DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
 
CMCS Informational Bulletin 
 
DATE:  January 16, 2014 
 
FROM:  Cindy Mann 
Director 
 
SUBJECT:  Reducing Nonurgent Use of Emergency Departments and Improving 
Appropriate Care in Appropriate Settings 
 
The Centers for Medicare & Medicaid Services (CMS) has been strengthening our collaborations 
with states in order to reduce costs, improve the patient experience, and improve the health of the 
populations we serve.  As beneficiaries gain coverage as a result of the Affordable Care Act, 
utilization of services across the health care system is likely to increase, and states and CMS share a 
strong interest in reducing unnecessary hospital emergency department (ED) usage.  In this changing 
environment, CMS is committed to partnering with states, plans, providers, and consumers to 
implement reforms that can appropriately address the needs of our beneficiaries more effectively and 
more efficiently. 
 
Part I of this Informational Bulletin summarizes three strategies to deliver appropriate care in the 
most appropriate settings.  In addition, since states have flexibility to develop payment methodologies 
or impose cost sharing for non-emergency use of ED services (see 42 CFR 447.54), part II of this 
Bulletin presents some of the evidence and regulatory issues with regard to distinguishing non-
emergent from emergent use of the ED. 
 
Background 
 
Medicaid beneficiaries use the ED at an almost two-fold higher rate than the privately insured.1,2  
This is not due to widespread inappropriate use of the ED amongst Medicaid beneficiaries, who tend 
to be in poorer health than the privately insured population; at least two studies found that the 
majority of ED visits by nonelderly Medicaid patients were for symptoms suggesting urgent or more 
serious medical problems.3  These studies estimate that non-urgent visits comprise only about 10 
percent of all ED visits by Medicaid beneficiaries, and suggest that higher utilization may be in part 
due to unmet health needs and lack of access to appropriate settings.  In this context, as most states 
have recognized, efforts to reduce ED use should focus not on merely reducing the number of ED 
visits, but also on promoting continuous coverage for eligible individuals and improving access to 
appropriate care settings to better address the health needs of the population. 
 
                                                 
1Garcia et al. 2010. Emergency Department Visitors and Visits: Who Used the Emergency Room in 2007? CDC, NCHS 
Data Brief No 38.  (NOTE: The percentages of Medicaid vs. privately insured enrollees with at least one emergency room 
visit in 2007 were:  children under 17 years (27% vs. 17%); adults 18-44 years (38% vs. 17%); adults 45-64 years (39% 
vs. 16%.) 
2 Sommers et al.  2012.  Dispelling Myths About Emergency Department Use: Majority of Medicaid Visits Are for 
Urgent or More Serious Symptoms. Center for Studying Health Systems Change. 
3 Garcia et al 2010;  Sommers et al 2012  Informational Bulletin  Page 2 
 
Part I:  Strategies to Reduce ED Use  
 
Based on CMS review of the literature, discussions with states, providers, and researchers, and 
findings reported on a CMS-supported Emergency Room (ER) Diversion grant program that operated 
in 20 states from 2008-2011,4 we have identified three key strategies to reduce inappropriate ED use. 
 
Strategy 1: Broaden Access to Primary Care Services.  Adequate access to health care settings 
aside from the emergency department is necessary, although not always sufficient.  When  there is 
limited capacity in the appropriate setting, there is nowhere to redirect the patient to avoid 
unnecessary ED use.  Access, of course, needs to be evaluated from the perspective of the 
beneficiarymany have limited transportation options and often people cannot leave work for an 
appointment without losing pay or putting their job at risk.5 States and health systems have 
experimented with varying degrees of success in developing urgent care clinics, or ensuring the 
availability of clinics with expanded hours. 
 
  Medical and Health Homes.  Primary care medical and health homes typically have extended 
hours (weekends and evenings), same day appointments, 24/7 nurse advice lines, and 
continuity with one provider.  In some models, patient navigators schedule appointments at 
primary care medical homes for frequent users.  Some of these efforts have reduced ED use.  
For instance, Community Care of North Carolina reduced the ED visit rate by 16% for 
asthma, with a total savings to Medicaid and CHIP of about $135 million.6 
 
Medicaid can support these efforts via the Medicaid Health Home authority which includes 
enhanced federal financial support (SMD: Health Home Core Quality Measures), or under a 
state plan amendment for integrated care models (Integrated Care Models).  Other states 
might build such a model into a section 1115 demonstration project. 
 
