AlthoughMedicare began applying the penalties in 2012, disagreementscontinue about whether they have improved patient safety.

Medicare cut payments to 2,583 hospitals Tuesday, continuing theAffordable Care Act's eight-year campaign to financially pressurehospitals into reducing the number of patients who return for asecond stay within a month.

The severity and broad application of the penalties, whichMedicare estimates will cost hospitals $563 million over a year,follows the trend of the past few years. Of the 3,129 generalhospitals evaluated in the Hospital Readmission Reduction Program,83 percent received a penalty, which will be deducted from eachpayment for a Medicare patient stay over the fiscal year thatbegins today.

Related: 3 questions that can reduce hospitalreadmissions

Although Medicare began applying the penalties in 2012,disagreements continue about whether they have improved patientsafety. On the positive side, they have encouraged hospitals tofocus on how their patients recuperate, and some nowassist them in procuring medications and follow-upappointments.

But the hospital industry and some academics have raisedconcerns that some hospitals may be avoiding readmitting patients who requireadditional inpatient care out of fear of the financialrepercussions, while others have said the program is not showingmajor benefits.

"A lot of hard work has gone into trying to reduce readmissions,and the needle has not moved very far," said Dr. Karen JoyntMaddox, co-director of the Center for Health Economics and Policyat Washington University in St. Louis, who has been skeptical ofthe initiative. "It's been a huge investment by hospitals but notvery much in outcomes, but some good things have come out ofit."

A few studies haveeven found an increase in mortality since the penalties tookeffect, but other studies,including a recent one by the Medicare Payment Advisory Commission(MedPAC), an independent body that helped devise the approach forCongress, identified no such link.

"I don't believe the HRRP kills people," David Grabowski, acommission member and health policy professor at Harvard MedicalSchool, said at the commission's meeting last month, using the acronym for thepenalty program.

The MedPAC staff's preliminary analysis, made public last month,found that the frequency of Medicare patients being readmittedwithin 30 days of discharge dropped from 16.7 percent in2010 to 15.7 percent in 2017. However, the analysis saidthe decrease was more significant once it took into considerationthat the average patient was frailer in 2017 than in 2010 and thusmore likely to end up back in the hospital, with all other thingsbeing equal.

"On a risk-adjusted basis, it appears that readmissions havedeclined in 2010 to 2018 without causing a material increase inmortality," Jeff Stensland, a MedPAC analyst, told the commission.

The penalties are based on the frequency of readmissions ofMedicare patients who had originally been treated for heartfailure, heart attack, pneumonia, chronic lung disease, hip andknee replacement or coronary artery bypass graft surgery.Readmissions that were scheduled to occur are not counted.

Medicare counts the readmission of patients who returned to ahospital within 30 days even if that hospital is not the one thatoriginally treated them. In those cases, the penalty is applied tothe first hospital. This year's penalties are based on dischargesfrom July 1, 2015, to June 30, 2018.

"This is like driving your car by looking in the rearview mirrorof the car three cars behind you," Dr. Jonathan Perlin, the chiefmedical officer of HCA Healthcare in Nashville and a MedPACcommission member, said at last month's meeting. "It's verydifficult to operationalize."

The average penalty will be a 0.71% decrease in payment for eachMedicare patient who leaves the hospital over the next year,according to a Kaiser Health News analysis. The KHN analysis alsofound:

• 1,177 hospitals received a higher penalty than they did lastyear.
• 1,148 hospitals received a lower one than last year.
• 64 hospitals received the same penalty as last year.
• 194 hospitals that had not been penalized last year are beingpunished this year.
• The maximum penalty — a 3 percent reduction inpayments — was assessed against 56 hospitals.
• 372 hospitals avoided penalties in both years.

These figures do not include 2,142 hospitals that Medicareexempted from the program this year, either because they had toofew cases to judge; were veterans hospitals, children's hospitals,psychiatric hospitals or were critical-access hospitals, which arethe only hospitals within reach of some patients.

Also, Maryland hospitals were excluded because Congress letsthat state set its own rules on how to distribute Medicare money andhandle readmissions.

The Centers for Medicare & Medicaid Services determines itspenalties by looking at national averages for each of theconditions, so hospitals that have reduced their readmissions fromprevious years can still take a hit. The hospital industry arguesit may be approaching the limits of how much it can do to preventreadmissions. A repeat stay, hospitals say, is sometimes necessaryno matter what precautions are taken.

Akin Demehin, director of policy at the American HospitalAssociation, said: "It raises the question: Is the value of theprogram to improve care or just to enact penalties onhospitals?"

Kaiser Health News isa nonprofit news service covering health issues. It is aneditorially independent program of the Kaiser Family Foundation,which is not affiliated with Kaiser Permanente.

Readmore: 

• Employee education can reduce unnecessary ERvisits
• Employer group urges collaboration to cut hospitalreadmissions
• Mistaking freestanding ERs for urgent care carriesexpensive consequences