DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
                                                                                                                                                                           
 
                  SHO #13-007 
                  ICM #4 
 
November 22, 2013 
 
RE: Quality Considerations for Medicaid and CHIP 
Programs 
 
Dear State Health Official: 
Dear State Medicaid Director:  
 
This letter is the fourth in a series of letters on integrated care models (ICMs)1 that provides 
states with guidance on designing and implementing care delivery and payment reforms that can 
achieve our shared goals of improving health, striving for quality care and reducing costs within 
Medicaid and the Childrens Health Insurance Program (CHIP).2  In previous and future 
communications on payment and service delivery reform, we use the term ICMs to describe 
these initiatives, which may include (but are not limited to) medical/health homes, Accountable 
Care Organizations (ACOs), ACO-like models, and other health care delivery and financing 
models, including managed care.  Such care models emphasize person-centered, continuous, 
coordinated, and comprehensive care (see Attachment 3 of SMD #12-002 for further 
description). 
 
As described in the associated letters in this series, the Centers for Medicare & Medicaid 
Services (CMS) within the Department of Health and Human Services (HHS) is supportive of 
new and existing forms of service payments that focus on improving health care quality.  These 
payment strategies may range from risk-based shared savings methodologies to payments that 
are added to what a provider receives through fee-for-service based on meeting performance 
expectations -- the common thread is a focus on paying for value and quality.   
As Medicaid programs transition away from rewarding volume and toward paying for value with 
financial incentives to improve outcomes for beneficiaries,3 CMS intends to actively support 
                                                           
1 On July 10, 2012 CMS released two letters on Integrated Care Models (SMD # 12-001 and #12-002); the first 
describing our broad vision for payment and delivery system reform and the second describing policy 
considerations. The July 2012 letters are available at http://www.medicaid.gov/Federal-Policy-
Guidance/downloads/SMD-12-001.pdf and http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-
12-002.pdf.  On August 30, 2013, CMS released SMD number 13-005 on the topic of shared savings, which is 
available at http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/SMD-13-005.pdf 
2 In this letter the term Medicaid will be used when referring to Medicaid and CHIP Programs.  
3 National Association of Medicaid Directors, Creating a Climate for Innovation, Nov. 9, 2011.  (At 
http://medicaiddirectors.org/node/192). 
 
  Page 2 State Health Official and State Medicaid Director  
 
quality improvement, learning from innovative efforts at the state and local level.  While CMS 
can support system-level thinking around quality improvement, innovation and action will be 
locally driven.4  In order to improve quality through payment, states must have the tools and 
information needed to undertake quality improvement efforts.  Furthermore, it is useful for state 
Medicaid programs and CMS to have a common understanding of what it means to measure, 
monitor, and improve the quality of health care in value-based payment models.  This letter 
provides a framework for quality improvement and measurement  developed in consultation 
with states  consistent with CMSs and HHSs approaches in these areas.5  Experience has 
shown that quality improvement and measurement are the foundation for payment models that 
can improve care and reduce costs, and so CMS will be looking for these types of strategies as 
states seek approval for new ways to structure payments to providers (e.g. ICMs). Moreover, this 
framework is relevant beyond just ICMs.  As such, CMS encourages states to develop statewide 
quality strategies that can guide efforts to improve quality across state Medicaid programs, using 
the components highlighted in this letter.   
 
Section I of this letter describes the features of robust and integrated statewide quality strategies 
that can be used to drive payment.  Section II describes the impact of this framework on CMS 
policies for payment delivery models and accountability.  The appendices contain: 1) a 
description of existing quality measurement and improvement efforts that impact Medicaid and 
CHIP;  2) an example of a measurement matrix; and 3) a description of alignment with existing 
quality initiatives and funding to support data infrastructure.   
 
I.  QUALITY IMPROVEMENT STRATEGIES FOR MEDICAID: GOALS, 
INTERVENTIONS, METRICS, TARGETS, TRANSPARENCY AND FEEDBACK  
The following five key components:  (1) goals, (2) interventions, (3) metrics, (4) targets, and (5) 
transparency and feedback, are integral to a states quality improvement vision and strategy.6   
For the purposes of Medicaid, these components, including measurement, should ultimately be 
laid out in a cohesive plan, and tied together, in the context of what is happening in a state across 
purchasers related to quality (i.e., which areas need targeted improvement, indicators that will 
help identify if improvement occurred, etc.). 
 
