Section 438.1 - Basis and scope(a)Statutory basis. This part is based on the following statutory sections: (1) Section 1902(a)(4) of the Act requires that States provide for methods of administration that the Secretary finds necessary for proper and efficient operation of the State plan. The application of the requirements of this part to PIHPs and PAHPs that do not meet the statutory definition of an MCO or a PCCM is under the authority in section 1902(a)(4) of the Act.(2) Section 1903(i)(25) of the Act prohibits payment to a State unless a State provides enrollee encounter data required by CMS.(3) Section 1903(m) of the Act contains requirements that apply to comprehensive risk contracts.(4) Section 1903(m)(2)(H) of the Act provides that an enrollee who loses Medicaid eligibility for not more than 2 months may be enrolled in the succeeding month in the same MCO or PCCM if that MCO or PCCM still has a contract with the State.(5) Section 1905(t) of the Act contains requirements that apply to PCCMs.(6) Section 1932 of the Act- (i) Provides that, with specified exceptions, a State may require Medicaid beneficiaries to enroll in MCOs or PCCMs.(ii) Establishes the rules that MCOs, PCCMs, the State, and the contracts between the State and those entities must meet, including compliance with requirements in sections 1903(m) and 1905(t) of the Act that are implemented in this part.(iii) Establishes protections for enrollees of MCOs and PCCMs.(iv) Requires States to develop a quality assessment and performance improvement strategy.(v) Specifies certain prohibitions aimed at the prevention of fraud and abuse.(vi) Provides that a State may not enter into contracts with MCOs unless it has established intermediate sanctions that it may impose on an MCO that fails to comply with specified requirements.(vii) Specifies rules for Indian enrollees, Indian health care providers, and Indian managed care entities.(viii) Makes other minor changes in the Medicaid program.(b)Scope. This part sets forth requirements, prohibitions, and procedures for the provision of Medicaid services through MCOs, PIHPs, PAHPs, PCCMs and PCCM entities. Requirements vary depending on the type of entity and on the authority under which the State contracts with the entity. Provisions that apply only when the contract is under a mandatory managed care program authorized by section 1932(a)(1)(A) of the Act are identified as such.