State Medicaid programs have considerable flexibility to determine payment methods and amounts for most provider types. The majority of fee-for-service payments are base payments for services. In addition, states may also make different types of supplemental payments, which are most often made to physicians and institutional providers such as hospitals and nursing facilities. There are different types of supplemental payments, each governed by different statutory and regulatory requirements: upper payment limit (UPL) supplemental payments, disproportionate share hospital (DSH) payments, uncompensated care pool payments, or other lump sum payments designed to support specific policy objectives.
This brief describes the use and oversight of UPL payments for hospitals, nursing facilities, and physicians based on a MACPAC review of provider-level data submitted by states to the Centers for Medicare & Medicaid Services (CMS) to demonstrate compliance with the UPL requirements. It concludes with a discussion of current policy issues, including the new requirement for CMS to make provider-level UPL data publicly available.