                                                           
4 VanLare JM, Conway PH. Value-Based Purchasing  National Programs to Move from Volume to Value. NEJM 
July 26, 2012.  
5National Quality Strategy 2012 Annual Progress Report to Congress, August 2012. 
www.ahrq.gov/workingforquality/nqs/nqs2012annlrpt.pdf; CMS National Quality Enterprise and Thomson Reuters, 
Continuous Quality Improvement: Models and Common Themes (July, 2009).  Also see Plan-Do-Study-Act 
model; and the Model for Improvement from the Institute for Healthcare Improvement Langley GL, Nolan KM, 
Nolan TW, Norman CL, and Provost LP. The Improvement Guide: A Practical Approach to Enhancing 
Organizational Performance (2nd edition). San Francisco: Jossey-Bass Publishers; 2009. Consultation with states 
has occurred in multiple forums, such as CMCSs Value-Based Purchasing MAC Collaborative (at 
www.medicaid.gov/State-Resource-Center/MAC-Learning-Collaboratives/Value-Based-Purchasing.html).  
6 Tools such as driver diagrams and run charts can also help visualize some of these components together as 
pathways.  See www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Quality-of-
Care/Downloads/QI-101-Webinar2-Slides.pdf; http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-
Topics/Quality-of-Care/Downloads/QI-101-Webinar3-Slides.pdf   Page 3 State Health Official and State Medicaid Director  
 
Stakeholder engagement in designing and implementing each of these components is critical.  
From consumers, to providers, to patients, multi-stakeholder approaches to quality are not only 
necessary for viability but have historically been a key to the success of quality improvement 
initiatives.  Stakeholder perspectives and values should be incorporated into this process from the 
initial conception of a quality improvement model, and should be reflected in the programmatic 
goals and measurement approaches. 
 
1. Identify shared goals and aims.  The foundation of a quality improvement strategy is a set of 
measurable goals and aims, which are defined as specific opportunities for change for the 
population.  In order to identify the goal or aim, states should start with a data-based baseline 
analysis (e.g. cost, utilization patterns, health needs of target populations, quality of life issues 
facing beneficiaries, barriers to care, past performance) of its Medicaid program, and in some 
cases the health care system overall.  This analysis should help states identify which areas need 
improvement by looking at the root causes of the issues and then target quality improvement 
resources accordingly.  A state can also look to the National Quality Strategys six domains (e.g., 
making care safer by reducing harm caused in the delivery of care; promoting effective 
communication and coordination of care) to help think through how to design its quality 
improvement strategy goals.    
The connection between the goals and the rest of the strategy is a key part of designing an 
effective strategy.  States should consider how the interventions will help achieve these goals as 
well as how the metrics will measure progress toward these goals.  These specific measurable 
health care quality goals are the drivers for the entire strategy  the interventions, payment 
model and metrics  should all be rooted in the specific goals identified.   
 
Quality improvement goals can be broad or aimed more narrowly.  In some cases, as states and 
innovators focus on improving in one area with specific quality improvement goals, it may be 
important to also set broad goals across the program or system in order to ensure that specific 
efforts are consistent with broader health system goals.   
 
States are also encouraged to examine how their goals can be aligned with existing and newly 
emerging initiatives, so that such initiatives can be leveraged by the state in its efforts to achieve 
quality improvement.  For instance, it is imperative that states align their quality improvement 
with efforts to increase meaningful use of health information technology and exchange (HIT/E), 
since HIT and HIE provide a foundation to support quality improvement measurement across 
providers. In addition, the Million Hearts Initiative is a broad national strategy aimed at 
preventing one million heart attacks and strokes over the next five years.7  The Partnership for 
Patients8 is a public-private partnership working to improve the quality, safety and affordability 
of health care for all Americans by focusing on two goals:  1) keeping patients from getting 
injured or sicker in the health care system and 2) helping patients heal without complications by 
avoiding readmissions following a stay in a hospital.  Programs such as the Partnership for 
Patients have been developed with stakeholder support and a strong evidence base for improving 
                                                           
