(a) Quality ratings. For each measurement year, the State must ensure that—

(1) The data necessary to calculate quality ratings for each quality measure described in § 438.510(a)(1) of this subpart are collected from:

(i) The State's contracted managed care plans that have 500 or more enrollees from the State's Medicaid program, to be calculated as described by CMS in the technical resource manual; and

(ii) Sources of Medicare data (including Medicare Advantage plans, Medicare providers, and CMS), the State's Medicaid fee-for-service providers, or both if all data necessary to calculate a measure cannot be provided by the managed care plans described in paragraph (a)(1) of this section and such data are available for collection by the State to the extent feasible without undue burden.

(2) Validation of data collected under paragraph (a)(1) of this section is performed, including all Medicaid managed care data and, to the extent feasible without undue burden, all data from sources described in paragraph (a)(1)(ii) of this section. Validation of data must not be performed by any entity with a conflict of interest, including managed care plans.

(3) A measure performance rate for each managed care plan whose contract covers a service or action assessed by the measure, as determined by the State, is calculated, for each quality measure identified under § 438.510(a)(1) of this subpart, using the methodology described in paragraph (b) of this section and the validated data described in paragraph (a)(2) of this section, including all Medicaid managed care data and, to the extent feasible without undue burden, all data from sources described in paragraph (a)(1)(ii) of this section.

(4) Quality ratings are issued by the State for each managed care plan for each measure that assesses a service or action covered by the plan's contract with the State, as determined by the State under paragraph (a)(3) of this section.

(b) Methodology. The State must ensure that the quality ratings issued under paragraph (a)(4) of this section:

(1) Include data for all enrollees who receive coverage through the managed care plan for a service or action for which data are necessary to calculate the quality rating for the managed care plan including Medicaid FFS and Medicare data for enrollees who receive Medicaid benefits for the State through FFS and managed care, are dually eligible for both Medicare and Medicaid and receive full benefits from Medicaid, or both).

(2) Are issued to each managed care plan at the plan level and by managed care program, so that a plan participating in multiple managed care programs is issued distinct ratings for each program in which it participates, resulting in quality ratings that are representative of services provided only to those beneficiaries enrolled in the plan through the rated program.

(c) Alternative QRS methodology. (1) A State may apply an alternative QRS methodology (that is, other than that described in paragraph (b) of this section) to the mandatory measures described in § 438.510(a)(1) of this subpart provided that—

(i) The ratings generated by the alternative QRS methodology yield information regarding managed care plan performance which, to the extent feasible, is substantially comparable to that yielded by the methodology described in § 438.515(b) of this subpart, taking into account such factors as differences in covered populations, benefits, and stage of delivery system transformation, to enable meaningful comparison of performance across States.

(ii) The State receives CMS approval prior to implementing an alternative QRS methodology or modifications to an approved alternative QRS methodology.

(2) To receive CMS approval for an alternative QRS methodology, a State must:

(i) Submit a request for, or modification of, an alternative QRS methodology to CMS in a form and manner and by a date determined by CMS; and

(ii) Include the following in the State's request for, or modification of, an alternative QRS methodology:

(A) The alternative QRS methodology to be used in generating plan ratings;

(B) Other information or documentation specified by CMS to demonstrate compliance with paragraph (c)(1) of this section; and

(C) Other supporting documents and evidence that the State believes demonstrates compliance with the requirements of (c)(1)(i) of this section.

(3) Subject to requirements established in paragraphs (c)(1)(i) and (ii) and (c)(2) of this section, the flexibility described in paragraph (c)(1) of this section permits the State to request and receive CMS approval to apply an alternative methodology from that described in paragraph (b)(1) and (2) of this section when calculating quality ratings issued to health plans as required under paragraph (a)(4) of this section. CMS will not review or approve an alternative methodology request submitted by the State that requests to implement a MAC QRS that—

(i) Does not comply with—

(A) The requirement to include mandatory measures established in § 438.510(a)(1).

(B) The general requirements for calculating quality ratings established in paragraphs (a)(1) through (4) of this section.

(C) The requirement to include the website features identified in § 438.520(a)(1) through (6) established in § 438.520(a).

(ii) Requests to include plans that do not meet the threshold established in paragraph (a)(1)(i) of this section, which is permitted without CMS review or approval.

(iii) Requests to implement additional measures or website features, which are permitted, without CMS review or approval, as described § 438.520(c).

(d) Request for implementation extension. In a form and manner determined by CMS, the State may request a one-year extension to the implementation date specified in this subpart for one or more MAC QRS requirements established in paragraph (b) of this section.

(1) A request for extension of the implementation deadline for the methodology requirements in this section must meet the following requirements:

(i) Identify the specific requirement(s) for which an extension is requested and;

(ii) Include a timeline of the steps the State has taken to meet the requirement as well as an anticipated timeline of the steps that remain;

(iii) Explain why the State will be unable to fully comply with the requirement by the implementation date, which must include a detailed description of the specific barriers the State has faced or faces in complying with the requirement; and

(iv) Include a detailed plan to implement the requirement by the end of the one-year extension including, but not limited to, the operational steps the State will take to address identified implementation barriers.

(2) The State must submit an extension request by September 1 of the fourth calendar year following July 9, 2024.

(3) CMS will approve an extension for 1 year if it determines that the request:

(i) Includes the information described in paragraph (d)(1) of this section;

(ii) Demonstrates that the State has made a good-faith effort to identify and begin executing an implementation strategy but is unable to comply with the specified requirement by the implementation date identified in this subpart; and

(iii) Demonstrates that the State has an actionable plan to implement the requirements by the end of the 1-year extension.

(e) Domain ratings. After engaging with States, beneficiaries, and other interested parties, CMS implements domain-level quality ratings, including care domains for which States are required to calculate and assign domain-level quality ratings for managed care plans, a methodology to calculate such ratings, and website display requirements for displaying such ratings on the MAC QRS website display described in § 438.520.