  Alternative Primary Care Sites.  Given that two-thirds of emergency visits occur after 
business hours (weekdays 9 am - 5 pm), identifying primary care sites available after business 
hours is one strategy for improving appropriate access to health care services.7  The private 
sector estimates potentially $4.4 billion in savings nationwide by increasing urgent care and 
retail clinic access for patients with nonemergency conditions.8  
 
                                                 
4 In these grants, states established alternative non-emergency service providers or primary care sites, used health 
information technology systems to improve the coordination of care, and conducted education and outreach programs to 
encourage beneficiaries to use the most appropriate settings.  States reported similar lessons learned, but varied in their 
success in reducing ED use.  For additional information see http://www.medicaid.gov/Medicaid-CHIP-Program-
Information/By-Topics/Delivery-Systems/Grant-Programs/ER-Diversion-Grants.html. 
5  For a technical discussion of measurement of access, please see 
http://www.aspe.hhs.gov/health/reports/2013/medicaidaccess/rpt_medicaidaccessstudy.pdf 
6 Steiner et al., 2008. Community care of North Carolina: Improving care through community health networks. Annals of 
FamilyMedicine. Vol 6, No 4 July/Aug. 
7 Pitts et al, 2010. Where Americans get acute care: Increasingly, its not at their doctors office.  Health Affairs. 29 
(9):1620-1629   
8 Weineck R. et al., 2010. Some Hospital Emergency Department Visits Could Be Handed by Alternative Care. RAND   Informational Bulletin  Page 3 
 
These efforts typically begin by drawing these sites into the Medicaid program as providers 
and using public education, patient navigators, or nurse advice lines to educate beneficiaries 
about the use of these care sites.  Ideally, the electronic medical record is interoperable 
between the beneficiarys usual primary care provider and the urgent care setting.  Some of 
these efforts have had marked success.  In New York, the implementation of an urgent care 
center decreased ED utilization by 48% for adults with a visit to the clinic.9  Georgia 
established four primary care sites in rural, underserved areas with extended or weekend 
hours and hired case managers for redirecting frequent ED users covered by Medicare and/or 
Medicaid to the sites.  Over a 3-year period, Georgia reported that the sites served about 
33,000 patients at an estimated saving of $7.3 million.10  
 
Strategy 2: Focus on Frequent ED Users  Super-utilizers.  Frequent ED users (often defined as 
individuals with 4 or more visits per year) comprise 4.5% to 8% of all ED patients across payors but 
account for 21% to 28% of all visits. 11  Targeting frequent ED users could improve quality and result 
in cost savings by increasing continuity and coordination of care. 
 
Frequent ED users are more likely to have poor physical and mental health, no usual source of care, 
higher-than-average utilization of other health services, and be dissatisfied with their medical care.12  
While they may be a small group of people, they can account for a large share of costs. In Oregon, for 
instance, 50% of ED expenses in Oregon could be attributed to 3% of the Medicaid population 
(~16,000 individuals).   Examples of state and local efforts include: 
 
  Ambulatory Clinic on Site at ED.   Minnesotas Hennepin County Medical Centers 
Coordinated Care Clinic (CCC), an ambulatory ICU clinic created to provide enhanced 
outpatient care to high utilizers of acute care, observed a 38% decrease in ER visits and a 25% 
decrease in hospitalizations in their client population over the first year of program 
participation.13  
 
  Medicaid Health Homes and Community Interventions for Super-utilizers:  Maine is 
addressing the needs of frequent ED users with Medicaid Health Homes.  The health homes 
include both a patient-centered medical home primary practice as well as Community Care 
Teams, which are multidisciplinary care management teams that support the states highest 
need residents by providing individualized care plans, intensive care management, in home 
visits, health coaching, and connecting beneficiaries with appropriate community resources.14 
 
                                                 
9 Merritt et al, 2000.  The Influence of an Urgent Care Center on the Frequency of ED Visits in an Urban Hospital Setting. 
Am J. of Emerg Med. Mar; 18 (2):123-5. 
10 Owens C., 2012.  Georgia Alternative Non-Emergency Room Diversion Project. Presentation to CMCS Quality 
Technical Advisory Group, July 25, 2012. 
11LaCalle et al. 2010.  Frequent users of emergency departments: The myths, the data and the policy implications. Ann 
Emerg Med. 56:42-48.  
12 Hunt et al, 2006. Characteristics of frequent users of emergency departments. Annals of Emergency Medicine. Vol 48: 
1-8.  
13 Americas Essential Hospitals. http://www.naph.org/Homepage-Sections/Explore/Innovations/2013-Gage-
Awards/HCMC-Coordinated-Care-Center-reduces-ED-uses-avoidable-hospitalizations.aspx; 
14 http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/CIB-07-24-2013.pdf  Informational Bulletin  Page 4 
 
