(a) General rule. Each State contracting with an MCO, PIHP or PAHP to furnish services to Medicaid beneficiaries must—

(1) Adopt the Medicaid managed care quality rating system developed by CMS in accordance with paragraph (b) of this section; or

(2) Adopt an alternative Medicaid managed care quality rating system in accordance with paragraph (c) of this section.

(3) Implement such Medicaid managed care quality rating system within 3 years of the date of a final notice published in the Federal Register.

(b) Quality rating system. CMS, in consultation with States and other stakeholders and after providing public notice and opportunity to comment, will identify performance measures and a methodology for a Medicaid managed care quality rating system that aligns with the summary indicators of the qualified health plan quality rating system developed per 45 CFR 156.1120.

(c) Alternative quality rating system.

(1) A State may submit a request to CMS for approval to use an alternative Medicaid managed care quality rating system that utilizes different performance measures or applies a different methodology from that described in paragraph (b) of this section provided that—

(i) The ratings generated by the alternative Medicaid managed care quality rating system yield information regarding MCO, PIHP, and PAHP performance which is substantially comparable to that yielded by the Medicaid managed care quality rating system described in paragraph (b) of this section; and,

(ii) The state receive CMS approval prior to implementing an alternative quality rating system or modifications to an approved alternative Medicaid managed care quality rating system.

(2) Prior to submitting a request for, or modification of, an alternative Medicaid managed care quality rating system to CMS, the State must—

(i) Obtain input from the State's Medical Care Advisory Committee established under §431.12 of this chapter; and

(ii) Provide an opportunity for public comment of at least 30 days on the proposed alternative Medicaid managed care quality rating system or modification.

(3) The State must document in the request to CMS the public comment process utilized by the State including discussion of the issues raised by the Medical Care Advisory Committee and the public. The request must document any policy revisions or modifications made in response to the comments and rationale for comments not accepted.

(d) Quality ratings. Each year, the State must collect data from each MCO, PIHP, and PAHP with which it contracts and issue an annual quality rating for each MCO, PIHP, and PAHP based on the data collected, using the Medicaid managed care quality rating system adopted under this section.

(e) Availability of information. The State must prominently display the quality rating given by the State to each MCO, PIHP, or PAHP under paragraph (d) of this section on the Web site required under §438.10(c)(3) in a manner that complies with the standards in §438.10(d).