---
kind: "section"
citation: "42 C.F.R. § 417.410"
title: "42"
number: "417.410"
heading: "Qualifying conditions: General rules."
url: "https://uscodex.org/cfr/42/417.410"
---

# §417.410. Qualifying conditions: General rules.

- (a) **Basic requirement.** In order to qualify for a contract with CMS under this subpart, an HMO or CMP must demonstrate its ability to enroll Medicare beneficiaries and other individuals and groups and to deliver a specified comprehensive range of high quality services efficiently, effectively, and economically to its Medicare enrollees.
- (b) **Other qualifying conditions.** An HMO or CMP must meet qualifying conditions that pertain to operating experience, enrollment, range of services, furnishing of services, and a quality assurance program.
- (c) **Standards.** Generally, each qualifying condition is interpreted by a series of standards that are used in surveying an HMO or CMP to determine its qualifications for a Medicare contract.
- (d) **Application of standards.** Application of the standards enables the surveyor to determine—
  - (1) The HMO's or CMP's activities;
  - (2) The extent to which the HMO or CMP complies with each condition;
  - (3) The nature and extent of any deficiencies; and
  - (4) **The need for improvement if CMS should enter into a contract with the HMO or CMP.**
- (e) **Requirements for a risk contract.** An HMO or CMP may enter into a risk contract with CMS if it—
  - (1) Meets all the applicable requirements in the statute and regulations;
  - (2) Has at least 5,000 enrollees or 1,500 enrollees if it serves a primarily rural area as defined in [§ 417.413(b)(3)](/cfr/42/417.413.md?p=b-3);
  - (3) Has at least 75 Medicare enrollees or has an acceptable plan to achieve this Medicare membership within 2 years;
  - (4) Satisfies CMS that it can bear the potential losses of a risk contract; and
  - (5) Has not previously terminated or failed to renew a risk contract within the preceding 5 years, unless CMS determines that circumstances warrant special consideration.
- (f) **Requirements for a reasonable cost sontract.** An HMO or CMP may enter into a reasonable cost contract if it meets one of the following:
  - (1) **The HMO or CMP qualifies for a risk contract, but chooses a reasonable cost contract.**
  - (2) The HMO or CMP meets the conditions for entering into a risk contract specified in [paragraph (e)](#e) of this section except that CMS does not judge the HMO or CMP capable of bearing the potential losses of a risk contract.
- (g) **Regulations on reasonable cost and risk reimbursement are set forth in subparts O and P of this part.**

## Notes

### Amendments

[50 FR 20570, May 17, 1985, as amended at 58 FR 38078, July 15, 1993; 60 FR 45676, Sept. 1, 1995]

### Source

Source: 50 FR 1346, Jan. 10, 1985, unless otherwise noted.

### Authority

Authority: 42 U.S.C. 1302 and 1395hh, and 300e, 300e-5, and 300e-9, and 31 U.S.C. 9701.

### Amendments

[50 FR 20570, May 17, 1985, as amended at 58 FR 38078, July 15, 1993; 60 FR 45676, Sept. 1, 1995]