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Using External Quality Review Organizations to Improve the Quality of Preventive and Developmental Services for Children

Executive Summary

Current federal regulations issued by the Centers for Medicare and Medicaid Services (CMS) obligate states to develop a written strategy for assessing the quality of care for Medicaid beneficiaries in managed care plans. These regulations, which took effect in March 2003, require states to adopt standardized methods for quality review activities, specify mandatory and optional quality review activities, and provide specific protocols for conducting quality reviews. In return, the regulations give states an enhanced federal match for quality review activities and broaden the types of organizations eligible to conduct reviews.

State Medicaid agencies typically contract with external quality review organizations (EQROs) to conduct quality-of-care studies. The new federal regulations encourage states to use EQROs to (1) perform mandatory review activities, such as determining managed care organization (MCO) compliance with federal managed care regulations or validating quality improvement projects completed by MCOs; (2) conduct focused studies and other optional activities; (3) serve as technical resources; and (4) consolidate quality review findings into a comprehensive annual report.

Child health policymakers and researchers have registered considerable interest in the extent to which states rely on EQROs to examine the quality of preventive and developmental services for children enrolled in Medicaid (or to evaluate studies conducted by MCOs on the same topic). There has been no effort, however, to gather systematic data on the involvement of EQROs in states' quality improvement efforts related to these services. Better information about this topic should prove useful to states as they develop and implement the quality review strategies now being mandated.

About the Study
This study was undertaken to determine the extent to which state Medicaid agencies have used or are planning to use EQROs to improve the quality of preventive and developmental services for young children. It was the researchers' goal to provide state Medicaid programs, MCOs, EQROs, and other child health professionals with information on quality improvement activities that will enhance the quality of such services.

Relying on a variety of data sources—including a survey of Medicaid directors, interviews with staffs from state Medicaid agencies, EQROs, and MCOs, and published EQRO reports and federal regulations—the researchers addressed the following questions:

  • How many states have used or are planning to use EQROs to conduct studies of well-child care?
  • What are some examples of quality review studies on this topic, and what methods have they used?
  • What factors enhance the likelihood that states will examine the topic of preventive and developmental services for young children?
  • What factors are influencing states' capacity to conduct quality reviews of preventive and developmental services?
  • What actions will promote further use of EQROs to improve the quality of services for young children enrolled in Medicaid?

Key Findings

Using the information gathered, the researchers found the following:

  • In any given year, only a limited number of states use EQROs to conduct studies for the purpose of improving the quality of preventive and developmental services for young children in Medicaid. In 2003–04, these states included Delaware, Michigan, Oregon, Texas, and Washington.
  • With a few important exceptions, most states use EQROs to examine rates of occurrence of specific services rather than the content of well-child visits.
  • Two factors play critical roles in driving states to focus on preventive and developmental services: influential champions and attention-getting data demonstrating problems in providing preventive and developmental services.
  • Current federal regulations and experience are prompting states to expand the methods used in quality-of-care studies beyond medical record reviews (e.g., analysis of claims and survey data), but medical record reviews may remain necessary for studies of preventive and developmental services.
  • Variability in EQROs' capability to conduct studies of preventive and developmental services presents a challenge to states interested in focusing on such services.
  • Some state Medicaid staffers believe that federal regulations limit their ability to conduct studies of preventive and developmental services. But other states and the researchers' own independent analysis found that the regulations offer substantial opportunities for assessing and improving the quality of these services if states undertake appropriate strategic planning and obtain appropriate technical assistance.These results suggest that (1) improving the quality of preventive and developmental services for young children enrolled in Medicaid requires a champion who can make a convincing case that the issue of quality deserves attention in a state's overall strategy for improving services for Medicaid beneficiaries; (2) a convincing case depends on the availability of methodologically strong information about gaps in the provision of preventive and developmental services, the cost of failure to provide them, or consumer demand for them; and (3) steps should be taken to strengthen the knowledge base for quality-of-care studies of preventive and developmental services for young children in Medicaid, and to ensure that staffers in Medicaid agencies draw from this knowledge base to develop appropriate language for MCO contracts.

The authors recommend that CMS or private foundations consider designating funds that could be allocated through contracts or grants to accomplish two tasks:

  • Develop training programs to a) help Medicaid staff, EQROs, and MCOs incorporate quality improvement activities into the current regulatory framework and b) make the case for targeting quality improvement activities on preventive and developmental services.
  • Develop a model set of specifications for both RFPs and contracts that would help state agencies select and implement appropriate quality-of-care activities.Our findings also lead to two recommendations for the states themselves:
    • Develop models of stakeholder collaboration for quality improvement projects, essential for identifying and implementing sustainable activities that lead to improved preventive and developmental services.
    • Consider using limited dollars more efficiently by conducting mandatory quality review activities in-house to preserve some dollars for independent quality improvement projects.

Publication Details



Using External Quality Review Organizations to Improve the Quality of Preventive and Developmental Services for Children, Henry T. Ireys, Ph.D., Tara Krissik, M.P.P., James M. Verdier, J.D., and Melissa Faux, The Commonwealth Fund, June 2005