7 Million Hearts Initiative: www.millionhearts.hhs.gov/aboutmh/overview.html 
8 Partnership for Patients: www.partnershipforpatients.cms.gov/   Page 4 State Health Official and State Medicaid Director  
 
care, and hold real promise for improving transitions from acute care hospitals to other care 
settings.   
2. Select interventions that achieve these goals.  The interventions selected should have a strong 
evidence base (when possible) for impacting the change that is targeted in the states quality 
improvement strategy, aims and goals.  Interventions may consist of payment reforms and 
delivery reforms, or collaborative quality improvement initiatives.  For instance, shared savings 
arrangements are payment changes that can create incentives to achieve the goal of reduced re-
hospitalizations.  But even with new incentives, changes in care or the way care is delivered 
(e.g., community transition programs, health homes, etc.) are still necessary to successfully 
reduce re-hospitalizations or re-institutionalizations.  States may consider conducting several 
small tests of change and Plan-Do-Study-Act (PDSA) cycles to quickly identify which 
interventions have the greatest potential to impact change and drive progress towards the goals 
and aims of the states quality strategy.   
3. Measure and monitor progress toward these goals.  Once the goals, aims and interventions 
for the quality improvement strategy are set, the appropriate metrics that can be directly tied to 
these goals and interventions must be selected.  Using the appropriate metrics will allow a state 
to understand when a change has resulted in improvement.  While designing a measurement 
approach that will be used to assess progress towards the quality strategy goals, states should 
consider a blend of process, structure, and outcome-focused quality metrics along with balancing 
measures that can help to reflect unintended consequences of change to other parts of the system 
or other systems.  For example, a state focused on implementing a medical home model for 
children can measure asthma admission rates (to reflect outcomes); up-to-date immunizations (to 
reflect important prevention processes); and/or an experience of care survey (to monitor for 
unintended consequences).  Understanding the quality measurement field is evolving, states 
should strive to use metrics that closely reflect true outcomes, particularly when there is more 
risk to the program and beneficiaries (i.e., a shared savings arrangement or capitation). 
A broad cross section of metrics beyond the scope of the intervention-specific goals may be 
necessary to indicate how specific improvements are affecting quality across the program, and 
they can also indicate if there is any slippage where quality improvement resources are not 
presently focused.  Furthermore, if the focus of intervention-specific goals is on long-term care 
services and supports, the measurement strategy should reflect the broad range of clinical, 
psycho-social and community support needs of the population.   
 
Rationale for Measures:  When selecting which measures to use, it is important to consider the 
rationale for selecting each measure and determine how each measure ties to the improvement 
goal or intervention.  This assessment will help the state identify which programmatic goals are 
and are not reflected with the available measures.  In addition, clarifying the connection from 
goal to measurement is useful in meaningfully conveying to internal/external stakeholders and to 
CMS what the state intends to achieve and how it will know that progress is occurring.   
Alignment with Existing Federal Measurement Programs and with Other State Activity:  States 
are strongly encouraged to select measures recognized by HHS and demonstrated to be evidence-
based, to the extent possible.  Measures should ideally be endorsed by nationally recognized 
entities.  When metrics are used to determine payment or incentive levels, states must use 
nationally endorsed metrics, or provide justification for use of non-endorsed metrics for these  Page 5 State Health Official and State Medicaid Director  
 
purposes of payment.  In the absence of nationally endorsed measures, the measures should be 
validated to establish the same level of scientific rigor that produces consistent and credible 
results about the quality of care when the measures are implemented.  To maximize 
measurement collection resources and minimize burden of provider reporting, states should 
begin the selection process with applicable measures already in use by the state as part of other 
programs or initiatives (e.g., the Medicaid and CHIP child and adult core sets, meaningful use of 
certified electronic health records (EHRs), managed care programs, section 1115(a) 
demonstration projects, section 1945 health homes for people with chronic conditions, home and 
community based services (HCBS) waivers and state plan amendments (SPA), etc.). This 
process should also include reviewing measures in use by Medicare programs that are relevant to 
states including, Medicare-Medicaid demonstrations, Physician Quality Reporting System, and 
Hospital Inpatient Quality Reporting Program.    
In order to support alignment with federal programs, the majority of the measures used in CMSs 
public reporting programs are available online in the CMS measures inventory.  The inventory 
contains detailed measure information for measures in a particular CMS program, 
see www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/QualityMeasures/CMS-Measures-Inventory.html. 
An additional resource is the HHS Measures Inventory which contains measures used by CMS 
and by other HHS Programs.  The HHS Measures Inventory is located 
at www.qualitymeasures.ahrq.gov/hhs/inventory.aspx?pop=yes and contains measurement 
specifications as they pertain to each individual HHS program, and the measures are searchable 
by target population or age, condition, care setting and NQF endorsement status.  In addition to 
the CMS measurement work that is underway, there are many HHS cross-agency efforts to 
develop and align measures and support the National Quality Strategy.9   
Future Measurement:  Quality improvement and measurement is best approached in cycles 
designed to continuously drive improvement in quality of care and health outcomes.  Some goals 
will likely be precursors to longer range goals, so sequencing of goals and associated 
measurement is an important aspect of quality improvement and measurement.  For instance, in 
the early phases of implementing a quality improvement strategy, metrics and interventions may 
be oriented towards building hard and soft infrastructure, and later metrics and interventions will 
relate more directly to health outcomes.  The ability of states to rely on metrics to ensure quality 
services to beneficiaries may be limited by a paucity of validated outcome measures, particularly 
for certain domains.  States may need to continue to recognize and account for Medicaid services 
through claims or other intermediate outcome processes that reasonably ensure quality services 
to beneficiaries, and we encourage states to discuss these approaches with CMS. 
                                                           