 
CMS recently issued additional guidance on policies and best practices for high utilizer programs 
(http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/CIB-07-24-2013.pdf).  The National 
Governors Association has also begun a collaboration across seven states around superutilizers.15 
 
Strategy 3: Target needs of people with behavioral health problems:  One particular group of 
high utilizers is people with behavioral health and substance abuse problems. About 12.5% of all ED 
visits across payors are due to mental health and/or substance abuse treatment needs.16  Some states 
and health plans have had dramatic success in improving health care and reducing overall ED usage 
by targeting the needs of this population.   In many successful examples, case managers connect 
frequent ED users with behavioral health or social services that meet their needs or interdisciplinary 
clinics provide targeted services that are lower cost than the ED and more appropriately treat the 
behavioral health needs of patients.  There are a number of examples of effective interventions for 
this population.  For instance, 
 
  Medical Homes for People with Substance Abuse Problems.  In Indiana, WellPoint Health 
Plan medical homes for patients with high-service use decreased ED utilization by 72% and 
decreased controlled substance prescriptions by 38% in the 6 months pre- and post-program.17  
Medical homes for people with substance abuse issues can also be a key intervention for 
super-utilizer programs as well  in Michigan, an integrated medicine clinic addressing super-
utilizers with mental health and substance abuse needs decreased ED visits by over 50% 
among highest utilizers.18 
 
  Housing and Case Management Program.  In Illinois, a housing and case management 
program for patients who are homeless decreased ED use by 24%.19  In New York, case 
management and a mobile health clinic for IV drug users decreased ED use by 20%.20  In 
Pennsylvania, a project linking patient navigators and persons with serious mental illness 
reported a 59% reduction in ED visits for individuals dually eligible for Medicare and 
Medicaid with the least serious acuity level and a 31% reduction in visits for individuals with 
the most serious acuity level.21 
 
                                                 
15 See http://www.nga.org/cms/home/news-room/news-releases/2013-news-releases/col2-content/states-focus-on-
reducing-health.html, and resources from a recent conference at http://www.nga.org/cms/home/nga-center-for-best-
practices/meeting--webcast-materials/page-health-meetings-webcasts/col2-content/main-content-list/developing-state-
level-capacity.html. 
16 Owens L et al. 2007. Mental Health and Substance Abuse-Related Emergency Department Visits among Adults. 
Agency for Healthcare Research and Quality.   
17http://www.mhpa.org/MHPA_Updates_and_Health_Care_News/?MHPA_Responds_to_Bloomberg_Govt_Study_on_ER_Visits  
18 http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/CIB-07-24-2013.pdf 
19 Sadowski LS et al. 2009 Effect of a housing and case management program on emergency department visits and 
hospitalizations among chronically ill homeless adults: a randomized trial. JAMA. May 6;301(17):1771-8.  
20 Pollack H et al., 2002. The impact of needle exchange based health services on emergency department use. J Gen 
Intern Med. May:17 (5):341-8. 
21 Nauman D and Williamson J, 2012. Establishment of Alternative Non-emergency Services Providers In McKeesport 
Pennsylvania.   Presentation to CMCS Quality Technical Advisory Group.  Informational Bulletin  Page 5 
 
As an example of the broad multipronged strategies proposed in this Bulletin, Washington state 
initially proposed making different payments to emergency departments on the basis of non-
emergency, as determined by a list of discharge diagnoses.  In the face of some controversy, the state 
instead adopted a series of seven steps, including all of the three identified above.  Within the first six 
months, the state reported a 10% reduction in Medicaid fee-for-service ED payments in this arena.22 
 
Part II:  Differentiating Emergency and Non-Emergency Use of the ED 
 
Current statute and regulations provide states with options for developing payment methodologies 
intended to encourage providers to direct patients to more appropriate care settings, or implementing 
cost sharing for beneficiaries based on a distinction between non-emergency and emergency use of 
the emergency department.  These provisions, however, can be challenging to implement in light of 
the difficulty in distinguishing upfront what is and is not an emergency.  This section of the Bulletin 
identifies some of the relevant considerations as states explore these options. 
 
