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Medicaid Managed Care Rule: Quality Ratings and Delivery System Reforms

By Ellen Albritton,


This is the second in a series that looks at what advocates should know about the newly released standards for Medicaid managed care plans. The first analysis explained changes to the enrollment process. This one analyzes some of the standards related to quality and delivery system reform.

States need to implement a Quality Rating System for plans

With the new standards, the federal government seeks to “enable states to better manage and measure the quality of care” provided by Medicaid managed care plans. We are pleased that, for the first time, states will be required to implement a Quality Rating System (QRS) for each managed care plan, and they must give plans a rating each year.

By using an easy-to-understand rating scale, a QRS can increase the transparency and accountability for the quality of services provided by managed care plans.

These ratings will help states in several ways. Consumers can use these ratings to help them choose a plan based on quality. States can use these ratings to:

  • Help determine goals for the state’s quality strategy (more on this below)
  • Provide plan oversight
  • Assist in contracting decisions with managed care plans

This QRS will be similar to the 5-star rating systems used for Medicare Advantage plans and for marketplace plans. In 2018, CMS plans on issuing final guidance regarding what, specifically, the QRS will measure, but it will include domains similar to those in the marketplace QRS: clinical quality, consumer experience, and efficiency and affordability.

Timeline to implement: States have three years after this final guidance to begin rating managed care plans in their state.

States also have the option to develop their own QRS, as long as it is comparable to the one developed by CMS. This is an important advocacy opportunity. States must provide at least a 30-day public comment period prior to submitting their alternate QRS to CMS for approval. States must also document for CMS how they engaged stakeholders in the development of the QRS and how they addressed stakeholders’ concerns.

Creating an alternate QRS could be an opportunity for states to implement a more robust Quality Rating System or to incorporate additional measures to focus on care delivered to especially vulnerable populations. Of course, states could try to use an alternate rating system to make the QRS less robust and less useful for consumers.

Finally, states are required to prominently display the quality ratings for each managed care plan on their website. Advocates can help ensure they are doing so in a manner that takes into consideration consumers with limited English proficiency or other special needs. Advocates can also work with their state to implement other education and outreach on the QRS so that consumers know about it and know how to use it to choose the plan that is best for them.

New requirements for states’ Quality Strategies

We are pleased with new requirements for states’ Quality Strategies for managed care plans, but we are disappointed that CMS did not extend the Quality Strategy to include the fee-for-service Medicaid delivery system.

A Quality Strategy is essentially a roadmap for measuring and improving the quality of care provided by managed care plans. States contracting with these plans were already required to develop a Quality Strategy, but the new standards require these strategies to now include:

  • Addressing health disparities related to race, ethnicity, sex, primary language, disability status, and age; and
  • Mechanisms to identify individuals who need long-term services and supports (LTSS) or have other special health care needs.

Though we were hoping CMS would require much more robust public engagement standards for the development of a state’s Quality Strategy, such as those required in the 1115 waiver process, , advocates still have an opportunity to influence these strategies. CMS does require states to have some kind of public engagement process. Previously, states only had to update their Quality Strategy “as needed,” but going forward they will be required to update or develop a new Quality Strategy, including soliciting public input, at least every three years.

Though states are required to consider the health status of all Medicaid managed care enrollees in the development of their Quality Strategy, the targeted quality measures and improvement plans in the final Quality Strategy don’t have to affect all enrollees.

It will be important for advocates to ensure their state is targeting meaningful quality measures, is adequately addressing health disparities, and is choosing improvement strategies that are evidence-based.

States are also now required to post the Quality Strategy on their website. Additionally, for the first time, states have to evaluate and publically report on their performance for the measures identified in their Quality Strategy and on progress made toward their identified goals.

Timeline: These new Quality Strategy requirements go into effect July 1, 2018.

Supporting state efforts to reform health care payment and delivery systems

Though the final Medicaid managed care rule didn’t give states new tools for implementing payment and delivery reform, the rule still strongly supports states in enacting these reforms by clarifying that states can require managed care plans to participate in them.

For example, states can require plans to participate in value-based payments, such as “pay for performance” or bundled payments, and these efforts can be specific to Medicaid or they can include other commercial payers. In order to increase timely access to important health care services, states can also require managed care organizations to adopt either minimum or enhanced reimbursement for those services.

In order to require managed care organizations to participate in these efforts, states must show that the delivery or payment reform initiative will address at least one goal from their Quality Strategy, and they must have a plan to measure how well the payment or delivery reform achieves the state’s goal(s).

Overall, the regulations related to quality improvement and delivery system reform in the new Medicaid managed care rule represent a step forward and, during implementation at the state level, can be strengthened even more.