care provided to our beneficiaries. These are the
mandatory and optional activities found in this section of our rule. To
provide consistency with the definition of EQR, and because we do not
require that States contract with an EQRO to conduct these activities,
we retain the language that an EQR must use information derived from
the EQR-related activities in the final rule.
Comment: Many commenters did not agree with our proposal to require
that information be used from a review of structural standards every 3
years, and cited the statutory language requiring ``an annual * * *''
review. Many commenters recommended that all activities be done
annually, citing reasons such as the changing status of provider
networks, and pressures to control utilization. One commenter claimed
that we did not adequately explain our rationale for permitting the use
of data and information that may be up to 3 years old. The commenter
argued that given the volatility of both the managed care market place
and State Medicaid programs, the problems identified in Medicaid
managed care systems throughout the country, and the fact that the
majority of beneficiaries are children, allowing the use of 3-year-old
data was inadequate. The commenter suggested that an evaluation of
quality, timeliness, and access to services must be timely to allow for
effective interventions to correct the problems.
Response: Reviews of MCO and PIHP compliance with structural and
operational standards are very time consuming and costly. To be
consistent with private industry standards, we proposed that
information from the review of MCO and PIHP compliance with standards
be from the most recent review conducted within the previous 3 years.
Both NCQA and JCAHO perform their accreditation reviews once every 3
years. As stated earlier, our rule takes a multipronged approach to
quality assessment and improvement. This is one reason why we require
the EQR to use information from a minimum of the three mandatory
activities to render a decision regarding the quality and timeliness of
and beneficiary access to health care services. We believe that this
comprehensive approach addresses the commenters' concerns, and that
annual reviews for compliance with structural standards is not
justified.
H. Nonduplication of Mandatory Activities (Sec. 438.360)
Proposed Sec. 438.360 provided State agencies, under certain
circumstances, the option not to require a review of MCO or PHP
compliance with certain structural and operational standards specified
in proposed Sec. 438.358(a)(2) if the MCO or PHP is a certified M+C
organization with a current Medicare contract, and has been evaluated
and approved by us, our contractor, or certain approved accrediting
organizations as a part of accreditation for compliance with these
standards. The December 1, 1999 proposed rule also provided that a
State agency under certain circumstances may similarly avoid duplicate
reviews of all mandatory activities (listed in paragraphs (a)(1) and
(a)(2) of proposed Sec. 438.358) for any MCO or PHP that serves only
individuals who are eligible for both Medicare and Medicaid. Under the
December 1, 1999 proposed rule, if the State agency exercises this
option, each MCO and PHP must make available to the State agency all
reports, findings, and other results of the Medicare quality review or
the accreditation survey that is to substitute for the Medicaid review.
Comment: Several commenters supported provisions designed to avoid
duplication in the EQR process.
Response: We retain the nonduplication provisions in the final rule
while providing clarifying language on their applicability, as
discussed in responses to comments below, in order to better explain
our intent.
[[Page 3603]]
Comment: Several commenters asked that the provisions in this
section not be restricted to Medicaid MCOs that have M+C contracts. The
commenters believe that the BBA does not restrict the nonduplication
provision to these organizations.
Response: We agree with the commenters that the BBA does not
require that an M+C contract be in place in order for the
nonduplication provisions to apply. In response to these comments, we
have changed the final rule to allow States, under certain
circumstances, to elect not to review structural and operational
standards of an MCO or PIHP that has been accredited by a national
accrediting organization approved by CMS under the procedures in 42 CFR
422.158 as applying standards at least as stringent as Medicare, where
the standards are comparable to those imposed by the State under Sec.
438.204(g). The EQRO must review the reports, findings, and other
results of the accreditation review to use in the EQR.
Comment: Several commenters recommended that we amend our
regulations to permit accreditation programs that address only a
portion of the Sec. 438.358(a)(2) requirements. One commenter wanted
us to retain the provision that allows an EQRO to use a review
conducted by a private accrediting organization, or as part of an
external review conducted under the Medicare program. Another commenter
suggested that we revise Sec. 438.360(b) to allow a State to exempt an
MCO from a review of the mandatory activities, as opposed to exempting
the MCO from the mandatory activities.
Response: We agree with the commenters that a State should be
permitted to use only certain portions of a Medicare or accreditation
review in place of a portion of a Medicaid review. As stated above, the
final rule provides States with the option of using a Medicare or (if
approved by CMS under Sec. 422.158) private accreditation review to
serve as the Medicaid compliance review of any or all of the standards
required to meet provisions under Sec. 438.204(g) as long as the MCO
or PIHP meets the requirements of Sec. 438.360(b) or (c). Because we
received numerous comments on the applicability of this provision, we
have revised the language in this section to more clearly explain our
intent to apply it to MCOs and PIHPs that have been reviewed by an
accrediting organization approved under Sec. 422.158. We also
clarified the regulations text to better identify the activities and
standards to which this section applies, and what information needs to
be provided to States and us to comply with this provision.
Comment: One commenter did not agree with provisions in Sec.
438.360(b)(3) or (c)(3) requiring that a State receive a copy of all
findings pertaining to the most recent accreditation review. The
commenter contended that standard-specific information is adequate and
that all review materials such as noted deficiencies, corrective action
plans, and summaries of unmet accreditation requirements are excessive
and unnecessary. The commenter suggested that we require MCOs to
provide the State with applicable reports, findings, and results. Many
commenters agreed that we should require that States receive and review
information from the Medicare review or accreditation review.
Response: We agree that requiring all reports, findings, and other
results of the Medicare review or accreditation review could be
excessive. We have revised the language Sec. 438.360(b)(3) and (c)(3)
to reflect that the reports, findings, and results provided can be
limited to those applicable to the standards for which the Medicare or
accreditation review or quality activities will substitute for the
Medicaid review activities.
Comment: One commenter asked us to clarify whether the
nonduplication provision exempts the MCO from a review for compliance
with standards, such as enrollee rights, maintaining a grievance
system, or using practice guidelines. One commenter recommended that we
allow deeming of credentialing and recredentialing requirements if the
MCO is NCQA certified.
Response: We provide that the State may permit the findings from
other allowable reviews to substitute for a duplicate review of the
structure and operations of the MCO or PIHP. Under this provision, an
MCO or PIHP is not exempted from a review of standards under Sec.
438.204(g). Rather, States are permitted the option of using Medicare
reviews or accreditation findings, including a review of credentialing
and recredentialing procedures, instead of conducting a separate (and
potentially duplicative) review, as long as the provisions under Sec.
438.360 are met. This would apply to information on compliance with
standards such as the requirements set forth in proposed Sec.
438.358(a)(2)(i) through (a)(2)(xiii) cited by the commenter.
Comment: Many commenters agreed that external reviews need to
validate performance measures specific to the Medicaid population in
the case of Medicaid contracts. In contrast, one commenter recommended
that an MCO fully accredited by a private accrediting organization
should also be exempt from calculating performance measures (for
example, HEDIS). The commenter believed that this would eliminate the
need for new-capacity building or criteria to ensure consistency.
Response: We do not agree that an accredited MCO or PIHP should be
exempt from a validation of performance measures calculated under Sec.
438.358(a)(1) unless it provides services to dual eligibles only. As
stated in our December 1, 1999 proposed rule, we believe the types of
data collected, measures calculated, and studies conducted, on the
Medicare population would differ from those for the Medicaid population
unless the MCO or PIHP served only dually eligible Medicare and
Medicaid beneficiaries. We believe this argument is also valid when
applied to the commercial population. We, therefore, retain the
language as written in the December 1, 1999 proposed rule. We note that
if the accrediting organization, acting as the EQRO of the State,
validates the performance measures required of the MCO or PIHP by the
State, the State can obtain the 75 percent match under section
1903(a)(3)(C)(ii) of the Act for having the accrediting organization
conduct that activity.
Comment: One commenter recommended that we revise the regulation to
give State agencies discretion to determine what EQR activities are
duplicative.
Response: We do not agree that States should have discretion to
determine what EQR activities are duplicative. Except in the case of an
MCO or PIHP that provides services to dual eligibles only, we limit the
nonduplication provisions to the structure and operational standards
reviewed under Sec. 438.358(b)(3).
Comment: Several commenters noted that accrediting organizations
differ in how they characterize the status conferred when MCOs meet
their accreditation standards. For example, these commenters pointed
out that not all accrediting organizations use the term ``full
accreditation.'' One commenter recommended that we clarify proposed
Sec. 438.360(b)(2)(ii) to avoid confusion regarding what accreditation
level must be attained to meet the requirements of the paragraph.
Another commenter asked us to clarify ``fully accredited'' and
recommended that we negotiate with accreditors seeking to be recognized
under this section to determine what type of accreditation would meet
the intent of this section.
[[Page 3604]]
Response: We understand that accrediting organizations use
different terms to describe the extent to which MCOs or PIHPs meet
their standards. However, in this provision of the regulation, we are
not requiring that the MCO or PIHP achieve a certain level of
accreditation. Rather, we are allowing States to use information
gathered in the private accreditation process that is shared with the
State to assess compliance. To make this more clear, in response to
this comment, we have removed the term ``fully accredited'' from the
regulations text. We also have revised the language of this section in
order to make our intent more clear. We now specify that accrediting
organizations that have been approved by us for M+C deeming under Sec.
422.158 meet the requirements of this provision.
Comment: Several commenters did not agree with permitting States to
avoid mandatory activities by relying upon information gathered from a
Medicare or private accreditation review in order to assess MCO
compliance with structural and operational standards. Some of these
commenters specifically strongly opposed the exemption from mandatory
activities when an MCO has a Medicare contract. They believed that
activities such as review for the availability of services,
establishment of provider networks, enrollee information,
confidentially, and use of practice guidelines all have Medicaid and
pediatric components that would not be examined under a Medicare
review. If an exemption is allowed, the commenters suggested that
additional activities be required to ensure compliance in problem-prone
or sensitive areas that reviews by Medicare or private accrediting
organizations may not adequately address. One of the commenters
recommended that if an MCO is being considered for the exemption, that
there must be substantial overlap between the Medicare and Medicaid
products in (1) geographic service area, (2) network composition and
management, (3) quality management structures and processes, and (4)
levels of accreditation. Many commenters suggested that unless our
quality review or accreditation has established the quality of the
Medicaid provider network and administrative structures, these
activities should not be exempted under nonduplication.
Response: The Congress clearly intended that we provide States the
option to avoid duplicating review activities conducted for Medicare or
by accrediting organizations. We limit the applicability of this
provision to the mandatory activity designed to help States assess
structural and operational standards for all MCOs and PIHPs other than
those serving only dual eligibles. For the latter, under Sec. 438.360,
we also permit States to use this option with respect to the validation
of performance measures or the validation of performance improvement
projects. We believe proposed Sec. 438.360 generally places sufficient
parameters on States that choose to exercise this option.
We retain the provision that permits States to use this option to
assess compliance with standards. We note that Sec. 438.207 of the
Medicaid managed care final rule requires that MCOs and PIHPs submit
documentation to the State of compliance with requirements in the
Medicaid managed care final rule that requires MCOs and PIHPs to
maintain a network of providers that is sufficient in number, mix, and
geographic distribution to meet the needs of the enrollees in the MCO
or PIHP. In addition, Sec. 438.207 requires that any time there has
been a significant change in MCO or PIHP operations that would affect
adequate capacity, additional documentation must be submitted. We
believe this information adequately complements any review of
availability of services that would be conducted by Medicare or an
accrediting organization that provides information for the EQR.
We are concerned, however, that the wording of proposed Sec.
438.360 has caused some confusion about the intent of this provision.
Specifically, our words ``A State may exempt an MCO from mandatory
activities * * *'' may be interpreted by some as exempting an MCO or
PIHP from oversight, rather than an exemption from State Medicaid
reviews that duplicate Medicare and private accreditation reviews. To
clarify this, we have removed the word ``exempt'' from this provision
in the final rule (noting also that the Congress did not use this word
in the corresponding statutory provision) and replaced it with language
reflecting the fact that these provisions do not exempt MCOs from
review for compliance with structural and operational standards, but
instead permit States to use information generated through Medicare or
private accreditation review to assess compliance with these standards,
in lieu of engaging in their own otherwise ``mandatory'' review
activity.
In addition, in response to the commenters' concerns about
permitting States to substitute Medicare or private accreditation
review for direct State review, we are adding a new paragraph (4) to
Sec. 438.360(b) and (c) requiring that States identify in their
qualities strategies those standards and activities they plan to
monitor through the use of Medicare or private accreditation review
data, and explain why direct State review would ``be duplicative.''
This will help ensure that this approach is only taken when State
review would truly be needlessly duplicative of review already
performed.
Comment: One commenter was concerned that proposed Sec. 438.360
appeared to allow the nonduplication exemptions to last indefinitely,
and believed that it was not unusual for plan performance to vary
significantly from year to year due to organizational changes. The
commenter recommended that States be required to develop mechanisms to
periodically re-evaluate MCO compliance with standards during the
course of a 3-year period, and to re-institute a direct Medicaid agency
review if accreditation, Medicare, or State oversight indicate
potential quality problems.
One of the commenters cited recent OIG studies that identified
significant issues with accrediting bodies, and did not think that
States should relinquish their direct MCO oversight responsibilities to
the accreditation industry.
Response: Neither the statutory nor conference committee language
discussed any time limit on a State using Medicare or accreditation
review data in its assessment of an MCO or PIHP in lieu of a direct
Medicaid review. We believe it appropriate to allow States to make the
determination as to whether this remains appropriate. We note that the
new paragraph (4) that we have added to Sec. 438.360(b) and (c)
requires that States explain and justify their use of this approach,
and believe that it is appropriate to permit the approach to be used
for so long as this justification remains valid. Therefore, we do not
specify a time limit in the final rule.
With respect to the commenter's recommendation for periodic re-
evaluation every 3 years, Sec. 438.360 requires that information
obtained from a Medicare review or a review by an accrediting
organization be provided to the State, which must then provide the
information to the EQRO for use in the EQR. Because this information
must be obtained from a review of compliance with standards conducted
within the past 3 years, this requirement should address the changes in
plan performance that the commenter is concerned about. Moreover, the
Medicaid managed care final rule requires that States have a quality
strategy that has procedures for assessing the quality and
appropriateness of care provided to
[[Page 3605]]
Medicaid beneficiaries, and that States must regularly monitor and
evaluate MCO and PIHP compliance with operational standards.
As noted in earlier responses, we believe the Congress clearly
intended States to have the option of avoiding duplicate reviews of
MCOs that have been accredited by a national accrediting organization,
and we accordingly allow for this in the final rule.
Comment: One commenter recommended that we clarify that States may
only eliminate elements of the EQR process, whether mandatory or
optional, if components of the M+C evaluation process or private
accreditation review are the same as or similar to those of the
Medicaid review process. Several commenters felt that this provision
should address two concepts: whether the standard or requirement is
duplicative, and whether the methodology of the review is duplicative.
One commenter asked that we clarify what we mean when we say, under
Sec. 438.360(b)(2), that the ``* * * methodologies must be * * *
established by the State, not CMS.'' The commenter noted that it is the
State, not CMS, that establishes the standards for the mandatory
activity under Sec. 438.358(a)(2) and therefore it is not clear what
benchmark we intend to use to determine comparability.
Response: This section of the regulation applies only to mandatory
activities as specified in Sec. 438.358(b). Because the optional
activities are not required, we do not address optional activities in
the nonduplication provisions. As stated earlier, we have clarified the
regulations text to better explain that Medicare or accreditation
standards must be comparable to those established by the State. We have
removed the reference to standards and review procedures needing to be
as stringent as those established by CMS because we agree with the
commenter, that it is the State, not CMS, that will establish standards
to comply with Sec. 438.204 of the Medicaid managed care final rule.
As for review methodology, the statute required that we establish
protocols to be used in EQR. The protocols we developed include generic
activities and steps to be followed to ensure that the EQR activities
are conducted in a reliable and valid manner.
Comment: One commenter asked that, because implementation of
proposed Sec. 438.360(b)(2)(ii) would depend upon our approval and
recognition of private accrediting organizations under Sec. 422.158 as
having standards and review procedures as stringent as those
established by Medicare, we move forward to make these later
determinations so this provision can be implemented in a timely fashion
when these regulations become final.
Response: We have already received and approved applications for
M+C deeming from several accrediting organizations: (1) NCQA, (2)
JCAHO, and (3) the Accreditation Association for Ambulatory Health Care
(AAAHC).
Comment: One commenter was confused about the distinction between
proposed Sec. 438.360 and proposed Sec. 438.362, and felt they were
redundant. The commenter also objected to our provisions applying to
dual eligibles, specifically the State's option of permitting
information obtained from performance improvement projects and
performance measures specific to dual eligibles to substitute for
Medicaid specific information.
Response: We do not agree that Sec. 438.360 and Sec. 438.362,
which permit States to exempt an MCO or PIHP from EQR in its entirety,
are redundant. However, we agree that proposed Sec. 438.360 was
potentially confusing in its use of the word ``exempt.'' We have
revised the language in Sec. 438.360 to clarify that Sec. 438.360
allows States to use the findings of Medicare or accreditation reviews
in place of a Medicaid review in order to avoid duplication, but does
not exempt MCOs or PIHPs from EQR, as does Sec. 438.362 where it
applies. We think that there is a clear distinction between Sec.
438.360 under which analysis and evaluation of information must still
be conducted, and Sec. 438.362 under which the MCO or PIHP is exempted
from the EQR function. We disagree with the commenter concerning the
appropriateness of the dual eligible provision. In the case of dual
eligibles, Medicare review necessarily is targeted to the population
involved. We therefore believe that Medicaid review could be
particularly duplicative in this case.
Comment: One commenter requested that if accreditation is to be
used as the basis for exemption, regulations require that the MCO be
specifically accredited with respect its Medicaid line of business, and
that information from this Medicaid enrollee review be provided to the
State.
Response: We do not agree that we should limit the applicability of
the nonduplication provisions in Sec. 438.360 to MCOs or PIHPs
accredited specifically for their Medicaid product. Most accrediting
organizations do not conduct separate reviews for an MCO's or PIHP's
Medicaid product. With respect to the commenter's second point, we do
require that the findings of the accreditation be provided to the State
and then, in turn, to the EQRO to be used as part of the EQR.
Comment: One commenter urged that we allow for the use of review
findings of related ``focus studies'' of groups that Medicaid serves
(for example, the elderly or disabled) which are conducted by other
types of certified Medicare organizations.
Response: As long as a focused study is conducted using a
methodology consistent with our protocols, and the study population is
composed of Medicaid beneficiaries, a State can have its EQRO use the
review findings. In addition, if the organization that conducts the
focused study is the State's EQRO, the State can obtain the 75 percent
enhanced match for its review of these findings.
Comment: One commenter believed that the activities under proposed
Sec. 438.358(a)(2) are not the same regardless of the populations
served, and specifically that there is a difference when serving
individuals with disabilities. To address this concern, the commenter
felt that the EQRO must be knowledgeable and sensitive to people with
disabilities in order to effectively assess an MCO's compliance with
standards.
Response: As specified in Sec. 438.354, an EQRO must meet certain
competency requirements, including having staff with knowledge of
Medicaid beneficiaries. In addition, our Medicaid managed care final
rule requires, under the State's quality strategy, that the State have
procedures in place for assessing the quality and appropriateness of
care and services furnished to enrollees with special health care
needs. This includes individuals with disabilities.
Comment: One commenter recommended that audits conducted by the
State licensing organization be coordinated with the EQRO, and that the
audit of components conducted by the State licensing organization be
``deemed'' to have been performed by the contracted EQRO.
Response: States can use their State licensing organization to
assess MCO or PIHP compliance with State standards, or perform any of
the mandatory or optional EQR-related activities identified in Sec.
438.358. If a State wants to use this information for the EQR, the
review must, at a minimum, use our protocols or protocols that are
consistent with ours. Thus, there would be no reason to ``deem'' these
reviews to have been performed by the EQRO, other than to claim the 75
percent match that would apply if the EQRO performed these functions.
As noted
[[Page 3606]]
above, however, if a State uses entities other than EQROs to perform
activities, the 75 percent match rate under section 1903(a)(3)(C)(ii)
of the Act would not be available. We hope and anticipate that States
will coordinate the EQR and EQR-related activities with other State
quality activities currently in place.
Comment: Many commenters believed that direct Medicaid agency
external reviews should always be performed with respect to grievance
systems because these commenters believe that the Medicaid fair
hearings process is unique.
Response: The EQRO is not responsible for reviewing the State's
fair hearing process. It must review information about the MCO or PIHP
internal grievance system. In order for a State to use a Medicare or
accreditation compliance determination to substitute for a Medicaid
review of the MCO's or PIHP's grievance system, the State will need to
address in its quality strategy the basis for considering the Medicare
or accrediting organization's standard comparable to the State's
grievance processes standard that needs to comply with the provisions
of subpart F of the Medicaid managed care final rule.
Comment: One commenter expressed concern that we excluded Medicare
beneficiaries who are eligible for Medicaid as a result of spenddown
requirements from the definition of dually eligible persons.
Response: We have not excluded from the definition of dually
eligible those Medicare beneficiaries who are eligible for Medicaid as
a result of spenddown requirements. We consider any person who is
receiving both Medicare and Medicaid benefits as a ``dually eligible''
person.
Comment: One commenter believed that the meaning of MCO in proposed
Sec. 438.360, and Sec. 438.362 was not clear. The commenter noted
that corporate entities may be wholly owned subsidiaries of other
corporate entities, and may hold multiple licenses. The commenter also
noted that in some cases a plan may have a large Medicaid product and a
very small Medicare product, calling into question the assumption that
adequate management of the Medicare enrollees is an appropriate proxy
for their Medicaid enrollees. The commenter recommended a more complete
definition of MCO, as it relates to the MCO's Medicare and Medicaid
product lines being incorporated into the rule.
Response: The definition of MCO as used in this regulation is
defined in Sec. 438.2 of the Medicaid managed care final rule.
According to this definition, an MCO is the entity that holds the
Medicaid comprehensive risk contract. We believe that this definition
addresses the commenter's concern, as the Medicare review provisions
will only apply if the same entity that holds the Medicaid contract
holds the Medicare contract.
Comment: One commenter recommended that we make clear that a State
may undertake optional EQR activities, even if it has exempted an MCO
from a portion of or all of the mandatory activities.
Response: A State may conduct the optional EQR activities when it
uses Medicare or accreditation review findings for the mandatory
activities. As long as the State uses the protocols developed by us or
protocols consistent with ours, the information derived from the
optional activities can be used in the EQR.
Comment: One commenter believed that when an MCO is accredited by a
private accrediting body, the States should be strongly encouraged not
to duplicate the review performed by the private accrediting body.
Response: The final rule provides States the option to use the
findings of an accrediting body instead of conducting its own review of
MCO or PIHP compliance with certain standards, if the MCO or PIHP has
been accredited by a national accrediting organization recognized by
us. We believe that States should have the discretion to make this
decision, and individuals who believe that this option should be
adopted should encourage States to do so.