The Medicaid statute and implementing regulations preclude cost sharing for emergency services, 
while permitting cost sharing (within limits) for non-emergency use of the ED.  Before a beneficiary 
can be charged for a non-emergency visit to the ED, the hospital is required to assess the individual 
clinically.  If it is determined that the individual does not need ED services, before cost sharing can 
be imposed, an accessible and available alternative provider must be identified, and a referral to  
coordinate scheduling must be provided.  The final rule published in July 2013 retains flexibility for 
states to adopt methods to distinguish non-emergency services in a manner consistent with applicable 
statute and regulations. 
 
States are also permitted to vary payments to providers, as long as payments are consistent with 
efficiency, economy and quality of care and are sufficient to ensure access to services similar to the 
access for the general population.  A number of states have adopted payment strategies to reduce 
inappropriate ED use.  Under one such strategy, the state will provide lower levels of payment for a 
non-emergent visit to the ED, as determined retrospectively by chart review, or based on a coding 
algorithm.  CMS and states will need to ensure that a states ED payment strategy does not impede 
care and that safeguards are in place to provide for care outside of the ED setting. 
 
States that propose either cost sharing or payment strategies should demonstrate sufficient access to 
services outside of the ED and consider expanding care through medical homes or other 
arrangements that improve linkages between patients and providers.  
 
Clinical issues in differentiating emergency and nonemergency use of the ED 
                                                 
22 Washington State Health Authority, at http://www.washingtonhealth.hca.wa.gov/press_release/implementing-
emergency-room-best-practices-improves-care.html.  The seven steps are:  1) Track emergency department visits to 
reduce ED shopping; 2) Implement patient education efforts to re-direct care to the most appropriate setting; 3) Institute 
an extensive case management program to reduce inappropriate emergency department utilization by frequent users; 4) 
Reduce inappropriate ED visits by collaborative use of prompt (72 hour) visits to primary care physicians and improving 
access to care; 5)  Implement narcotic guidelines that will discourage narcotic-seeking behavior; 6)  Track data on 
patients prescribed controlled substances by widespread participation in the states Prescription Monitoring Program; and 
7) Track progress of the plan to make sure steps are working. 
  Informational Bulletin  Page 6 
 
For purposes of making valid differentials in payment or cost sharing, states must establish a 
reasonable, clinically-based method to distinguish emergency from non-emergency visits.  The 
application of this method must occur after a hospital has fulfilled its Emergency Medical Treatment 
and Labor Act (EMTALA) obligations (see below), but before any further evaluation or treatment is 
provided, in order to ensure that the patient has a chance to seek other care without paying the cost 
sharing.  Where the policy is to provide a differential payment rate or implement cost sharing, the 
application of the method should occur after a hospital has fulfilled its EMTALA obligations, but 
before any further evaluation or treatment is provided, in order to allow the provider an opportunity 
to ensure that the patient is directed to an appropriate non-emergency setting. 
 
Different methods have been used to distinguish emergent from nonemergent care before a full 
evaluation is done; however no two methods appear to agree.  The Billings algorithm, which is often 
cited, provides very different results from the triage determination of non-urgent care that is done at 
the time of an ED visit, and still other methodologies differ from both of these.23   A study in JAMA 
in March 2013 underscored this challenge.24  The study compared the presenting complaint (the 
patients first complaint when they arrive to the ED) to the final discharge diagnosis (the final 
diagnosis after a full evaluation is done) and found significant overlap between emergencies and non-
emergencies whether using presenting complaints or discharge diagnoses as the tool for 
differentiation.  
 
Relevant Statutory and Regulatory Issues 
 
Regardless of state laws or Medicaid health care delivery arrangements, hospital providers that 
participate in the Medicare program  are bound by EMTALA, found at sections 1866 and 1867 of the 
Social Security Act and implemented at 42 CFR 489.20 and 489.24.  EMTALA requires such 
hospitals having emergency departments to provide a medical screening examination to every 
individual who comes to the emergency department seeking examination or treatment,  and, when 
necessary, stabilizing treatment by qualified medical personnel or appropriate transfers for any 
individual determined to have an emergency medical condition.25  States will want to be sensitive to 
                                                 
