Incompatible live donor kidney transplantation (ILDKT) offers a survival advantage over dialysis to patients with anti-HLA donor-specific antibody (DSA). Program-specific reports (PSRs) fail to account for ILDKT, placing this practice at regulatory risk. We collected DSA data, categorized as positive Luminex, negative flow crossmatch (PLNF) (n = 185), positive flow, negative cytotoxic crossmatch (PFNC) (n = 536) or positive cytotoxic crossmatch (PCC) (n = 304), from 22 centers. We tested associations between DSA, graft loss and mortality after adjusting for PSR model factors, using 9669 compatible patients as a comparison. PLNF patients had similar graft loss; however, PFNC (adjusted hazard ratio [aHR] = 1.64, 95% confidence interval [CI]: 1.15–2.23, p = 0.007) and PCC (aHR = 5.01, 95% CI: 3.71–6.77, p < 0.001) were associated with increased graft loss in the first year. PLNF patients had similar mortality; however, PFNC (aHR = 2.04; 95% CI: 1.28–3.26; p = 0.003) and PCC (aHR = 4.59; 95% CI: 2.98–7.07; p < 0.001) were associated with increased mortality. We simulated Centers for Medicare & Medicaid Services flagging to examine ILDKT's effect on the risk of being flagged. Compared to equal-quality centers performing no ILDKT, centers performing 5%, 10% or 20% PFNC had a 1.19-, 1.33- and 1.73-fold higher odds of being flagged. Centers performing 5%, 10% or 20% PCC had a 2.22-, 4.09- and 10.72-fold higher odds. Failure to account for ILDKT's increased risk places centers providing this life-saving treatment in jeopardy of regulatory intervention.