Colorado Medicaid adds HCBS soft caps

Colorado Medicaid is moving forward with annual unit limits, described as “soft caps,” for select home and community-based services. The update comes from the Colorado Department of Health Care Policy & Financing (HCPF) in Operational Memo 26-003 (January 15, 2026) and applies to services delivered under HCBS waivers and the Community First Choice (CFC) benefit.

What is changing

Colorado Medicaid will implement annual unit limits (“soft caps”) for the following services:

• Personal Care 

• Homemaker 

• Health Maintenance Activities (HMA)

The annual unit limits apply across all service delivery models, including:

• Agency-based services 

• In-Home Support Services (IHSS) 

• Consumer-Directed Attendant Support Services (CDASS)

This represents a shift in how certain HCBS and CFC services will be authorized and monitored, with utilization expected to receive closer attention under the new framework.

Timing, approval, and plan update requirements

The changes are scheduled to apply to certification periods beginning April 1, 2026 and later, pending CMS approval. In addition, providers must ensure plans are updated to reflect the new limits by November 30, 2026.

Colorado has also outlined an exception process for members whose needs exceed the annual caps. This exception pathway is expected to be a key component of ongoing service access for members with higher needs when annual utilization would otherwise exceed the set limits.

Operational considerations for agency leadership

For agency leadership, the new utilization limits may result in increased scrutiny of service use and greater reliance on exception requests to support members whose needs exceed the annual caps. Without strong internal controls, providers may face a heightened risk of denied or recouped claims if services exceed authorized limits or if documentation does not adequately support exceptions.

HCPF’s memo underscores several practical areas for provider focus:

• Implement systems to track member utilization against annual limits in real time. 

• Proactively engage case management teams before caps are reached. 

• Prepare standardized exception request templates supported by robust clinical documentation. 

• Ensure billing and compliance teams review claim validation processes, so services billed align precisely with updated authorizations and approved exception thresholds.