---
kind: "section"
citation: "42 C.F.R. § 425.104"
title: "42"
number: "425.104"
heading: "Legal entity."
url: "https://uscodex.org/cfr/42/425.104"
---

# §425.104. Legal entity.

- (a) An ACO must be a legal entity, formed under applicable State, Federal, or Tribal law, and authorized to conduct business in each State in which it operates for purposes of the following:
  - (1) **Receiving and distributing shared savings.**
  - (2) **Repaying shared losses or other monies determined to be owed to CMS.**
  - (3) Establishing, reporting, and ensuring provider compliance with health care quality criteria, including quality performance standards.
  - (4) **Fulfilling other ACO functions identified in this part.**
- (b) An ACO formed by two or more ACO participants, each of which is identified by a unique TIN, must be a legal entity separate from any of its ACO participants.
- (c) An ACO formed by a single ACO participant may use its existing legal entity and governing body, provided it satisfies the other requirements in §§ 425.104 and [425.106](/cfr/42/425.106.md).

## Notes

### Amendments

[76 FR 67973, Nov. 2, 2011, as amended at 80 FR 32834, June 9, 2015]

### Authority

Authority: 42 U.S.C. 1302, 1306, 1395hh, and 1395jjj.

### Source

Source: 76 FR 67973, Nov. 2, 2011, unless otherwise noted.

### Amendments

[76 FR 67973, Nov. 2, 2011, as amended at 80 FR 32834, June 9, 2015]