(a) Notice of sanction. Except as provided in § 438.706(c), before imposing any of the intermediate sanctions specified in this subpart, the State must give the affected entity timely written notice that explains the following:

1. (1) The basis and nature of the sanction.
2. (2) Any other appeal rights that the State elects to provide.

(2) Procedures. The State must do all of the following:

1. (i) Give the MCO, PCCM or PCCM entity written notice of its intent to terminate, the reason for termination, and the time and place of the hearing.
2. (ii) After the hearing, give the entity written notice of the decision affirming or reversing the proposed termination of the contract and, for an affirming decision, the effective date of termination.
3. (iii) For an affirming decision, give enrollees of the MCO, PCCM or PCCM entity notice of the termination and information, consistent with § 438.10, on their options for receiving Medicaid services following the effective date of termination.