[Code of Federal Regulations]
[Title 12, Volume 1]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR433.113]

[Page 85]
 
                         TITLE 42--PUBLIC HEALTH
 
  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 
                 HEALTH AND HUMAN SERVICES--(Continued)
 
PART 433--STATE FISCAL ADMINISTRATION--Table of Contents
 
   Subpart C--Mechanized Claims Processing and Information Retrieval 
                                 Systems
 
Sec. 433.113  Reduction of FFP for failure to operate a system and obtain initial approval.

    (a) Except as waived under Sec. 433.130 or 433.131, FFP will be 
reduced as specified in paragraph (b) of this section unless the 
Medicaid agency has in continuous operation a mechanized claims 
processing and information retrieval system that meets the following 
conditions:
    (1) The APD for the system was approved by CMS;
    (2) The system is operational by September 30, 1985; and
    (3) The system is initially approved by the last day of the fourth 
quarter that begins after the date the system became operational as 
determined by CMS.
    (b) CMS will reduce FFP in expenditures for compensation and 
training of skilled professional medical personnel and support staff 
under section 1903(a)(2) of the Act, and for general administration 
under section 1903(a)(7) of the Act, by the following increments applied 
separately to those two categories of expenditures:
    (1) Five percentage points for the first two quarters beginning 
after a deadline in paragraph (a) of this section;
    (2) An additional five percentage points during each additional two-
quarter period, through the quarter in which the State achieves 
compliance with the conditions for initial operation or initial approval 
of an operating system. FFP reductions will not exceed 25 percentage 
points for each type of reduction.
    (c) The amount of FFP (determined under section 1903(a)(3)(B)) that 
would be available retroactively for operating a system that later 
receives initial approval will be reduced by CMS by the same percentage 
points for the identical periods of time described in subparagraph 
(b)(1) of this section, until the system is initially approved. No 
reduction will be made after the first quarter during which the system 
is initially approved.

[50 FR 30847, July 30, 1985, as amended at 54 FR 41973, Oct. 13, 1989]