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Massachusetts used incorrect methodology to calculate UPL

Healthcare Auditing Weekly, January 17, 2006

The OIG has found that Massachusetts' methodology for calculating the upper payment limit (UPL) for FY 2003 did not meet CMS and state regulations.

The UPL is an estimate of the maximum amount that would be paid for Medicaid services under Medicare payment principles.

The OIG reviewed Massachusetts Office of Medicaid's upper payment limit UPL calculations for inpatient hospital services. The OIG's objectives were to determine whether the state agency calculated the UPL for acute care inpatient hospitals in accordance with federal regulations, and properly included UPL payments in the calculation of hospital-specific disproportionate share hospital limits.

The OIG found that the state's methodology for calculating the inpatient UPL was not in complete agreement with the revised regulations issued by CMS and the state plan. For example, the state agency did not include all hospital inpatient providers in the calculation or use the most accurate Medicaid claims payment data available as a basis for its UPL calculation.

The state agency agreed that all hospitals should be included in the UPL calculation, but did not agree that actual Medicaid paid claims data are required as the basis for the UPL calculation.

Click here to read the audit report, "Nationwide Review of Compliance With the Interrupted Stay Provision of the Inpatient Rehabilitation Facility Prospective Payment System for Calendar Years 2002 and 2003," (A-0 1-03-00009) issued December 19, 2005.

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