Frequently Asked Questions About Utah’s UPL Program

 Utah’s Skilled Nursing Facility Upper Payment Limit (UPL) program is a federally authorized Medicaid funding program designed to help cover the gap between what Medicaid pays and the actual cost of caring for Medicaid patients in nursing homes statewide. It brings more than $100 million dollars in federal funds to the state annually at no cost to Utah taxpayers. These additional funds are used to improve resident care in nursing facilities through investments in staffing, infrastructure, technology, and quality-of-life enhancements. The UPL program not only dramatically increases the resources that are available for care across the state but also ensures that some of Utah’s most vulnerable seniors can access high-quality, long-term care. Without the UPL program, many skilled nursing facilities would struggle to stay open.  

 Before Utah’s UPL program, skilled nursing facilities were receiving $100 less per Medicaid patient per day than the actual cost of providing care to those patients, leaving many facilities on the verge of closure and losing millions of dollars per year. To address this issue, federal law and Medicaid policy allow states to implement UPL programs. This approach has been used by 25 states, many for decades. Utah adopted the UPL program in 2013 to help provide more funding for the cost of nursing home care, all without any additional funds from the State of Utah. 

 Under federal guidelines established by the Centers for Medicare and Medicaid Services (CMS), Utah’s UPL program allows Non-State Governmental Entities, typically rural hospitals, to partner with privately operated skilled nursing facilities to secure additional Medicaid funding. The rural hospitals provide local funding upfront from their own operating accounts, and then the state Medicaid agency, the Department of Health and Human Services, uses these dollars to apply for federal matching funds, which are then distributed through the Medicaid system and deposited directly in nursing facility bank accounts. These additional funds enhance patient care through better staffing, equipment, and training, while also supporting critical upgrades to aging facilities that directly impact residents’ quality of life.  

Utah’s UPL program has invested hundreds of millions of federal dollars over the past 12 years in Utah’s skilled nursing facilities at no direct cost to Utah taxpayers. While the long-term care industry still faces challenges in Utah and nationwide, this program has led to significant improvements in the quality of services, care delivery, and the environments in which some of the state’s most vulnerable residents receive that care. The outcomes include:

· Expanded access to services for low-income and Medicaid-dependent residents.

· Supported increased wages and better recruitment of qualified caregivers.

· Enabled enhanced staff training and culture programs.

· Provided clinical tools and resources that support improved care outcomes.

· Replaced or renovated of more than 25 nursing facilities statewide.

· Replaced at least four aging nursing facilities; a fifth is under construction.

· Renovated and remodeled dozens of other facilities across the state.

· Completed facility upgrades including private rooms, private bathrooms, improved HVAC, and whole-facility generators.

· Provided technological upgrades such as in-room lifts and centralized nursing stations.

· Enhanced resident environments with more open space, homelike features, and better infection control. 

 Utah’s UPL program is one of the most rigorously regulated programs of its kind in the nation. It incorporates multiple layers of state and federal oversight and auditing to ensure integrity, transparency, and compliance. These safeguards are designed to ensure that the additional federal Medicaid dollars accessed through the program are invested in resident care, staffing improvements, and facility infrastructure. When Utah launched its UPL program in 2013, it surveyed similar programs in other states and incorporated additional oversight measures to help ensure funds were used as intended. With the requirements of regular audits, consistent detailed reporting, and strict oversight at both the state and federal levels, accountability is built into every step of Utah’s UPL program, making misusing funds virtually impossible. 

 Federal rules mandate that the UPL program be administered by a Non-State Governmental Entity (NSGE), typically a rural hospital. In addition to providing its own operating funds up front, the NSGE oversees the program and administers compliance. Each participating skilled nursing facility manages its own operations independently with seasoned elder care managers who provide constant daily patient care. UPL funds are used by the nursing facilities throughout the fiscal year to support patient care and operations. Once those expenses have been met, any remaining dollars at the end of the year may then be used by the NSGE (as compensation for providing upfront funding and managing the program) to improve healthcare delivery in rural communities, consistent with federal and state program requirements. At that time, the NSGE also is reimbursed for the upfront funding it provided during the year prior.  