9 One such effort, modeled after the National Quality Strategy, is the Substance Abuse and Mental Health Services 
Administrations "National Behavioral Health Quality Framework. The NBHQF has undergone a rigorous review 
within HHS and via an extensive external set of stakeholders, resulting in a set of recommended core and 
supplemental measures, many of which are endorsed by the National Quality Forum, and intended to capture key 
behavioral health activities across HHS.  Additional resources can be found on the Agency for Healthcare Research 
and Quality website: http://www.ahrq.gov/policymakers/measurement/index.html and 
http://www.ahrq.gov/professionals/quality-patient-safety/quality-resources/index.html .  Page 6 State Health Official and State Medicaid Director  
 
CMS recognizes that in many areas, further measure development is critical and the agency is 
investing in this field.  If there are few available standardized, nationally-validated measures that 
are appropriate for critical elements of the quality strategy, states should identify which quality 
improvement areas need to be addressed and then develop a plan for phasing in additional 
measures to meet these measurement gap areas as validated measures become available.     
 
States can consider using a multi-year glide-path approach to increase the number and 
complexity of measures used in the program.  For example, in the first year of the program, a 
state could start with mainly process-focused measures, but in the measurement strategy 
identifying the measures that may be harder to collect but are focused on health outcomes.  In 
these cases, CMS will expect states to transition from process-focused measures toward 
outcomes measures to the degree feasible.   
 
Graphic 1.  Glide path for moving from process focused measurement to outcomes10  
 
 
4. Defining the starting point and targets for performance.  Using the data-based analysis, 
previous state performance and national benchmarking data, the state should identify baselines 
for each of the measures it intends to collect.  If states undertaking new initiatives do not have 
baseline data for their measures, they should create a timeline for identifying and setting 
baselines, consistent with the glide-path approach mentioned above.  
 
States may choose to provide financial incentives to providers for absolute achievement, targeted 
improvement on metrics, or both.  There are multiple ways to accomplish this.  The nature of the 
split between absolute achievement and targeted improvement will depend on the characteristics 
of the metric and the basic goals of the effort.11  States may also find CMSs August 2013 
                                                           
10 This glide path approach was initially developed for the long-term demonstration of meaningful use of certified 
EHRs by the HHS Health IT Policy Committee, established under the American Reinvestment and Recovery Act as 
an official Federal Advisory Committee.  
11 For instance, a state may choose to align with CMSs Hospital Value-Based Purchasing incentive structure, which 
awards points for both achievement relative to a national benchmark and improvement based on a hospitals past 
performance, at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/HospitalQualityInits/index.html?redirect=/hospitalqualityinits/.   
Another approach would be to set a target of 90th percentile of national performance for it measures.  In brief, 
providers earn the reward in one of two wayseither the provider meets this performance target, or the provider 
closes the gap between current performance (baseline) and this 90th percentile target by a pre-specified amount.    Page 7 State Health Official and State Medicaid Director  
 
guidance on shared savings to be useful to clarify state responsibilities on these financial 
incentives.12   
 
5. Feedback Loops and Transparency  
Transparency and feedback help to understand what measures of quality are improving (or not), 
and create the opportunity for developing and diffusing best practices, avoiding a repeat of 
problems and driving quality improvement more broadly.  A critical element of transparency and 
feedback is the availability of appropriately structured, reliable and timely data that can support 
an analysis plan.  
 
