More hospitals face readmission penalties of 1% or higher in 2027

This article presents an excellent opportunity for EMS agencies operating MIH/CP programs to approach local hospitals with a compelling value proposition: We can help you reduce avoidable readmissions, improve patient outcomes, and potentially protect millions of dollars in Medicare reimbursement.

Although hospitals are reimbursed for the readmission, the readmission penalty is applied to EVERY Medicare dollar paid to the hospital. A 1% penalty for a hospital generating $50 million in annual Medicare revenue is a $500,000 penalty!

The key is positioning MIH not simply as another community health initiative, but as a hospital financial performance and clinical quality improvement strategy.

Three opportunities for EMS-based MIH programs:

• Offer a targeted post-discharge readmission prevention program
  • Instead of offering general wellness visits, EMS agencies should propose a structured, hospital-funded MIH intervention for patients at greatest risk of readmission.
  • The proposal: Have the hospital refer selected patients to MIH immediately after discharge, prioritizing conditions included in HRRP, such as heart failure, COPD, pneumonia, acute myocardial infarction, and certain surgical procedures.

• Create a hospital-connected alternative-to-ED pathway
  • Many recently discharged patients call 911 because they experience a new symptom, have a medication question, or cannot access timely outpatient care.
  • For these patients, the traditional EMS model may initiate another hospital encounter, even when the patient’s needs could be safely managed in another setting.
  • The proposal: Establish a formal partnership through which EMS clinicians can identify recently discharged patients during 911 encounters and, under approved medical protocols, connect appropriate patients with hospital clinicians, telehealth, urgent follow-up, or MIH services.

• Propose a shared-savings-style hospital–EMS partnership
  • Rather than asking hospitals to support MIH as a community benefit expense, EMS agencies can present it as a measurable financial investment.
  • The proposal: Develop a 6–12-month pilot with a defined patient population, hospital referral process, MIH staffing model, performance dashboard, and financial evaluation.

CMS has a publicly available table you can use to find a hospital’s readmission penalty. It can be found here:

https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/archived-supplemental-data-files/fy-2027-ipps-final-rule-hospital-readmissions-reduction-program-supplemental-data-file

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More hospitals face readmission penalties of 1% or higher in 2027

By Diane Eastabrook, Tim Broderick, Kevin Davis

October 08, 2026

https://www.modernhealthcare.com/providers/mh-cms-hospital-readmission-penalties-2027

Key Takeaways

• The number of hospitals subject to Medicare payment penalties because of excess readmissions will be higher in fiscal 2027.
• Fiscal 2027 is the second consecutive year for which that number grew.
• The share of hospitals facing no readmissions penalties fell to nearly 20%.

A slightly larger number of hospitals will face readmission penalties of 1% or higher in fiscal 2027, according to new data from the Centers for Medicare and Medicaid Services.

Under the Hospital Readmissions Reduction Program, 8.4% of hospitals, or 244 facilities, will see Medicare payments cut at least 1% because of excess readmissions. That compares with 8.1% for fiscal 2026. Fiscal 2027 began Oct. 1.

This marks the second consecutive year when the number of hospitals subject to larger penalties rose after dropping each year since fiscal 2022.

That means that more than 70% of hospitals, or 2,090, will be on the hook for readmission penalties below 1%, a slight decline from fiscal 2026. Nearly 20%, or 578 hospitals, face no penalties, compared with nearly 22%, or 641 hospitals, in fiscal 2026.

Source: Centers for Medicare and Medicaid Services Created with Datawrapper

The program tracks readmissions data from fee-for-service Medicare beneficiaries and, for the first time this fiscal year, Medicare Advantage enrollees. The hospital readmissions three-year performance period for fiscal 2027 penalties is based on Medicare claims from July 1, 2023, through June 30, 2025.

The Hospital Readmissions Reduction Program is a Medicare initiative that launched more than a decade ago to tackle the high costs and clinical implications of patients needing to return to the hospital to be treated for the same conditions.