I. Exemption From External Quality Review (Sec. 438.362)
Proposed Sec. 438.362 provided an option for a State agency to
exempt an MCO or PHP from the EQR requirements in section 1932(c)(2)(A)
of the Act if: (1) The MCO or PHP has a current Medicare contract under
part C of title XVIII or under section 1876 of the Act; and (2) for at
least 2 years, the MCO or PHP has satisfied EQR requirements under
section 1932(c)(2)(A) of the Act with respect to its Medicaid contract.
In addition, we proposed that the Medicaid and Medicare contracts be
required to cover all or part of the same geographic area. We also
proposed that the State agency require each exempted MCO and PHP to
annually provide the State with copies of all Medicare reviews
performed by us, by our agent or any private accrediting organization,
with respect to the quality, timeliness, and access to its services.
Comment: Many commenters opposed this exemption of certain MCOs
from EQR. One of the commenters felt that this provision completely
abrogates the responsibility of the States and CMS to monitor the
quality of Medicaid managed care systems for children. One commenter
agreed with this provision, as long as it was an option for States.
Response: In the BBA, the Congress expressly provided States with
the option of exempting from EQR those MCOs that provide Medicare
services and also have had experience serving the Medicaid population.
This provision, however, does not exempt States from monitoring MCOs
and PIHPs for compliance with the mandatory activities listed in Sec.
438.358. These activities, required of MCOs and PIHPs under our
Medicaid managed care final rule, are essential to ensure the quality
of services provided to Medicaid beneficiaries by MCOs and PIHPs. For
example, the BBA requires that States have a quality strategy in place
when contracting with MCOs and PIHPs. States will still need to ensure
MCO and PIHP compliance with the BBA provisions and our regional
offices will continue to monitor States for compliance regardless of
whether or not an EQR is conducted.
Comment: One commenter asked how this provision would impact a
Medicaid plan that gave up its M+C product. Specifically, the commenter
asked if there would be an immediate requirement for an EQRO review.
Response: Under Sec. 438.362(a)(1), the MCO and PIHP must have a
current Medicare contract. Therefore, as EQR is an annual requirement,
the year following the termination of the M+C plan, the State is
required to contract with an EQRO to, at a minimum, review and analyze
information from the validation of performance improvement projects
conducted by the MCO or PIHP and performance measures calculated by the
MCO or PIHP that year. The State will also need to ensure MCO or PIHP
compliance with structural and operational standards. If the MCO or
PIHP had been reviewed by Medicare or an accrediting organization
within the previous 3 years, that information could be used in the EQR.
If this were the year that the MCO or PIHP was to be reviewed for
structural and operation standards, the State or its contractor, or the
EQRO would have to conduct a review.
Comment: Several commenters asked us to clarify who we considered
appropriate to determine whether an MCO or PIHP performed acceptably in
previously conducted EQRs, as this was not a requirement under the
section 1902(a)(30)(C) of the Act EQR requirements. Some of the
commenters
[[Page 3607]]
stated that it would not be appropriate for the State to make the
determination, as the independent nature of the EQR might be
compromised. Many commenters asked us to clarify what we consider to be
acceptable performance and recommended that an MCO or PHP be required
to perform acceptably on quality, timeliness, and access in order for a
State to allow for the exemption.
Response: Whether an MCO or PIHP has performed acceptably is
determined by the State based on the results of the EQR, which must
include a detailed assessment of each MCO's and PIHP's strengths and
weaknesses with respect to quality, timeliness, and access to health
care services provided to Medicaid beneficiaries. If a State elects to
exempt an MCO or PIHP from an EQR it must, as specified in Sec.
438.362(a)(3), ensure that an MCO or PIHP not only have had a Medicaid
contract for 2 years but that the MCO or PIHP has also been subject to
an EQR as specified in this rule. This effectively means that no MCO or
PIHP could be exempted under Sec. 438.362 until EQR under this final
rule is in effect for at least 2 years. As long as the provisions under
this section are met, the State will determine the length of time for
which it will exempt an MCO or PIHP from EQR. The State will be able to
use information obtained from the Medicare or accreditation reviews, as
the submission of Medicare review findings is required under Sec.
438.362(b).
Comment: One commenter was concerned that similar geographic
coverage areas do not necessarily ensure similar administration,
networks, benefits, and quality improvement projects for the different
beneficiaries who are served by the Medicare and Medicaid programs.
Another commenter agreed with the requirement that the two contracts
cover the same geographic area, but was concerned that practice
patterns tend to vary geographically for given clinical topics and
specific types of treatment. The commenter suggested we change the
geographic requirement to require similar or identical service areas
instead of overlapping areas. Two commenters supported the requirement
that the two contracts cover all or part of the same geographic area,
but suggested that we include additional requirements that the two
contracts must (1) include the same provider networks and (2) offer the
same or similar benefit and services to consumers. The commenters
believe this is important because M+C plans serve markedly different
populations, provide different benefit packages, and often offer
different provider networks than Medicaid plans. One commenter asked us
to clarify whether the Medicaid and Medicare services areas have to be
identical for MCOs and PHPs to qualify for exemption.
Response: Under Sec. 438.362(a)(2), we require that the Medicare
and Medicaid contracts cover all or part of the same geographic area in
order for a State to exempt the MCO or PIHP from EQR. We required an
overlap of service areas in this provision because we believe this will
increase the likelihood that the findings from the Medicare review will
serve as a proxy indicator of the care delivered to the MCO's or PIHP's
Medicaid beneficiaries. We have made some clarifying language changes
to the regulations text in the final rule to more clearly state our
intent that the contracts must cover all or part of the same geographic
area within the State that is allowing the MCO or PIHP exemption from
EQR. However, we think that requiring identical service areas or the
same or similar benefit packages is too restrictive, and may
effectively exclude the use of an exemption intended by the Congress.
Comment: Several commenters asked that we not restrict the
exemption provision to M+C organizations, but also allow it to apply to
MCOs and PHPs that have undergone or achieved ``excellent'' status by a
private accreditation review.
Response: In the BBA, the Congress applied the total exemption in
section 1932(c)(2)(C) of the Act only to M+C organizations.
Consequently, we have not applied this provision to commercial MCOs and
PIHPs. However, we address nonduplication provisions related to EQR
activities as they apply to private accreditation under Sec. 438.360.
Comment: Several commenters concurred with the requirement that an
MCO or PHP must demonstrate acceptable performance determined by the
EQR for the 2-year period before exemption. One of these commenters,
however, was concerned that the regulation appears to allow exempt
status to last indefinitely, and noted that it is not unusual for plan
performance to vary significantly from year to year due to
organizational changes. Several commenters recommended that States be
required to develop mechanisms to periodically re-evaluate an MCO's
exempt status, and to re-institute EQR if accreditation, Medicare, or
State oversight indicate potential quality problems. One commenter
opposed our proposal to require that the MCO have complied with EQR
requirements for 2 prior years. This commenter believed that this
interpretation was unduly restrictive, and inappropriately limited the
discretion given to State agencies to exempt MCOs based on the State
agencies' experience with the MCOs or PHPs.
Response: We believe that the language in this rule properly
reflects congressional intent to allow States the option to exempt a
Medicare MCO from EQR. Once an entity is exempted, and continues to
meet the criteria for exemption, we believe that the Congress intended
that the Medicare quality review requirements serve as a proxy for the
Medicaid EQR requirements. Because the State will have access under
Sec. 438.362(b) to data from these reviews, any problems that develop
should be recognized through this process. We thus do not believe it
would be appropriate to require States affirmatively to re-evaluate an
MCO's or PIHP's EQR-exempt status.
With respect to our requirement that 2 years of success in Medicaid
EQR be required, as noted in the preamble to the proposed rule, we
considered several interpretations of the statutory provision that
requires at least 2 years of Medicaid contracting in order for this
exemption to apply. We concluded that the Congress' intent in requiring
2 years of Medicaid contracting experience was to ensure that the MCO
had sufficient quality measures in place to meet Medicaid EQR standards
before it could be exempted from Medicaid review. Since these EQR
standards are new, this necessarily would require that an MCO have a
Medicaid contract for 2 years under these EQR requirements before the
exemption in Sec. 438.362 would apply. This ensures that all MCOs and
PIHPs have been subject to Medicaid EQR at some point, and have been
found to be compliant with Medicaid standards in this review.
We emphasize again, however, that the EQR requirements, from which
MCOs and PIHPs can be exempted under Sec. 438.362 are only one part of
the Quality Strategy provided for in the BBA. Other BBA provisions
require States contracting with MCOs to ensure the quality and
appropriateness of care and services furnished to Medicaid
beneficiaries. We believe that if States find MCOs or PIHPs not to be
providing appropriate quality care, they would exercise their option to
require an EQR.
Comment: Many commenters agreed that MCOs should be required to
submit copies of reviews performed by Medicare or an accrediting
organization. One commenter did see the benefit in receiving Medicare
review reports. One of the commenters cautioned that accreditation
reviews are generally performed less frequently than annually.
Response: We only require that information from the Medicare or
[[Page 3608]]
accreditation review be provided annually. We are not requiring that
Medicare or accreditation reviews be conducted annually. If no new
information is obtained in a specific year, it is not necessary for the
MCO or PIHP to provide the State information provided the previous
year. If a State chooses to exempt the MCO or PIHP, this does not
relieve the State from ensuring that access to timely and quality
services is being provided. Findings from a Medicare or accreditation
review will provide the State a useful source of information to
determine access to quality services for Medicaid beneficiaries. To
better explain the types of information we are requiring be provided if
a State chooses this option, and to address situations in which an
entity is accredited by a private accrediting body approved by CMS
under Sec. 422.158, we have added clarifying language that makes a
distinction between when a Medicare review is conducted by us or our
contractor and when an accreditation review based on deemed compliance
by such an approved entity. The findings of an accreditation review of
an MCO or PIHP must be from a review of the Medicare line of business
as this provision only applies to an M+C organization.
Comment: Many commenters recommended that MCOs that have
established distinct provider networks for Medicaid and Medicare
beneficiaries not be exempt from EQRs.
Response: As explained in an earlier response, we attempted to
address differences inherent in Medicare and Medicaid contracts by
requiring the contracts to have some geographic overlap. We do not
believe, however, it is necessary or appropriate to require that
Medicare and Medicaid beneficiaries of the MCO or PIHP use the same
providers. We believe that an MCO or PIHP that demonstrates
satisfactory compliance in M+C external review has demonstrated that it
has appropriate quality safeguards in place, and that these would
extend to all providers, whether seen by Medicare, Medicaid, or
commercial enrollees.
We note that in providing for this exemption in section
1932(c)(2)(C) of the Act, the Congress did not require that Medicare
and Medicaid enrollees use the same providers. It did require, however,
that the entity have 2 years of Medicaid contracting experience. Under
our interpretation of this requirement, discussed in a previous comment
response, an MCO or PIHP would be required to demonstrate satisfactory
results from 2 years of Medicaid EQR under part 438 before it would be
eligible for the exemption under Sec. 438.362. Thus, even if different
providers are used by Medicaid enrollees than Medicare enrollees, the
MCO or PIHP would have demonstrated for 2 years that the Medicaid
providers performed satisfactorily in EQR before being exempted from
this review. Having already demonstrated that its Medicaid providers
met quality standards, the fact that it continues to satisfy quality
standards in future years under Medicare external review is an
indication that the entity is continuing its level of commitment to
quality.
Comment: Many commenters recommended that the regulations specify
that in the case of mergers and acquisitions, MCOs be treated as new
contractors in the Medicaid program, and be subject to an EQR.
Response: We do not agree with the commenter that the regulations
should specify that all MCOs and PIHPs that have been acquired or
merged with another MCO or PIHP be treated as new contractors. There
are a variety of scenarios that occur when a merger or acquisition
occurs as indicated by the complex rules that govern how private
accrediting organizations address these situations. In addition, States
have their own laws and regulations governing mergers and acquisitions.
We, therefore, believe the States are in the best position to determine
quality improvement requirements for newly formed entities and this
regulation provides States the option to allow for the exemption as
long as all the provisions in this section are met.
Comment: One commenter asked that we revise Sec. 438.362(b)(1) to
specify that the State agency must require each exempted MCO to provide
it annually with copies of Medicaid reviews performed by State agents
or any private accrediting organization with respect to the quality,
timeliness, and access to services instead of Medicare review findings.
Response: We are not revising Sec. 438.362(b)(1) to require
Medicaid review findings be submitted to the State because if a State
or its agent conducted a review, there would be no need to require the
MCO or PIHP to submit the review findings, as the State would already
have this information. There is a need, however, for the MCO or PHP to
submit Medicare review findings if a State chooses to exempt an MCO or
PIHP from EQR, which is why this requirement is included in Sec.
438.362(b). The exemption provision does not relieve a State from the
responsibility for ensuring the adequacy of care provided by an MCO or
PIHP, and the data from Medicare quality reviews are a source of
information that will be necessary for States to use to determine the
appropriateness of exempting an MCO or PIHP from an EQR the following
year.
Comment: One commenter recommended allowing States the flexibility
to decide if their Medicaid services can properly be evaluated by a
Medicare review.
Response: States have the flexibility to determine if Medicaid
services can be appropriately evaluated by a Medicare review. This
provision provides States with the option to exempt an MCO or PIHP from
EQR. It does not require the exemption.
J. External Quality Review Results (Sec. 438.364)
In Sec. 438.364, we proposed a requirement that the product of EQR
be a detailed technical report, containing (1) a detailed assessment of
each MCO's and PHP's strengths and weaknesses with respect to quality
of the health care services furnished to Medicaid enrollees, (2)
recommendations for improving the quality of the services furnished by
each MCO and PHP, (3) comparative information about all MCOs and PHPs
as determined appropriate by the State agency, and (4) an assessment of
the degree to which each MCO and PHP addressed effectively the
recommendations for quality improvement, as made by the EQRO during the
previous year's EQR. Proposed Sec. 438.364 also specified that the
State must provide the results of the EQR to members of the general
public upon request, and that the information released may not disclose
the identity of any patient.
Comment: One commenter suggested that, because of the differing
nature of adult and child health care needs, all data produced during
the course of an EQR should be available by age groups so that parents
may choose an MCO on the basis of the provision of quality pediatric
care.
Response: This rule requires information from a variety of
activities to be provided to an EQRO and included in the analysis and
evaluation of the care provided by MCOs and PIHPs. Not all of the EQR
activities provide detailed information that can be broken out by age
groups or other categories. For example, a review for compliance with
structural and operational standards would not yield beneficiary
specific information. However, encounter data could potentially provide
that information. In addition, the populations served by MCOs and PIHPs
are likely to vary along multiple dimensions, including age,
[[Page 3609]]
income, diagnosis, and ethnic group. Because of the variability in the
populations served by particular MCOs and PIHPs, we have provided
States flexibility to determine the content of the results made
available and the manner in which it is presented. To the extent that
this information identifies quality issues pertaining to a specific
population, the State may include that information in the results it
makes available. However, we are not in the final rule requiring that
EQR results be available by age groups, as this may not always be
possible or appropriate for a given MCO or PIHP or for given data.
Comment: One commenter contended that not all quality improvement
studies monitor quality, timeliness, and access. The commenter
accordingly suggested that neither the State nor the EQRO should be
required to summarize the strengths and weaknesses of the MCO or PIHP
for each of these elements. The commenter also believed that if
multiple studies are conducted, project time lines are not likely to
coincide. In addition, the commenter recommended that proposed Sec.
438.364(a)(5) be revised to require ``An assessment of the degree to
which each MCO has addressed effectively the recommendations for
quality improvement as made by the EQRO during the previous measurement
of the measure or of a similar measure, as appropriate to the study
performed.''
Response: The commenter suggesting that the State or EQR should not
be required to summarize strengths and weaknesses of an MCO or PIHP for
``each of the elements'' of quality, timeliness, and access implies
that the results of the EQR process need not address all three of these
areas. Because section 1932(c)(2)(A) of the Act requires that an annual
EQR include all three of these elements, it is essential that strengths
and weakness identified by the EQR process with regard to each are
described in the results. Because there appears to be confusion on this
point, we have revised Sec. 438.364(a)(1) to specifically reference
``timeliness and access.''
The commenter's suggestion that Sec. 438.364(a)(5) be revised to
permit the use of a ``previous measurement of a measure,'' as opposed
to the previous year's EQR recommendations (as the baseline against
which improvements in MCO or PIHP performance are assessed) is
inconsistent with the clear direction of section 1932(c)(2) of the Act
that EQR be an annual review. Further, the Medicaid managed care final
rule requires performance measurement and improvement projects be
underway on an annual basis. Consequently, we retain but modify the
language of the proposed rule requiring the EQR to contain as
assessment, as opposed to a ``detailed'' assessment of the degree to
which each MCO and PIHP has addressed effectively the recommendations
for quality improvement, as made by the EQRO during the previous year's
EQR.
Comment: One commenter believed that the reference to ``strengths
and weaknesses'' in proposed Sec. 438.364(a)(2) implies a subjectivity
that the commenter found inappropriate in carrying out the EQRO's
responsibilities. The commenter recommended that the EQRO be required
to report objectively on the performance of each MCO based on the
measures selected. This commenter also questioned whether having an
EQRO make recommendations for improving care and assessing the degree
to which an MCO has met the previous year's recommendations are
appropriate elements of the reports, because this is currently--and
appropriately in the commenter's view--the province of the State (that
is, identifying deficiencies in contract performance and holding MCOs
accountable for correcting these deficiencies). The commenter requested
that we exclude from the EQR reports, an EQRO's recommendations for
improving care and assessing the degree to which the previous year's
recommendations were met. If we retain these provisions, the commenter
asked that Sec. 438.364(a)(3) be revised to (1) allow the MCO the
opportunity to submit a corrective action plan, which, if accepted
would be adopted by the EQRO as its recommendation or (2) at a minimum,
have the opportunity to comment on the EQRO's proposed recommendations.
The commenter also suggested that Sec. 438.364(a)(5) be revised so
that the recommendations made by the EQRO are reviewed and approved by
the State before finalizing the recommendations.
Response: We do not agree with the commenter that the report of EQR
results should not address MCO and PIHP strengths and weaknesses. While
we agree that the EQRO should consider the information produced by
various EQR-related activities in an objective manner, the results of
the analysis and evaluation of information will likely identify
differences in the performance of MCOs and PIHPs with respect to issues
under study. We believe that it is reasonable to expect the EQRO to be
able to identify MCOs and PIHPs that had higher or lower scores on the
State's standardized performance measures, and MCOs and PIHPs that had
stronger evidence of compliance with certain standards. It is also
reasonable for interested parties to expect this information to be
publicly available. We note that this is common practice in the private
sector where private accrediting organizations release comparative
information on health plans.
We agree with the commenter that the State is the entity
responsible for holding MCOs and PIHPs accountable for contract
performance. The EQR is a source of information States can use to
determine the adequacy of MCO and PIHP contractual performance
regarding quality, timeliness, and access to services. The State may
choose to require MCOs and PIHPs to submit corrective action plans
based on the EQR results. In addition, as the State is the entity that
holds the contract with the EQRO, the State may specify that it have
the opportunity to review, comment, or approve the recommendations. The
EQR results will be provided to us upon request, and will most often be
requested and used by our regional office staff when conducting managed
care program monitoring reviews. As a result, we retain the language
included in the proposed rule.
Comment: One commenter concurred with proposed Sec. 438.364, and
specifically supported the requirement that EQR results (including
assessments of MCO strengths and weaknesses and recommendations for
improvement) be documented in sufficient detail and made publicly
available. The commenter felt this was vital in order to allow
interested parties to evaluate the conclusions of the EQR. Another
commenter concurred with proposed Sec. 438.364, and noted that the
report required therein could be made available on the internet, to all
interested parties, thus reducing the burden of report distribution.
Response: We agree with the commenters. Because the proposed
language at Sec. 438.364(b) could be interpreted to require the
release of information in hard copy format only, in response to this
comment we have modified the regulations text to indicate that the
State must provide the information specified in paragraph (a) of this
section, upon request, through print and electronic media, to
interested parties.
Comment: One commenter noted that State staff currently perform the
activities in paragraph (a)(2) of proposed Sec. 438.364, and that
requiring an EQRO to do this would increase the cost of the EQRO
contract. The commenter also believed that the EQRO should not be
making recommendations on improving the health care services furnished
by each MCO, as specified under paragraphs (a)(3) and (a)(5) of
proposed
[[Page 3610]]
Sec. 438.364. The commenter felt that the MCO should be responsible
for designing interventions for improving its members' quality of care,
and the EQR process should evaluate the effectiveness of these MCO
interventions. Another commenter recommended these sections be deleted,
contending that the Act does not require an external entity to perform
any of the activities listed under paragraphs (a)(2) through (a)(5).
Response: As stated earlier, we agree that the State is ultimately
responsible for rendering decisions about MCO and PIHP performance, and
that EQR results represent one source of information States can use to
determine MCO and PIHP performance. However, the Congress, in the BBA,
stated that the EQRO is to perform a review of ``the quality outcomes
and timeliness of, and access to the items and services for which the
organization is responsible.'' The Congress further required that the
results of the reviews be made available to multiple parties. We
believe that a review requires the EQRO to make judgements regarding
the MCOs' and PIHPs' performance in these areas and that the judgements
can reasonably be expected to point to the MCOs' and PIHPs' strengths
and weaknesses, recommendations about the quality, timeliness, and
access to services provided by MCOs and PIHPs, and for how to make
improvements. In order to enable the EQR process to be as effective and
useful as possible, we retain these provisions in the final rule.
Comment: One commenter recommended that the regulation specify that
the EQR results be made available in alternative formats for persons
with sensory impairments, when requested.
Response: This comment appropriately suggests accommodations for
persons with disabilities. At the end of Sec. 438.364(b), in response
to this comment we have added a sentence requiring States to make the
EQR results available in alternative formats for persons with sensory
impairments when requested.
Comment: Several commenters believed that while it may make sense
to mandate disclosure of valid, reliable, and objective performance,
and satisfaction measures, States should not be required to disclose
the results of other health plan operations, such as contractual
compliance, and quality improvement studies. In the view of these
commenters, EQR activities should promote a frank assessment of
performance in order to provide MCOs and PIHPs the knowledge necessary
to perform better in the future. The commenters suggested that if the
results of quality improvement studies were made public, MCOs would not
treat the process as an unfettered opportunity to assess their own
performance. Instead, the commenters believed they would tend to
conduct studies in a way that is likely to generate favorable outcomes
and, thereby, meaningful quality improvement efforts. One of these
commenters also noted that if the primary audience for this information
was Medicaid enrollees, we needed to consider whether such a detailed
technical report would be relevant to our beneficiaries' needs.
Response: As we indicated in the preamble to the proposed rule, we
proposed to require only that summary information made generally
available is sufficient to enable interested parties to evaluate the
conclusions of the EQR. The State is not expected to provide more
detailed underlying data to beneficiaries or the general public.