There are different kinds of analysis plans.  Analysis plans that represent rapid cycle assessment 
are intended to support mid-course corrections in interventions and to accelerate local learning 
and improvement.  These data may need to be shared, for example, among different provider 
types or between providers and a health plan who have an active stake in the intervention.  Other 
analysis plans may support the calculation and distribution of incentive payments; these data 
may not be needed as frequently as is needed for rapid cycle assessment but certainly would need 
to be complete and reliable.  Other analysis plans may be designed to support effective program 
monitoring or to understand, in robust terms, how an actual set of complex interactions can have 
differential effects on the quality and cost of care and on health outcomes, perhaps stratified by 
demographic differences.  All of these types of analyses serve different but important roles in 
driving, understanding and diffusing quality improvement.  The latter types are critical to 
program integrity and policy making.   
 
As part of their state-wide quality strategy, states are also strongly encouraged to consider 
making quality performance publicly transparent, which is a key ingredient of quality 
improvement.  These data systems are also important to supporting public transparency, for 
example in producing quality report cards or posting state, plan or provider performance on 
measures.  
 
CMS recently released guidance on the Transformed Medicaid Statistical Information System 
(T-MSIS) program, which will be foundational to the effort described in this letter.13 
Specifically, one of the goals of the T-MSIS effort is to make available robust, timely, and 
accurate data in order to ensure the highest financial and program performance, support policy 
analysis and ongoing improvement, identify potential fraud or waste, and enable data-driven 
decision making. It is critical that State Health Officials align their T-MSIS efforts, especially 
related to timing, with the glide path for quality improvement. 
   
                                                           
12 The shared savings guidance is available at http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/SMD-
13-005.pdf 
13 CMS State Medicaid Director Letter: Transformed Medicaid Statistical Information System (TMSIS) Data. 
SMDL# 13-004, August 23, 2013. http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/SMD-13-004.pdf 
   Page 8 State Health Official and State Medicaid Director  
 
A comprehensive, statewide, quality strategy will anticipate these various data needs and include 
plans for addressing them.  Health information exchanges and health information technology 
infrastructures are helpful in facilitating these data exchanges.  Existing policies and a discussion 
of federal financial participation to support data infrastructure are covered in Appendix 3.   
 
II.  IMPACT OF QUALITY STRATEGY ON CMS POLICIES 
All states should consider developing a single, statewide comprehensive quality improvement 
strategy that broadly supports all aspects of a states Medicaid program.  The approach can help 
with alignment of a states quality improvement activities, identification of resources and can 
enable CMS to better support a states vision for improving health and reducing costs. 
Delivery System Payment Models with Accountability for Quality  
A robust statewide quality improvement strategy that reflects the components described in this 
letter, along with validated metrics for pre-defined outcomes, is critical to move to an 
accountability framework where states rely on measurable improvements as the basis for 
validating Medicaid quality incentive payments rather than transactional items such as logs and 
progress reports.  CMS expects that states pursuing models that rely on measurable 
improvements as the basis for validation of payment will be able to articulate a comprehensive 
quality strategy that describes their overall goals and interventions. This strategy should underlie 
the measures and reporting processes that will be used to determine the payments, the anticipated 
improvements or thresholds required to receive payment, any criteria that might limit eligibility 
to receive payments and the timing and distribution process of the payments.  
Measuring quality can be challenging in an environment of evolving measures and systems, but 
CMS will work closely with states on a model-by-model basis to support flexibility and ensure 
provider accountability in order to enable states to fully implement these models.14 
An accountability framework based on quality must be supported by a robust data infrastructure 
to collect, analyze and report metrics.  If such an infrastructure does not exist, states should, in 
partnership with providers, develop sequential goals and metrics over time.  Such infrastructure 
might begin with building the capacity to capture basic electronic health records data and 
progressively move towards more sophisticated capacities to report and analyze these data 
elements.  We describe the existing policy and federal financial participation to support data 
infrastructure development, such as TMSIS/MMIS and HIT/E in Appendix 3. 
Relationship of Managed Care Requirements and Quality  
When developing the overall statewide quality strategy discussed in this letter, states should 
think broadly across all delivery systems, including managed care.  Forty-two states currently 
use prepaid managed care arrangements to deliver care to Medicaid and CHIP enrollees.  
Managed care has existing quality requirements and regulations  (e.g., 42 CFR Part 438 Subparts 
D and E), which continue to apply to such programs.  The overall statewide quality strategy 
                                                           
