Guidance on Nursing Facility State Plan Payment and Upper Payment Limit Approaches in Medicaid Relying on the Medicare Patient-Driven Payment Model (SMD 22-005)

Mary Madison, RN, RAC-CT, CDP
Clinical Consultant – Briggs Healthcare

“As stated at the beginning of this letter, CMS will no longer support the Medicare RUGs systems after October 1, 2023. CMS is available to assist states as Medicare RUGs transition to PDPM. Initial readiness determinations should be made by the states in collaboration with their provider communities. States that decide to transition to PDPM for purposes of Medicaid payment and UPL demonstrations should carefully review their currently approved state plan benefits and payment methodologies, as well as their UPL demonstration methodology for nursing facility services. States that include references to RUGs in the state plan and wish to change their payment methodologies to be based on Medicare PDPM or a different payment system must conduct public process and notices in accordance with statute and regulation and submit a state plan amendment to CMS for approval.

For technical assistance, please contact Andrew Badaracco, Acting Director for the Division of Reimbursement Policy at, or the Medicaid UPL resource mailbox at”   

The letter referred to in the above CMS statement is found here. The letter is addressed to the State Medical Director. The above statement is found beneath Conclusion on page 14 of the 16-page letter. Pages 15 and 16 are marked as an Appendix.