 If misunderstandings led to Utah’s program being eliminated, the state would forfeit more than $100 million annually in additional federal Medicaid funding, which comes at no cost to Utah taxpayers. This would lead to nursing home closures, fewer care options for seniors, and increased strain on hospitals, with fewer places to discharge patients who need ongoing care. The burden and cost of providing nursing home care would be shifted to providers, families, and taxpayers. Additionally, more seniors would be forced to remain at home in potentially dangerous conditions instead of receiving care that should be delivered by nursing facilities.  

 The financial structure of Utah’s UPL program is complex and highly regulated by the state and federal government. As a result, it is often oversimplified. For example, there has been a misperception in two reports by the state auditor’s office that more than half of UPL funds go to rural hospitals administering the program. This misperception ignores the enormous matching upfront funds the hospital is required to pay to the state each quarter to participate in the program and unlock additional federal funds. Those matching funds are returned to the hospital for its use in routine healthcare operations. In short, the vast majority of UPL funds are used by nursing facilities to provide patient care, and the remaining, much smaller portion (provided for financing and administering the program) is used by hospitals to improve access to and delivery of health services in rural communities. 

 A recent review (and another in 2017) by the Utah State Auditor’s Office examined Utah’s UPL program, including how funds are distributed, tracked, and reported across participating entities. The audit did not have any findings indicating a failure to comply with state or federal law, nor any weaknesses or deficiencies in internal controls. The NSGEs, however, were disappointed with the audit, because it misunderstands and misrepresents how this complex program works. Significant efforts were made to help the auditor’s office understand the UPL program, including providing them with extensive information, meeting proactively with the auditor and her team, and submitting detailed clarifications after reviewing the draft audit. 

 Challenges reflected in the Centers for Medicare and Medicaid Services and other survey data are not unique to skilled nursing facilities in Utah’s UPL program, rather, such issues are national in scope. Nursing facilities everywhere face similar pressures in terms of quality measures and staffing. Without UPL funding, many nursing homes would not be able to keep their doors open, let alone improve. With this program, they are not only remaining open but making steady strides in improving the quality of care. While data can capture snapshots of challenges, it doesn’t always capture qualitative progress over time, and UPL funds are frequently what make that progress possible.

It is also important to note that some parties have tried to equate the performance of UPL facilities and non-UPL facilities, which is not a fair apples-to-apples comparison. Virtually every Medicaid facility in Utah participates in the UPL program, while non-UPL facilities serve different populations and are often supported by private-pay and insurance resources using more diversified operating models. Utah’s UPL facilities provide a different service to a different type of patient, caring for some of the most complex and vulnerable seniors in our state. Ultimately, Utah’s UPL program is a  with the goal of sustained improvements that continue to strengthen the quality of eldercare in Utah over time.

 During the COVID-19 pandemic, the State of Utah requested UPL facilities to be converted into centers exclusively for COVID-19 patients, as a measure to protect uninfected populations. This was incredibly challenging for those staffing these facilities because the losses to COVID were significantly higher in a setting in which many patients were critically ill. This explains why outcomes related to COVID were starker at Utah UPL facilities overall. 

 When Utah launched its UPL program in 2013, it researched and analyzed Indiana’s UPL program, as well as dozens of other programs around the country, for guidance on creating appropriate checks and balances. But Utah didn’t stop there: state leaders added even more oversight to ensure the improved delivery of healthcare services. The Utah Department of Health and Human Services increased transparency, strengthened controls, and introduced quality metrics to ensure the additional Medicaid funds from the federal government are used as intended. While an issue arose in one other state more than 12 years ago, this hasn’t been the case in Utah because its UPL program is more carefully managed by the state, more transparent, and more rigorously regulated, making it virtually impossible to misuse funds. 

 Utah’s UPL program is aligned with state goals of expanding access, especially in rural areas, and modernizing health infrastructure without increasing tax burden. It complements Medicaid expansion, long-term care planning, and efforts to keep Utahns in their communities while aging. The UPL program enhances both quality and efficiency.