UPPER LIMIT PAYMENTS

Current federal regulations permit states to establish programs to make additional payments to public hospitals for Medicaid discharges up to an amount that Medicare would pay for the same services through a supplemental upper limit payment program (UPL). 

The UPL program is based on the premise that some public facilities have higher operating costs due to patient populations that are sicker and more likely to have no health care coverage at all. In Ohio, public hospitals use the intergovernmental transfer mechanism to provide state matching funds required to draw down federal dollars at the Federal Medical Assistance Percentage rate (FMAP). The entire amount is then considered a Medicaid payment and reported on the Medicaid Cost Report. Ohio’s UPL program began operating for public hospitals in 2001 and state hospitals in 2002.