42 CFR §403.300

1. (a)Basis. This subpart implements section 1886(c) of the Act, which authorizes payment for Medicare inpatient hospital services in accordance with a State's reimbursement control system rather than under the Medicare reimbursement principles as described in CMS's regulations and instructions.
2. (b)Purpose. Contained in this subpart are—
   1. (1)The basic requirements that a State reimbursement control system must meet in order to be approved by CMS;
   2. (2)A description of CMS's review and evaluation procedures; and
   3. (3)The conditions that apply if the system is approved.