No patient leaves the hospital hoping to return soon. But a decade ago, one in five Medicare patients who were hospitalized for common conditions ended up back in the hospital within 30 days. Because roughly half of those cases were thought to be preventable, reducing hospital readmissions was seen by policymakers as a rare opportunity to improve the quality of care while reducing costs.

In 2010, the federal agency that oversees Medicare, the Centers for Medicare and Medicaid Services, established the Hospital Readmissions Reduction Program under the Affordable Care Act. Two years later, the program began imposing financial penalties on hospitals with high rates of readmission within 30 days of a hospitalization for pneumonia, heart attack or heart failure, a chronic condition in which the heart has difficulty pumping blood to the body.

At first, the reduction program seemed like the win-win that policymakers had hoped for. Readmission rates declined nationwide for target conditions. Medicare saved an estimated $10 billion because of the reduction in hospital admissions . Based on those results, many policymakers have called for expanding the program.

But a deeper look at the Hospital Readmissions Reduction Program reveals a few troubling trends. First, since the policy has been in place, patients returning to a hospital are more likely to be cared for in emergency rooms and observation units. This has raised concern that some hospitals may be avoiding readmissions, even for patients who would benefit most from inpatient care.