42 CFR § 456.650 - Basis, purpose and scope.
(a) Basis. Section 1903(g) of the Act requires that FFP for long-stay inpatient services at a level of care be reduced, by a specified formula, for any quarter in which a State fails to make a satisfactory showing that it has an effective program of utilization control for that level of care.
(b) Purpose. This subpart specifies -
(1) What States must do to make a satisfactory showing;
(2) How the Administrator will determine whether reductions will be imposed; and
(3) How the required reductions will be implemented.
(c) Scope. The reductions required by this subpart do not apply to -
(1) Services provided under a contract with a health maintenance organization; or