States may limit overall aggregate payments made to a hospice during a hospice cap period. The cap period runs from October 1 of each year through September 30 of the following year. The total payment made for services provided to Medicaid beneficiaries during this period is compared to the cap amount for this period. The hospice must refund any payments in excess of the cap. This limit is based on services rendered during the cap year regardless of when payment is actually made. States calculate all payments made to hospices on behalf of all Medicaid hospice beneficiaries receiving services during the cap year, regardless of the year in which the beneficiary is counted in determining the cap.
The hospice cap is calculated differently for new hospices entering the Medicaid program if the hospice has not participated in the program for an entire cap year. The Centers for Medicare & Medicaid Services requires that the initial cap calculations for newly certified hospices cover a period of at least 12 months but not more than 23 months.