Frequently Asked Questions

The UPL limits payment to the Medicare rate or cost. Providers paid at reconciled cost may receive no more than their reconciled amount. As a result, states cannot attribute the “UPL room” from other providers to pay additional amounts to any provider paid at reconciled cost. Due to this payment limitation, states should not include any provider paid at reconciled cost in their UPL demonstrations; however, they must account for these providers. Specifically, states must include with their UPL submissions documentation of those providers paid at reconciled cost and confirm by provider use of either a Medicare cost report or Centers for Medicare & Medicaid Services-approved cost report template to identify allowed cost. Further, states must document the ownership status (state owned, non-state government owned, or private) of each provider.

FAQ ID:92436

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.

FAQ ID:92191

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.

FAQ ID:92196

No, states that already have submitted their 2018 (07/01/2017 - 06/30/2018) inpatient hospital, outpatient hospital, or nursing facility services UPL demonstrations will not have to resubmit using the templates. In that instance, CMS will populate the templates using data already submitted by the state.

FAQ ID:92211

The UPL demonstration year is defined according to the last year encompassed by the demonstration. For example, a UPL covering the period 07/01/2016 to 06/30/2017 is defined as the 2017 UPL.

FAQ ID:92231

Yes, a state should submit multiple workbooks to CMS to provide a complete UPL demonstration for each service category subject to the UPL (Inpatient Hospital services (IPH), Outpatient Hospital services (OPH), Nursing Facility services (NF), Clinic, Institutions for Mental Disease (IMD), Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID), Psychiatric Residential Treatment Facility (PRTF), and Qualified Practitioner supplemental payments). When submitting UPL demonstrations, the state should 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.As well, states may submit one separate workbook for each ownership category (state government owned, non-state government owned, and private).

FAQ ID:92241

The UPL limits payment to the Medicare rate or cost. Providers paid at cost may receive no more than their reconciled amount. As a result, states cannot attribute the "UPL room" from other providers to pay additional amounts to any provider paid at cost. Due to this payment limitation, states should not include any provider paid at cost in their UPL demonstrations; however, they must account for these providers. Specifically, states must include with their UPL submissions documentation of those providers paid at cost and, therefore, excluded from the calculation of the UPL.

FAQ ID:92396

Section 1903(i)(7) of the Social Security Act specifies a separate UPL for CDL services which limits payment to no more than the Medicare rate on a per test basis. To meet the statutory provision, the UPL for CDL services must be separately demonstrated from the OPH services UPL. States do not have the ability to "borrow room" from the CDL UPL and apply it to the OPH UPL.

FAQ ID:92401

Section 1902(a) (25) (I) of the Act defines ""health insurers"" to include self-insured plans, group health plans (as defined in section Medicaid Management Information Systems (MMIS)(l) of the Employee Retirement Income Security Act of 1974 (ERISA)), service benefit plans, managed care organizations (MCOs), pharmacy benefit managers (PBMs), and ""other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service."" Workers' compensation, automobile insurance, and liability insurance plans all are included within the definition of ""health insurer"" for purposes of this section and the requisite state laws which must be enacted pursuant to it.

The CMS interprets ""other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim"" to include:

1. Prepaid Inpatient Health Plans (PIHPs) and Prepaid Ambulatory Health Plans (PAHPs). For purposes of Medicaid managed care, PIHPs and PAHPs are entities that contract with the state to deliver Medicaid-covered services; in that context, they would also be considered ""other parties that are, by contract, legally responsible for payment of a claim for a health care item or service;"" and,
2. Such entities as third party administrators (TPAs), fiscal intermediaries, and managed care contractors, which administer benefits on behalf of the riskbearing plan sponsor (e.g., an employer with a self-insured health plan). CMS recognizes that entities such as PBMs and TPAs do not necessarily have ultimate financial liability, but, to the extent that they are required, by contract or otherwise, to review claims and authorize payment by the plan sponsor, they are included within the definition of ""third party"" and ""health insurer"" for purposes of section 1902(a) (25) of the Act.

Nothing in revisions to the Social Security Act made by the Deficit Reduction Act of 2005 (DRA) imposes new liability to pay claims on entities that do not otherwise bear such liability. Nor does section 1902(a) (25) of the Act negate any right of indemnification against a plan sponsor or other entity with ultimate liability for health care claims by a contracting party that pays the claims.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 252.32 KB) 

FAQ ID:94021

Indemnity policies may be considered third party resources if the policies meet certain criteria. Federal Medicaid regulations at 42 CFR 433.136 define a third party as ""any individual, entity, or program that is or may be liable to pay all or part of the expenditures for medical assistance furnished under a state plan."" This includes private insurance. Section 433.136 also defines private insurer to include ""any commercial insurance company offering health or casualty insurance to individuals or groups (including both experience-related insurance contracts and indemnity contracts)."" Private insurers are required to comply with the Deficit Reduction Act of 2005 (DRA) and related state enactments.

Indemnity plans may include a variety of insurance policies such as accident, cancer/specified disease, dental, hospital confinement indemnity, hospital confinement sickness indemnity, hospital intensive care, long-term care, short-term disability, specified health event, and vision. An individualized review of the various policy terms would be necessary to determine if they should be considered a third party resource for purposes of Medicaid. If this review determines that the policy provides for payment of health care items and services, the policy is a third party resource and payments would be assigned to the Medicaid agency.

An indemnity policy may be designed to pay a cash benefit to policyholders, unless the policyholder chooses otherwise. The policy may state that these payments may be used to cover medical expenses or living expenses such as rent, child care, or groceries. However, the insurance company may condition payment upon the occurrence of a medical event. Whenever payments are linked to specific medical events, these payments should be considered third party payments. Thus, the state could seek to recover Medicaid payments from the policy benefits.

Where indemnity policies do not qualify as a third party resource, any payments made to a Medicaid beneficiary may be countable as income for Medicaid eligibility purposes.

Supplemental Links:

• This FAQ was released as part of a larger set. View the full set. (PDF, 252.32 KB) 

FAQ ID:94026