How Much Does Emergency Department Use Affect the Cost of Medicaid Programs?

Study objective: Use of the emergency department (ED) is often assumed to be an important component of health care expenditures for Medicaid enrollees. We seek to quantify the absolute and percentage of total Medicaid expenditures associated with outpatient ED visits. Methods: This retrospective study used 2002 data from Oregon's Medicaid program. ED expenditures were defined to include hospital, physician, and ancillary services associated with any ED visit not resulting in an inpatient admission. We estimated average monthly ED expenditures in absolute values and as a percentage of total medical expenditures. Multivariate models were used to assess the effect of demographic factors and eligibility status on ED spending and use. Results: We analyzed expenditures for 544,729 individuals enrolled in the Oregon Medicaid program in 2002. Monthly ED-associated expenditures averaged $12.63 (95% confidence interval $12.50 to $12.77) per member, representing 6.8% of total medical expenditures. Ancillary services (laboratory tests and diagnostic imaging) accounted for 35% of ED spending. Spending for ED services was skewed; 50% of all ED expenditures could be attributed to 3.0% of enrollees who made multiple ED visits. Conclusion: ED expenses are a relatively small percentage of total medical spending by Medicaid enrollees. An aggressive policy to cut ED expenditures by 25% would reduce Medicaid expenditures by less than 2% per year. Actual savings would be even smaller if reduced ED utilization were offset by increased spending at the primary care level. Because the majority of Medicaid patients do not use the ED in a given year, efforts to reduce ED expenditures may be best accomplished through targeting selected enrollees who have high ED expenditures, rather than attempting to decrease overall ED use.