However, to clarify the level of detail to be provided in the EQR
results, in response to this comment, we are revising Sec.
438.364(a)(1)(iii) to require only that a description of data be
provided in the technical report, as opposed to requiring that the
actual data obtained be provided. Our intention was never to require
that raw data be provided. In addition, as noted above, we are
providing clarifying language in Sec. 438.364(a)(1) to make clear that
the technical report conclusions address timeliness and access to care
as well as quality of care.
We note that section 1932(c)(2)(A)(iv) of the Act specifies that
EQR results be made available to providers, enrollees, and potential
enrollees. In the proposed rule, we broadened this requirement to
specify that the results be made available to the general public. To
ensure that adequate information is available for beneficiaries, as
well as providers, beneficiary advocates, and other stakeholder, we
believe that some detail in the report is warranted. In addition to
making the EQR results available, States have the flexibility to
repackage these results in order to address specific audiences more
appropriately.
Comment: Many commenters agreed with our effort to ensure public
access to EQR results. The commenters also recommended that the
findings of private accreditation reviews be made available to the
public when they substitute for all or part of the EQR. They stated
that this is consistent with the President's Advisory Commission of
Consumer Protection and Quality in the Health Care Industry
recommendation that when a private accreditation is used, there must be
full disclosure of the standards, survey protocols, and the detailed
information from the surveys.
Response: Section 438.364 identifies the results of the EQR process
that must be made available and to whom it must be made available. When
an EQRO is using private accreditation or Medicare review results under
the nonduplication option under Sec. 438.360, the EQR results, in
accordance with Sec. 438.364(a)(1), must still include the information
required under paragraphs (a)(1)(i) through (a)(1)(iv) of this section.
We believe that when a State chooses to use the results of a Medicare
or private accreditation review to replace a Medicaid review, that
there must be information on the data obtained from the Medicare or
accreditation review and conclusions drawn from the data consistent
with Sec. 438.364(a)(1)(iii) and (a)(1)(iv).
Comment: One commenter asked us to clarify whether the regulation
envisions that the full technical report be available to the public, or
whether only certain information about the technical report will be
made available. The commenter recommended that we establish guidelines
for preparation of a summary report that must be developed from the
technical report. The commenter believes that a summary report will be
more useful to the public and will avoid the potential for the release
of proprietary information that might appear in the reports.
Response: As we stated in the preamble of the proposed rule, we are
only requiring that States make available summary-level information
that is ``sufficient to enable interested parties to evaluate the
conclusions of the EQR.'' The State is not expected to provide more
detailed underlying data or proprietary information to beneficiaries or
the general public. As we noted earlier, to provide clarification on
the level of detail to be provided in the EQR results, we are revising
Sec. 438.364 (a)(1)(iii) to require that a description of data be
provided in the technical report as opposed to requiring that the data
obtained be provided.
K. Federal Financial Participation (FFP) (Sec. 438.370)
Proposed Sec. 438.370 provided that FFP would be available (1) at
the 75 percent rate for EQR, the conduct of EQR activities, and the
production of EQR results, by EQROs and their subcontractors, and (2)
at the 50 percent rate for EQR-related activities performed by entities
not qualifying as EQROS. The 50 percent rate applies even if the
activities are of the same type as those that would be matched at the
75 percent rate if performed by an EQRO.
[[Page 3611]]
Comment: Several commenters asked us to clarify whether a State
must contract with an EQRO in order to fulfill its EQR obligations
under these regulations, and specifically whether it would fail to
fulfill its obligation under the law if it contracts with an entity not
qualified to be an EQRO.
Response: To fulfill its obligations under this regulation, a State
must contract with an EQRO to conduct an analysis and evaluation of the
aggregated information produced from, at a minimum, the mandatory EQR-
related activities and produce the EQR results as required under Sec.
438.364. In response to this comment, we have made clarifying changes
to Sec. 438.370 to better explain for what activities and functions
States can obtain a 75 percent, or 50 percent match. That is, States
can obtain the 75 percent enhanced match for EQR (the analysis and
evaluation of information produced from EQR-related activities), EQR-
related activities, and the production of EQR results as long as these
functions and activities are conducted by an EQRO. States can obtain
the 50 percent match for EQR-related activities conducted by entities
not qualified as EQROs. However, States must contract with an EQRO that
meets the requirements of Sec. 438.354 to perform the EQR function of
analyzing and evaluating the aggregate information from EQR-related
activities. If a State did not so contract, it would be out of
compliance with the requirement in section 1932(c)(2) of the Act for
EQR.
Comment: One commenter asked whether the enhanced FFP is available
for the optional activities a State may include in an EQR. Another
commenter supported the enhanced FFP rates provided for in the Act.
Response: The enhanced FFP is available for the optional EQR
activities as long as they are conducted by an EQRO that meets the
requirements of Sec. 438.354 using the appropriate CMS protocol or a
consistent protocol.
Comment: One commenter requested clarification as to whether the
upper payment limit (UPL) can be adjusted to take into account
administrative expenses and if not, whether States will be able to
request waivers of the UPL to reflect these additional expenses.
Response: The Medicaid managed care final regulation replaced the
UPL requirements at Sec. 447.361 with new rate setting rules (Sec.
438.6) by incorporating and expanding requirements for actuarial
soundness. These new requirements recognize administrative costs and
allow for States to adjust capitation rates to reflect MCO and PIHP
administrative costs.
Comment: One commenter recommended that we revise Sec. 438.370 to
require States to appropriate a portion of the enhanced FFP to cover
each MCO's administrative cost associated with meeting this EQR
requirement.
Response: We believe that the statute does not permit States to use
the enhanced funds to pay for MCO and PIHP administrative costs
associated with EQR. The 75 percent enhanced match is only available
for costs incurred by States for contracting with an EQRO. However, as
noted above, with the elimination of the UPL, States now reflect
administrative costs in capitation payments to MCOs and PIHPs.
Comment: One commenter asked us to clarify whether validation
activities are reimbursable at the 75 percent enhanced FFP rate for EQR
activities.
Response: The following validation activities are reimbursable at
the 75 percent enhanced match as long as they are conducted by an EQRO
that meets the requirements of Sec. 438.354 and the EQRO uses
protocols developed by us, or protocols consistent with our protocols:
validation of performance measures, validation of performance
improvement projects, validation of consumer or provider surveys, and
validation of encounter data.
L. Miscellaneous Comments on the Preamble of the December 1, 1999
Proposed Rule
We noted in the preamble to the proposed rule that we followed two
principles in its development: first, to provide flexibility to State
agencies; and second, to reflect well-accepted advances in the methods
of quality measurement and improvement.
The proposed rule also acknowledged that in a separate rule
published in 1998, we had proposed to eliminate the requirements in
Sec. 434.53 that States have a system of periodic medical audits.
The proposed rule included a proposed effective date of 60 days
following publication with provisions that must be implemented through
contracts with EQROs to be effective with contracts entered into or
revised on or after 60 days, but no longer than 12 months from the
effective date. We received the following comments relating to the
above issues.
Comment: Several commenters expressed support for the approach
taken in the proposed rule in providing flexibility for States, and
asked us to retain mechanisms States already have in place for EQR.
Several commenters, however, found that the proposed rule did not
afford States the flexibility and discretion afforded by the BBA. One
commenter argued that States that demonstrate that their quality
improvement processes meet or exceed the goals of these regulations
should be permitted to continue with current arrangements. The
commenter further contended that section 1932(c)(1)(B) of the Act,
which requires that the Secretary's standards not preempt any State
standards that are more stringent than those in the proposed rule,
supports their position.
Response: Section 1932(c)(1)(B) of the Act refers to the quality
assessment and improvement strategy that States are required to develop
and implement. The components of this strategy were set forth in the
Medicaid managed care final rule published on June 14, 2002. The EQR
requirement is one component of this overall State strategy. We agree
that the statute allows States to exceed the requirements of the
quality assessment and improvement strategy as outlined in the Medicaid
managed care final rule. However, the BBA also required the Secretary
to undertake the activities set forth in this rule; that is, establish
a method for identifying qualified entities to conduct EQR, develop
protocols to be used for EQR, and otherwise implement the EQR
provisions of the BBA. States will continue to have the flexibility to
exceed the requirements included in this rule and conduct optional
EQRO-related activities.
Comment: Several commenters asked us to explain how QISMC, the
final Medicaid rules, and the EQR compose a cohesive vision and how
States should integrate the proposed rule into other quality assessment
and performance improvement activities. One of the commenters believed
that the proposed rule appeared to set a standard for an overall
evaluation rather than a specific external review study. Since QISMC
sets overall standards, the commenter believed that a nonduplicative
connection to QISMC was important. The second commenter asked us to
clarify how the EQR regulations will fit in with current and pending
State requirements.
Response: This final rule, as did the proposed rule, provides for
an overall evaluation by an EQRO of the MCO's or PIHP's ability to
provide timely and quality services to Medicaid beneficiaries as
required by section 1932(c)(2) of the Act. The mandatory EQR activities
are based on standards and activities that States must have in place
under subpart D of the Medicaid managed care final rule.
Key elements of the QISMC document were incorporated into the
Medicaid
[[Page 3612]]
managed care final rule, as appropriate. However, in other instances
the QISMC standards, which we previously offered to States as
guidelines and not requirements, were not appropriate as requirements
in the regulations text. Further, the QISMC standards in a number of
ways have become outdated. For example, the QISMC document does not
sufficiently address individuals with special health care needs.
Individuals looking for a cohesive vision of a quality improvement
system for Medicaid managed care should look to three documents: (1)
The Medicaid managed care final rule, (2) this EQR final rule, and (3)
the EQR protocols developed in response to the BBA statutory
requirement. The QISMC document has been superseded by these three
documents for the purposes of Medicaid. Each of these documents is
accompanied by text describing how they should be integrated into State
quality improvement systems.
Comment: One commenter contended that the proposed rule
significantly reduced State flexibility in defining the content and
cycle of EQR, exacerbated what the commenter considered a double
standard for quality oversight between Medicaid FFS and Medicaid
managed care, and placed new requirements on States not previously
required of managed care programs. The commenter was concerned that
this rule would create another reason to discourage MCOs and
potentially PIHPs (especially those that provide behavioral health
services) from participating in Medicaid resulting in fewer managed
care options for Medicaid agencies and beneficiaries.
Response: We do not agree that this regulation significantly
reduces State flexibility. EQR is not a new requirement on States. EQR
has been a requirement for States contracting with MCOs since section
1902(a)(30)(C) of the Act was enacted in OBRA 1986. The BBA introduced
new requirements for EQR and provided parameters we are obligated to
follow in developing this regulation. The new requirement in section
1932(c)(2)(A)(iii) of the Act that protocols be developed which must be
followed by States necessarily limits State flexibility to some extent.
However, we believe that we have provided appropriate flexibility in
implementing this statutory requirement. To do this, in collaboration
with an expert panel that included State participants, we defined what
activities we considered to be essential for an EQR. The statute also
requires that EQR be conducted annually. While flexibility as the
nature of review under EQR may have been limited somewhat by the
requirement in section 1932(c)(2)(a)(iii) of the Act that protocols be
followed, the new rule provides States with substantial new flexibility
by allowing an expansion of the types of entities with which States can
contract to conduct EQR activities, and extends the 75 percent match
rate to these types of entities. In addition, this final rule allows a
State to conduct EQR-related activities itself or through other State
contractors. Thus, we do not believe that this rule will discourage
managed care contracting.
Comment: One commenter expressed concern that the rule will limit a
State's ability to maintain and improve distinct State quality
initiatives due to more extensive Federal quality improvement
initiatives. Specifically, the commenter believes the rule would
require States to either externalize or duplicate ongoing State quality
improvement activities.
Response: We do not believe that these EQR requirements will result
in a duplication of any ongoing State quality improvement activities. A
State may conduct any of the EQR-related activities internally or
through other State contractors. The State will need to conduct the
activities using our protocols or protocols consistent with ours if the
information is to be used as part of the EQR. Therefore, at a minimum,
our protocols or protocols consistent with ours must be used for the
mandatory activities. As stated earlier, the protocols are generic
instructions to ensure that the activities are conducted in a
methodologically sound manner. If a State chooses to conduct EQR
activities internally or have a State contractor other than the EQRO
conduct the activities, the State expenses will be matched at 50
percent. States must contract with an EQRO for only one function, that
is for the analysis and evaluation of the aggregated information
provided from the EQR activities and the development of the EQR
results. States can also continue to conduct other quality initiatives
outside of the scope of EQR and claim the 50 percent administrative
match.
Comment: One commenter contended that the proposed rule exceeded
our statutory authority. Specifically, the commenter argued that with
this rule, we effectively assumed control of a State's quality
assessment and performance improvement strategy by specifying (1) the
details of QI activities through detailed protocols developed without
input from individual States, and (2) which activities can be performed
by a State government entity, and which must be delegated to the EQRO.
The commenter recommended that the proposed rule be withdrawn and
redrafted to: (1) Allow for public review and comment of the protocols,
and (2) permit States to carry out their statutory responsibilities as
reflected in section 1932 (c)(1)(A) of the Act. The commenter also
doubted that uniformity of EQR results could be accomplished in light
of State programs that demand custom-tailored management and oversight
models.
Response: We do not agree that we have exceeded our statutory
authority in developing this regulation. The statute clearly required
us to develop protocols to be used in the external review. We developed
the protocols, as mandated, through an independent quality review
organization with the guidance of an expert panel that included State
representation, as required by the statute. A Federal Register notice
announcing the completion of the protocols was published on November
23, 2001 (66 FR 58741). In that notice, we asked for comment on the
extent to which burdens were imposed by the protocols, or on any other
aspect of the protocols. Comments received from that solicitation, and
our responses, are included in the preamble to this final rule.
We also believe we have provided significant flexibility to States
as to which activities must be performed by an EQRO, as the only
activity that must be conducted by the EQRO is the analysis and
evaluation of the aggregated information produced from the EQR
activities, and production of the results of that review as defined in
Sec. 438.364. The State can conduct the mandatory EQR-related
activities, or have another State contractor conduct these activities,
as long as the State uses our protocols or protocols consistent with
ours.
Comment: One commenter believed that the EQR activities in the
proposed rule were duplicative of the scope of work required in
Independent External Evaluations of waivers under section 1915(b) of
the Act, and recommended that the proposed rule be withdrawn until we
develop a unified, coordinated approach to waiver oversight.
Response: The EQR activities in this rule are not duplicative of
activities conducted as a part of independent assessments under section
1915(b) of the Act. The independent assessment requirement is a review
of a State's mandatory managed care program under the authority of
section 1915(b) of the Act. It reviews how adequately a State ensures
access to quality services in the mandatory managed care waiver
program, and the costs of the waiver program. The unit of analysis of
the
[[Page 3613]]
independent assessment under section 1915(b) of the Act is the State's
managed care program as a whole, not individual MCOs or PIHPs. In
contrast, the EQR review is a review of individual MCOs and PIHPs. The
EQR requirement applies to all MCOs and PIHPs regardless of whether the
program is voluntary or mandatory or whether it is authorized under a
waiver. Further, EQR is conducted annually, whereas the review under
section 1915(b) of the Act is conducted for the first 2-year period of
the waiver, and the first renewal period (assuming the review results
are acceptable). In addition, the independent assessment that we
require in the case of a waiver under section 1915(b) of the Act
applies to PCCM programs as well as programs with capitated
arrangements. The EQR requirement does not apply to PCCM programs.
Comments: One commenter supported the proposed elimination of the
requirement in Sec. 434.53 for a system of periodic medical audits.
Response: While we note that this comment does not directly pertain
to this proposed rule, we agree with the commenter. We believe that the
system of periodic medical audits under Sec. 434.53 is an out-dated
approach to quality assessment and improvement which would be
duplicative of EQR activities. (In this sense, the matter is relevant
to this final rule.) Consequently, the Medicaid managed care final rule
published on June 14, 2002 eliminated this requirement, as well as
other regulations in subpart E of part 434.
Comment: Several commenters thought the proposed time period for
bringing contracts into compliance with the new EQR requirements did
not provide sufficient time for States. One commenter suggested that
the new EQR rules apply to contracts entered into or revised on or
after 90 days, but no longer than 18 months from the effective date.
One commenter believed that States needed more than a year to implement
this rule. One commenter recommended implementation of the redrafted
rule on January 1 to be consistent with NCQA and other planning cycles
and allow up to 180 days before implementation.
Response: To be consistent with the Medicaid managed care final
rule, we have retained the effective date of this rule to be 60 days
following its publication. However, we have revised the time frame for
provisions to be implemented through contracts with MCOs, PIHPs, and
EQROs so that they must be effective with contracts entered into or
revised on or after 60 days following the publication date. States have
up until no longer than 12 months from the effective date to bring
contacts into compliance with the final rule provisions.
M. Collection of Information Requirements: December 1, 1999 Proposed
Rule
In the December 1, 1999 proposed rule, we asked for comment on the
following provisions that contain information collection requirements:
nonduplication of mandatory activities (Sec. 438.360), exemption from
external quality review (Sec. 438.362), and external quality review
results (Sec. 438.364).
A. General Comments
Comment: One commenter contended that the burden to the MCO of
working with the EQRO is not included.
Response: As part of the MCO and PIHP contracts with States, MCOs
and PIHPs are required to work with States on a routine basis. This
includes working with State contractors. We do not believe that working
with EQROs adds burden for MCOs and PIHPs but continue to believe that
it is part of the normal course of business for MCOs and PIHPs with
Medicaid contracts. Further, a requirement for EQR is not new. It has
been in place since the late 1980's under section 1902(a)(30)(C) of the
Act.
Comment: One commenter felt that while the financial impact of this
rule may be difficult to quantify, the proposed regulations would
significantly increase the time and administrative burden on States,
EQROs, MCOs, and PHPs well beyond the hourly estimates in the preamble.
Response: We do not agree that the regulation will significantly
increase the time and administrative burden of States, EQROs, MCOs, and
PIHPs beyond what we estimated in the proposed rule. Through our data
and information collection, we know that the EQR-related activities
referenced in this rule are those that are already typically required
by States. Similarly, MCOs have previously been complying with EQR
requirements subsequent to the enactment of section 1902(a)(30)(C) of
the Act in 1986.
Section 438.360 Nonduplication of Mandatory Activities
Comment: Several commenters argued that the estimate of the total
burden for the State for the proposed nonduplication provisions was too
low, and asked how the estimate of 4 hours was determined. One
commenter asked what data the MCO would need to provide to the State
under proposed Sec. 438.360(b)(2) and (c)(2).
Response: We estimated that it would take State staff approximately
4 hours to collect, copy, and disseminate the reports, findings, and
other results of Medicare reviews or information obtained from the
accreditation reviews and sent to the State. Because we received
several comments indicating that this estimate was low, but commenters
did not provide us with what they believe the estimate to be, we have
increased the burden hours by 100 percent, to 8 hours. In accordance
with Sec. 438.360(b)(3) of the final rule, the MCO or PIHP needs to
provide to the State any reports, findings, or results from an
accreditation review or our review for Medicare for the standards in
Sec. 438.204(g) that are being substituted in place of a Medicaid
review. In addition, if the MCO or PIHP provides services to dually
eligible individuals and the State allows the MCO or PIHP to provide
information from a Medicare review of performance measures and
performance improvement projects for the EQR in place of separate
Medicaid measures and projects, under Sec. 438.360(c)(3), the MCO or
PIHP will need to provide the results of Medicare review activities to
the State.
Section 438.362 Exemption From External Quality Review
We did not receive any comments on the information collection
burdens associated with complying with this provision.
Section 438.364 External Quality Review Results
Comment: One commenter noted that the preamble of the proposed rule
addresses the burden of disseminating information, but not of creating
the content listed. The commenter believed that the burden for creating
the information required to comply with Sec. 438.364(a)(2) would be
significant, and would serve no purpose other than to comply with the
rule. The commenter recommended deleting Sec. 438.364(a)(2). Several
commenters argued that the effort to compile and aggregate the data,
analyze, and formulate the review reports will take a significant
number of hours above the estimated number.
Response: The proposed rule did not address the burden of
conducting EQR activities, because we had not completed the protocols
at the time the proposed rule was published. A request for comment on
the information collection requirement burden of the protocols was
solicited in our November 23, 2001 Federal Register notice. We did,
however, address in the proposed rule the burden associated with
creating the EQR results report. We estimated
[[Page 3614]]
that it would take 160 hours for an EQRO to prepare and submit the EQR
results. Since we received several comments stating that it would take
more time than the 160 hours we proposed, but commenters did not
provide us with time estimates, we are increasing the burden hours by
25 percent.
We do not agree that the burden of Sec. 438.364(a)(2) is
significant, or that it serves no useful purpose. We believe that an
assessment of the strengths and weaknesses of MCOs and PIHP performance
as it relates to the quality, timeliness, and access to health care
services was the intent of the statutory provision that requires the
results of EQR be made available to beneficiaries and providers. We
retain these EQR results provisions in the final rule.
N. Impact Statement
To comply with Executive order 12866 and the Regulatory Flexibility
Act we examined the impact of the December 1, 1999 proposed rule. We
determined that the net impact of the proposed rule would be below the
$100 million annual threshold, and that a regulatory impact analysis
was, therefore, not required.
Comment: Several commenters believed that the proposed rule would
result in greater costs and burden to States and MCOs than we estimated
in the impact statement. The commenters stated that we did not estimate
the increased costs to States and MCOs for external review for
compliance with standards. The commenter also felt that we did not
consider the negative impact of external auditing on other MCO
activities, or new and ongoing infrastructure and labor, needed to
comply with these provisions. One commenter contended that these
activities would require MCOs and their providers to devote significant
staff time to collect, organize, and prepare for review of large
quantities of quality assurance data. Another commenter felt that due
to the independence requirements, the net results would be that fewer
entities would qualify to conduct EQR.
Response: We do not agree with these comments. The only activity
that must be conducted by an EQRO is the analysis and evaluation of the
information obtained from the EQR activities. If a State chooses to, it
can conduct any of the EQR-related activities and receive the 50
percent administrative match as long as the activities are conducted
using our protocols or protocols consistent with those we developed. In
addition, many States are already conducting or having State
contractors conduct many of the EQR activities. As we stated in our
proposed rule, most States are already obtaining a 75 percent matching
rate for many of these activities and we, therefore, believe there will
not be a significant increase in Medicaid expenditures, and that no new
significant infrastructure will be needed. We do not believe that this
requirement will cause MCOs to devote significantly more time to
collect, organize, and prepare for EQR than is already required by
States to ensure compliance with their contracts with MCOs and PIHPs.
Because this will be a new requirement on PIHPs, we acknowledged in
the proposed rule that there may be additional cost to the Federal
government, since States currently conducting these activities receive
a 50 percent administrative match, but under this rule they can now
obtain the enhanced 75 percent FFP. We do not believe these costs are
significant. Based on an analysis of 2001 Quality Improvement
Organization funding on the CMS-64, we estimate a cost of $5,800,000.
