November 30, 2001

Proposed Rule Eliminates 150 Percent Medicaid UPL for Locally Owned Public Hospitals

The Centers for Medicare and Medicaid Services (CMS) Nov. 23 published a proposed rule [66 Federal Register 58694] that would eliminate the 150 percent Medicaid upper payment limit (UPL) for services provided by non-state government owned/operated hospitals. According to the rule, state Medicaid payments to those hospitals will not be allowed to exceed 100 percent of Medicare payments for comparable services.

The proposed rule states that CMS does not believe a significant amount of the additional payments permitted under the 150 percent UPL are "being used to further the mission of these hospitals or their role in serving Medicaid patients." In terms of compliance deadlines, the proposed rule continues the transition provisions established in the January 2001 rule (i.e., states with older plan amendments, and thus a greater dependency on the 150 percent UPL, will have longer phase-out periods than states with newer plan amendments). CMS has issued a 30-day comment period and expects to finalize the rule by mid-February.

Information: Chris Mitchell, AAMC Office of Governmental Relations, 202-828-0526.