The Centers for Medicare & Medicaid Services (CMS) uses kidney transplant outcomes, unadjusted for standard comorbidity, to identify centers with sufficiently higher than expected rates of graft failure or patient death (underperforming centers) that they may be denied Medicare participation. To examine whether comorbidity adjustment would affect this determination, we identified centers that would have failed to meet 1-year graft survival criteria, 1992–2005, with and without adjustment using the Elixhauser Comorbidity Index. Adjustment was performed for each U.S. center for 24 consecutive (overlapping) 30-month intervals, including 102 176 adult deceased-donor and living-donor kidney transplant patients with Medicare as primary payer 6 months pretransplant. For each interval, we determined percent positive agreement (PPA) (number of centers underperforming both before and after adjustment, divided by number underperforming either before or after adjustment). Overall PPA was 80.8%, with no evidence of a trend over time. Among deceased-donor recipients, 10 of 31 comorbid conditions were predictors of graft failure in at least half of the intervals, as were six conditions among living-donor recipients. Lack of comorbidity adjustment may disadvantage centers willing to accept higher risk patients. Risk of jeopardizing Medicare funding may give centers incentive to deny transplantation to higher risk patients.