Comment: One commenter, while supportive of holding MCOs
accountable by measuring quality of care, noted that there is no such
requirement for the Medicaid FFS program, and that these costs are,
therefore, not reflected in the rate-setting methodology for managed
care plans. This commenter also noted that undertaking these reviews
has a significant cost implication for both the MCOs and the State.
Response: The statutory quality assessment provisions implemented
in this final rule do not apply to the Medicaid FFS program. Moreover,
there is no statutory or legislative history to indicate that the
Congress intended that these provisions should apply to Medicaid FFS.
The Collection of Information Requirements and Impact Statement address
what we believe to be the cost implications of this requirement as it
pertains to Medicaid capitated programs. We note that in the Medicaid
managed care final rule, a new methodology was adopted for setting
capitation rates. This methodology permits States to reflect MCO and
PIHP administrative costs (including costs of complying with quality
assessment requirements that do not apply under FFS Medicaid) in
capitation rates.
Comment: One commenter believed that requiring an independent
organization to conduct a review of an MCO's structural and operational
standards would add an additional administrative expense to the
program.
Response: States currently review MCOs and PIHPs for compliance
with State standards. If conducted by the State, this expense is
reimbursed at a 50 percent administrative match. However, some States
currently define this activity as part of EQR, and thus receive the 75
percent enhanced Federal match. Under the provisions of this rule, if a
State chooses to contract with an EQRO to conduct a review of MCO and
PIHP compliance with State standards, a State can obtain a 75 percent
enhanced match rate. While this may increase Federal expenditures, we
do not believe that the increase will be significant, as some States
already have their EQROs conduct this activity. Thus, we do not believe
this affects our conclusions regarding the need for a regulatory impact
analysis.
Comment: One commenter believed that the proposed reporting
requirement would increase costs.
Response: States currently have their EQROs develop reports. We
believe that this will not add significantly to the current costs
incurred by the Medicaid program.
Comment: One commenter believed that our proposed decision to
extend EQR requirements to PHPs would increase costs to States, and
that we have not fully analyzed this financial impact.
Response: We stated in our proposed rule that applying this
provision to PHPs might result in additional costs. Although States are
currently conducting a variety of quality activities with their PIHPs
and receiving a 50 percent administrative match for their costs, they
now may obtain the enhanced 75 percent FFP match for these activities.
Again, while this will result in some additional Federal costs, State
costs will decline. We do not believe these costs are significant. As
stated in a previous response, based on an analysis of 2001 Quality
Improvement Organization funding from the CMS-64, we estimate a cost of
$5,800,000.
Comment: One commenter was concerned about the cost of responding
to additional EQR requirements, and the potential for duplication and
administrative burden to comply with QISMC, the Medicaid rules, and EQR
rules.
Response: We do not foresee that there will be any duplication of
effort between complying with the BBA provisions, including the EQR
provisions, and QISMC. As we stated previously, QISMC has been
superseded by the Medicaid managed care final rules that incorporate
key elements of the QISMC document.
[[Page 3615]]
III. Collection of Information Requirements: November 23, 2001 Federal
Register Notice: Discussion of Public Comments
Many of the comments we received in response to the November 23,
2001 Federal Register notice were issues pertaining to the December 1,
1999 proposed rule, as opposed to collection of information
requirements or other issues concerning the protocols. Most of those
issues were addressed in the previous section that responded to
comments received on the December 1, 1999 proposed rule. This section
addresses comments related to the burden estimates and any other aspect
of the collection of information. We believe that burden estimates
apply to the following sections of the regulation: EQR protocols (Sec.
438.352), Nonduplication of mandatory activities (Sec. 438.360),
Exemption from EQR (Sec. 438.362), and EQR results (Sec. 438.364). We
first address general comments.
A. General Comments
Comment: Several commenters did not agree with the methodology we
used to estimate costs associated with implementing EQR. One commenter
believes the methodology is flawed and our projected costs may be
significantly lower than actual costs because our sample was too small
and the range of estimates is too large for cost averaging. The
commenter is also concerned that the methodology does not account for
indirect costs such as rent, transportation, and medical record
photocopies. The commenter recommended that indirect costs that account
for geographic variation should be added to accurately predict the cost
of using the protocols. One commenter stated that our approach did not
include a determination of whether the function performed by the
sampled EQROs approximated the functions that would need to be
conducted in accordance with the protocols. The commenter further noted
that because we estimated a range of hours for conducting EQR-related
activities, we have not provided a representative assessment of the
burden to perform the EQR activities. The commenter recommended we
develop a more accurate projection of hours and costs associated with
performing these activities consistent with the protocols.
Response: While the actual number of EQROs we interviewed was
relatively small, as stated in our November 23, 2001 Federal Register
notice, these EQROs had reviewed 16 managed care programs in 8 States
(Arizona, California, the District of Columbia, Maryland, New Mexico,
Nevada, Tennessee, and West Virginia). Each of these States contract
with a different number of MCOs to provide Medicaid services, ranging
from States contracting with a few MCOs to States with several dozen
MCOs. So, even though the number of EQROs we interviewed was small, we
believe we chose EQROs that represented a broad range of experience in
terms of the number of MCOs they review, as well as representing an
adequate geographic mix.
We also recognize that using a broad range of hours given by the
interviewed EQROs to estimate the average number of hours it will take
to conduct each activity may overestimate or underestimate the actual
costs. However, by showing the ranges of costs we averaged, we show the
variability across States that are inherent when conducting quality
review activities. As stated above, we believe the interviewed EQROs
represent an adequate number of MCOs reviewed. In addition, even though
we did not specifically ask each EQRO about the methodology that they
used to conduct the EQR activities, the protocols represent generic
activities and steps that are followed in both the public and private
sector. We, therefore, believe that the activities for which we
collected cost information were conducted using a methodology
consistent with our protocols. Moreover, we have no reason to believe
that the interviewed EQROs' estimates provided did not include indirect
costs for conducting EQR activities. Because the commenters did not
suggest a specific methodology or what other data should be used in
such a methodology, we retain the methodology used in the November 23,
2001 Federal Register notice. We have updated the estimates based on
more current data on the number of MCOs and PIHPs contracting with
State Medicaid agencies to provide services to Medicaid beneficiaries.
Comment: One commenter objected to our not including the time
necessary for MCOs to collect and submit the information necessary to
perform the functions identified under Sec. 438.358, activities
related to EQR. The commenter recommended that we interview health
plans to determine the estimates for this activity and include them in
our analysis.
Response: We agree with the commenter and include burden estimates
in this final rule to address the time and costs associated with MCO
and PIHP submission of information necessary for the validation of
performance measures, validation of performance improvement projects,
and a review for compliance with structural and operational standards.
The protocols for all three of these activities require that
documentation be provided by the MCO or PIHP. We do not anticipate,
however, that new documentation will need to be developed. For example,
the documentation review activity that occurs when a review for
compliance with standards is conducted includes a review of reports,
policies, and surveys that already exist. We believe that it will take
each MCO or PIHP approximately 4 weeks of one full-time equivalent
employee to prepare the information to be submitted for the three
mandatory activities and we have added this estimate under Sec.
438.352, the EQR protocols.
Comment: Two commenters believe the protocols will result in
significant burdens in the areas of data collection, duplication of
management oversight, and financial costs to the State and its
contracting MCOs. One commenter estimated the new costs associated with
the three mandatory activities and the overall EQR will be an
additional $250,000 per MCO. Another commenter believes the cost per
MCO would be approximately $424,000 for the three mandatory activities.
The commenters noted there will be additional indirect cost incurred by
the State to administer and oversee the EQRO contracts, and by the MCOs
associated with the annual preparation for the three mandatory
activities.
Response: We do not agree that the protocols will cause significant
financial costs to MCOs and States, cause significant burdens in the
areas of data collection, or duplicate other oversight activities. Many
States already require their contracting MCOs and PIHPs to conduct
performance improvement projects, calculate performance measures, and
comply with State standards. The three mandatory activities that ensure
compliance with these requirements are also already conducted by many
States. However, States may not be contracting with their EQRO for the
conduct of all these activities. As stated earlier in this preamble,
the State can conduct these activities itself or contract with an EQRO
or other entity for the conduct of the EQR-related activities. If the
State contracts with an EQRO, it will receive the enhanced 75 percent
FFP. If States are not currently contracting with their EQROs for these
activities and decide to contract with their EQRO for EQR-related
activities under this authority, it will decrease their costs related
to quality activities, as opposed to increasing their costs.
[[Page 3616]]
We believe that the EQR mandatory activities can easily be
incorporated into existing State quality assessment systems and will
not duplicate existing oversight activities. The conduct of EQR and the
conduct of EQR-related activities is required as part of the quality
strategy under Sec. 438.204 of the Medicaid managed care final rule
and MCO quality assessment and performance improvement program
requirements under Sec. 438.240 of the Medicaid managed care final
rule. Furthermore, we believe that there will not be additional costs
incurred by the State to administer and oversee the EQRO contracts
since this is already an existing requirement on States and MCOs under
OBRA 1986. Because the commenters did not provide us with an
alternative methodology to use or evidence to support their statement,
we retain the approach taken in the November 23, 2001 Federal Register
notice on the information collection requirements and in the impact
statement in the December 1, 1999 proposed rule.
Comment: One commenter disagreed with our assumption that the
implementation of EQR would not have an increased cost to the Federal
government. The commenter did not agree that the costs incurred with
current EQR activities are representative of costs that would be
incurred under the new requirement. The commenter argued that States
currently contract with EQROs for a more limited scope of activities.
Response: Our December 1, 1999 proposed rule acknowledged that
there is likely to be an increase in Federal expenditures but that we
did not anticipate this to be a significant increase. We agree with the
commenter that the scope of work may be different under the BBA EQR
requirements than it was under the OBRA 1986 requirements. However, we
do not believe that the cost difference will be significant and it is
likely that there could be a decrease. By expanding the pool of
organizations available to conduct EQR, State agencies may be able to
negotiate savings. We also hope that additional savings will be
realized through opportunities afforded by this rule to coordinate EQR
activities with other quality and oversight activities.
As stated in our December 1, 1999 proposed rule, we expect some
increase in expenditures since we are applying the EQR requirement to
PIHPs. We do not expect this to be a significant increase in
expenditures because States already conduct quality review activities
on PIHPs and receive a 50 percent FFP. Now States will be able to
qualify for the enhanced 75 percent FFP.
Section 438.352 EQR Protocols--General Comments
Comment: One commenter believes the scope of the protocols could
result in excessive burdens and they should be revised.
Response: For several reasons, we do not agree that the scope of
the protocols will result in excessive burdens. First, all protocols
are based on procedures already in use in the private sector. These
protocols, therefore, are consistent with common industry practice in
widespread use today. Second, many States and MCOs and PIHPs are
already conducting these activities, using methods consistent with or
more intensive than the activities and steps found in these protocols.
For example, many State agencies are using the CAHPS surveys. The
protocols for administering these surveys are consistent with our
survey protocol, but much more prescriptive. Similarly, many States are
also requiring validation of performance measures or encounter data
using approaches consistent with these protocols. Third, the States
have the option to use the protocols we developed or protocols
consistent with ours. The protocols also include sample worksheets that
can be used or modified at the State's discretion. Fourth, we note that
States are only required to use three of the nine protocols that we
have developed; the other six protocols are developed for optional
activities that States can choose to undertake or not, at their
discretion. For these reasons, we believe the protocols will not be
excessively burdensome, and we retain the scope of the protocols as
introduced through the November 23, 2001 Federal Register notice.
Comment: One commenter recommended that there be a better
explanation of the use and purpose of the protocols.
Response: Section 1932 (c)(2)(iii) of the Act required us, in
coordination with NGA, to contract with an independent quality review
organization to develop protocols to be used as part of EQR. The
purpose of the protocols is to provide EQROs with a set of generic
instructions that ensure that EQR activities are conducted using sound
methodological principles. To provide ongoing explanation about the use
of the protocols, we have created a Web site at http://www.cms.hhs.gov/medicaid/managedcare/mceqrhmp.asp
that presents the protocols and an
explanation of their intended use.
Comment: One commenter recommended that we not base the protocols
on Federal or industry guidelines and standards, but that we
incorporate these standards by reference.
Response: We disagree with the commenter. We purposefully directed
our contractor to develop the protocols following protocols and quality
review activities currently used in the managed care and quality
oversight industries. We believe it is important to take advantage of
the knowledge and experience that exists in the Medicare program and
the private sector. Consistency with these approaches will also
minimize the burden of complying with the protocols.
Comment: One commenter believes that the activities in this
protocol will result in the State agency becoming the accrediting
agency for Medicaid managed care, increasing the scope of prescribing
and monitoring necessary by the State.
Response: We disagree with the commenter. The purpose of the three
mandatory EQR-related activities is to ensure that MCOs and PIHPs are
in compliance with Sec. Sec. 438.204(g) and 438.240 of the Medicaid
managed care final rule. However, many States currently conduct these
activities. States that do not currently monitor for compliance with
quality standards, monitor MCO and PIHP quality improvement projects or
require the calculation of performance measures will need to initiate
these activities. We believe that monitoring for these activities is
consistent with the intent of the BBA EQR statutory provision to ensure
that MCOs and PIHPs are providing access to timely and quality
services.
Comment: One commenter believes the protocols are very clear in
describing what information needs to be collected.
Response: We agree with the commenter and retain the activities and
steps in the protocols introduced through the November 23, 2001 Federal
Register notice.
Comment: One commenter believes that the protocols lack an
evidenced-based approach to quality improvement. Another commenter
believes that measuring MCO performance should be oriented to empirical
performance outcomes and applied against quantifiable baselines and
benchmarks rather than determining compliance through document reviews
and interviews.
Response: We disagree with the first commenter. As we explained
above, these protocols were developed
[[Page 3617]]
consistent with protocols and quality review activities currently used
in the managed care and quality oversight industries. Further, the
protocols addressing performance improvement projects explicitly
incorporate provisions addressing the use of clinical and nonclinical
evidence in the selection of quality indicators. We agree with the
second commenter that MCO and PIHP performance should be oriented
towards performance outcomes that are measured against baselines and
benchmarks. This is one reason why the information obtained from the
validation of performance measures and the validation of performance
projects is to be included as part of the EQR function. We also believe
however, that a review of the MCO's and PIHP's compliance with State
standards is essential for determining whether access to quality and
timely services is provided. We believe this information used in
conjunction with the information obtained from the validation of
performance measures and performance improvement projects provides for
both a qualitative and quantitative approach to assessing MCO and PIHP
performance.
Comment: One commenter recommended that specific clinical areas
(for example, early and periodic screening, diagnosis, and treatment
(EPSDT) reporting) be addressed in multiple protocols.
Response: We believe that a variety of both clinical and
nonclinical areas of care need to be assessed by the State and MCO or
PIHP over time. However, we do not specify in regulation or in our
protocols what those specific clinical and nonclinical areas should be
because we believe that States should have the discretion to identify
priority topics based on their knowledge of the public health
priorities in the State, the health care needs of their beneficiaries,
and based on discussions with beneficiaries and other stakeholders in
the State. If we do decide that it is necessary to identify national
priority topics, Sec. 438.240(a)(2) of the Medicaid managed care final
rule provides us with the authority to do so in consultation with
States and other stakeholders.
Comment: One commenter asked that the protocols reflect our review
criteria for children with special needs.
Response: When States require children with special health care
needs to enroll in a capitated Medicaid managed care program, they must
follow the review criteria provided in the January 19, 2001 State
Medicaid Directors' letter. The Medicaid managed care final rule
includes standards States must comply with when contracting with MCOs
and PIHPs that enroll Medicaid beneficiaries, including children with
special health care needs. These standards address the principles on
which the review criteria are based. This protocol does not put forth
any new standards, but identifies methods to determine compliance with
current standards.
Comment: One commenter suggested that the protocols require the
validation of performance measures submitted by MCOs, unless the
measures were validated by a reliable entity using comparable
standards.
Response: If performance measures are validated by an entity using
an approach consistent with our protocol, only the information obtained
from that review needs to be provided to the EQRO to be used as part of
the EQR function. The review activity itself need not be duplicated. In
addition, if the entity qualifies as an EQRO, the State can capture the
enhanced 75 percent Federal match.
Comment: One commenter recommended that assessments of quality
should include multiple sources of information including audits,
certifications of sufficient networks and systems, and other
submissions the MCO has provided to the State outside of the review
process.
Response: We agree with the commenter that information from
multiple sources should be included as part of the EQR. We believe we
have accomplished this through the multipronged approach we have
provided for in this final rule. The EQR will include information from
the validation of performance improvement projects, the validation of
performance measures, and a review for compliance with standards that
may include plan network adequacy information, service authorization
procedures, and other documentation that attests to the structural and
operational components of the MCO or PIHP.
B. Protocol for Determining Compliance With Structural and Operational
Standards
1. General Comments
Comment: The commenter believes that because we used a combination
of private sector protocols in the development of the protocol for
compliance with structural and operational standards, our protocol is
likely to be more burdensome than that of any one private sector
protocol.
Response: We reviewed a number of private sector protocols in the
development of the protocol for compliance with structural and
operational standards. We identified those elements common to all and
used those as a basis for the protocol. Our protocol is not an additive
combination of private sector protocols. Conversely, it is a synthesis
or a streamlining of common elements found in multiple private sector
protocols. Consequently, we do not believe our protocol is more
burdensome than any one private sector protocol.
Comment: One commenter argued that CMS, for Medicare, is changing
its onsite review process so this will be less frequent and more
targeted. Medicare is also streamlining its review guide and will be
reviewing less documentation and including more self-auditing by MCOs.
The commenter recommended that we adopt a similar approach.
Response: The process for how this protocol will be used is set
forth in this final rule, which contains provision for less frequent
monitoring, and under certain circumstances, for the nonduplication of
activities conducted under the Medicare program reviews or independent
accreditation surveys. Through these regulatory provisions, we believe
we have adopted a streamlined approach to quality review, similar to
that used by Medicare.
Comment: One commenter is concerned that this protocol requires
intensive onsite reviews to determine compliance with the structural
and operational standards required in the Medicaid managed care final
rule. The commenter believes that to meet the goals of EQR, it is not
necessary to include all the areas identified in the monitoring
protocol and that States should not be required to use this approach.
One commenter believes that the guidance on the onsite review process
is prescriptive and it is unlikely that the EQRO will need or use this
detailed level of guidance. In general, the commenter believes the
protocol is overly detailed and should be simplified to examine major
structural and process requirements.
Response: The degree to which the protocol relies upon onsite
reviews is consistent with the degree to which onsite review is used by
private accrediting bodies. Therefore, we do not believe the onsite
review specified in our protocol is too intensive. In the private
sector, when an accrediting body has a standard, they monitor for
compliance with it through a combination of interview activities and
document review. We have followed this private sector approach and
intend that all Federal requirements be monitored for compliance.
Because the protocol contains only ``potential'' interview questions
and documents for
[[Page 3618]]
``potential'' review, States, in using the protocol, will be able to
target the reviews as they determine appropriate. We believe the
protocol provides an appropriate amount of detail needed to reflect the
scope and depth of the quality review activities to be conducted. We
note in the protocol that, although the EQR activities must be
consistent with the protocol, they need not be identical, thus
providing the option for the States to prescribe a less detailed level
of activity to the EQRO.
Comment: One commenter recommended that documents be obtained in
advance and that multiple fact-finding efforts occur over time before
conducting the onsite reviews. This allows State staff to be better
prepared and is less disruptive for MCO staff.
Response: The EQR protocols are designed for use by EQROs which in
many circumstances are not likely to be staffed by State personnel.
However, State staff conducting compliance reviews may also use the
protocols at their discretion. The protocols specify that documents may
be obtained in advance, and reviewers, though not directed to do so,
are not precluded from performing these activities over time.
Comment: One commenter recommended that the protocol include the
review of previous monitoring reports and that the MCO's efforts and
progress in correcting past problems be noted.
Response: We agree with the commenter. Therefore, in the final
protocol, we have added that, before the onsite visit, reports on
previous reviews and subsequent MCO and PIHP corrective actions be
reviewed to identify areas on which the EQRO might need to focus the
current monitoring activities.
Comment: One commenter recommended that the protocol include a
mechanism for the State to prepare and submit oversight findings to the
MCO and approaches to follow-up to ensure that corrective action has
occurred. The commenter also recommended that every onsite review end
with an exit interview to focus the MCO's attention on those areas the
State is concerned about and intends to address in the findings and
recommendations report.
Response: We agree with the commenter that evaluation results need
to be reported to the MCO or PIHP. This reporting is common practice
upon completion of a performance evaluation and a number of strategies
are available for this reporting. We describe four possible
alternatives for reporting in the protocol, but States are not
precluded from selecting other alternatives that might include exit
interviews with the MCO or PIHP at the conclusion of the onsite review.
Comment: One commenter recommended simplifying the compliance
scoring system and placing greater emphasis on objective indicators of
organizational performance such as performance improvement projects and
survey results.
Response: We agree that other sources of information may provide
information pertaining to MCO/PIHP compliance with the regulatory
provisions, and we list some of these sources in the protocol under
Activity 5, ``Collecting Accessory Information.'' In defining
regulatory compliance, we have indicated that the State Medicaid agency
will need to identify the level of compliance it requires and what
rating or scoring system is to be used. In the protocol, we offer
examples of common approaches, but because there is no evidence that
one scoring system is better than all others, we allow States the
discretion to select the scoring system to be used.
Comment: One commenter believes that of the four alternatives
listed in the protocol for reporting evaluation results to the State
Medicaid agency, neither the first nor the fourth alternative is
acceptable. The commenter claims the first alternative makes
information vital to the review; that is, the reviewers' analysis,
unavailable to the State, while the fourth alternative represents a
complete delegation of the State's monitoring responsibility to the
EQRO.
Response: We do not agree with the commenter. In the first
alternative, analysis is guaranteed based upon the definition of EQR in
this final rule. According to that definition, EQR requires ``the
analysis and evaluation of aggregated information.'' In the fourth
alternative, reporting is accomplished based on pre-established State
thresholds and guidelines, and therefore does not represent a complete
delegation of the State's monitoring responsibility to the EQRO. The
four alternatives listed in the protocol are possible scoring
strategies; we state in the protocol that other options are available
for use by States.
Comment: One commenter recommended that States require EQROs to use
a standard written reporting tool.
Response: We agree with the commenter and have included a sample
document and reporting tool (Appendix C, Attachment C of the final
protocol) for this purpose. However, we allow States to modify this
sample tool or develop another standard reporting tool, at their
discretion.
Comment: One commenter noted that many questions are broad and not
well written so the nature of the response being sought is unclear. The
commenter recommended that the entire section for interviews should be
reviewed in the context of whether the EQR rule is being exceeded by
the data required during the interviews. Several commenters recommended
that the interview section be dramatically shortened by eliminating
duplicate questions and by deleting questions whose answers cannot be
evaluated against the State's MCO contract specifications or a specific
provision in the rule.
