States Can Use Smart Strategies to Curb ER Visits

We often hear that Medicaid beneficiaries use the emergency room (ER) for too much of their health care.  In response, some states have tried to reduce non-emergency use of the ER by charging beneficiaries co-pays.  As we explained in a recent paper, however, this approach is flawed — and other states have found better ways to connect beneficiaries with the care they need and avoid unnecessary ER use.

Medicaid beneficiaries do use the ER more frequently than adults with other health coverage, but their visits are almost always for serious medical problems.  Only about 10 percent of ER visits paid by Medicaid in 2008 were for non-emergency conditions — slightly more than the share of ER visits by people with private insurance (7 percent).  And a recent study shows that charging co-pays for non-emergency use of the ER didn’t change beneficiaries’ use of either the ER or primary care.

Several states have had significant success in curbing unnecessary ER use, however, by expanding access to primary care and targeting interventions at the people who frequently use the ER.  For example, New Mexico created a statewide 24/7 nurse advice hotline for all state residents, which diverted 65 percent of callers from the ER and has saved the state $68 million.  And in the year after Washington moved Medicaid beneficiaries to managed care and required hospitals to adopt seven best practices, non-emergency ER use fell by 14 percent and the state saved $34 million.

Indiana has also implemented a successful strategy, but curiously now is imposing co-pays for ER use.  Under the state’s Right Choices Program, which focuses on preventing unnecessary and inappropriate use of care by beneficiaries who use the most services, one of Indiana’s managed care plans has seen a 72 percent drop in ER use.  Despite this success, Indiana received approval in its recent Medicaid waiver to impose a $25 co-pay the second time a beneficiary uses the ER for non-emergency care in a 12-month period, purportedly to test whether the approach will reduce unnecessary ER use and increase use of health care in other settings — a theory that’s already been disproven, as I mentioned above.

It’s hard to see why Indiana wants to incur administrative costs for this experiment when we know that co-pays don’t work — and that targeted interventions like the Right Choices Program do.