CMS: More hospitals to face higher readmission penalties in 2026

By Andrew Cass / September 23, 2025

The number of hospitals facing readmission penalties of at least 1% is set to increase in fiscal year 2026, according to preliminary data from CMS released Sept. 19. 

Beginning Oct. 1, 240 hospitals (8.1%) will be subject to penalties of 1% or more under the Hospital Readmissions Reduction Program. That is up from 208 hospitals (7%) in fiscal 2025.

The share of hospitals receiving no penalty will remain largely unchanged, rising slightly to 641 hospitals (21.8%) from 638 (21.4%) in 2025. The majority of hospitals — 70.1% in fiscal 2026 compared with 71.6% in 2025 — will face penalties below 1%.

CMS also reported the average penalty by dual-eligible patient share. Hospitals with the highest proportion of Medicare-Medicaid dual-eligible patients will see an average penalty of 0.33% in fiscal 2026, compared with 0.31% the year prior. Hospitals with the lowest proportion will face an average penalty of 0.35%, up from 0.32% in fiscal 2025.

For fiscal 2026, the readmissions performance period covers discharges between July 1, 2021, and June 30, 2024, a rolling three-year timeframe.

The Hospital Readmissions Reduction Program was established under the ACA to reduce avoidable hospital readmissions by applying payment reductions to hospitals with higher-than-expected rates for certain conditions and procedures.