Response: We do not agree that we should more narrowly construct or
abbreviate the interview questions. We have included a range of
potential interview questions related to the subject matter of the
regulatory provisions for reviewer use in prompting discussion. We
expect, in practice, the reviewers will customize the interviews as
necessary to clarify issues and confirm document findings. In the
protocol, we compiled questions related to the regulatory provisions
for each group of interview participants; for example, MCO or PIHP
leadership, enrollee services staff. While this format creates some
redundancy among the interview groups, we believe it facilitates the
interviews by enabling each interview group's questions to stand alone.
We also note that it is common practice in private accreditation
reviews to ask the same or similar questions of different MCO or PIHP
staff and also to review documents to support information obtained from
interviews to determine if the information obtained from multiple
sources converges and reaffirms the EQROs conclusions.
Comment: One commenter believes the protocols are bureaucratic and
administratively burdensome and that there is a lack of evidence of the
success of this type of process-oriented oversight. The commenter
further stated that the level of detail is excessive to ensure
conformance with MCO contracts and the BBA rule, and that the purpose
is not for an accreditation.
Response: The protocols are based upon the common elements found in
compliance protocols used by private sector accrediting bodies and the
Medicare program. Consequently, we do not believe they are overly
bureaucratic, administratively burdensome, or without a sound
evidentiary basis. We also have followed the private sector approach in
specifying that all standards, in this case the Federal
[[Page 3619]]
requirements, be monitored for compliance. We believe the protocol
provides an appropriate amount of detail needed to reflect the scope
and depth of the quality review activities to be conducted. We note
again that the specific interview questions are suggestions only, and
we expect the questions to be customized for each review.
Comment: One commenter claimed that some informational items the
EQRO is to collect from the State Medicaid agency do not exist as
contract provisions and may not exist as other standard documents. This
will create additional paperwork. The commenter recommended that the
EQRO should only verify that the State's managed care contracts require
compliance with applicable State and Federal laws.
Response: We do not agree with the commenter. The background
information that the EQRO will need to collect from the State under
this protocol includes written documentation of those standards,
requirements, or decisions pertaining to MCOs and PIHPs that the State
established to comply with the regulatory requirements that implement
the BBA provisions governing standards for contracts with MCOs and
PIHPs. This information is needed to assess MCO or PIHP compliance with
those regulatory provisions for which the State is required to
establish certain standards.
Comment: One commenter claimed that the number and types of
documents the EQRO is to obtain from the MCO are too extensive and that
many of the Code of Federal Regulations citations used to justify the
collection of documentation are incorrect and do not relate to the
topic. The commenter recommended that the protocol be reviewed for
incorrect citations and references and that corrections be made.
Response: We do not agree with the commenter. We believe the
documents listed are those needed to evaluate MCO or PIHP compliance
with the Medicaid regulatory provisions. The regulatory provisions
cited indicate where information obtained from the documents can be
applied in the review process. For example, although Sec. 438.214
pertains to credentialing and recredentialing, this provision is
applicable to oversight of delegated activities, if the MCO or PIHP
delegates credentialing to another entity.
Comment: One commenter recommended that Appendix B to this protocol
have a cross-reference table that summarizes each interview question
with the respective oversight organization documentation listed.
Response: We believe the format for the protocol itself is
generally comparable to the recommended cross-reference table for
Appendix B (Attachment B of the final protocol). The protocol includes
a table cross-walking the review documentation with the related
regulatory provisions. The subsequent interview sections then aggregate
the interview questions by regulatory provision for each interview
group.
Comment: One commenter was concerned that we do not include
information available from consumers as a source of information to be
used in this protocol. Several commenters believe this protocol does
not go far enough to examine actual practices of MCOs' or
beneficiaries' experience with care; rather, it focuses on policies and
procedures. One commenter recommended the protocol include interviews
with State Medicaid personnel and providers, and input from consumers,
consumer advocates, and people with special health care needs.
Response: We agree that providers, consumers, and others mentioned
may offer further information about MCO or PIHP performance; however,
interviewing these groups requires additional time and substantial
resources. Therefore, in this protocol, we have made provider and
contractor interviews optional. However, we have further promulgated a
separate protocol for the use of provider and consumer surveys as a
source of information that can be used for EQR at the option of the
State. We believe that mandating additional surveys as a part of this
protocol would be burdensome and unnecessary.
Comment: One commenter believes the MCOs can prepare in advance for
the review. The commenter recommended reviewers should interview
providers and beneficiaries not preselected by the MCOs to ensure
compliance with established policies.
Response: We agree with the commenter's concern regarding
preselection. For the reasons previously noted, however, provider
interviews are an optional part of this protocol. Consumer and provider
surveys are also specified as a separate, optional EQR-related activity
for securing input from beneficiaries and providers.
Comment: One commenter recommended that among document review and
interviews, we include in our approach extensive file review.
Response: We are unsure what files the commenter is proposing for
review. The approach used in the protocol is the same approach used by
the private sector accrediting bodies and in the Medicare program. If
the commenter is referring to medical record review, these are included
and discussed in the protocols for validating and conducting
performance improvement projects and validating and calculating
performance measures.
Comment: One commenter suggested that because a core component of
quality programs is responsibility for the program at the highest level
of the organization, we include a discussion of committee structure and
committee oversight in the overview section.
Response: We assume the commenter is referring to the MCO or PIHP's
quality assurance committee and oversight. The protocol addresses
compliance with the standards required in the Medicaid managed care
final rule. Because committee structure and committee oversight as a
core component of quality programs is not included as a standard in the
Medicaid managed care final rule, it would not be appropriate to
require it in the protocol.
Comment: One commenter believes that the pertinent issue in team
development (p. 6 of the protocol) is the identification of the
specific functions to be reviewed and the assignment of appropriate
personnel to the task, not the size of the team.
Response: We agree that an important consideration in the
development of the review team is the determination of the types of
personnel appropriate for the review as related to the functions to be
reviewed. Therefore, we have specified the desirability of reviewers
possessing knowledge of Medicaid and managed care, and experience and
familiarity with the regulatory provisions, the evaluation process, and
performance expectations.
Comment: One commenter recommended that we include in the list of
documents on page 18, committee minutes, vendor oversight committee,
and committee structure of the quality program.
Response: The list of documents on page 18 refers to the documents
used for determining compliance with specific regulatory provisions.
Because the commenter has not stated what regulatory provisions these
documents would be used to address, we are unclear as to how to propose
their use and have not included them in the document list.
2. Provider/Contractor Services
Comment: One commenter recommended that the review of credentialing
files by the EQRO be deleted because the criteria for auditing the
files are inadequate. The commenter
[[Page 3620]]
recommended that the element be simplified to call for the EQRO to
review MCO credentialing policies and procedures for conformance with
State contract requirements.
Response: We disagree with the commenter. We believe that a review
of policies and procedures alone, when the opportunity exists to review
documents providing direct evidence of compliance or noncompliance with
the policies and procedures, is a more effective review mechanism. This
is consistent with the approach used by private sector accrediting
bodies and in the Medicare program.
3. Staff Planning/Education/Development
Comment: One commenter suggested that the requirement for the MCO
to produce staff handbooks and information about staff training and
orientation be dropped for lack of specificity or rewritten to make
clear what criteria the auditors are to use in reviewing the required
materials.
Response: We indicate on the list of documents the regulatory
provisions to which each document applies. In this instance, staff
handbooks and information about staff training and orientation pertain
to the requirement that staff be educated about the enrollee's right to
receive adequate information; for example, information on disenrollment
rights and hearing and appeals. We have specified interview questions
for MCO/PIHP leadership, provider and contract services staff, and
enrollee services staff concerning how appropriate staff are informed
regarding the enrollee right to information. We believe this provides
sufficient clarity with respect to the criteria reviewers are looking
for and we retain the references to the staff handbook, staff training,
and orientation.
Comment: One commenter suggested that the interview questions
include probes to determine how staff are trained to comply with
Federal and State laws, and how staff advise enrollees of their rights.
The commenter recommended further that interview questions address the
content, frequency, and thoroughness of the training to confirm no
major area of law is overlooked.
Response: We have specified staff handbooks, and orientation and
training curriculum, in the list of documents to be reviewed and
included interview questions to confirm MCO/PIHP compliance with the
regulatory requirements pertaining to enrollee rights and compliance
with Federal and State laws. However, if issues arise during the
document review concerning the adequacy of the staff's training
regarding these provisions, reviewers are directed to explore them
during the interviews. We believe this direction affords the reviewers
the flexibility necessary to appropriately tailor the review activity.
Further, we do not believe it is possible, given the diversity among
States and MCO/PIHPs and the scope of the review itself, to include in
the list of potential interview questions probes to explore all
applicable State laws.
4. Consumer Protections
Comment: One commenter recommended that the protocol include the
monitoring of the Medicaid managed care final rule provisions related
to consumer protections. The commenter specified for inclusion
provisions addressing: the free choice of providers for family planning
services (Sec. 431.51); prohibition on provider discrimination (Sec.
438.12); availability of out-of-network providers in rural areas (Sec.
438.52(b)); disenrollment rights as a result of grievance procedures,
and related notice and appeal rights (Sec. 438.56(d) and (f));
enrollee rights regarding treatment, second opinions, and medical
record access and correction (Sec. 438.100); marketing activities
(Sec. Sec. 438.104, 438.700(b)); liability for payment beyond what is
legally allowable (Sec. 438.106); program integrity requirements
(Sec. 438.608); imposition of sanctions (Sec. 438.700); and multiple
charges and denial of services for inability to pay cost sharing (Sec.
447.53).
Response: We have listed in the protocol documents for review to
determine compliance with regulatory provisions related to prohibition
on provider discrimination; disenrollment rights as a result of
grievance procedures, and related notice and appeal rights (Sec.
438.56(d)); and enrollee rights regarding treatment, second opinions,
and medical record access and correction. We further agree with the
commenter and have amended the protocol to include review of the MCO/
PIHP's relevant policies and procedures to assess compliance with the
regulatory requirements pertaining to the free choice of providers for
family planning services; liability for payment beyond what is legally
allowable; and multiple charges and denial of services for inability to
pay cost sharing. However, the provisions concerning availability of
out-of-network providers in rural areas; marketing activities (Sec.
438.700(b)); program integrity requirements (Sec. 438.608); and
imposition of sanctions (Sec. 438.700) are responsibilities of the
State and not the MCO/PIHP and, therefore, we have not included them as
a focus of this protocol. The regulatory requirements in Sec. 438.104,
while they pertain to MCO/PIHP marketing activities, are contract
requirements that do not directly provide information on quality and
are more particular to a State responsibility. Because the protocol is
designed to determine MCO/PIHP compliance, we believe it would not be
appropriate to monitor these latter activities through the protocol.
5. Enrollee Services
Comment: One commenter believes a State can contract with the MCO
to provide information to potential enrollees, and recommends the
protocol monitor the MCO's compliance with these informational
requirements.
Response: In the August 20, 2001 Medicaid managed care proposed
rule, we stated that ``it would be unreasonable to require every MCO/
PIHP to provide the relevant information to all potential enrollees.''
We believe the MCO/PIHP should not be contracted by the State to
undertake this responsibility, and explained in the proposed rule that
``the State agency is the more appropriate entity to do'' the potential
enrollee informing. This requirement was, therefore, not included in
our Medicaid managed care final rule and we are not changing the
protocol to monitor the MCO's/PIHP's compliance with providing
information to potential enrollees.
Comment: One commenter recommended the protocol include a standard
reflecting the regulatory requirement for the provision to enrollees of
information on services not provided due to moral or religious
objections.
Response: We agree with the commenter. The protocol identifies the
section of the regulation that requires enrollees to be provided with
information about services that are not provided by the MCO or PIHP
because of moral or religious objections. It also identifies relevant
documents to be reviewed to determine compliance (see pages 22 and 77
of the protocol). These documents include Medicaid enrollee service
policies and procedures, statement of enrollee rights, and marketing
materials.
Comment: One commenter believes the protocol should include
guidance on how to measure the adequacy of the MCO's activities to
inform enrollees. The commenter recommends the protocol include
additional guidance on the fourth grade reading-level standard for
materials, and confirmation that written materials are at an
understandable grade level and in
[[Page 3621]]
alternative forms to accommodate individuals with sight impairments.
Response: We note that we have provided guidance on this issue in
the August 2001 proposed Medicaid managed care rule. In the preamble to
the August 2001 proposed rule, we indicated that materials should be
understandable to enrollees at a fourth to fifth grade reading level,
or at another level established by the State agency that adequately
reflects the potential population to be enrolled. Materials should use
an easily readable typeface, frequent headings, and should provide
short, simple explanations of key concepts. Technical or legal language
should be avoided whenever possible. We proposed further that
enrollment notices as well as informational and instructional materials
relating to enrollment take into account the specific needs of
enrollees and potential enrollees, including furnishing information in
alternative formats for the visually impaired and for individuals with
limited reading proficiency. Also, in 1999, we developed and
distributed to the State Medicaid agencies and made available to others
a guide entitled, ``Writing and Designing Print Materials for
Beneficiaries: A Guide for State Medicaid Agencies.'' The guide was
produced to assist States and MCOs/PIHPs in the creation of materials
appropriate for their Medicaid populations. We believe the guidance
that we have provided in the August 2001 proposed rule and through this
guide is appropriate and reflects the current state-of-the-art. Because
there is no state-of-the-art standard to apply in measuring the
adequacy of the MCO's/PIHP's efforts to inform enrollees, we decline to
do so in this protocol.
Comment: One commenter recommended that we monitor the States'
definition of what constitutes a ``significant change'' in certain MCO
structural and operational features to ensure the State's definition of
``significant change'' is reasonable and fair to enrollees, and that we
provide guidance on what parameters a State can use in setting the
definitional standards.
Response: The protocol addresses the extent to which an MCO/PIHP,
as opposed to the State, complies with the requirements in the Medicaid
managed care final rule. Section 438.10(f)(4) of the Medicaid managed
care final rule specifies that the definition of ``significant change''
is the State's responsibility. It, therefore, would not be appropriate
to include in the protocol the monitoring of the State's definition.
Monitoring of States occurs through separate activities conducted by
our regional offices. Further, as we stated previously, the protocol is
not intended as a mechanism to impose additional quality standards on
MCOs/PIHPs or States. Therefore, we do not believe it appropriate to
provide guidance in the protocol on what parameters a State can use in
setting the definitional standards.
Comment: One commenter noted that the interview questions are good
initial probes, but suggested the protocol include additional guidance
to more fully probe the MCO's dissemination of enrollee information,
and require interviews of providers and enrollees regarding the quality
of the informational materials.
Response: We specify in the protocol that reviewers should tailor
the interviews as necessary to clarify and confirm document findings.
We believe this direction affords the reviewers sufficient flexibility
to more fully probe areas as appropriate. Further, we do not believe it
is possible, given the diversity among States and MCOs/PIHPs and the
scope of the review itself, to include in the list of potential
interview questions probes to explore every possible problem or issue
that might arise. Provider interviews are time and resource intensive,
but because they offer an opportunity to secure additional information
regarding MCO/PIHP performance, we have included them as an optional
activity if informational needs warrant them and resources permit. We
provide for the consideration of enrollee input by including the review
of the results of Medicaid beneficiary surveys as accessory information
under Activity 5.
Comment: One commenter believes the protocol does not adequately
address linguistic issues. The commenter recommended that the review
confirm that MCOs collect required language information on enrollees
and recognize non-English speakers in all transactions. The commenter
suggested further that the protocol include the review of documentation
regarding professional translations of written materials, and
interviews to assess the quality of the written translations and the
MCO's oral interpretation practices and resources.
Response: We believe the protocol does adequately address
linguistic issues. In Appendix B (page 79, Attachment B of the final
protocol), among the materials to be obtained from the State, we
include information on the language(s) that the State Medicaid agency
has determined are prevalent in the MCO's/PIHP's geographic service
area. On page 85, we direct the reviewer to look at marketing,
enrollment and other informational and instructional materials relating
to enrollment, enrollee handbooks, new enrollee materials, statements
of enrollee rights, and other written materials routinely prepared for
Medicaid enrollees and potential enrollees to determine whether these
materials are available in the language(s) that have been identified as
prevalent within the MCO/PIHP's particular service area. Further, the
Medicaid managed care final rule at Sec. 438.204(b)(2) requires States
to identify the primary language spoken by each Medicaid enrollee and
provide this information to the MCO/PIHP at the time of enrollment.
Finally, we believe requiring EQRO re-review of translated materials is
more burdensome than appropriate and therefore have not included it in
the protocol.
6. Enrollee-Provider Communication
Comment: One commenter objected to the implication that by contract
MCOs may place limits on providers' communication with enrollees about
reproductive health services. The commenter recommended that the
protocol include document review and interview questions to address
whether reproductive health services are provided and whether
restrictions are placed on provider communication. The commenter
suggested further that for MCOs that exclude any reproductive health
services the State monitor enrollee access to the full scope of
services. The commenter noted a potential correlation between
restricted access to reproductive health care services and poor
outcomes in other women's health areas, and recommended the State
monitor related health outcomes and comparison of rates to those of
MCOs without restrictions.
Response: Appendix B of the protocol (Attachment B of the final
protocol) specifies documents for review and interview questions to
address whether the MCO/PIHP has any moral or religious objection to
providing, reimbursing for, or providing coverage of, a counseling or
referral service for a particular Medicaid service or services. This
would include reproductive health services. For counseling and referral
services the MCO/PIHP does not cover because of moral or religious
objections, the Medicaid managed care final rule at Sec.
438.10(f)(6)(xii) specifies that it is the State's responsibility to
provide enrollees with information on where and how to obtain the
service(s). The protocol is designed to address MCO/PIHP compliance
with the BBA regulatory standards. Consequently, State monitoring of
enrollee access to
[[Page 3622]]
the full scope of services and State monitoring of health outcomes in
other women's health areas for enrollees with restricted access to
reproductive health care services, and comparison of these rates to
those of MCO/PIHPs without restrictions is beyond the scope of the
protocol.
7. Emergency Services
Comment: One commenter suggested that the interview questions
concerning inappropriate use of emergency rooms emphasize a comparison
of their inappropriate use with access to routine and urgent care.
Response: We agree with the commenter and have therefore expanded
the relevant interview questions in Appendix B of the protocol
(Attachment B of the final protocol) under Sec. 438.210 that addresses
coverage and authorization of services to inquire about the potential
relationship between inappropriate emergency room use and enrollee
access to routine and urgent care.
8. Delivery Network
Comment: One commenter recommended that the protocol, in reviewing
the MCO's/PIHP's network of appropriate providers, consider
specifically the providers needed to meet the needs of pregnant women,
children and individuals with special needs, particularly those
targeted for enrollment.
Response: In the Medicaid managed care final rule at Sec. 438.206,
we require the MCO/PIHP to establish a network of appropriate providers
that considers the ``expected utilization of services, considering
Medicaid enrollee characteristics and health care needs.'' We intend
and expect that MCOs and PIHPs that serve pregnant women and
individuals with special health care needs will consider their
characteristics and needs. However, we do not explicitly identify them
in this protocol because they are not explicitly mentioned in the
regulation in this provision and because not all MCOs and PIHPs may
serve pregnant women and individuals with special health care needs.
9. Access
Comment: One commenter suggested that the review address
transportation services to network providers and out-of-network
providers for enrollees without access within established time and
distance standards, and for enrollees with disabilities and special
needs.
Response: The regulations do not contain standards for the
provision of transportation services to network or out-of-network
providers, or for enrollees with disabilities and special needs. In
addition, transportation is a service that may or may not be included
under the MCO/PIHP contract. Therefore, in the protocol's document
review and interview questions, we include only those transportation
issues addressed in the regulation.
Comment: One commenter recommended that the monitoring of access to
out-of-network providers include a review of the procedures for
determining when in-plan access is unavailable and out-of-network
services are appropriate; obtaining access to out-of-network services;
and for providing in-plan services for enrollees denied out-of-network
access.
Response: The protocol specifies a review of the MCO's/PIHP's
administrative policies and procedures pertaining to the use of out-of-
network providers. Although we reference documents by generic name or
title, we explain that what is important is the presence or absence of
evidence to determine compliance with the specified regulatory
provision. We anticipate reviewers will use the relevant documents to
determine compliance with all aspects of the regulatory provision
regarding out-of-network access including those identified by the
commenter.
Comment: One commenter suggested that the document review include
policies, procedures, and criteria for determining that second opinions
are rendered by qualified providers.
Response: We agree with the commenter. The protocol specifies a
review of the MCO's/PIHP's administrative policies and procedures for
providing enrollees with a second opinion from a qualified health care
professional. As previously indicated, although the documents are
referred to by generic name or title, we explain that what is important
is the presence or absence of evidence to determine compliance with the
regulatory provision. We anticipate reviewers will use the relevant
documents to determine compliance with all aspects of the regulatory
provision requiring that second opinions are rendered by qualified
providers.
Comment: One commenter recommended that the document review related
to direct access to women's health services be expanded to include
materials produced by the State to inform MCOs and by MCOs to inform
providers. The commenter suggested further that the review include
policies and procedures for implementing direct access to these
services.
Response: Within the review of enrollee rights, the protocol
specifies a review of staff and provider orientation, education, and
training curricula and materials, and other provider and staff
communication tools for evidence that staff and providers consider,
among the enrollees' rights, direct access to women's health services.
We also specify the review of the results of MCO/PIHP monitoring of
complaints and grievances, enrollee survey or other MCO/PIHP sources of
enrollee information to detect violations of enrollee rights, including
the provision of direct access to women's health services. However, we
do not include in the protocol a review of materials produced by the
State because the protocol is a review of MCOs or PIHPs, not State
Medicaid agencies. Review of State compliance with Federal requirements
is carried out by our regional office staff through a separate process.
Comment: One commenter recommended that the reviewer monitor the
time it takes for enrollees to obtain appointments with network
providers.
Response: We agree with the commenter. Our protocol directs the
reviewers to obtain the State Medicaid agency's standards for timely
access and to review documents showing how the MCO/PIHP ensures
compliance and continuously monitors its network providers for
compliance with the timely access standards. The protocol lists some
acceptable mechanisms the MCO/PIHP may use for monitoring compliance.
Comment: One commenter suggested that inappropriate use of
emergency rooms be evaluated according to the ``reasonable lay person''
standard. The commenter also recommended that the monitoring of
emergency room use consider access to nonemergent care and follow-up
outreach and education for enrollees using emergency rooms for
nonemergency care.
Response: The protocol monitors MCO/PIHP application of the prudent
layperson standard in the regulation at Sec. 438.114. As we indicated
in our response to a previous comment on emergency room use, we have
added an interview question to inquire about the potential relationship
between inappropriate emergency room use and enrollee access to routine
and urgent care. However, MCO/PIHP follow-up outreach and education for
enrollees using emergency rooms for nonemergency care is not a
regulatory requirement, and it would be inappropriate to include it in
the protocol.
