§ 422.354 Requirements for affiliated providers.

A PSO that consists of two or more providers must demonstrate to CMS'S satisfaction that it meets the following requirements: (a) The providers are affiliated. For purposes of this subpart, providers are affiliated if, through contract, ownership, or otherwise— (1) One provider, directly or indirectly, controls, is controlled by, or is under common control with another; (2) Each provider is part of a lawful combination under which each shares substantial financial risk in connection with the PSO's operations; (3) Both, or all, providers are part of a controlled group of corporations under section 1563 of the Internal Revenue Code of 1986; or (4) Both, or all, providers are part of an affiliated service group under section 414 of that Code. (b) Each affiliated provider of the PSO shares, directly or indirectly, substantial financial risk for the furnishing of services the PSO is obligated to provide under the contract. (c) Affiliated providers, as a whole or in part, have at least a majority financial interest in the PSO. (d) For purposes of paragraph(a)(1) of this section, control is presumed to exist if one party, directly or indirectly, owns, controls, or holds the power to vote, or proxies for, not less than 51 percent of the voting rights or governance right of another.