U.S. flag

An official website of the United States government

State Managed Care Quality Strategies

Federal regulations at 42 CFR § 438.340 for Medicaid, and through a cross-reference at  § 457.1240(e) for separate CHIP, lay the groundwork for the development and maintenance of a state managed care quality strategy to assess and improve the quality of managed care services offered within the state.  This quality strategy is intended to serve as a blueprint for states and their contracted health plans for assessing the quality of care that beneficiaries receive, and setting forth measurable goals and targets for quality improvement and network adequacy. The 2024 Managed Care Access, Finance, and Quality Final Rule (CMS 2439-F) clarifies public comment periods and the requirement that states post on their websites the results of a three-year review related to the State managed care quality strategy. It also establishes changes that allow CMS the opportunity to provide feedback periodically to help states strengthen their quality strategies before they are finalized.

This page provides information on:

States' Responsibilities for Updating and Posting the Managed Care Quality Strategy

Each state Medicaid and CHIP agency contracting with any of the four types of managed care entities - managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), prepaid ambulatory health plans (PAHPs) and/or primary care case management entities (PCCM-Es) described in 42 CFR § 438.310(c)(2) - must: 

  • Review and update the quality strategy at least every 3 years as required in 42 CFR § 438.340(c)(2).  This triennial review must include an evaluation of the effectiveness of the quality strategy in accordance with § 438.340(c)(2)(i). States may satisfy this requirement in one of two ways:
    • By means of the state's annual external quality review (EQR) technical report. If A state choosing to use this method, must ensure that its EQR technical report includes a section that addresses the effectiveness of the state's quality strategy and determine whether any updates to the quality strategy are necessary based on the results of the EQR. 
    • By means of a separate report on the implementation and effectiveness of the quality strategy.
  • Make the quality strategy available for public comment in accordance with 42 CFR § 438.340(c)(3), which includes obtaining input from its Medical Care Advisory Committee, beneficiaries, and other key stakeholders in the development or revision of the quality strategy, before submission to CMS, and consulting with Tribes in accordance with the state’s Tribal consultation policy, if the state enrolls Indians in the MCO, PIHP, PAHP, or PCCM-E described in § 438.310(c)(2). 
    • The quality strategy must be made available for public comment at the 3-year renewal mark, regardless of whether the state intends to make significant changes as required in 42 CFR §§ 438.340(c)(1) and 457.1240(e).  States must comply with this requirement no later than July 9, 2025. 
  • Make the quality strategy available on its website, as set forth in 42 CFR § 438.340(c)(2).
    • Included in the posting on the state’s website must also be the results of the evaluation of the effectiveness of the quality strategy every 3 years (42 CFR §§ 438.340(c)(2)(ii) and 457.1240(e)). States must comply with this requirement no later than July 9, 2025.  
  • Prior to adopting as final, submit to CMS a copy of the quality strategy:
    • Whenever significant changes are made to the document, or whenever significant changes occur within the State's Medicaid program (42 CFR § 438.340(c)(3)(ii), and 
    • Every 3 years, following the review and evaluation of the strategy described at 42 CFR § 438.340(c)(2), in addition to when significant changes are made (§§ 438.340 (c)(3)(ii)(A) and 457.1240(e)). States must comply with this requirement no later than July 9, 2025.

All quality strategy requirements apply to CHIP plans, as set forth in 42 CFR § 457.1240(e) except that the reference to consultation with the Medical Care Advisory Committee described in § 438.340(c)(1)(i) does not apply.

Developing a Managed Care Quality Strategy

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

In accordance with 42 CFR 438.340 and through a cross-reference at § 457.1240(e), at a minimum, all Medicaid and CHIP quality strategies must include:

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

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

Federal Quality Strategy Alignment

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

Technical Assistance Resources

The Medicaid and CHIP Managed Care Monitoring and Oversight Initiative website includes a series of technical assistance toolkits to assist states in complying with various managed care standards and regulations, and to help states improve state monitoring and oversight of their managed care programs.  In addition to the available toolkits, CMS will continue to develop additional resources and make them available on an ongoing basis.

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