[Code of Federal Regulations] [Title 42, Volume 2] [Revised as of October 1, 2002] From the U.S. Government Printing Office via GPO Access [CITE: 42CFR417.1] [Page 684-687] TITLE 42--PUBLIC HEALTH HUMAN SERVICES PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL PLANS, AND HEALTH CARE PREPAYMENT PLANS--Table of Contents Subpart A--General Provisions Sec. 417.1 Definitions. As used in this part, unless the context indicates otherwise-- Basic health services means health services described in Sec. 417.101(a). Community rating system means a system of fixing rates of payments for health services that meets the requirements of Sec. 417.104(a)(3). Comprehensive health services means as a minimum the following services which may be limited as to time and cost: (1) Physician services (Sec. 417.101(a)(1)); (2) Outpatient services and inpatient hospital services (Sec. 417.101(a)(2)); (3) Medically necessary emergency health services (Sec. 417.101(a)(3)); and (4) Diagnostic laboratory and diagnostic and therapeutic radiologic services (Sec. 417.101(a)(6)). [[Page 685]] Direct service contract means a contract for the provision of basic or supplemental health services or both between an HMO and (1) a health professional other than a member of the staff of the HMO, or (2) an entity other than a medical group or an IPA. Enrollee means an individual for whom an HMO, CMP, or HCPP assumes the responsibility, under a contract or agreement, for the furnishing of health care services on a prepaid basis. Full-time student means a student who is enrolled for a sufficient number of credit hours in a semester or other academic term to enable the student to complete the course of study within not more than the number of semesters or other academic terms normally required to complete that course of study on a full-time basis at the school in which the student is enrolled. Furnished, when used in connection with prepaid health care services, means services that are maid available to an enrollee either dierctly by, or under arrangements made by, the HMO, CMP, or HCPP. Health maintenance organization (HMO) means a legal entity that provides or arranges for the provision of basic and supplemental health services to its enrollees in the manner prescribed by, is organized and operated in the manner prescribed by, and otherwise meets the requirements of, section 1301 of the PHS Act and the regulations in subparts B and C of this part. Health professionals means physicians (doctors of medicine and doctors of osteopathy), dentists, nurses, podiatrists, optometrists, physicians' assistants, clinical psychologists, social workers, pharmacists, nutritionists, occupational therapists, physical therapists, and other professionals engaged in the delivery of health services who are licensed, practice under an institutional license, are certified, or practice under authority of the HMO, a medical group, individual practice association, or other authority consistent with State law. Individual practice association (IPA) means a partnership, association, corporation, or other legal entity that delivers or arranges for the delivery of health services and which has entered into written services arrangement or arrangements with health professionals, a majority of whom are licensed to practice medicine or osteopathy. The written services arrangement must provide: (1) That these health professionals will provide their professional services in accordance with a compensation arrangement established by the entity; and (2) To the extent feasible, for the sharing by these health professionals of health (including medical) and other records, equipment, and professional, technical, and administrative staff. Medical group means a partnership, association, corporation, or other group: (1) That is composed of health professionals licensed to practice medicine or osteopathy and of such other licensed health professionals (including dentists, optometrists, and podiatrists) as are necessary for the provision of health services for which the group is responsible; (2) A majority of the members of which are licensed to practice medicine or osteopathy; and (3) The members of which: (i) After the end of the 48 month period beginning after the month in which the HMO for which the group provides health services becomes a qualified HMO, as their principal professional activity (over 50 percent individually) engage in the coordinated practice of their profession and as a group responsibility have substantial responsibility (over 35 percent in the aggregate of their professional activity) for the delivery of health services to enrollees of an HMO; (ii) Pool their income from practice as members of the group and distribute it among themselves according to a prearranged salary or drawing account or other similar plan unrelated to the provision of specific health services; (iii) Share health (including medical) records and substantial portions of major equipment and of