[[Page 3623]]
Comment: One commenter suggested expanding the protocol's
activities to include the review of training curricula and materials on
cultural and linguistic competency, including the scope and depth of
the training, its frequency, and extent of staff attendance; the
procedures for the translation and testing of enrollee informational
materials; and arrangements with community-based organizations
representing relevant ethnic groups.
Response: We disagree with the commenter. Our protocol addresses
the extent to which an MCO/PIHP complies with the regulatory provisions
that implement the Medicaid managed care sections of the BBA. The
Medicaid managed care final rule, at Sec. 438.206(c)(2), requires that
MCOs/PIHPs participate in the State's efforts to promote the culturally
competent delivery of services. Therefore, the protocol specifies a
review of documents for evidence of the MCO's/PIHP's participation in
the relevant State efforts. The inclusion of additional requirements
not required by regulation within the protocol would be inappropriate.
10. Coordination & Continuity of Care
Comment: One commenter recommended that the review of coordination
and continuity of care include interview questions regarding the
provision of any specialty care services currently not provided in-
network, and MCO efforts to make these services available in-network.
The commenter also suggested that the interview questions be expanded
to inquire what proportion of Medicaid enrollees with special health
care needs have a person or entity formally designated as primarily
responsible for coordinating their health care services.
Response: We agree, in part, with the commenter. Consequently, we
have added an interview question for the organization leaders to
inquire about the provision of any specialty care services currently
not provided in-network. We have not added questions about MCO or PIHP
efforts to make these services available in-network because it is not
clear whether or not it is always necessary that all specialty services
be provided by in-network providers. We have added additional potential
interview questions for enrollee services staff to determine what
proportion of Medicaid enrollees with special health care needs have a
person or entity formally designated as primarily responsible for
coordinating their health care services.
Comment: One commenter believes the protocol should differentiate
between gatekeeping activities that are involved with utilization
control and care coordination and case management functions that are
related to supporting service access and coordination. The commenter
believes further that reviewers should consider the MCOs' scope of
responsibility for EPSDT case management, and how these services are
provided or referrals are made.
Response: We agree with the commenter that a State may want to
differentiate between care coordination models. In so doing, a State
may decide to explicitly address care coordination for EPSDT care
management. We specify in the protocol that MCOs/PIHPs may establish
different coordination mechanisms, and in monitoring for compliance
with the requirements for care coordination, direct the reviewers to
obtain the State's requirements for MCO/PIHP care coordination
programs.
Comment: One commenter recommended that the interview protocol
address how and who conducts the MCOs' health screens; how the MCO
assesses enrollee needs and determines if the provider is qualified to
perform the assessment; how enrollees access case management services;
how an enrollee's need for a treatment plan is determined; and how the
providers are informed of the process. The commenter also suggested
additional interview questions to address the number of treatment plans
developed by categories of individuals, the number of denied requests
for treatment plans and the reason for denial, and the number of
treatment plans denied.
Response: The protocol includes interviewer questions for the case
managers and care coordinators and for the enrollee services staff
regarding the implementation of health screens, the conduct of health
assessments for Medicaid enrollees, processes for care coordination,
and procedures to determine how an enrollee's need for a treatment plan
is determined. The protocol's interview questions for the provider/
contractor services staff probe how providers are made aware of and are
involved in procedures for assessments, treatment planning, and care
coordination. We agree with the commenter regarding the need to explore
the MCO's/PIHP's treatment planning. We have revised the protocol to
include a series of questions for the case managers and care
coordinators concerning the number of treatment plans developed, the
number of denied requests for treatment plans and the reason for
denial, and the number of treatment plans denied. However, our revision
will not include a review of the treatment plans by categories of
individuals. We do not require specific categories and, therefore, have
no standard against which to measure the MCO's/PIHP's performance.
11. Prior Authorization
Comment: One commenter believes the protocol should include a
review of prior authorization procedures and policies and a
determination of their reasonableness, reflection of good medical
practice, and timely application. The commenter suggested reviewers
monitor the number of and reasons for delayed expedited requests, and
the health consequences associated with prior authorization delays and
denials of expedited authorizations. The commenter further believes the
MCOs' informal communications with providers should be monitored,
including the handling of provider telephone inquiries, resulting
changes to the course of treatment, and provision of enrollee notice
and appeal rights.
Response: We agree with the commenter regarding the need to
determine compliance with the requirement for timely prior
authorization decisions, and therefore have included in the protocol
document review and interview questions to determine compliance.
However, the regulations include no standards for the reasonableness of
the policies and procedures or for their reflection of good medical
practice; these issues are therefore beyond the scope of the protocol
that is designed to assess compliance with the Medicaid managed care
regulatory requirements.
We also agree with the commenter's suggestion to review the number
and reasons for delayed expedited requests. We have revised the
document review for service authorizations to include the review of
tracking logs or other authorization record-keeping documents to
address number and reasons for delayed expedited requests.
We do not agree with the suggestion to monitor health consequences
associated with prior authorization delays and denials of expedited
authorizations. We believe that determinations on whether health
consequences were due to authorization delays or denials, or to the
normal progression of the enrollees' health condition would be
subjective. Further, States are required to maintain records of
grievances and appeals and review this information as part of the State
quality strategy. If enrollees' health outcomes are adversely affected
by the MCO's/PIHP's handling of service authorization requests, this
should become evident to the State through this grievance and appeals
review.
[[Page 3624]]
Therefore, we have not added this review activity to the protocol. We
are also not requiring the EQR to review informal communication with
providers. Informal communications by their nature do not routinely
involve written documentation, and we believe it would be burdensome to
require reviewers to monitor verbal exchanges.
Comment: One commenter recommended that the interview questions
address the MCO's process and criteria for extensions of the standard
14 days for regular prior authorization decisions.
Response: We disagree with the commenter: timeframes for standard
prior authorization decisions are established by the State. The
protocol addresses compliance with the standard requirements in the
Medicaid managed care final rule. Because extensions to State-
established timeframes for standard authorization decisions is not
included in the regulations addressing enrollee services, it would be
inappropriate to include it in the protocol.
12. Enrollment & Disenrollment
Comment: One commenter believes that the protocol should provide
guidance to reviewers concerning when it is appropriate for enrollees
to use the MCO's grievance process before the State makes a
determination on the enrollee's disenrollment request.
Response: The Medicaid managed care regulation does not specify the
circumstances under which it is appropriate for enrollees to use the
MCO's/PIHP's grievance process before the State makes a determination
on the enrollee's disenrollment request. The protocol is designed to
address MCO/PIHP compliance with the regulatory provisions and is not
intended as a vehicle for either specifying additional requirements or
providing guidance.
Comment: One commenter recommended the protocol include comparisons
of MCO disenrollment rates and default or automatic enrollment rates
because high rates can signify quality or access problems in the former
instance and information deficits in the latter.
Response: While we agree with the commenter that disenrollment
rates and default or automatic enrollment rates may be correlated, we
do not agree that a comparison of rates alone will suffice. Instead, we
have revised the protocol to specify that the document review include
the MCO/PIHP disenrollment rates, and that the review of the
disenrollment sample determine if a relationship exists between the
enrollees requesting disenrollment and enrollees enrolled in the MCO/
PIHP automatically or by default.
13. Grievance System
Comment: One commenter suggested that the protocol include review
of policies and interview questions to ensure the MCO does not deter
enrollees from requesting fair hearings. The commenter recommended
further that the reviewer consider the number of grievances and fair
hearings versus the population served, and determine whether grievances
are held in suspense at certain levels of the review process or
enrollees are deterred from filing or pursuing grievance or fair
hearing requests. The commenter also suggested the reviewer convene
focus groups concerning how the grievance system is working.
Response: We believe the protocol, in the portion addressing review
of documents related to enrollee grievances, appeals and State fair
hearings, addresses the MCO/PIHP compliance with the regulatory
provisions, and in so doing, ensures that the MCO/PIHP does not deter
enrollees from requesting fair hearings or pursuing grievance or fair
hearing requests. The protocol specifies a review of logs, registries,
or other MCO/PIHP documentation of appeals, grievances, and requests
for State fair hearings made by Medicaid enrollees. Further, States are
required to maintain records of grievances and appeals and review this
information as part of the State quality strategy. If grievances are
held in suspense, this should become evident to the State through this
grievance and appeals review. We believe that focus groups, like
provider and consumer interviews, are time and resource intensive.
Therefore, we include consideration of other accessory information,
such as beneficiary surveys that may offer information on how the
grievance system is working but do not require in this protocol that
the reviewer convene focus groups.
Comment: One commenter believes that notice of action requirements
(for denial, reduction or termination of services) apply to all types
of plans and asked that this be clearly stated in the protocol. The
commenter further suggested the protocol include interview questions to
probe the actions that trigger notices required by due process of the
law, and a review of the MCO's notices to determine that the notices
comply with the legal requirements for adequate notice of hearing
rights, assure enrollees the care they receive will not be affected
because a grievance has been filed, are in languages prevalent in the
service area, and clearly specify the action the MCO is taking.
Response: The protocol is designed to specifically determine MCO
and PIHP compliance with provisions in the Medicaid managed care final
rule, regardless of whether or not the provisions apply to other types
of managed care plans. We have, therefore, addressed these two entities
in assessing compliance with the requirements concerning notice of
action. We believe a document review is more effective for this issue
than interview questions as an approach to compliance determination.
Furthermore, the protocol includes the review of a sample of MCO/PIHP
notices to determine the extent to which notices include the legal
requirements for adequate notice of hearing rights and specify the
action the MCO/PIHP is taking. We agree with the commenter and have
expanded this review to determine that notices include assurances that
enrollees will not be treated differentially, and are in languages
prevalent in the service area. We believe that by reviewing a sample of
beneficiaries that have been denied services and the reasons for
denials, reviewers will identify those actions that trigger notices
required by due process of the law.
Comment: One commenter believes the protocol fails to ascertain the
extent to which enrollees have realistic access to the grievance
process. The commenter recommended that the protocol include interview
questions concerning the process and frequency by which enrollees are
informed of the grievance procedures. The commenter also suggested
reviewers monitor the timeliness of grievance processing, interview
enrollees regarding the free exercise of their rights, and review the
MCO's procedures for supplying translation and interpretation services
during the grievance process.
Response: As we noted in the prior response, we believe a document
review is more effective than interview questions in determining
compliance with these provisions. The protocol includes the review of
the MCO/PIHP's administrative procedures and policies as well as a
sample of MCO/PIHP notices. We agree with the commenter that reviewers
should monitor the timeliness of grievance processing and review the
MCO's/PIHP's procedures for supplying translation and interpretation
services during the grievance process. Therefore, we have specified
that in reviewing the sample of notices, the reviewer should determine
the timeliness of grievance processing, and have included a review of
the MCO's/PIHP's procedures for supplying
[[Page 3625]]
translation and interpretation services during the grievance process.
However, since enrollee interviews are time and resource intensive and
beneficiary survey results are specified for consideration as accessory
information, we have not included this activity.
Comment: One commenter recommended reviewers interview enrollees to
determine how they are informed of the right to request continuation of
benefits pending resolution of an appeal or fair hearing, and whether
continuing benefits were received when requested. The commenter also
suggested that the reviewers compare the MCO's policies with the
enrollees' experiences.
Response: As noted previously, enrollee interviews are time and
resource intensive and are therefore not a review activity included in
the protocol. Instead, reviewers are directed to review the results of
beneficiary surveys as accessory information. The protocol also
specifies a review of the MCO/PIHP administrative policies and
procedures, and the review of a sample of notices, to determine the
extent to which enrollees are informed of their right to request
continuation of benefits pending resolution of an appeal or fair
hearing. The findings from the document reviews can then be compared to
the survey results as suggested by the commenter.
Comment: One commenter disagreed with the protocol not permitting
the combination of case manager and care coordinator interviews with
other interviews. The commenter further recommended the protocol
include interview questions for case managers and care coordinators on
the enrollees' process for accessing case management services to ensure
consistency with MCO policies, the procedures for interfacing with
carved-out or other services not covered by the MCO, and the ease of
accessing specialist care.
Response: The protocol specifies that the case manager's and care
coordinator's interviews may be combined with the Medical Director
interview or the Utilization Management interview. This option is
consistent with the process used by private accrediting bodies and in
the Medicare program reviews. The protocol specifies potential
interview questions for case managers and care coordinators to confirm
MCO/PIHP compliance with the regulatory requirements pertaining to
enrollee rights, service access, and coordination and continuity of
care. However, if issues arise during the document review concerning
the process for accessing case management services, for interfacing
with carved-out or other services not covered by the MCO, or the ease
of accessing specialist care, reviewers are directed to explore them
during the interviews. We believe this direction affords the reviewers
the flexibility necessary to appropriately tailor the review activity
to the structure, operations, and circumstances identified for each
MCO/PIHP. Further, we do not believe it is possible, given the
diversity among States and MCOs/PIHPs and the scope of the review
itself, to include in the list of potential interview questions probes
to explore every possible problem or issue that might arise.
Comment: One commenter believes that in collecting accessory
information it is important to consider non-Medicaid enrollee survey
results and compare these to the Medicaid results to ensure all
enrollees are receiving the same level of care.
Response: We believe there are numerous analyses of EQR-related
activities that can be undertaken. Specifically, the results of
compliance monitoring, encounter data, and performance measurements can
all be compared, contrasted, analyzed, and correlated. We do not
believe the Federal government can or should specify a single set of
analyses that will yield the most useful information for all States and
MCOs/PIHPs. We believe that States will choose their EQROs on the basis
of their demonstrated competence in quality review and analysis, and we
defer to the State's decisions about the lines of inquiry EQROs should
pursue regarding all EQR-related data, including surveys of Medicaid
enrollees and possible comparisons to Medicare enrollees, commercial
enrollees, and SCHIP enrollees.
C. Protocols for Calculating or Validating Performance Measures
Comment: One commenter asked that clarification be provided
regarding the collection and validation of performance measures. The
commenter is concerned that there is no description of essential EQRO
activities to ensure that the performance measures being used by the
State are scientifically sound, meaningful, valid, and reproducible.
The commenter does not believe that the collection methodology outlined
in the protocols will ensure valid and reliable measures. The commenter
recommended that we take steps to ensure that EQROs use only evidence-
based performance measures.
Response: We disagree with the commenter. The protocols outline a
methodology to be used in the validation or calculation of performance
measures to ensure that valid and reliable measures are calculated or
to determine the extent to which valid and reliable measures have been
calculated by the MCO/PIHP. The protocols were designed to be
consistent with approaches used by NCQA and Medicare QIOs but to also
describe how to validate or calculate measures such as those found in
HEDIS as well as those developed by States or other groups or
organizations. We advocate the calculation of measures that have been
tested and accepted in the private and public sectors but provide
States with the flexibility to develop measures or use measures
developed by others that meet their program needs.
In addition to specifying essential activities to be conducted as
part of performance measure validation or calculation, we have provided
an Appendix to this protocol that provides guidance on how to assess an
MCO's or PIHP's underlying information system (IS) to ensure that valid
and reliable data are used in the calculation of the performance
measures. The IS assessment may be conducted as part of this protocol
by the EQRO validating or calculating the performance measures, or the
EQRO may review an assessment conducted by another party.
Comment: One commenter believes that States have already invested
substantial resources in establishing systems to carry out performance
measurement activities and that it is not clear how these established
systems can be adapted easily to meet the requirements of the
protocols.
Response: Because the essential components of the protocols are
accepted practice in both the public and private sector, we expect that
States will not have to significantly adapt their approaches to
performance measurement. The performance measures protocols are to be
used for validating measures calculated by the MCO or PIHP as required
by the Medicaid managed care final rule or for calculating additional
measures as directed by the State. State approaches to performance
measurement might vary but we expect States to require the essential
components of the protocol for performance measurement activities--
review of MCO/PIHP data management processes, evaluation of compliance
with specifications for performance measures, and verification of
performance measurement.
Comment: One commenter believes this protocol is outdated and
suggested we reference current industry tools. Another commenter argued
that the performance measure validation process is heavily biased
toward proprietary systems entities developed in the
[[Page 3626]]
business of accreditation. The commenter believes this bias limits
flexibility in the process and promotes a narrow view of performance
measurement and jeopardizes State's ability to be innovative in
performance measurement.
Response: One reason we did not include the protocols in a
regulation was because we recognize that the protocols will need to be
updated as the state-of-the-art in quality assessment and improvement
changes. However, we believe that the activities listed in the protocol
are still those in current use in the industry. Further, to be in
compliance with the EQR rule, States only need to ensure that our
protocols or those consistent with ours are used.
In addition, we do not agree that the protocol is biased toward
proprietary systems. We used three sources to develop the performance
measures protocols (that is, NCQA's HEDIS validation protocol, IPRO
documents, and documents from the MEDSTAT group). We identified
activities common to these tools and incorporated those activities to
ensure valid and reliable methods are used when calculating or
validating performance measures. Only one of these tools was developed
by an organization that is in the business of accreditation, and we do
not agree that the performance measures protocol limits State
flexibility in the performance measures development process. We provide
States with the flexibility to use established measures or to develop
their own measures. We recommend, however, when States choose to
develop or use measures not widely used in the private and public
sector, that these measures should be evidenced-based and tested.
Comment: Several commenters believe the process described for
validating performance measures is bureaucratic and administratively
burdensome. The commenters state that they do not understand the value
of interviewing MCO staff and believe annual onsite review is not
necessary and is burdensome.
Response: The process in the protocols for validating performance
measures is consistent with the process used in the private sector and
the Medicare program. We drew from established tools in the development
of these protocols. The protocol includes interviewing MCO and PIHP
staff in addition to reviewing MCO/PIHP documentation of how
performance measures are produced. The purpose of interviewing staff is
not to obtain information that can otherwise be obtained from
documentation. It is to supplement and confirm information as needed.
In the protocol, interviews of MCO/PIHP personnel are identified as an
effective mechanism to understanding an MCO's/PIHP's IS and its
application to performance measurement. While much information can be
obtained by reviewing an MCOs/PIHPs internal documents describing its
IS, we believe that interviews with MCO/PIHP staff can be a helpful
adjunct to the review of IS documents in understanding the issues the
MCO/PIHP has with respect to ISs and how it affects the MCO's/PIHP's
production of performance measures.
Comment: One commenter argued that some States calculate and report
MCO-level performance measures and therefore, much of what is contained
in the calculating performance measures protocol is not applicable to
MCOs, but is applicable to the State.
Response: We recognize that States may have MCOs and PIHPs submit
encounter data to them instead of performance measures and, therefore,
the State may be the entity calculating the performance measure. We
have allowed for this in the quality assessment and performance
improvement program requirements specified in Sec. 438.240 of the
Medicaid managed care final rule. However, regardless of who calculates
the performance measures, MCO and PIHP-level performance measures must
be calculated as required by the Medicaid managed care final rule and,
if calculated by the MCO/PIHP, must be validated to provide information
for the EQR function. We have added clarifying language under Sec.
438.358(b)(2) to recognize that States may be calculating the MCO/PIHP
performance measures and in this circumstance the State would provide
the information obtained from this activity to the EQRO for the EQR
function.
Comment: One commenter suggested combining the validating
performance measures protocol and the calculating performance measures
protocol to reduce the length and complexity of the two protocols.
Response: We purposefully provided separate protocols for each EQR-
related activity. Even though some of the protocols are variations on a
theme (for example, validating performance measures and calculating
measures) we wanted to provide stand-alone documents for each activity.
In addition, though the protocols are variations on a theme, the
activities do differ somewhat and we believe the clearest way to
present the information is in separate documents.
Comment: One commenter argued that the 30 sample medical record
review recommended in the protocol for performance measures not
calculated with administrative data only will add tremendous cost, is
needlessly intrusive, and is very time consuming.
Response: This aspect of the protocol illustrates what we mean when
we say that States must use protocols that are consistent with (but not
identical to) our protocols. In this protocol, onsite Activity 4 is the
``Assessment of Processes to Produce Numerators.'' To be consistent
with our protocol, the EQRO must perform this activity (that is, assess
the MCOs' or PIHPs' processes to produce the performance measure
numerator). In our description of Activity 4, we describe how this
activity is to be conducted and state that this activity should include
a review of a sample of the medical records used to determine the
numerator. Thirty medical records is the number that was included in
the private sector protocols we reviewed. However, EQROs may use
another sample size and still be consistent with our protocol. Our
protocol endorses the policies found in private sector protocols, that
require a sufficient number of medical records be reviewed to validate
a reported numerator for a given performance measure. As stated
previously, however, activities used to provide information for the EQR
must be conducted ``consistent with'' our protocols. ``Consistent
with'' means that the protocols used contain all of the activities and
steps included in our protocols. How EQROs and States implement the
activities and steps is left to their discretion.
Comment: One commenter suggested we add lab data as a data source
to calculating performance measures numerators (page 8, item 4).
Response: We agree with the commenter and have added laboratory
data as a possible data source for calculating performance measures.
Comment: One commenter suggested some editorial changes.
Response: We have made editorial changes that were recommended
where we thought appropriate and helpful.
Comment: One commenter suggested on page 15 we add ``place of
service'' to the list of claims and encounter data elements to be
assessed when assessing the integrity of the MCO's/PIHP's IS.
Response: We agree with the commenter and have added place of
service to the list of claims and encounter data elements that may be
used to conduct performance measurement.
[[Page 3627]]
D. Protocols for Conducting or Validating Performance Improvement
Projects and Conducting Focused Studies
Comment: One commenter believes all the activities in this protocol
are reasonable.
Response: We agree and retain the activities in the protocol.
Comment: One commenter asked for clarification of why the protocol
for conducting performance improvement projects was developed. The
commenter questioned the value of this protocol since the EQRO is not
affiliated with any MCO and has no way to implement performance
improvement initiatives affecting the actual delivery of care. The
commenter recommended eliminating this protocol.
Response: This protocol was developed to provide EQROs and States
guidance on the activities required when conducting performance
projects as an optional EQR-related activity that qualifies for 75
percent FFP. A State may itself, through another State contractor, or
through the EQRO, have additional performance improvement projects
conducted other than those required to be conducted by the MCO/PIHP
under Sec. 438.240(b)(1) of the Medicaid managed care final rule and
Sec. 438.358(b)(1) of this rule. As long as the project is conducted
consistent with the protocol, the information can be provided to the
EQRO and be included as part of the EQR function. If the State itself
or other State contractor conducts the activity, the State would not
qualify for the 75 percent enhance match. If the EQRO conducts the
performance improvement project, the State could claim the enhanced
match. We developed separate protocols for the conduct of performance
improvement projects and the validation of performance improvement
projects to have stand-alone documents.
Comment: One commenter recommended that the focused study protocol
be combined with the validating performance improvement projects
protocol. The resulting protocol should be an optional protocol to be
used at the State's discretion. One commenter recommended that the
validating performance improvement projects and conducting performance
improvement projects protocols be combined.
