[Code of Federal Regulations]
[Title 42, Volume 3]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR438.230]

[Page 216]
 
                         TITLE 42--PUBLIC HEALTH
 
  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 
                 HEALTH AND HUMAN SERVICES--(Continued)
 
PART 438--MANAGED CARE--Table of Contents
 
        Subpart D--Quality Assessment and Performance Improvement
 
Sec. 438.230  Subcontractual relationships and delegation.

    (a) General rule. The State must ensure, through its contracts, that 
each MCO, PIHP, and PAHP--
    (1) Oversees and is accountable for any functions and 
responsibilities that it delegates to any subcontractor; and
    (2) Meets the conditions of paragraph (b) of this section.
    (b) Specific conditions. (1) Before any delegation, each MCO, PIHP, 
and PAHP evaluates the prospective subcontractor's ability to perform 
the activities to be delegated.
    (2) There is a written agreement that--
    (i) Specifies the activities and report responsibilities delegated 
to the subcontractor; and
    (ii) Provides for revoking delegation or imposing other sanctions if 
the subcontractor's performance is inadequate.
    (3) The MCO, PIHP, or PAHP monitors the subcontractor's performance 
on an ongoing basis and subjects it to formal review according to a 
periodic schedule established by the State, consistent with industry 
standards or State MCO laws and regulations.
    (4) If any MCO, PIHP, or PAHP identifies deficiencies or areas for 
improvement, the MCO, PIHP, or PAHP and the subcontractor take 
corrective action.

                  Measurement and Improvement Standards