Federal Policy
CMS Penalizes 2,334 Hospitals Under Readmissions Program for FY2027
CMS is penalizing 2,334 hospitals, about 80% of those evaluated, under the Hospital Readmissions Reduction Program in fiscal 2027, with penalties effective October 1. Ten hospitals face the maximum 3% penalty and 244 hospitals face penalties of 1% or more, up slightly from fiscal 2026. Fiscal 2027 marks the first time CMS calculated performance using both Medicare Advantage and fee-for-service data, though penalties still apply only to traditional Medicare payments; CMS also shortened the performance period from three years to two. Hospitals serving the highest proportion of dually eligible patients will see an average 0.33% penalty, unchanged from last year.
Why it mattersHospitals with high dual-eligible populations continue to face disproportionate Medicare payment reductions, a signal states and plans should watch as they assess provider financial pressure affecting Medicaid network stability.