Upper Payment Limit FAQs

Unlike the UPLs for other Medicaid institutional payments, which rely on an aggregate approach by ownership category (private, state owned, non state government owned) to ensure Medicaid payments are consistent with efficiency and economy, the PRTF UPL is calculated for each facility. Specifically, the UPL relies on 42 CFR 447.325 which states that Medicaid agencies “may pay the customary charges of the provider but must not pay more than the prevailing charges in the locality for comparable services under comparable circumstances." The plain language meaning of this requirement is that a state may pay a PRTF no more than it charges for covered Medicaid services provided to Medicaid recipients.

When a hospital acquires another hospital, the state should use all available data to determine the UPL and work with CMS to assure appropriate reporting. When a hospital ceases operation, the state should not annualize data if it does not cover a 12-month period.

Yes, the state is required to report the number of Medicaid days. This information is recorded at variable 310 – Medicaid days.