One of the biggest changes the federal health care law makes for hospitals has just kicked in. For the first time ever, the federal government has started penalizing hospitals that fail to meet certain quality measures, by paying them less. 

CPR Health Reporter Eric Whitney says Colorado hospitals did well compared to those in other states, but not everyone thinks the new system is fair. 

This is a transcript of Eric's story.

Reporter: The federal government is trying to reduce the number of patients who have to be re-admitted to hospitals because their health declined within a month of being discharged. It’s trying to change a system that actually rewards hospitals when patients have to come back. Hospitals are kind of like hotels, they make money when they fill their beds.

Summer: You could make the case that, well, for every admission you reduce, you reduce revenue. 

Reporter: Steven Summer is head of the Colorado Hospital Association. He says that because hospitals get paid for volume, not value, they’ve had no direct financial incentive to make sure patients don’t come back. 

Summer: One of the building blocks of reform that was in the Affordable Care Act was to begin to move us from a system of fee for service, where you pay for every time you use the health care system, to a system that the payment is for the outcome and not necessarily the steps along the way. 

Reporter: So now the government is penalizing hospitals that take too many steps restoring patients to health. 

Jordan Rau is a correspondent for Kaiser Health News in Washington DC. He analyzed the list of hospitals nationwide that failed to meet the new government standard for re-admission rates.

Rau: They are penalizing about two-thirds the hospitals by taking away a portion of their reimbursements for next year.

Reporter: That means a majority of American hospitals failed to meet the new federal standard for re-admissions, and the government will pay them less. But Colorado did better.

Rau: Colorado does great. it’s got some of the lowest re-admission rates in the country, I ranked it as about 40th in re-admissions among states. To some extent that’s not surprising, because Denver in particular and Colorado in general has been a testing ground for some of these efforts to reduce re-admissions.

Reporter: One of those testing grounds is Exempla Lutheran hospital in Wheatridge. It’s done things like give Gail Anderson, a registered nurse, a relatively new job, she’s a certified “health coach.”

Anderson: We’re in the cardiac gym right now, and we’ve got the treadmills, we’ve got recumbent bikes, we’ve got step machines.

Reporter: Anderson teaches patients how to use these machines, but does more. she’s closely involved with patients when they leave the hospital, helping them deal with the blizzard of information and follow up responsibilities that are thrown at them when they’re discharged - things like managing medications, scheduling appointments with doctors outside the hospital and making sure they’re doing their re-hab. Anderson says it’s way different than the old way of discharging patients, which she describes as: 

Anderson: See ya! Hope it works out great (laughs), yeah. 

Reporter: But even with all this effort, and other techniques, it’s still too early to say definitively what works. 

MacKenzie: Probably 75% or more of the re-admissions that happen within 30 days are beyond the hospital’s control.

Reporter: Dr. Thomas MacKenzie is a pretty tough critic of the government’s new penalties for high re-admission rates. And he doesn’t even work at hospital that got penalized. Just the opposite. He’s the chief of quality at Denver Health, a hospital that the government cites as a model for other hospitals to emulate.

MacKenzie:  If hospital A has a lower re-admission rate than hospital B, it doesn’t necessarily mean that hospital B is providing lower quality care. In fact, it may be that they’re providing higher quality care, and they’re keeping their patients who would have died at other hospitals alive, and therefore eligible for re-admission. 

Reporter: MacKenzie thinks it’s not really fair to hold hospitals accountable for re-admissions for a whole month after a patient is discharged. He thinks looking at how many patients come back within three days to a week would more accurately reflect the quality of care. He says re-admissions after that are probably due to factors beyond the hospital’s control.

Meanwhile, Steven Summer with the Colorado hospital association says hospitals don’t really like the new penalties for excess hospital visits, but are willing to live with them. He says that’s because in the future, the federal health law promises financial rewards for hospitals that achieve high quality.

EW: How far down the line are we looking until hospitals can reap the benefit of being paid for quality versus quantity?

Summer: Can we have the conversation after the election? 

Reporter: The outcome of this fall’s election will have a lot to do with how much of the Affordable Care Act remains in effect. For now, hospitals nationwide are giving up $280 million for failing to meet law’s new standards for patient re-admissions. 

[Photo: CPR News]