Jefferson Stratford Hospital faces the largest Medicare payment cut in South Jersey. The 1.32 percent reduction took effect Oct. 1 under a federal program that penalizes hospitals for high readmission rates.
The penalty is more than double the 0.56 percent average cut imposed on 54 New Jersey hospitals this fiscal year, according to a Patch analysis of data from the Centers for Medicare & Medicaid Services (CMS). Two other hospitals close to Cherry Hill also face reductions: West Jersey Hospital in Voorhees at 0.94 percent and Cooper University Hospital in Camden at 0.45 percent.
The cuts come through the federal Hospital Readmissions Reduction Program (HRRP). It reduces base Medicare payments to hospitals where patients return for unplanned inpatient care within 30 days of discharge at higher-than-expected rates.
For Cherry Hill residents on traditional Medicare, the penalties will not directly raise hospital bills or out-of-pocket costs. But the cuts could put financial pressure on hospitals, potentially affecting their operations and services, Patch reported.
How the program works
CMS tracks readmissions tied to six conditions and procedures: heart attack, heart failure, pneumonia, chronic obstructive pulmonary disease (COPD), coronary artery bypass graft surgery and elective hip or knee replacement. The agency compares each hospital's readmission rates against expected rates. Those calculations account for factors such as age, medical history and other health conditions. The program also adjusts for hospitals' shares of patients who qualify for both Medicare and Medicaid.
Hospitals can lose up to 3 percent of their Medicare inpatient payments. Nationally, 2,334 hospitals face penalties this fiscal year, about 80 percent of all hospitals evaluated. Ten received the maximum cut.
This year's evaluation used Medicare discharge data from July 1, 2023, through June 30, 2025. CMS shortened the measurement window from three years to two. For the first time, the agency also incorporated data from Medicare Advantage, the privately administered alternative to traditional Medicare, according to Norwood, a healthcare consulting firm. The penalties themselves still apply only to traditional Medicare inpatient payments.
Added pressure for Jefferson Health
The Medicare penalty arrives as Jefferson Health navigates a separate dispute with Horizon Blue Cross Blue Shield of New Jersey. Reporter Harold Brubaker of the Philadelphia Inquirer reported that Jefferson's three South Jersey hospitals, in Cherry Hill, Stratford and Washington Township, will leave Horizon's network on March 1 if the two sides fail to reach a new agreement.
Statewide, the largest cut went to CarePoint Health–Bayonne Medical Center at 1.81 percent. Patch lists 11 penalized hospitals across South Jersey, with the full list available on its site.
CMS plans to expand the readmissions program. Sepsis will be added to the list of penalized conditions beginning in fiscal year 2029, with data collection already underway, according to Norwood.
