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Medicare's per-beneficiary ceiling on annual hospice payments
Medicare's annual per-beneficiary spending ceiling — $35,361.44 in FY2026 — multiplied by a hospice's proportional beneficiary count; payments above that total must be repaid as an overpayment.
The aggregate cap calculation is the method Medicare uses to limit a hospice's total annual payment: it multiplies a fixed per-beneficiary cap amount by the number of Medicare beneficiaries the hospice served during the cap year. Payments above that ceiling must be repaid to Medicare.
The cap amount is set annually and is $35,361.44 for the FY2026 cap year, up from $34,465.34 for FY2025 (CMS FY2026 Hospice Wage Index final rule fact sheet)[1]. A hospice's aggregate cap equals that amount times its beneficiary count for the cap period, counted under the patient-by-patient proportional method, which assigns each hospice a fractional share of a beneficiary based on the portion of the patient's total hospice days that occurred at that hospice during the cap year (42 CFR 418.309)[2]. Total Medicare payments received for the cap period, including add-ons, are then compared against that allowable amount, and any excess is an overpayment the hospice must return. The cap amount is updated each year by the hospice payment update percentage rather than the Consumer Price Index, a provision Congress most recently extended through the 2035 cap year under the Consolidated Appropriations Act, 2026 (42 CFR 418.309)[2]. The FY2027 final rule (CMS-1851-F, July 30, 2026) sets the cap at $36,174.75 (CMS FY2027 final rule fact sheet)[3].
The cap converts a long-length-of-stay census into a direct repayment liability, with the greatest pressure on hospices serving diagnoses with unpredictable trajectories, such as dementia. Because the ceiling is per beneficiary, the allowable amount rises with each additional admission — short-stay patients expand headroom while very-long-stay patients consume payment against a fixed per-beneficiary limit, making payer and diagnosis mix the primary determinants of cap risk. A hospice that exceeds its aggregate cap owes the excess to Medicare as an overpayment, typically a lump sum due at year-end. Live discharge patterns, admission mix, and census management are the variables that determine whether payments remain within the ceiling during a cap period.
It is $35,361.44 per beneficiary for the FY2026 cap year (CMS FY2026 final rule fact sheet)[1].
Under the patient-by-patient proportional method, each hospice receives a fractional share of a beneficiary equal to the portion of that patient's total hospice days it provided during the cap year (42 CFR 418.309)[2].
The amount paid above your aggregate cap is an overpayment that must be returned to Medicare (42 CFR 418.309)[2].
Vitalis Care is the end-of-life care app that helps hospices deliver compassionate care — while staying on top of schedules, field operations, documentation, compliance, and reimbursement.
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