---
kind: "section"
citation: "42 C.F.R. § 422.352"
title: "42"
number: "422.352"
heading: "Basic requirements."
url: "https://uscodex.org/cfr/42/422.352"
---

# §422.352. 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](/cfr/42/422.370.md);
  - (2) Meets the definition of a PSO set forth in [§ 422.350](/cfr/42/422.350.md) 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)](/cfr/42/412.62.md?p=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.**

## Notes

### Amendments

[63 FR 18134, Apr. 14, 1998, as amended at 63 FR 35098, June 26, 1998; 65 FR 40327, June 29, 2000]

### Authority

Authority: 42 U.S.C. 1302, 1306, 1395w-21 through 1395w-28, and 1395hh.

### Source

Source: 63 FR 18134, Apr. 14, 1998, unless otherwise noted.

### Amendments

[63 FR 18134, Apr. 14, 1998, as amended at 63 FR 35098, June 26, 1998; 65 FR 40327, June 29, 2000]