[Code of Federal Regulations]
[Title 42, Volume 3]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR438.240]

[Page 217-218]
 
                         TITLE 42--PUBLIC HEALTH
 
  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 
                  HEALTH AND HUMAN SERVICES (CONTINUED)
 
PART 438_MANAGED CARE--Table of Contents
 
        Subpart D_Quality Assessment and Performance Improvement
 
Sec. 438.240  Quality assessment and performance improvement program.

    (a) General rules. (1) The State must require, through its 
contracts, that each MCO and PIHP have an ongoing quality assessment and 
performance improvement program for the services it furnishes to its 
enrollees.
    (2) CMS, in consultation with States and other stakeholders, may 
specify performance measures and topics for performance improvement 
projects to be required by States in their contracts with MCOs and 
PIHPs.
    (b) Basic elements of MCO and PIHP quality assessment and 
performance improvement programs. At a minimum, the State must require 
that each MCO and PIHP comply with the following requirements:
    (1) Conduct performance improvement projects as described in 
paragraph (d) of this section. These projects must be designed to 
achieve, through ongoing measurements and intervention, significant 
improvement, sustained over time, in clinical care and nonclinical care 
areas that are expected to have a favorable effect on health outcomes 
and enrollee satisfaction.
    (2) Submit performance measurement data as described in paragraph 
(c) of this section.
    (3) Have in effect mechanisms to detect both underutilization and 
overutilization of services.
    (4) Have in effect mechanisms to assess the quality and 
appropriateness of care furnished to enrollees with special health care 
needs.
    (c) Performance measurement. Annually each MCO and PIHP must--
    (1) Measure and report to the State its performance, using standard 
measures required by the State including those that incorporate the 
requirements of Sec. 438.204(c) and Sec. 438.240(a)(2);
    (2) Submit to the State, data specified by the State, that enables 
the State to measure the MCO's or PIHP's performance; or
    (3) Perform a combination of the activities described in paragraphs 
(c)(1) and (c)(2) of this section.

[[Page 218]]

    (d) Performance improvement projects. (1) MCOs and PIHPs must have 
an ongoing program of performance improvement projects that focus on 
clinical and nonclinical areas, and that involve the following:
    (i) Measurement of performance using objective quality indicators.
    (ii) Implementation of system interventions to achieve improvement 
in quality.
    (iii) Evaluation of the effectiveness of the interventions.
    (iv) Planning and initiation of activities for increasing or 
sustaining improvement.
    (2) Each MCO and PIHP must report the status and results of each 
project to the State as requested, including those that incorporate the 
requirements of Sec. 438.240(a)(2). Each performance improvement 
project must be completed in a reasonable time period so as to generally 
allow information on the success of performance improvement projects in 
the aggregate to produce new information on quality of care every year.
    (e) Program review by the State. (1) The State must review, at least 
annually, the impact and effectiveness of each MCO's and PIHP's quality 
assessment and performance improvement program. The review must 
include--
    (i) The MCO's and PIHP's performance on the standard measures on 
which it is required to report; and
    (ii) The results of each MCO's and PIHP's performance improvement 
projects.
    (2) The State may require that an MCO or PIHP have in effect a 
process for its own evaluation of the impact and effectiveness of its 
quality assessment and performance improvement program.