Basic requirements.

(a) General rule. An organization is considered a PSO for purposes of a MA contract if the organization— (1) Has obtained a waiver of State licensure as provided for under § 422.370; (2) Meets the definition of a PSO set forth in § 422.350 and other applicable requirements of this subpart; and (3) Is effectively controlled by the provider or, in the case of a group, by one or more of the affiliated providers that established and operate the PSO. (b) Provision of services. A PSO must demonstrate to CMS's satisfaction that it is capable of delivering to Medicare enrollees the range of services required under a contract with CMS. Each PSO must deliver a substantial proportion of those services directly through the provider or the affiliated providers responsible for operating the PSO. Substantial proportion means— (1) For a non-rural PSO, not less than 70% of Medicare services covered under the contract. (2) For a rural PSO, not less than 60% of Medicare services covered under the contract. (c) Rural PSO. To qualify as a rural PSO, a PSO must— (1) Demonstrate to CMS that— (i) It has available in the rural area, as defined in § 412.62(f) of this chapter, routine services including but not limited to primary care, routine specialty care, and emergency services; and (ii) The level of use of providers outside the rural area is consistent with general referral patterns for the area; and (2) Enroll Medicare beneficiaries, the majority of which reside in the rural area the PSO serves. [63 FR 18134, Apr. 14, 1998, as amended at 63 FR 35098, June 26, 1998; 65 FR 40327, June 29, 2000]