14 Examples of measures used by states in payment reform efforts can be found: 
www.dhcs.ca.gov/Documents/CA%201115%20Amendment%20Approval%2006.28.2012.pdf (page 314); 
www.hhsc.state.tx.us/1115-docs/RHP/Category-3-RHP.pdf  Page 9 State Health Official and State Medicaid Director  
 
described in this letter is one way to fulfill some of these requirements, but these authorities are 
best understood in the context of the overall statewide Medicaid program quality strategy, as 
described in this letter. 
States operating managed care programs using managed care organizations and pre-paid 
inpatient health plans are required to conduct External Quality Reviews (EQRs).15  The EQR 
process is intended to help states assess and improve the quality of managed care offered by their 
contracted health plans. There are many ways in which these processes can be improved to better 
meet the quality improvement needs of states.  For example, states could focus current EQR 
required activities on their performance or outcomes of care, in addition to oversight of the 
process and structure of managed care delivery systems. 
The goals a state seeks to achieve, as laid out in the quality strategy described in this letter, 
should be reflected in the scope as well as the results of the EQR.  Reviewing the EQR 
performance results allows the state to assess whether new interventions are needed to reach 
specific health-based goals.  In addition, this analysis will assist the state in determining whether 
its quality strategy is in need of modification.  Strengthening the alignment between a states 
overall quality strategy and the EQR process will help states achieve improvements in their 
Medicaid and CHIP programs. 
In addition to recent quality improvement work that has been underway related to Medicaid, 
there are also opportunities to leverage the knowledge base available from Medicares Quality 
Improvement Organizations (QIOs) working at the community-level to improve the quality of 
health care. Since many QIOs are also EQR organizations, there are ample opportunities for 
synergy of efforts across Medicare and Medicaid.   
Ideally, the quality strategy will also be implemented as part of statewide all-payer initiatives to 
improve quality for all populations, where Medicaid is just one part of that larger effort.   
 
III.  CONCLUSION 
While states may vary in their approach to designing statewide quality strategies and the ways 
payment is used to support quality improvement, the components highlighted here should be 
reflected in all states strategies.  At the same time, we realize that all states are not completely 
prepared to embark on quality improvement and system reform efforts in the same waysome 
may use a gradual approach in exploring the enhanced flexibilities while others may delve into 
large-scale system reform efforts.  No matter where a state falls across this spectrum, we 
encourage states to use this letter as a first step to either begin or expand upon quality 
conversations with CMS. 
     
   
                                                           
15 42 CFR Part 438 Subpart E.  Page 10 State Health Official and State Medicaid Director  
 
We hope this information is helpful.  CMS stands ready to partner with states in their ongoing 
efforts to transition towards accountability based on improvements in health care quality and 
outcomes.  By strengthening and transforming our accountability, we can be better partners in 
these efforts to improve care, improve the patient experience and reduce costs.  Questions about 
this guidance may be directed to Dr. Stephen Cha, CMCS Chief Medical Officer 
at stephen.cha@cms.hhs.gov; or discussions can be arranged through the SOTA process.  
            Sincerely, 
 
            /s/ 
 
            Cindy Mann 
            Director 
 
 
 
cc:  
 
CMS Regional Administrators  
 
CMS Associate Regional Administrators  
Division of Medicaid and Childrens Health Operations 
 
Ron Smith  
Director of Legislative Affairs  
American Public Human Services Association  
 
Matt Salo  
President 
National Association of Medicaid Directors  
 
 
Joy Wilson  
Director, Health Committee  
National Conference of State Legislatures  
 
Melinda J. Becker 
Senior Legislative Associate 
Committee on Health and Homeland Security 
National Governors Association 
 
Debra Miller  
Director for Health Policy  
Council of State Governments  
 
Christopher Gould 
Director, Government Relations   Page 11 State Health Official and State Medicaid Director  
 
Association of State and Territorial Health Officials  
 
Alan R. Weil, J.D., M.P.P.  
Executive Director  
National Academy for State Health Policy  
     
 
Appendix 1: Existing Quality Measurement and Improvement Efforts that Impact 
Medicaid and CHIP 
Over the past several years, CMS and HHS have implemented quality-focused activities 
designed to help states build their quality infrastructures.  A comprehensive description of 
quality programs across HHS is beyond the scope of this guidance.  However, included here are 
several examples of how the department is working to support states. 
 
