Published in January 2003, External Quality Review (EQR) regulations require that states which contract with Medicaid Managed Care Organizations (MCO) or Prepaid Inpatient Health Plans (PIHP) conduct an EQR of each entity. An EQR includes the analysis and evaluation of aggregated information on quality, timeliness, and access to the health care services that a MCO, PIHP, or their contractors, furnish to Medicaid recipients. States may perform EQR tasks directly, or may contract with independent entities called External Quality Review Organizations (EQRO) to conduct the external quality review. Federal financial participation in these activities will vary depending upon the entity conducting them.

CMS provides states with federal matching funds for review expenditures, including the production of results. Federal regulations require certain mandatory activities and deliverables and offer the choice to require some optional activities.  

Related Resources

2012 EQRO Fact Sheet
The EQR Managed Care Organization Protocol
The State Quality Strategy Tool Kit for State Medicaid Agencies
External Quality Review Kit for State Medicaid Agencies
NCQA's Medicaid Managed Care Toolkit
OIG’s External Quality Reviews in Medicaid Managed Care
The URAC Guide to Medicaid Managed Care External Quality Review

External Quality Review Mandatory and Optional Activities and Deliverables

Mandatory Activities

1. Validation of state-required performance improvement projects (PIP) undertaken by a managed care organization (MCO)/prepaid inpatient health plan (PIHP);

2. Validation of plan performance measures required by the state and reported by the MCO; and

3. A review, conducted in the past through years, to determine the plan’s compliance with state-specified standards for quality program operations.

Regulations Offer States the Choice of Requiring up to Five Optional Activities:

1. Validation of encounter data reported by a plan,

2. Administration and validation of consumer and provider surveys on quality of care,

3. Calculation of additional performance measures,

4. Conduct of additional PIPs, and

5. Conduct of studies on quality focused on a particular aspect of clinical or nonclinical services at a point in time.

Regulations Require the Review to Produce Five Specific Deliverables:

1. A detailed technical report describing the data aggregation and analysis and the way in which conclusions were drawn as to the quality, timeliness, and access to the care furnished by the plans;

2. An assessment of each plan’s strengths and weaknesses with respect to quality, timeliness, and access to care;

3. As the state determines, methodologically appropriate, comparative information about all plans;

4. Recommendations for improving the quality of health care services furnished by the plans; and

5. An assessment of the degree to which each plan has addressed effectively the quality improvement recommendations made by an EQRO during the prior year’s review.