23 For instance, in the Billings algorithm, a certain percentage of final diagnoses of abdominal pain are assigned to the 
urgent category because analyses will show that a certain portion of patients may come to the ED complaining of pain 
that could be a heart attack but after a workup determine that the cause was abdominal pain.  Another percent of 
abdominal pain is assigned to the nonurgent categorya patient might present with obvious heartburn, and so the final 
diagnosis of abdominal pain would be nonurgent.  But for any single diagnosis of abdominal pain, it is impossible to 
determine through the Billings algorithm whether this is urgent or nonurgentonly at an aggregate population level. 
24 Raven et al, Comparison of presenting complaint vs. discharge diagnosis for identifying nonemergency emergency 
department visits. JAMA, March 20, 2013. 
25 Under EMTALA, an emergency medical condition is defined as acute symptoms of sufficient severity (including 
severe pain, psychiatric disturbances and/or symptoms of substance abuse) that, in the absence of immediate medical 
attention, could reasonably be expected to place the health of the individual or an unborn child in serious jeopardy, or 
result in serious impairment of bodily functions or serious dysfunction of any bodily organ or part.  In the case of a 
pregnant woman having contractions, the definition also means there is inadequate time to affect a safe transfer or that 
transfer may pose a threat to the health or safety of the woman or unborn child.  In addition to these requirements for 
providers under EMTALA, Medicaid regulations at 438.114 governing coverage provided by managed care organizations 
(MCOs) require them to cover services needed to evaluate or stabilize an emergency medical condition, defined 
somewhat differently than under EMTALA as a medical condition manifesting itself by acute symptoms of sufficient 
severity (including severe pain) that a prudent layperson, who possesses an average knowledge of health and medicine,  Informational Bulletin  Page 7 
 
the potential that methodologies intended to affect provider or beneficiary behavior in the ED, if not 
designed properly, could create provider EMTALA compliance issues. 
 
Under EMTALA, all individuals who present to the ED at Medicare-participating facilities must be 
treated the same with respect to services required under EMTALA, regardless of their ability to pay 
and/or their payer (private, public, or uninsured) status.  Providers cannot lawfully withhold or delay 
EMTALA screening or services for a class of individuals on the basis that they are Medicaid 
beneficiaries.   Generally, hospitals must fulfill their obligations to an individual under EMTALA 
prior to employment of any processes required by a specific payer.  For example, the following 
practices are likely to conflict with EMTALA requirements:  use of special registration procedures 
for Medicaid beneficiaries prior to the hospitals fulfillment of its EMTALA obligations; or 
requirements for hospitals to consult with Medicaid staff or vendors as part of the required screening 
examination or for determination of what stabilizing treatment is needed, e.g., whether an admission 
is required, or whether a transfer, which is appropriate under EMTALA, is allowable by the Medicaid 
program. 
 
It is also important to note that Medicaid regulations at 42 CFR 440.230, implementing benefit 
standards for the program, require that benefits be sufficient in amount, duration and scope.  This 
regulation also requires that services, including outpatient hospital services, be furnished without 
arbitrary limits based on diagnosis, type of illness, or condition.  As such, hard caps on annual visits 
to hospital EDs are not approvable because they restrict outpatient hospital services furnished by 
hospital EDs, which treat acute and immediate conditions.26  In addition, the unintended 
consequences, both in terms of care provision to beneficiaries, and financial impact to hospitals, are 
high. 
 
Conclusion 
 
CMS is very supportive of efforts to ensure that appropriate care is delivered in the most appropriate 
settings.  Successful strategies to reduce inappropriate ED use can have the enhanced benefit of 
improving care and lowering costs. 
 
Experience and research suggests that narrow strategies to reduce ED usage by attempting to 
distinguish need on a case by case basis have had limited success in reducing expenditures to date, 
due in part to the very reasons for   higher rates of utilization by Medicaid beneficiaries including 
unmet multiple health needs and the limited availability of alternative health care services. 
 
However, broader strategies - such as expanding primary care access, superutilizer programs, and 
targeting the needs of people with behavioral health and substance abuse issues -- appear to have 
                                                                                                                                                                     
could reasonably expect the absence of immediate medical attention to result in the following: (1) Placing the health of 
the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy.  
(2) Serious impairment to bodily functions.  (3) Serious dysfunction of any bodily organ or part.  Providers are expected 
to comply with the EMTALA definition and requirements, regardless of the coverage provided by a Medicaid MCO or 
any other payor. 
26 A soft cap is distinguished from a hard cap in that additional services will be covered with prior or special 
authorization.   Informational Bulletin  Page 8 
 
considerable promise for addressing unmet health needs as the underlying causes of high ED 
utilization.  We have identified in this Bulletin several strategies for reducing inappropriate use of ED 
services, and are eager to work with states and providers interested in implementing these 
approaches. 
 
We hope this information is helpful and we welcome additional examples of best practices or 
innovative strategies in this area.  For more information, please contact Stephen Cha, MD, CMCS 
Chief Medical Officer at Stephen.Cha@cms.hhs.gov.