Response: We have developed separate protocols for validating and
conducting performance improvement projects and for conducting a
focused study of health care quality in order to provide stand-alone
documents for each of the EQR-related activities. The focused study
protocol and the conducting performance improvement projects protocol
are to be used at the State's discretion if it decides to include
information from these optional EQR-related activities as part of the
EQR. In contrast, validating performance improvement projects conducted
by MCOs/PIHPs is a mandatory activity. Although these protocols have
much in common, there are some differences and we believe it is more
helpful to the readers and users of the protocols to present these
similar, but different activities in separate documents.
Comment: One commenter argued that the focused study protocol is
biased towards proprietary measurement systems, that we advocate the
use of indicators that are generally used in the public health
community such as those developed by NCQA and the Foundation for
Accountability (FACCT). The commenter recommended that the protocol be
neutral in tone and approach the topic of performance measure selection
from the perspective of State preferences and existing or evolving
State-specified systems.
Response: We agree with the commenter that we advocate the use of
performance indicators that are generally used in the public health and
managed care industry. This is because these measures have been tested
for validity and reliability and are widely accepted in the public and
private sectors. However, we also, in the performance measures (both
conducting and validating) and focused study protocols state that other
indicators may be used. We recommend that these indicators be developed
on the basis of current clinical practice guidelines or clinical
literature derived from health services research or findings of expert
or consensus panels.
Comment: One commenter suggested we add appointment availability
studies, network assessment studies, open-closed panel reports, member
and provider satisfaction survey data, and provider language reports as
potential sources of information for selecting study topic for
performance improvement projects or focused studies of health care
quality.
Response: We agree with the commenter and have revised the
potential sources of supporting information section, under Activity
``Selecting the Study Topic,'' in the performance improvement projects
(conducting and validating) and focused studies protocols to include
the following: data on appointments and provider networks such as
access, open and closed panels, and provider language spoken. Data from
surveys was already included in this section in each protocol.
Comment: One commenter suggested we add a discussion of service
needs for special needs populations to the list of methods for
selecting the study topic.
Response: We recommend in this section that topics should reflect
high-volume or high-risk conditions of populations served, including
populations with special health care needs such as children in foster
care, adults with disabilities, and the homeless. We further state that
although these populations may be small, their special health care
needs place them at high risk. We believe these provisions address the
commenter's concerns and that no change is needed.
Comment: One commenter believes that our rationale for reliable
data collection only addresses clinical data collection. The commenter
suggested we add a section for service studies such as appointment
availability and that methods to implement this include review of
appointment books, and ``secret shopper'' techniques when someone calls
to make an appointment. These kinds of indicators require scripts and
very clear definitions of items such as acute care, emergent care, and
routine care.
Response: We agree with the commenter that we did not include a
discussion on data collection issues when using nonclinical data. We
have added a paragraph in the performance improvement projects (both
conducting and validating) and focused studies protocols to address
this issue.
E. Protocol for Validating Encounter Data
Comment: One commenter stated that the protocol does not allow for
the fact that encounter data may be used for risk adjusted payment and/
or other utilization data analysis purposes.
Response: Accurate and reliable encounter data is crucial to
performing any analysis of utilization data, and in particular to the
development of capitated payments which are based on utilization data.
This protocol specifies processes for assessing the completeness and
accuracy of the encounter data MCOs and PIHPs submit to the State. We
believe this protocol for validation of encounter data accommodates the
multiple purposes for which encounter data are used.
Comment: One commenter stated that this protocol is long, detailed,
needlessly prescriptive and biased toward the MEDSTAT and HEDIS models.
The commenter also stated that since States generally have encounter
data validation processes in place, this
[[Page 3628]]
protocol will be redundant and should therefore be dropped, reformatted
as technical assistance or combined with other protocols to reduce the
length and complexity of the protocols.
Response: In developing this protocol (as with all the protocols)
we instructed our contractor to draw from existing protocols that have
been tested and used in the public and private sectors, and that are
consistent with current industry practice. The elements contained in
the MEDSTAT and HEDIS tools are consistent with other validation
processes reviewed, and contain generic activities and steps that
include the essential components of a methodologically sound review of
encounter data. By requiring protocols that are ``consistent with,''
rather than ``identical,'' we believe that we have allowed for State
flexibility while ensuring a minimum standard of quality. Since the
validation of encounter data is an optional EQR-related activity,
States have the option to conduct this activity or not. Consequently,
we do not believe this protocol is redundant, needlessly prescriptive,
or biased.
Comment: One commenter believes this protocol should address State
data issues and improvements that may impede the ability of MCOs and
PHPs to improve their data quality. These issues include the inability
of the State to receive MCO and PHP data, unclear data specifications
to MCOs and PHPs, and State policies and procedures.
Response: Section 4705(a)(2) of the BBA specifies that EQR be a
review of MCOs. Therefore, these protocols focus on MCOs and PIHPs, not
on the State. State Medicaid agencies have available to them a variety
of approaches that use contractors to strengthen their Medicaid
Management Information System (MMIS). Additionally, we have funding
opportunities that assist States with improvements to their MMIS. We,
therefore, are not modifying this protocol to address State Medicaid
agency data issues.
Comment: One commenter asked for clarification about the purpose of
the chart on page 11, including how the categories were decided upon,
and who will calculate the elements.
Response: The ``Acceptable Error Rates Specifications and
Identified Areas of Concern Form,'' is meant to serve as an example of
a tool that an EQRO can use when assessing rates of accuracy and
completeness for each data field. This tool can be used at the State's
or EQRO's discretion. It may be adapted to meet individual State
standards, or a State or EQRO may decide to develop a similar tool. Its
purpose is to illustrate that States need to specify what error rate
they will determine to be acceptable for the various types of encounter
data to be submitted to them. The categories of ``encounter type'' were
determined by the subcontractor that developed this protocol based on
its extensive experience as a contractor to us and State Medicaid
agencies on the production, assessment, and improvement of encounter
data. The acceptable error rates should be specified by the State.
Comment: One commenter recommended against an analysis of mandatory
fields (page 16) because these items are generally mandatory and an
MCO's submission would not be accepted if any of the fields were not
complete.
Response: We do not agree that an MCO's/PIHP's submission would not
be accepted if any of the fields were not complete. State Medicaid
agencies determine the acceptable levels of missing, surplus, or
erroneous data. States also determine the standards for encounter data
accuracy and completeness, to which encounter data submitted by MCOs
and PIHPs will be compared. This protocol recommends that the encounter
data validation process analyze and interpret the data in submitted
fields to determine if the information is of the type that was
requested by the State Medicaid agency, and if the values are valid and
reasonable.
Comment: One commenter believes that because an MCO does not
participate in or control the process of documenting the service in the
medical record and subsequent billing that is based upon the medical
record, there is no possibility for payor misbehavior.
Response: This protocol specifies processes for assessing the
completeness and accuracy of encounter data MCOs/PIHPs submit. The
protocol references reviews of medical records as an activity that is
conducted to verify the accuracy of the automated data submitted, using
the medical record as the point of reference. Payor misbehavior is not
the issue. The issue addressed by this protocol is the accuracy of the
information a provider submits, through the MCO/PIHP to the State, and
the extent to which the MCO/PIHP has procedures in place to promote the
accuracy and completeness of the data submitted by their providers.
Comment: One commenter believes the acceptable error rates form
(page 5) is not information that can be assessed during an onsite
visit.
Response: The Acceptable Error Rate form is a tool that can be used
by the State or EQRO to document whether the MCO/PIHP has exceeded the
acceptable error rate for each encounter type, and whether any concerns
have been raised that trigger the need for further investigation. The
protocol does not specify at what location (State Medicaid agency
offices, MCO or PIHP offices, or EQRO offices) compliance with
acceptable error rates is to be determined. The location where this
form is to be constructed or used is to be determined by the State.
Comment: One commenter suggested that the protocol address rejected
data.
Response: Activity 3, ``Analyze Electronic Encounter Data for
Completeness and Accuracy,'' represents the core of the process the
EQRO will use to test the validity of the encounter data. Activity 3 is
designed to yield information about the general magnitude of missing
encounter data, and should identify problems in the MCO's/PIHP's
process for compiling and submitting encounter data. Rejected data
should be included in the evidence of and reasons for an MCO's/PIHP's
inability to submit encounter data. Additionally, Appendix Z
(Information Systems Capabilities Assessment) asks what happens to the
encounter if one or more required fields are missing, incomplete, or
invalid.
Comment: One commenter suggested that the protocol address
additional significant issues in performing data accuracy assessments.
The commenter further recommended that it be clear before proceeding if
the data are pre- or post-edits and whether they are from the MCO, the
State, or from the State's data warehouse.
Response: We do not understand what the commenter is referring to
when suggesting that the protocol address additional significant issues
in performing accuracy assessments. In response to the second comment,
the data that the protocol addresses is MCO/PIHP level data, and where
the data resides is unique to each State. The protocol addresses
encounter data submitted by the MCO/PIHP to the State. Therefore, the
data would include any edits made by the MCO/PIHP. The State will need
to identify to the EQRO the extent to which it has performed any edits
of the data submitted by the MCO/PIHP.
Comment: One commenter suggested that the protocol address
benchmark data that can be used to help determine data completeness.
Response: The use of benchmarks is discussed in a number of the
Steps in Activities 2 and 3. The protocol does not specify exact
benchmarks that are to be used because benchmarks should be
[[Page 3629]]
tailored to each State's status with respect to the accuracy and
completeness of its encounter data. The protocol instead discusses how
the EQRO should use benchmarks for testing the quality of data.
Additionally, the protocol indicates the source for some benchmarks,
and in some cases, provides instructions for EQROs to develop certain
benchmarks.
Comment: One commenter suggested that the protocol address
incorporation of vendor data in reporting to the State.
Response: We agree that vendor data should be included when
reporting to the State. That is why we reference the importance of
vendor data when assessing the MCO's/PIHP's capability to produce
accurate and complete encounter data in Activity 2. Activity 2 directs
the EQRO to conduct an IS assessment that is consistent with the
process described in Appendix Z. Appendix Z includes as elements that
impact the accuracy and completeness of encounter data, the MCO's/
PIHP's data submission policies, and the contract requirements for
vendors and contractors.
F. Information Systems Capabilities Assessment (Appendix Z)
Comment: One commenter believes the level of detail required in the
information systems capabilities assessment (ISCA) tool is excessive.
The commenter does not believe that the reviewer should have the option
of asking for the source code for a variety of computer and report
programs. Moreover, the commenter stated that MCOs do not necessarily
have the source code because that information may be proprietary and
may be the property of a vendor.
Response: We do not agree that the ISCA tool requires an excessive
level of detail. A number of public and private sector protocols and
tools were examined to promote consistency between this assessment and
similar public and private sector activities. We also disagree with the
comment that the reviewer does not need the source codes used to
perform various calculations, and because these codes are proprietary
the MCO/PIHP would not have access to this documentation. The source
codes referred to in the protocol are codes used in the programs
written by MCO/PIHP staff or by their contractors to calculate
continuous enrollment or other calculations using MCO/PIHP
administrative data. Consequently, whenever the accuracy of
calculations performed by the MCO/PIHP impact on other aspects of the
quality measurement; for example, performance measures, the EQRO will
require source codes to validate the accuracy of those calculations.
These source codes should, therefore, be available to the MCO/PIHP.
Comment: One commenter believes the onsite activities under this
Appendix probe policies and procedures not subject to regulation and
that they are not relevant to the State MCO contract.
Response: We disagree with the premise that the policies and
procedures related to the MCO/PHP ISCA are not subject to regulation.
This Appendix relates to three different regulatory provisions. Under
Sec. 438.242 of the Medicaid managed care final rule, the State must
ensure, through its contracts, that each MCO/PIHP maintains an IS that
accurately and completely collects, analyzes, integrates, and reports
data on utilization, enrollment and disenrollment. Additionally, Sec.
438.240 stipulates that the State must require MCOs/PIHPs to have an
ongoing quality assessment and improvement program for which accurate
and complete data is an essential element. Further, in Sec. 438.350 of
this final rule, each State is required to provide its EQRO information
obtained through methods consistent with these protocols. In our
contractor's review of private sector industry and Medicare practices,
it was determined that an assessment of an MCO's/PIHP's IS is an
essential component of validation of encounter data and performance
measurement.
Comment: One commenter believes that this Appendix is outdated and
suggested the encounter data protocol should reference current industry
available tools.
Response: When we started developing the protocols we used the most
recent version of the public and private sector tools referenced. These
private and public sector tools have since been updated. However,
because we developed the protocols as generic activities and steps to
be used in the conduct of the EQR-related activities, we do not agree
that the protocols are outdated. Furthermore, in this final rule we
allow for use of other protocols, as long as they are consistent (that
is, contain the activities and steps identified in these protocols)
with those we have developed.
Comment: One commenter believes that States may routinely assess
MCO IS capabilities and in these cases this protocol is of limited
applicability.
Response: To avoid duplication, in all the protocols calling for an
ISCA, we state that the EQRO may use information about the MCO/PIHP
ISCA obtained from an ISCA conducted by another party as part of
another review such as the validation of performance measures,
validation of encounter data, or a review for compliance with
standards. If the ISCA was performed by another party as part of
another review, the State or EQRO should obtain a copy of the
assessment, review it to determine if the findings are current,
consistent with this Appendix, and where appropriate, seek more recent
or additional information. If a recent assessment has not been
conducted, an ISCA that is consistent with this Appendix should be
conducted.
G. Protocols for Administering or Validating Surveys
Comment: One commenter argued that the protocol for administering a
survey is very prescriptive and the value of such a detailed protocol
is questionable particularly when States choose to follow the
recommended CAHPS survey method. The commenter asked us to clarify how
much latitude there was to follow the CAHPS methodology.
Response: The administration of validation of consumer or provider
surveys of quality of care are optional EQR-related activities. If a
State elects to have its EQR perform these activities and to qualify
for the 75 percent enhanced match, our protocol or a protocol
consistent with ours must be used. Our protocol includes generally
accepted practices of survey design and implementation. We relied upon,
but condensed, generally accepted principles of survey design and
administration discussed in textbooks and other health services
publications. Although many States use CAHPS surveys (and the CAHPS
survey methodology would meet the requirements of this protocol) it was
necessary to put forth this protocol to cover those instances when
States desired to use a survey other than a CAHPS survey.
Comment: One commenter asked us to clarify the distinctions between
the two survey protocols.
Response: The first protocol applies to the situation in which the
State or its agent administers a survey, that is, designs and/or
conducts a survey. Administration of a survey may include the design
and implementation of a new survey or the modification of an existing
survey and its implementation.
The second protocol applies to the situation in which the State or
its agent validates the use of a survey administered or conducted by
another party. The process of validation is necessary to ensure that
the survey results are both reliable and valid. In
[[Page 3630]]
this protocol, survey validation is limited to a review of the survey
procedures. The validation process does not include collecting survey
data anew from respondents to verify their responses.
Comment: One commenter believes that beta testing all surveys and
the additional questions to members and providers would be time
consuming and cost prohibitive.
Response: The protocols do not suggest beta testing of all surveys.
Instead, they acknowledge the commitment of time and resources and the
demands on survey respondents that make such an activity infeasible.
The protocol suggests that survey validation be limited to a review of
survey procedures.
H. Other Appendices (Attachments to Final Protocols)
Comment: One commenter recommended that we explain the obligations
of the State or the EQRO with regard to the documents included in the
appendices (for example, what is the role of the documents and how the
documents are to be used).
Response: With the exception of Appendix Z, ISCA for MCOs and
PIHPs, the appendices (Attachments to the final protocols) provide
additional guidance to States and EQROs on how to implement the EQR-
related activities. The information contained in the appendices
(Attachments to the final protocols) are to be used at the discretion
of the State or EQRO based on the particular circumstances of the
activity being conducted and other means of obtaining needed
information.
I. Section 438.360 (Nonduplication of Mandatory Activities)
Comment: One commenter believes the estimates of the time necessary
to collect the information under this provision are too low. In
addition, the commenter believes that this function needs to be
performed by both professional staff and clerical staff and that a
blend of the hourly costs should be used to determine the estimated
costs.
Response: As we stated earlier, because we received several
comments indicating that this estimate is low but commenters did not
provide us with what they believe the correct estimate to be, we have
increased the burden hours by 100 percent to 8 hours. We have taken the
commenters recommendation and blended the hourly costs to reflect that
both professional and clerical staff will partake in this effort.
J. Section 438.362 (Exemption From EQR)
No comments were received on this section.
K. Section 438.364 (EQR Results)
No comments were received on this section.
IV. Provisions of the Final Regulation
For the most part, this final rule adopts the provisions of the
December 1, 1999 proposed rule. In response to public comments, we have
made clarifying wording changes. Those provisions of this final rule
that differ from the provisions of the December 1, 1999 proposed rule
follow.
Section 438.310--Basis, Scope, and Applicability
We have revised this section to reference the applicability of this
rule to PIHPs. We have added the reference to PIHPs throughout the rule
as appropriate.
Section 438.320--Definitions
We have revised this section by adding clarifying language to the
definitions for the terms ``EQR'' and ``EQRO'' and adding a definition
for the term ``financial relationship.'' The definition of EQR has been
revised to clarify that this rule applies to the care provided to
Medicaid beneficiaries that receive health care services furnished by
MCO and PIHP subcontractors as well as MCOs and PIHPs. This definition
has also been revised to clarify that EQR-related activities are not
considered part of the EQR function. We have revised the definition of
EQRO to mean an organization that conducts the EQR function as well as
EQR-related activities. EQR-related activities had not previously been
included in the EQRO definition. As a result of this clarifying
language, how we use the terms EQR, EQR-related activities, and EQRO
needed to be changed in several sections of this rule.
Section 438.350--State Responsibilities
We have revised this section to add clarifying language that the
information provided to the EQRO is consistent with the information we
require as part the EQR results; for each EQR-related activity that
provides information for the EQR, the EQRO must have the objectives of
the activity, the methods of data collection and analysis, a
description of the data obtained, and the conclusions drawn.
Section 438.352--External Quality Review Protocols
We have revised this section to add clarifying language at
paragraph (c) of this section to explain what we meant by each protocol
must specify the ``detailed procedures'' to be followed in collecting
the data to promote its accuracy, validity, and reliability. We have
changed the wording of ``detailed procedures'' to ``activities and
steps'' to be consistent with how the EQR protocols have been designed.
Section 438.354--Qualifications of External Quality Review
Organizations
We have revised this section to add at paragraph (b)(1) that the
EQRO must have ``demonstrated experience'' as well as knowledge of the
Medicaid recipients, policies, data systems, and processes; managed
care delivery systems, organizations, and financing; quality assessment
and improvement methods, and research design and methodology.
We have revised paragraph (c) of this section to require that all
EQROs, as opposed to only State entities that qualify as EQROs, may not
deliver any health care services to Medicaid beneficiaries, or conduct
on the State's behalf ongoing Medicaid managed care program operations
related to the oversight of MCO or PIHP quality of services. This later
provision has been revised to apply only to Medicaid managed care
operations as opposed to all Medicaid program operations. This provides
States the opportunity to contract with a broader group of entities
than was provided for in the December 1, 1999 proposed rule.
We have also revised paragraph (c) of this section to add
clarifying language to explain how ``control'' is defined in 48 CFR
19.101. In addition, we have added a provision that prohibits an entity
from qualifying as an EQRO if it has a financial relationship with an
MCO or PIHP that it will review as an EQRO.
Section 438.356--State Contract Options
We have revised paragraph (a) of this section to clarify that
States may only contract with one entity for EQR alone or EQR and other
EQR-related activities, but may contract with multiple entities to
conduct additional EQR-related activities.
Section 438.358--Activities Related to External Review
We have revised this section by adding cross-references to the
Medicaid managed care final rule. We have made these cross-references
throughout this rule where appropriate. We had not
[[Page 3631]]
included these cross-references in the December 1, 1999 proposed rule
as the Medicaid managed care final rule had not yet been published.
We have added a general rule under paragraph (a) to clarify that
the mandatory and optional EQR related activities can be conducted by
the State, the State's agent that is not an MCO or PIHP, or an EQRO.
We have revised paragraph (b)(1) to clarify that information from
the validation of performance improvement projects that are underway,
as opposed to those being performed, must be obtained from the MCO or
PIHP. We have revised paragraph (b)(2) to clarify that information on
performance measures can be obtained from either those calculated by
the MCO/PIHP and validated by the State or its agent, or those
calculated by the State on behalf of the MCO/PIHP. We have also revised
(b)(3) by eliminating the reference to specific State standards. These
are now referenced in the aggregate by our cross-reference to the
Medicaid managed care final rule provision. We have also revised
paragraph (c) to clarify that information from optional activities must
be from information derived within the preceding 12 months.
Section 438.360--Nonduplication of Mandatory Activities
We have revised this section by removing the word ``exempt.'' Using
this word caused confusion with the ``exemption of EQR requirements''
under Sec. 438.362. In its place, we provide language that explains
that the nonduplication provisions allow States to use information from
either a Medicare or accreditation review for certain standards and
activities in place of a Medicaid review.
We have also revised this section to allow States to apply this
provision to MCOs and PIHPs that provide health care services to
commercial consumers of health care as well as Medicare beneficiaries.
We have further revised this section to clarify that national
accrediting organizations are those organizations that have been
approved and recognized for M+C deeming. We have made this
clarification throughout the rule as appropriate.
We have restructured this section by revising paragraph (b) so it
applies to both M+C and MCOs and PIHPs that provide services to
commercial consumers and have revised paragraph (c) to address
additional provisions for those MCOs and PIHPs providing services to
dually eligible beneficiaries only. Under paragraph (b) and (c), we
have added a provision that requires the State in its quality strategy
to identify those standards and activities for which it will substitute
the Medicare or accreditation review for the Medicaid review. In
addition, we require the State to explain the rationale for why the
State considers the standards or activities duplicative.
Section 438.362--Exemption From External Quality Review
We have revised paragraph (a)(2) to clarify that the Medicare and
Medicaid contract must overlap geographically within the State when it
exempts the MCO or PIHP from EQR. The December 1, 1999 proposed rule
did not require that the overlap be within the State.
We have revised (b)(1) to clarify that information from Medicare
reviews is to be obtained by the State from the MCO or PIHP. The
language in the December 1, 1999 proposed rule could have been
misinterpreted to mean that the State had to obtain the information
from CMS or its agent. We have also revised paragraph (b)(2) to clarify
that the MCO or PIHP must provide the State a copy of the accreditation
review findings as opposed to ensuring the State receives a copy.
Section 438.364--External Quality Review Results
We have revised paragraph (a)(1) to clarify that in the detailed
report, conclusions are drawn as to the timeliness of and access to
care as well as the quality of care. We have revised paragraph
(a)(1)(iii) to clarify that the detailed report should include a
``description'' of the data obtained for each EQR-related activity as
opposed to the data obtained. We did not intend for the raw data to be
provided as part of the EQR results. We have also revised paragraph
(a)(2) to require an assessment of the MCO's and PIHP's strengths and
weaknesses be addressed as opposed to a ``detailed'' assessment of the
MCO's and PIHP's strengths and weaknesses.
