PURPOSE: This rule establishes a methodology for determining Upper Payment Limit (UPL) payments provided to state government-owned hospitals beginning July 1, 2022.

1. (1) General Principles.

   1. (A) Hospital Upper Payment Limit (UPL) payments cannot exceed the Medicare Upper Payment Limit as authorized by federal law and included in Missouri’s State Plan.

2. (2) Beginning with SFY 2023, state government-owned hospitals will be paid an interim payment semi-monthly up to the estimated inpatient (IP) UPL gap.

   1. (A) Prior to each SFY, the division shall calculate the estimated Medicaid payments for the coming SFY for each hospital. The total estimated Medicaid payments for each hospital shall be subtracted from the hospital’s IP UPL calculated in accordance with the methodology set forth below, then summed to calculate the IP UPL gap. The IP UPL gap is reduced by the estimated inpatient fee-for-service Graduate Medical Education (GME) payments for the coming SFY for each hospital to calculate the total amount of funding available. The previous SFY’s payments are compared to current SFY’s estimated claims-based payments and when the estimated current year payments are less than prior year payments, that hospital is eligible for a UPL payment. The available IP UPL gap is distributed to each eligible hospital based on the percent to total of the available room in the prior year and current year comparison. The available gap under the IP UPL for each eligible hospital will be aggregated to create the supplemental payment amount. The total calculated supplemental payment amount will be paid to eligible hospitals.

      1. 1. The IP UPL will be determined based on the hospital’s

Medicaid inpatient costs using Medicare cost reporting principles. All Medicare cost report worksheet, column, or line references are based upon the Medicare Cost Report (MCR) CMS 2552-10 and should be adjusted for any CMS-approved successor MCR. The amount that Medicare would pay shall be calculated as follows:

1. A. Using Medicare cost report data within the previous

two (2) years of the IP UPL demonstration dates in accordance with IP UPL guidelines set by CMS, Total Medicare Costs shall be derived from the reported Inpatient Hospital Cost on the following cost report variable locations:

1. (I) Worksheet D-1, Hospital/IPF/IRF Components,

Column 1, Line 49;

1. (II) Plus Organ Acquisitions Cost from all applicable

Worksheets D-4, Column 1, Line 69; and

1. (III) Plus GME Aggregated Approved Amount from

Worksheet E-4, Column 1, Line 49;

1. B. Total Medicare Patient Days shall be derived from

Worksheet S-3, Part I, Column 6, Lines 14, 16, and 17 of the same cost report as the Total Medicare Costs;

1. C. A calculated Medicare Cost Per Diem shall be calculated

by dividing the Total Medicare Costs by the hospital’s Total Medicare Patient Days;

1. D. The calculated Medicare Cost Per Diem shall be

multiplied by the total Medicaid Patient Days from a twelve- (12-) month data set from the prior two (2) years of the IP UPL demonstration dates in accordance with the IP UPL guidelines set by CMS to derive the hospital’s IP UPL.

1. (I) The data source for the Medicaid Patient Days and

Total Medicaid Payments shall be from the state’s Medicaid Management Information System (MMIS) claims data;

1. E. The calculated IP UPL shall be inflated from the

midpoint of the hospital’s cost report period to the midpoint of the IP UPL demonstration period using the CMS Prospective Payment System (PPS) hospital market basket index; and

1. F. If payments in this section would result in payments

to any category of hospitals in excess of the IP UPL calculation required by 42 CFR 447.272, payments for each eligible hospital receiving payments under this section will be reduced proportionately to ensure compliance with the IP UPL.

1. (3) Beginning with SFY 2026, state government-owned hospitals will be paid a final payment up to the final IP UPL gap.

AUTHORITY: sections 208.201 and 660.017, RSMo 2016, and sections 208.152 and 208.153, RSMo Supp. 2025.* Emergency rule filed May 20, 2011, effective July 1, 2011, expired Dec. 28, 2011. Original rule filed May 20, 2011, effective Jan. 30, 2012. Emergency amendment filed June 14, 2022, effective July 1, 2022, expired Feb. 23, 2023. Amended: Filed June 14, 2022, effective Jan. 30, 2023. Emergency amendment filed July 26, 2024, effective Aug. 9, 2024, expired Feb. 27, 2025. Amended: Filed July 26, 2024, effective Feb. 28, 2025. Amended: Filed Aug. 18, 2025, effective March 30, 2026. *Original authority: 208.152, RSMo 1967, amended 1969, 1971, 1972, 1973, 1975, 1977, 1978, 1981, 1986, 1988, 1990, 1992, 1993, 2004, 2005, 2007, 2011, 2013, 2014, 2015, 2016, 2018, 2021, 2023, 2024, 2025; 208.153, RSMo 1967, amended 1967, 1973, 1989, 1990, 1991, 2007, 2012, 2024; 208.201, RSMo 1987, amended 2007; and 660.017, RSMo 1993, amended 1995.