Medicaid Payment and Reimbursement

Three Strikes Against the Idea that Coverage Reduces ED Use

August 31, 2017 4:00 pm

Although the Affordable Care Act (ACA) had three areas of focus—coverage (or access), cost, and quality—the interminable repeal, replacement, or repair debate in Washington has been centered on coverage, with far less discussion of cost and virtually no mention of quality.

Many industry expects have posited that providing health insurance coverage to low-income adults can synergistically reduce cost by promoting less costly preventive care and avoiding more costly acute care, often initiated by visits to the emergency department (ED). ED use is a significant driver of cost, accounting for 5 to 6 percent of U.S. health expenditures. Medicaid alone spends $23 billion to $47 billion each year on ED care.

Theoretically, providing people with greater access to and ability to pay for sources of care outside the ED should result in reduced ED use. But three significant cases have demonstrated the opposite result: Increased coverage and access have led to increased ED use.

Various studies have been conducted on the impact of providing Medicaid coverage to previously uninsured adults. Some researchers have employed a high-level approach that compares total ED use before and after the ACA expanded Medicaid eligibility and between  expansion and nonexpansion states, concluding that Medicaid coverage does not affect ED use. However, because of the high-level approach, the researchers could not know which ED visits were by patients who obtained new health insurance (Medicaid) in 2014, the first year of Medicaid expansion, and which were by patients who were continuously enrolled, were uninsured, or may have switched insurance type.

Oregon’s Randomized, Controlled Study

These researchers’ findings were refuted by a randomized, controlled study involving 24,646 lottery-selected uninsured individuals in Oregon who were granted Medicaid coverage in 2008, which showed that these Medicaid beneficiaries increased their ED visits by 40 percent in the first 15 months after receiving coverage. a Many observers speculated that the rise in ED use was due to pent-up demand and would dissipate over time as the newly insured found and used other sites of care or as their health needs were met and their health improved. However, the researchers were unable to find any evidence that the increase in ED use due to Medicaid coverage was driven by pent-up demand that decreased over time; in fact, they observed that the effect on ED use actually persisted over the first two years of coverage.

The study also determined that Medicaid coverage increased the joint probability of a person’s having both an ED visit and an office visit by 13.2 percentage points, indicating that expanded coverage will not necessarily drive material substitution of office visits for ED use.

California’s Experience

In accordance with the ACA, the nation’s most populous state expanded its Medicaid (Medi-Cal) population from 8 million in 2014 to currently 14 million, 35 percent of the state’s population. Contrary to widely held expectations, from early 2014 to late 2016, ED visits by the state’s Medi-Cal patients rose 44 percent. In the last quarter of 2016 alone, California’s Medi-Cal patients logged about 1.4 million ED visits. b


The Federally Qualified Health Center Advanced Primary Care Practice (FQHC APCP) Demonstration, which ran from 2011 to 2014, went further than the Oregon and California cases, supporting implementation of processes to improve access, continuity, and coordination of care. The program provided care management fees and technical assistance to a nationwide sample of 503 FQHCs to help them attain the highest level (level 3) medical-home recognition by the National Committee for Quality Assurance.

The program succeeded in helping FQHCs achieve medical-home recognition, with 70 percent of demonstration sites gaining level 3 recognition within three years. However, the demonstration sites had relatively larger increases in visits to the ED, inpatient admissions, and Medicare Part B expenditures. c

The experiences of Medicaid in Oregon and California, as well as in the FQHC APCP Demonstration, show that expanded coverage and access to care have actually increased, not decreased, ED visits and costs. Thus, policymakers will need to look elsewhere, most likely to value-based care initiatives, to make progress in bending the healthcare cost curve.

Ken Perez is vice president of healthcare policy, Omnicell, Inc., Mountain View, Calif., and a member of HFMA’s Northern California Chapter.


a. Finkelstein, A.M., Taubman, S. L., Allen, H.L., Wright, B.J., and Baicker, K., “Effect of Medicaid Coverage on ED Use—Further Evidence from Oregon’s Experiment,” New England Journal of Medicine, Oct. 20, 2016.

b. Seipel, T., “Emergency Room Visits by Medi-Cal Patients Soaring, State Data Shows,” The Mercury News, June 24, 2017.

c. Timbie, J.W., Setodji, C.M., Kress, A., Lavelle, T.A., et al., “Implementation of Medical Homes in Federally Qualified Health Centers,” New England Journal of Medicine, July 20, 2017.


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