We have revised paragraph (b) to require that the EQR results, upon
request, be made available in alternative formats for persons with
sensory impairments and that the EQR results be made available through
electronic as well as printed copies.
Section 438.370--Federal Financial Participation
We have revised (a) to clarify that 75 percent FFP is also
available for the production of the EQR results.
V. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), we are required to
provide a 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA requires that we
solicit comment on the following issues:
[sbull] The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
[sbull] The accuracy of our estimate of the information collection
burden.
[sbull] The quality, utility, and clarity of the information to be
collected.
[sbull] Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Therefore, we are soliciting public comment on each of these issues
for Sec. Sec. 438.352, 438.360, 438.362 and 438.364 of this document
that contain information collection requirements.
We published a notice in the Federal Register on November 23, 2001,
to give the public a 60-day period in which to comment. The basic
purpose was to afford the public an opportunity to comment on the
protocols. We have addressed the comments received in response to this
Federal Register notice in section III. above.
For purposes of this requirement, we incorporated Medicaid managed
care data from the 2001 Medicaid enrollment report. As of June 2001,
there were 329 MCOs (this includes 5 HIOs that must adhere to the EQR
requirements of this regulation), and 129 mental health and substance
abuse PIHPs.
Sec. 438.358 (Activities related to EQR)--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 Sec. 438.240(b)(1) and
that were under way 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 Sec. 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 Sec. Sec. 438.240(b)(1) and (2), for the
conduct of performance improvement projects and calculation of
performance measures, respectively)
[[Page 3632]]
established by the State to comply with the requirements of Sec.
438.204(g).
In addition, if a State, at its option, wishes to provide
additional information to its EQRO, and to have CMS provide 75 percent
FFP in the costs of producing this information, then the additional
information must be produced through activities identified as optional
activities in this final rule and also must be produced in a manner
consistent with (as opposed to identical to) the protocols for these
six optional activities. These six optional activities are (1)
validation of client level data such as claims and encounters, (2)
administration or validation of a survey, (3) calculation of
performance measures, (4) conduct of performance improvement projects,
and (5) conduct of focused studies of quality of care.
The burden associated with this requirement is the time and effort
for a State, EQRO, or other State contractor, to conduct and document
the findings of the three mandatory activities--the validation of
performance improvement projects conducted by the MCO/PIHP, the
validation of performance measures calculated by the MCO/PIHP, and a
review of MCO/PIHP compliance with structural and operational
standards. Each of these activities will need to be conducted on the
329 MCOs and 129 PIHPs that we estimate are currently providing
Medicaid services. The types of services provided by these managed care
entities and the number of performance improvement projects conducted
and performance measures calculated will vary.
We interviewed four EQROs who in 2000 reviewed MCOs/PIHPs in 16
mandatory or voluntary managed care programs in eight States. Based on
the information provided by the four EQROs, we confirmed that the hours
and costs to conduct these activities vary. The information provided
includes: (1) It takes 25 to 138 hours at a cost of $2,000 to $10,000
to validate a performance improvement project conducted by an MCO/PIHP;
(2) it takes 12 to 202 hours at a cost of $1,200 to $7,000 to validate
a performance measure calculated by an MCO/PIHP; and it takes 200 to
800 hours at a cost of $11,000 to $49,000 to review for MCO/PIHP
compliance with structural and operational standards. Based on the
submitted information, it takes an average of 65, 53, and 361 hours,
respectively, to conduct the above mandatory EQR activities. Therefore,
the average total burden associated with this requirement is 479 hours
x 458 entities (329 MCOs + 129 PIHPs). Assuming wages of $63 per hour
for professionals to comply with the requirement, the cost is
$13,821,066.
For the optional EQR activities--validation of client level data
(such as claims and encounters), administration or validation of
consumer or provider surveys, calculation of performance measures,
conduct of performance improvement projects, and conduct of focused
studies--we have no data to estimate the hours associated with how long
it will take to conduct these activities. We, therefore, estimate that
it will take 350 hours to validate client level data and 50 hours to
validate consumer or provider surveys. We estimate it will take three
times as long to calculate performance measures as it takes on average
to validate (159 hours) and three times as long to conduct performance
improvement projects and focused studies as it takes on average to
validate performance improvement projects (195 hours). We also estimate
that it will take three times as long to administer a consumer or
provider survey than it takes to validate a survey (150 hours).
Based on 2001 State reported data, we know that of the 42 States
that had capitated programs (MCOs or PIHPs) in 2001, 29 (69 percent)
had their EQROs validate MCO/PIHP encounter data, 18 (43 percent) had
their EQRO administer or validate consumer or provider surveys, 12 (29
percent) had their EQRO calculate performance measures, 16 (38 percent)
had their EQRO conduct performance improvement projects, and 32 (76
percent) had their EQRO conduct focused studies. Using the
aforementioned percentages and applying them to the number of MCOs and
PIHPs, we estimate that States will contract with their EQROs to
validate the encounter data of 316 MCOs/PIHPs, administer or validate
consumer or provider surveys of 197 MCOs/PIHPs, calculate performance
measures of 133 MCOs/PIHPs, conduct performance improvement projects of
174 MCOs/PIHPs, and conduct focused studies of 348 MCOs/PIHPs.
We, therefore, estimate the average total burden associated with
conducting each optional EQR activity as follows:
[sbull] Validating client level data 350 hours x 316 MCOs/PIHPs =
110,600 hours.
[sbull] Validating consumer or provider surveys 50 hours x 98 MCOs/
PIHPs (\1/2\ of 197 MCO/PIHPs that administered or validated surveys) =
4,900 hours.
[sbull] Administering consumer or provider surveys 150 hours x 99
MCOs/PIHPs (\1/2\ of 197 MCO/PIHPs that administered or validated
surveys) = 14,850 hours.
[sbull] Calculating performance measures 159 hours x 133 MCOs/PIHPs
= 21,147 hours.
[sbull] Conducting performance improvement projects 195 hours x 174
MCOs/PIHPs = 33,930 hours.
[sbull] Conducting focused studies 159 hours x 348 = 55,332 hours.
Assuming a wage of $63 per hour for professionals to comply with
the requirement, the cost of conducting the optional EQR activities is
(240,759 hours x $63) $15,167,817. We solicit comments specifically on
this issue because we had no data on which to base the estimated hours
for the conduct of each of the optional EQR activities.
The burden estimate associated with this requirement also includes
the time and effort for an MCO/PIHP to prepare the information
necessary for the EQRO or other State contractor to conduct the three
mandatory activities--the validation of performance improvement
projects conducted by the MCO/PIHP, the validation of performance
measures calculated by the MCO/PIHP, and a review of MCO/PIHP
compliance with structural and operational standards. We estimate that
it will take each MCO and PIHP 160 hours to prepare this documentation.
We believe one-half of the time preparing the information will be done
by professional staff at $63 per hour and the other one-half of the
time preparing the information will be done using clerical staff at $12
per hour. Therefore, to comply with the requirement, the cost of
compiling the necessary information is (458 MCOs/PIHPs x (80 hours x
$63 + 80 hours x $12) $2,748,000.
Sec. 438.360 (Nonduplication of mandatory activities)--In order to
avoid duplication, the State agency may allow the MCO/PIHP to
substitute information from a Medicare or accreditation review for the
Medicaid review if specified conditions are met. To demonstrate
compliance with these requirements an MCO/PIHP must provide to the
State agency reports, findings, and other results of the Medicare or
private accreditation review. The burden associated with these
requirements is the time and effort for an MCO/PIHP to disclose the
reports, findings, and other results of the Medicare or private
accreditation review to the State agency. Of the 329 MCOs and 129 PIHPs
providing Medicaid services, approximately 122 are Medicaid-only MCOs.
We believe that there is the potential for States to allow the
remaining 336 MCOs/PIHPs to take advantage of the nonduplication
provision and that these MCOs/PIHPs will be required to disclose the
necessary information to each State
[[Page 3633]]
agency. We estimate that it will take each MCO 8 hours to disclose the
necessary documentation to the State, 4 hours of professional time and
4 hours of clerical time. Therefore, the total burden associated with
this requirement is 336 MCOs/PIHPs x 8 hours = 2688 annual burden
hours. At $37.50 per hour ($12 + $63/2), the cost will be $100,800.
This section also requires that a State agency provide the reports,
findings, and other results of the Medicare or private accreditation
review to the appropriate EQRO. We estimate that it will take, on
average, 8 hours for a State to disclose the necessary documentation to
the appropriate EQRO. The total annual burden associated with this
requirement is 2688 hours ($37.50 per hour) and $100,800.
This section also requires a State to include in its quality
strategy information concerning the activities or standards for which
it is obtaining information from Medicare or an accrediting
organization. We believe that the burden for this information
collection requirement is included in the burden addressed in the
Medicaid managed care rule and approved under OMB number 0938.
Sec. 438.362 (Exemption from EQR)--Each year, exempted MCOs/PIHPs
must provide to the State agency the most recent Medicare review
findings reported to the MCO/PIHP. This information must include (1)
all data, correspondence, information, and findings pertaining to the
MCO's/PIHP's compliance with Medicare standards for access, quality
assessment and performance improvement, health services, or delegation
of these activities; (2) all measures of the MCO's/PIHP's performance;
and (3) the findings and results of all performance improvement
projects pertaining to Medicare enrollees.
If an exempted MCO/PIHP has been reviewed by a private accrediting
organization and the survey results have been used to either fulfill
certain requirements for Medicare external review under 42 CFR part
422, subpart D or to deem compliance with Medicare requirements as
provided in Sec. 422.156, the MCO/PIHP must submit a copy of all
findings pertaining to its most recent accreditation review to the
State agency. These findings must include accreditation survey results
of evaluation of compliance with individual accreditation standards,
noted deficiencies, corrective action plans, and summaries of unmet
accreditation requirements.
The burden associated with these requirements is not applicable for
2 years following the final publication of this regulation. After 2
years, the time and effort for an exempted MCO/PIHP to disclose the
findings of its most recent Medicare or private accreditation review to
the State agency will be the burden associated with these requirements.
We estimate, of the approximately 202 MCOs that potentially may provide
Medicare services in addition to Medicaid services, State agencies will
allow for approximately 10 percent of the MCOs to be exempt from the
EQR requirement. We further estimate that it will take each MCO 8 hours
to prepare and submit the necessary documentation to the State agency.
Therefore, the total burden associated with this requirement is 10
percent of 202 MCOs x 8 hours = 160 annual burden hours. At a cost of
$37.50 ($12 + $63/2) per hour, we assume a total cost of $6,000.
Sec. 438.364 (EQR results)--The EQRO responsible for the EQR
function will be required to provide to the State agency a detailed
technical report that describes for each mandatory and optional
activity undertaken for the EQR, the objectives, technical methods of
data collection and analysis, a description of the data obtained,
conclusions drawn from the data, and the manner in which the
conclusions were drawn as to the quality of the care furnished by the
MCO/PIHP. In addition, the report must include: (1) An assessment of
each MCO's/PIHP's strengths and weaknesses with respect to the quality,
timeliness, and access to health care services furnished to Medicaid
beneficiaries; (2) recommendations for improving the quality of health
care services furnished by each MCO/PIHP; (3) as the State agency
determines methodologically appropriate, comparative information about
all MCOs/PIHPs, and (4) an assessment of the degree to which each MCO/
PIHP has addressed effectively the recommendations for quality
improvement, as made by the EQRO during the previous year's EQR.
The burden associated with this requirement is the time and effort
for an EQRO to submit to a State agency a detailed technical report for
each EQR conducted. We estimate that it will take an EQRO 200 hours to
prepare and submit the necessary documentation to the State agency.
Therefore, the total burden associated with this requirement is 458
technical reports (329 MCOs + 129 PIHPs) x 200 hours = 91,600 annual
burden hours. Assuming wages of $63 per hour for professionals to
comply with this requirement, the cost is $5,770,800.
This section also requires each State agency to provide copies of
technical reports, upon request, to interested parties such as
participating health care providers, enrollees and potential enrollees
of the MCO/PIHP, beneficiary advocate groups, and members of the
general public.
The burden associated with this requirement is the time and effort
for a State agency to disclose copies of a given technical report to
interested parties. We estimate that on average, it will take a State
agency 8 hours to disclose the required information. Therefore, the
total burden associated with this requirement is 329 MCOs + 129 PIHPs x
25 requests per MCO or PIHP x 8 hours = 91,600 annual burden hours and
a cost ($12 per hour) of $1,099,200.
The information collection requirements contained in this final
rule will be submitted to OMB for review. In accordance with the
Paperwork Reduction Act, these requirements will not go into effect
until approved by OMB.
If you comment on any of these information collection and record
keeping requirements, please mail 3 copies directly to the following:
Centers for Medicare & Medicaid Services, Office of Information
Services, Security and Standards Group, Division of CMS Enterprise
Standards, Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-
1850; Attn: Julie Brown, HCFA-2015-F; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Brenda Aguilar, CMS Desk Officer.
VI. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review) the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, when regulation is necessary,
to select regulatory approaches that maximize net benefits, including
potential economic, environmental, public health and safety effects,
distributive impacts, and equity. A regulatory impact analysis (RIA)
must be prepared for major rules with economically significant effects
($100 million or more in any one year).
[[Page 3634]]
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, we prepare a regulatory
flexibility analysis unless we certify that a rule will not have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, nonprofit organizations, and
governmental agencies. Most hospitals and other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$5 to $25 million or less annually. Individuals and States are not
included in the definition of a small entity.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis for any proposed rule that may have a significant
impact on the operations of a substantial number of small rural
hospitals. This analysis must conform to the provisions of section 604
of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside a
Metropolitan Statistical Area and has fewer than 100 beds.
The Unfunded Mandates Reform Act (Pub. L. 104-4) requires that
agencies prepare an assessment of anticipated costs and benefits before
proposing any rule that may result in an annual expenditure by State,
local, and tribal governments, in the aggregate, or by the private
sector, of $110 million or more. This rule does not impose any mandates
on State, local, or tribal governments, or the private sector that will
result in an annual expenditure of $110 million or more.
Under Executive Order 13132, we are required to adhere to certain
criteria regarding Federalism in developing regulations. We have
determined that this regulation will not significantly affect States
rights, roles, and responsibilities. Section 1903(a)(30)(C) of the Act
currently requires an EQR for each contract a State has with a section
1903(m) organization. In accordance with section 4705 of the BBA, this
rule will establish requirements and procedures for EQR of Medicaid
MCOs. We require States to ensure that an annual EQR is performed by a
qualified EQRO for each contracting MCO, the EQRO has adequate
information to carry out the review, and that the results of the
reviews are made available to interested parties such as participating
health care providers, enrollees, advocate groups, and the general
public. We also require that these EQR provisions apply to PIHPs and
certain entities with comprehensive risk contracts that have been
exempted from the requirements of section 1903(m) of the Act. We
believe this is consistent with the intent of the Congress in enacting
the quality provisions of the BBA. This rule would not require State
agencies to dismantle EQR mechanisms that they have used to meet
section 1902 (a)(30)(C) of the Act and which they have found to be
effective and efficient. Rather, this rule would provide States greater
flexibility in the types of entities they may use to conduct EQR.
We worked closely with States in developing this regulation.
Specifically, in accordance with section 1932(c)(2)(A)(ii) of the Act,
which requires the Secretary to consult with States to establish a
method for identifying entities qualified to conduct EQR, we met with
States and other stakeholders under the auspices of the NASHP to
establish a criteria to identify qualified entities. Most of the
recommendations made at this meeting have been incorporated into this
rule. For recommendations not accepted, an explanation was provided in
the December 1, 1999 proposed rule.
In addition, section 1932(c)(2)(A)(iii) of the Act requires the
Secretary to coordinate with the NGA in contracting with an independent
quality review organization to develop protocols to be used in EQR. To
meet this requirement, we issued a request for proposal for one or more
contractors to develop a set of review protocols for EQROs to use in
the conduct of EQRs. Two State representatives selected by the NGA were
members of the panel that reviewed and rated responding proposals.
Moreover, part of the development of the EQR protocols includes
convening an expert panel for review and comment of the protocols.
State representatives were included in this process.
B. Anticipated Effects
In publishing this final rule, we considered two main alternatives.
The first was to allow this final rule to be published, incorporating
public comments on the proposed rule. The second alternative was to
implement the provisions of the BBA as written, without expanding the
regulations beyond the statutory language. We believe this final rule
as written was the appropriate alternative to choose. Used in
conjunction with the Medicaid Managed Care final rule published June
14, 2002, this final rule is a necessary tool for States to use to
create and maintain strong, viable Medicaid managed care programs that
deliver high quality health care in their State marketplaces and health
care delivery systems. Further, we felt this final rule was necessary
to implement the Congress' directive to the Secretary to establish a
method for identifying entities qualified to conduct EQR.
We do not anticipate that the provisions in this final rule will
have a substantial economic impact on most hospitals, including small
rural hospitals. The BBA provisions include some new requirements on
State agencies and MCOs, but not directly on individual hospitals. The
impact on individual hospitals will vary according to each hospital's
current and future contractual relationships with MCOs. Furthermore,
the impact will also vary according to each hospital's current
procedures and level of compliance with existing law and regulation
pertaining to Medicaid managed care. For these reasons, this final rule
will not have a significant impact on the operations of a substantial
number of hospitals. The only other small entity affected by these
regulations would be the EQROs. However, this rule does not impose
additional burdens on them. Instead, the rule offers these
organizations the benefit of opportunities for additional revenues.
Thus we certify that this rule will not have a significant economic
impact on a substantial number of small entities.
We do not anticipate a significant increase in Medicaid
expenditures as a result of the publication of these regulations for
the following reasons. First, approximately 42 States are currently
obtaining 75 percent enhanced FFP for EQR activities carried out by
QIOs and organizations that meet the requirements to contract with
Medicare as a QIO. Permitting these State agencies to claim 75 percent
matching for EQR activities conducted by the additional types of
entities allowed by these regulations would therefore not result in
increased costs to the extent that State agencies switch from QIO or
organizations that meet the requirements to contract with Medicare as a
QIO to these other entities. Moreover, we believe that, by expanding
the pool of organizations available to conduct EQR, State agencies may
be able to negotiate savings compared to current costs of dealing with
PRO and PRO-like organizations. Additional savings may be realized
through opportunities afforded by the final rule to coordinate EQR
activities with quality reviews conducted for other purposes.
Additional costs may arise where State agencies currently conduct
quality review activities at 50 percent Federal matching rate that
would now qualify for 75 percent, and from new EQR activities
undertaken as a result of the BBA requirements.
In addition, even though we extend this requirement to PIHPs, again
we do
[[Page 3635]]
not expect this to significantly increase Medicaid expenditures. PIHP
costs account for approximately 5 percent of the payments we make to
capitated arrangements. Furthermore, State agencies currently conduct
quality review activities on PIHPs at a 50 percent Federal matching
rate. Additional costs may arise for States' quality review activities
that would now qualify for 75 percent and for new quality review
activities undertaken as a result of the activities required in this
rule.
Although we cannot quantify these various cost and savings effects,
we believe that their net impact would be well below the $100 million
threshold for a major rule, and therefore that a regulatory impact
analysis is not required. We do not believe that this final rule will
cause MCOs to devote significantly more time to collect, organize and
prepare for EQR than is already required by States. While the scope of
work for EQR may be different under this final rule, we do not believe
that the cost difference will be significant and States may actually be
able to achieve savings since we are expanding the pool of
organizations available to conduct EQR. Further, additional savings may
also be realized through opportunities afforded by this rule to
coordinate EQR activities with other quality and oversight activities.
We acknowledge with the increased opportunity to contract with other
qualified entities to conduct EQR, more States may avail themselves the
75 percent match for EQR activities. However, we do not believe this
would represent a significant cost impact.
C. Conclusion
For these reasons, we are not preparing analyses for either the RFA
or section 1102(b) of the Act because we have determined, and we
certify, that this rule will not have a significant economic impact on
a substantial number of small entities or a significant impact on the
operations of a substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 433
Administrative practice and procedure, Child support, Claims, Grant
programs-health, Medicaid, Reporting and record keeping requirements.
42 CFR Part 438
Grant Programs--health, Managed care entities, Medicaid, Quality
assurance, Reporting and record keeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below.
PART 433--STATE FISCAL ADMINISTRATION
A. Amend part 433 as set forth below.
1. The authority citation for part 433 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. In Sec. 433.15, add a new paragraph (b)(10) to read as follows:
Sec. 433.15 Rates of FFP for administration.
* * * * *
(b) * * *
(10) Funds expended for the performance of external quality review
or the related activities described in Sec. 438.358 of this chapter
when they are performed by an external quality review organization as
defined in Sec. 438.320 of this chapter: 75 percent.
B. Add a new subpart E to part 438 to read as set forth below.
PART 438--MANAGED CARE
Subpart E--External Quality Review
Sec.
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.
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Subpart E--External Quality Review
Sec. 438.310 Basis, scope, and applicability.
(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.
Sec. 438.320 Definitions.
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 Sec.
438.354, and performs external quality review, other EQR-related
activities as set forth in Sec. 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.
Sec. 438.350 State responsibilities.
Each State that contracts with MCOs or PIHPs must ensure that--
(a) Except as provided in Sec. 438.362, a qualified EQRO performs
an annual EQR for each contracting MCO or PIHP;
[[Page 3636]]
(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 Sec. 438.358.
(d) For each EQR-related activity, the information must include the
elements described in Sec. 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 Sec. 438.352; and
(f) The results of the reviews are made available as specified in
Sec. 438.364.
Sec. 438.352 External quality review protocols.
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.
Sec. 438.354 Qualifications of external quality review organizations.
(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 Sec. 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.
Sec. 438.356 State contract options.
(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 Sec. 438.358.
(b) Each EQRO must meet the competence requirements as specified in
Sec. 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
Sec. 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.
Sec. 438.358 Activities related to external quality review.
(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 Sec. 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 Sec. 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 Sec. Sec. 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 Sec. 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.
Sec. 438.360 Nonduplication of mandatory activities.
(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 Sec. 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
[[Page 3637]]
organizations. For information about an MCO's or PIHP's compliance with
one or more standards required under Sec. 438.204(g), (except with
respect to standards under Sec. Sec. 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 Sec. 438.204(g) and the EQR-
related activity under Sec. 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 Sec. 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 Sec. 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 Sec.
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 Sec. 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 Sec. 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.
Sec. 438.362 Exemption from external quality review.
(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
Sec. 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.
Sec. 438.364 External quality review results.
(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 Sec. 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 Sec. 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.
Sec. 438.370 Federal financial participation.
(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 Sec. 438.358 conducted by EQROs and their subcontractors.
(b) FFP at the 50 percent rate is available in expenditures for
EQR-
[[Page 3638]]
related activities conducted by any entity that does not qualify as an
EQRO.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance)
Dated: August 6, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Approved: October 3, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-1294 Filed 1-23-03; 8:45 am]
BILLING CODE 4120-01-P