[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: 42CFR438.354]

[Page 219-220]
 
                         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 E_External Quality Review
 
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.

[[Page 220]]

    (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.