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Texas Nursing Home Upper Payment Limit Program Update

The Texas Nursing Home Upper Payment Limit (UPL) could result in significant financial benefits for nursing home operators and many Texas governmental hospitals. Here is an update on the program’s status and key action steps.

In October 2012, the Centers for Medicare & Medicaid Services (CMS) approved a Texas State Plan Amendment allowing for a nursing home Intergovernmental Transfer (IGT)/UPL program. This plan allows for nonstate, government-owned entities that hold nursing facility licenses in Texas to participate in a UPL program, which would enable nursing facilities to receive additional payments for their Medicaid residents up to an amount that otherwise would have been paid by Medicare Part A for the same service. Participating entities would make IGT payments to the state, which would subsequently draw down federal matching dollars based on the Texas Federal Medical Assistance Percentages. These funds then would be redistributed to the participating entities.

Where We Are Now

The state currently plans to allow qualifying facilities to sign up for the program prior to September 30, 2013, and the program itself is expected to begin October 1, 2013. In addition, providers that later become eligible to participate will have the opportunity to enter the program on the first day of the federal fiscal quarter following the date they become eligible to participate. However, there are currently many unanswered questions about the program:

  • How will the state actually compute the maximum UPL dollars available?
  • How and when will IGT and UPL payments be made between the state and qualifying providers?
  • What impact will the passage of Senate Bill 7 have on this program? (One component of SB 7, which was passed during the latest Texas legislative session, is the mandate that Texas nursing facilities will move to a managed-care system in October 2014.)

SB 7 certainly creates some challenges for the viability of the nursing facility UPL program because the program currently would only be available under traditional Medicaid and not managed care. However, the state has been receptive to the idea of applying for a waiver program from CMS to allow these UPL funds to continue to be accessible.

Although uncertainties exist, this UPL program can be beneficial to current nursing home operators and nonstate, government-owned entities such as hospital districts and authorities. Under the UPL program, these entities will need to partner with existing nursing home operators to qualify for these funds. These arrangements could be an excellent way to coordinate care and potentially help reduce hospital readmissions.

What to Do Now if You Are Considering Participation in this UPL Program

While it may be premature to execute change of ownership agreements between entities, we suggest nursing home operators and potential partners continue to move forward with their discussions as follows:

  • Execute a confidentiality agreement between the nursing facility operator and potential hospital partner or other qualifying entity.
  • Generate cash flow models that will assist in evaluating the benefits of this program.
  • Review draft management and lease agreements that would be necessary if and when the parties decide to move forward.
    • These agreements would be entered into directly between the current nursing facility operator and a participating hospital or other qualifying entity. While some groups may determine a third-party management company is beneficial, others will decide the added administrative cost of such an entity is not warranted.

If you’d like more information regarding this program, contact your BKD representative.

This post was written by:

A health care partner with more than 15 years of experience, Jon leads BKD's Texas long-term care practice. His experience includes Medicare and Medicaid reimbursement consulting, prospective payment system consulting and corporate compliance plan development and implementation.

2 Responses to “Texas Nursing Home Upper Payment Limit Program Update”

  1. avatar Linda Littlefield says:

    I have read your article on the Nursing Home Upper Payment Limit Program and I was interested to know how many if any nursing homes in Texas are participating in this program. I am sure that I do not understand this program but having a small privately owned Nursing Facility I am interested in learning more. These days it is everything one can do to keep the doors open with the Texas Medicaid rates.
    I would appreciate any further information you could share.

    Linda Littlefiled

  2. avatar Jon Unroe says:

    Hi Linda,

    Thanks for your interest in my article regarding the Nursing Home UPL program.

    You ask a very good question and unfortunately the State has not yet disclosed the entities that are participating in this program. I can tell you that I am currently working with over 20 facilities that are in the process of working with qualifying hospitals with which they will partner to be able to participate in the program.

    I am seeing that on average the net additional dollars that will be earned under this program will be approximately $80 per Medicaid patient day. The numbers are substantial but one issue that is slowing some facilities down is the fact that we will be moving to managed care for Medicaid reimbursement (scheduled for Sept of 2014). This will change the UPL program but right now I am being told that the State is working on a way to allow these additional UPL dollars to still be available after the switch to managed care.

    I hope this helps and I certainly am available to talk with you about this in more detail if you would like.

    Thanks and have a great weekend.

    Jon A. Unroe


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Recent Comment

  • Karen Vance says:
    This would be under §484.18 of the Conditions of Participation describing regulations for the Plan of Care. Below is the Standard that addresses your issue: "§484.18(b) - Agency professional staff promptly alert the physician to any changes that suggest a need to alter the plan of care." From the State Operations Manual (guidance for state surveyors) "The
    February 24, 2011 on Webinars

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