Initiatives from the Center for Medicare and Medicaid Innovation (CMMI) and the Center for 
Medicaid and CHIP Services (CMCS) can also provide states with important quality 
improvement synergies through programs such as Strong Start, the Comprehensive Primary Care 
Initiative, the State Innovation Models, and the Testing Experience and Functional Assessment 
Tool in Medicaid Long Term Services/Supports (TEFT) grants.  Recently CMS has also released 
information to support states in addressing quality improvement efforts related to super 
utilizers16, mental health parity17 and prevention18.   
 
Medicaid.gov  Quality of Care.  Includes links to major CMCS quality activities and 
efforts. http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Quality-of-
Care/Quality-of-Care.html  
 
Design and implement quality improvement projects.  Quality Improvement 101 webinar 
series for state Medicaid/CHIP staff launched February 2013). www.medicaid.gov/Medicaid-
CHIP-Program-Information/By-Topics/Quality-of-Care/Downloads/QI-101-Webinar1-Slides.pdf 
Initial Core Set of Health Care Quality Measures for Medicaid-Eligible Adults.  
www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Quality-of-Care/Adult-
Health-Care-Quality-Measures.html 
Initial Core Set of Health Care Quality Measures for Children in Medicaid and CHIP. 
www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Quality-of-
Care/Downloads/ChildCoreMeasures.pdf 
Support for states in becoming value-based purchasers. www.medicaid.gov/State-Resource-
Center/MAC-Learning-Collaboratives/Value-Based-Purchasing.html 
Agency for HealthCare Resource and Quality (AHRQ) resource to generate a health care 
reporting website.  The Agency for Healthcare Research and Quality (AHRQ)s MONAHRQ 
tool: http://monahrq.ahrq.gov/  
                                                           
16 Super utilizers informational bulletin: http://www.medicaid.gov/federal-policy-guidance/downloads/CIB-07-24-
2013.pdf 
17 Mental health parity state health official letter: http://www.medicaid.gov/Federal-Policy-
Guidance/downloads/SHO-13-001.pdf and state Medicaid Director letter http://www.medicaid.gov/Federal-Policy-
Guidance/downloads/SMD-11-23-11.pdf 
18 Medicaid Prevention Learning Network: http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-
Topics/Benefits/Prevention.html 
 
12 
   
 
Meaningful Use of Certified Electronic Health Records (EHRs) and the Medicare and 
Medicaid EHR Incentive Programs. http://cms.gov/Regulations-and-
Guidance/Legislation/EHRIncentivePrograms/index.html?redirect=/ehrincentiveprograms 
Transformed Medicaid Statistical Information Systems (T-MSIS). Develop a uniform 
information and reporting system that will include accurate data for information management 
and monitoring quality improvement through the transformation of its Medicaid Statistical 
Information System (MSIS) and the Medicaid and CHIP Program system 
(MACPro). http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/SMD-13-004.pdf 
Health Homes. www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Long-
Term-Services-and-Support/Integrating-Care/Health-Homes/Health-Homes.html 
Quality for Long-Term Care Populations 
  Integrated approaches to quality improvement strategies, develop national 
standardized measures, and coordinate quality technical assistance across the across 
Medicaid authorities supporting long term services and supports. 
(www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Quality-of-
Care/Quality-of-Care-HCBS.html )  
  Quality in Home and Community-Based Services 
(HCBS).  www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Long-
Term-Services-and-Support/Home-and-Community-Based-Services/Home-and-
Community-Based-Services.html  and 
www.medicaid.gov/AffordableCareAct/Provisions/Community-Based-Long-Term-
Services-and-Supports.html 
  Money Follows the Person (MFP). www.medicaid.gov/Medicaid-CHIP-Program-
Information/By-Topics/Long-Term-Services-and-Support/Balancing/Money-Follows-
the-Person.html    
  Balancing Incentive Program (BIP).  www.medicaid.gov/Medicaid-CHIP-Program-
Information/By-Topics/Long-Term-Services-and-Support/Balancing/Balancing-
Incentive-Program.html 
 
Oversight of Quality in Medicaid Managed Care Programs. www.medicaid.gov/Medicaid-
CHIP-Program-Information/By-Topics/Quality-of-Care/Quality-of-Care-External-Quality-
Review.html 
 
 
 
   
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Appendix 2: Example of a Measurement Matrix  
 
