The Centers for Medicare and Medicaid Services (CMS) has issued new regulations and guidance to help implement two major pieces of federal legislation: The Medicare Modernization Act and the Deficit Reduction Act of 2005. In addition, the administration has also proposed major regulatory initiatives that would change long-standing Medicaid policy by regulation rather than legislative action. The paper focuses on six new regulations, including the proposed rule on the Rehabilitation Service Option and the interim final rule on Targeted Case Management, and explains current policy, the proposed regulatory changes as well as the impact and issues with these changes.