professional, technical, and administrative staff; (iv) Establish an arrangement whereby an enrollee's enrollment status is not known to the health professional who provides health services to the enrollee. [[Page 686]] Medical group members means (1) a health professional engaged as a partner, associate, or shareholder in the medical group, or (2) any other health professional employed by the group who may be designated as a medical group member by the medical group. Medically underserved population means the population of an urban or rural area as described in Sec. 417.912(d). Nonmetropolitan area means an area no part of which is within a standard metropolitan statistical area as designated by the Office of Management and Budget and which does not contain a city whose population exceeds 50,000 individuals. Party in interest means: (1) Any director, officer, partner, or employee responsible for management or administration of an HMO, any person who is directly or indirectly the beneficial owner of more than 5 percent of the equity of the HMO, any person who is the beneficial owner of a mortgage, deed of trust, note, or other interest secured by, and valuing more than 5 percent of the assets of the HMO, and, in the case of an HMO organized as a nonprofit corporation, an incorporator or member of the corporation under applicable State corporation law; (2) Any entity in which a person described in paragraph (1): (i) Is an officer or director; (ii) Is a partner (if the entity is organized as a partnership); (iii) Has directly or indirectly a beneficial interest of more than 5 percent of the equity; or (iv) Has a mortgage, deed of trust, note, or other interest valuing more than 5 percent of the assets of such entity; (3) Any spouse, child, or parent of an individual described in paragraph (1). Policymaking body of an HMO means a board of directors, governing body, or other body of individuals that has the authority to establish policy for the HMO. Qualified HMO means an HMO found by CMS to be qualified within the meaning of section 1310 of the PHS Act and subpart D of this part. Rural area means any area not listed as a place having a population of 2,500 or more in Document PC(1)A, ``Number of Inhabitants,'' Table VI, ``Population of Places,'' and not listed as an urbanized area in Table XI, ``Population of Urbanized Areas'' of the same document (1970 Census or most recent update of this document, Bureau of Census, U.S. Department of Commerce). Secretary means the Secretary of Health and Human Services and any other officer or employee of the Department of Health and Human Services to whom the authority involved has been delegated. Service area means a geographic area, defined through zip codes, census tracts, or other geographic measurements, that is the area, as determined by CMS, within which the HMO furnishes basic and supplemental health services and makes them available and accessible to all its enrollees in accordance with Sec. 417.106(b). Significant business transaction means any business transaction or series of transactions during any one fiscal year of the HMO, the total value of which exceeds the lesser of $25,000 or 5 percent of the total operating expenses of the HMO. Staff of the HMO means health professionals who are employees of the HMO and who-- (1) Provide services to HMO enrollees at an HMO facility subject to the staff policies and operational procedures of the HMO; (2) Engage in the coordinated practice of their profession and provide to enrollees of the HMO the health services that the HMO has contracted to provide; (3) Share medical and other records, equipment, and professional, technical, and administrative staff of the HMO; and (4) Provide their professional services in accordance with a compensation arrangement, other than fee-for-service, established by the HMO. This arrangement may include, but is not limited to, fee-for-time, retainer or salary. Subscriber means an enrollee who has entered into a contractual relationship with the HMO or who is responsible for making payments for basic health services (and contracted for supplemental health services) to the HMO or on whose behalf these payments are made. [[Page 687]] Supplemental health services means the health services described in Sec. 417.102(a). Unusual or infrequently used health services means: (1) Those health services that are projected to involve fewer than 1 percent of the encounters per year for the entire HMO enrollment, or, (2) Those health services the provision of which, given the enrollment projection of the HMO and generally accepted staffing patterns, is projected will require less than 0.25 full time equivalent health professionals. [45 FR 72528, Oct. 31, 1980, as amended at 47 FR 19338, May 5, 1982; 52 FR 22321, June 11, 1987. Redesignated at 52 FR 36746, Sept. 30, 1987. Redesignated and amended at 56 FR 51985, Oct. 17, 1991; 58 FR 38067, July 15, 1993; 60 FR 34887, July 5, 1995; 60 FR 45674, Sept. 1, 1995]