Project Goals  Measures  Alignment to  Baseline  Benchmark  Average 
Description  other  Performance 
(title,  CMS/State  Target for 
steward,  Programs  Upcoming 
NQF#)  Year*  
  Follow-up   Inpatient  2011  2012  58.6% 
Improving  after  Psychiatric  statewide  National 
behavioral  hospitalization  Facility  baseline:   Medicaid 
health and  for mental  Quality  57.6%   benchmark 
physical health  illness (NQF  Reporting,  of 90th 
coordination  #0576)  Medicaid  percentile: 
Adult Core  68%  
Set,  
Childrens 
Core Set,  
Part C Display 
Measure 
  Medical  CMS  2011  National  53.1% 
Improving  assistance  Medicaid  statewide  Medicaid  advised to 
primary care  with smoking  Adult Core  baseline:   benchmark  quit  
  and tobacco  50% advised  of 90th 
  use cessation  to quit by  percentile:  
(NQF #0027)  MD (range  81.4% 
  45-58%) 
*  Performance targets will be determined for each individual innovator.  In this case, each 
innovators target is to close 10% of the gap between their own baseline performance and the 
most recent national Medicaid data for the 90th percentile.  An average statewide aggregate 
performance target for the upcoming year is provided here for reference. 
 
 
 
 
 
   
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Appendix 3: Alignment with Existing Quality Initiatives, and Funding for Data 
Infrastructure 
Examples of existing efforts where there is the potential for significant quality improvement 
overlap include (but are not limited to):  
  State Medicaid Health information technology (HIT) Plans and statewide HIT strategies 
  Health Information Exchange (HIE) Operational Plans  
  Medicaid Management Information Systems (MMIS) funding and Medicaid Information 
Technology Architecture (MITA) efforts 
  Grants from the Center for Medicare and Medicaid Innovations, (e.g., State Innovation 
Models and the Comprehensive Primary Care Initiative)  
  Medicaid waiver programs and section 1945 Health Homes initiatives 
  State Demonstrations to Integrate Care for Dual Eligible Individuals 
  CHIPRA Quality Demonstration Grant Program; and  
  Any other funding or strategic plans tied to quality measure alignment and development.  
 
The CMS can support infrastructure and data systems enhancements to support some of these 
activities through enhanced federal match for design, development and implementation of 
MMIS.  States that modify their MMIS to support the data systems for quality can receive an 
enhanced 90 percent federal matching payment under section 1903(a)(3) of the Act.  This 
funding includes all staff costs directly attributable to the design, development and 
implementation of the data system. For continuing operations and maintenance of the MMIS, 
states can receive a 75 percent federal matching payment.  In order to be eligible for the 
enhanced federal match rate, a states MMIS must comply with the seven standards and 
conditions listed in the Federal Register, 76 Fed. Reg. 21950 (April 19, 2011). Additionally, 
CMS released a set of Frequently Asked Questions on this funding on April 25, 2013.19   
In addition, funding may be available to support State investments in HIE.  Under CMSs State 
Medicaid Director Letter (#11-004) dated May 18, 2011 (and subsequent Frequently Asked 
Questions20), CMS provided guidance to State Medicaid agencies regarding the implementation 
of section 4201 of the American Recovery and Reinvestment Act of 2009 (the Recovery Act), 
Pub. L. 111-5 and regulations at 42 Code of Federal Regulations (CFR) Part 495, Subpart D. 
Specifically, this SMD letter provided further detail on Medicaids contribution (fair share) to 
HIE infrastructure development to enable Medicaid providers to meaningfully use certified 
EHRs. This letter also provided more detailed guidance on the State expenditures related to the 
development of HIE(s) that may be eligible for 90 percent FFP.  
   
                                                           
19 http://www.medicaid.gov/state-resource-center/FAQ-medicaid-and-chip-affordable-care-act-
implementation/downloads/Affordable-Care-Act-FAQ-enhanced-funding-for-medicaid.pdf 
 
20 http://www.medicaid.gov/Federal-Policy-Guidance/downloads/FAQ-09-10-2013.pdf 
 
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Depending on the infrastructure development systems and funding authority, states must submit 
an HIT or a MMIS Advanced Planning Document to CMS for review and prior approval in order 
to receive this funding. States should consult with CMS prior to submission of federal funding 
requests to ensure: 1) compliance with the requirements under MMIS and HIT funding authority 
and 2) that the appropriate funding streams are being leveraged and applied correctly. 
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