The HSE has warned that it will slash funding at St James and St Vincent's hospitals from next week if they do not comply with rules on public pay.
The Irish Independent reports that both facilities have been told that government funds will be reduced by 20% if their senior managers pay is not brought into line with pay caps.
The controversy over salary top-ups broke in December last year after it emerged that hospital executives at both the CRC and St Vincent's Healthcare Group were in receipt of salary top-ups from privately funded sources.
It is feared cuts to hospital budgets would adversely impact on patient care and services.