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 (2) Facilities in which a QIO is performing medical and utilization reviews under contract with the Medicaid agency in accordance with § 431.630 of this chapter. [44 FR 56338, Oct. 1, 1979, as amended at 50 FR 15327, Apr. 17, 1985; 51 FR 43198, Dec. 1, 1986]