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News
More hospitals are getting dinged by Medicare for high readmission rates. For fiscal year 2027, 80% of hospitals — 2,334 facilities — will face reduced Medicare payments under the Hospital Readmissions Reduction Program, up from 78% the year before. It marks the second consecutive year of worsening results, and the first cycle to include Medicare Advantage data.
More hospitals are feeling the financial pinch from Medicare's readmission penalty program. For fiscal year 2027, 80% of U.S. hospitals — 2,334 facilities — will see their Medicare payments reduced under the Hospital Readmissions Reduction Program (HRRP), up from 78% (2,304 facilities) in 2026. It's the second straight year of worsening results, continuing a troubling trend for the healthcare system.
The HRRP, created under the Affordable Care Act, penalizes hospitals with higher-than-average readmission rates for conditions like heart attack and pneumonia. Penalties can reach up to 3% of Medicare payments, though most facilities face cuts under 1%. Notably, this is the first penalty cycle to incorporate data from Medicare Advantage beneficiaries.
By the Numbers:
Why it matters: The HRRP has historically driven hospitals to invest in discharge planning and care transitions, saving Medicare billions annually. But with penalties rising for a second year running — and ongoing debate about whether improvements reflect genuine care quality gains — pressure is mounting on hospitals to do more, particularly safety-net facilities serving the most vulnerable patients.
