Upper Payment Limit FAQs
Effective state fiscal year 2020, each state must submit a complete data set of payments to Medicaid providers, including providers paid at cost, as well as critical access hospitals. This would require states to submit cost and payment data to CMS that previously was not requested.
In accordance with Medicare cost reporting, the state must use 12 months of cost data reported by each facility. With regard to payment data, the state should use actual amounts, to the extent available, then calculate a claims completion factor based on historic utilization. The state’s UPL submission must include an explanation of its methodology to estimate payments. The use of a claims completion factor provides a reasonable estimate of the amount that Medicare would pay for these services, consistent with the UPL as defined at 42 CFR 447.272.
The difference between a prospective and retrospective UPL is in the relationship between the UPL demonstration period and the date when the UPL is submitted. For a UPL demonstration period of 7/1/2018 to 6/30/2019, a UPL is considered retrospective when it is submitted on or after the start of the demonstration period (on or after 7/1/2018). Using the same UPL demonstration period (7/1/2018 to 6/30/2019), a UPL is considered prospective if it is submitted prior to 7/1/2018.
No, an upper payment limit demonstration considers all Medicaid payments (base and supplemental). States must conduct UPL demonstrations for the applicable services described in State Medicaid Director Letter (SMDL) 13-003 regardless of whether a state makes supplemental payments under the Medicaid state plan for the services.
States are requested to submit their UPL demonstrations to the UPL mailbox at MedicaidUPL@cms.hhs.gov, but should also send a copy of each demonstration to their CMS Regional Office, including the National Institutional Reimbursement Team (NIRT) and Non-Institutional Payment Team (NIPT) staff as appropriate, and addressed to the Associate Regional Administrator. UPL demonstrations should be submitted to meet the annual reporting requirement described in SMDL 13-003, as well as when proposing changes in payment through SPAs.
When the data that factors into the state's UPL demonstration has not changed from one year to the next, then the state could apply the same overall UPL demonstration to the following year. The state must submit a justification to support the application of a previous year's UPL demonstration to another year.
No, the information must be submitted by the State Medicaid Director (or designated state official).
Yes, a demonstration submitted within the fiscal year that is used to document that SPA methodology changes comply with the UPL requirements may be used to satisfy the SMDL requirements as long as no subsequent changes are made to the state's provider payment methodology prior to the state's annual submission and CMS has reviewed and accepted the demonstration.
Yes, CMS requires states to use all of the OMB approved templates for their 2019 (07/01/2018 to 06/30/2019) UPL demonstrations submitted to meet the annual UPL reporting requirement and with State Plan Amendment (SPA) submissions. When submitting UPL demonstrations, use the following naming convention: UPL_<UPL Demo Date Range>_<Service Type Abbreviation>_R<Region Number>_<State Abbreviation>_<Workbook Number>.xls. Here is an example of the naming convention: UPL_20170701-20180630_IP_R01_CT_01.xls.
The cost of the tax should be reported in Variable 401 - MCD Provider Tax Cost. A state may separately report the Medicaid portion of the cost of a provider assessment/tax only when it is using a cost based methodology to calculate the UPL. A state may not include this cost when calculating a DRG or Payment based UPL demonstration.