Objective To examine the impact of a 2007 redesign of West Virginia's Medicaid program, which included an incentive and “nudging” scheme intended to encourage better health care behaviors and reduce Emergency Department (ED) visits. Data Sources West Virginia Medicaid enrollment and claims data from 2005 to 2010. Study Design We utilized a “differences in differences” technique with individual and time fixed effects to assess the impact of redesign on ED visits. Starting in 2007, categorically eligible Medicaid beneficiaries were moved from traditional Medicaid to the new Mountain Health Choices (MHC) Program on a rolling basis, approximating a natural experiment. Members chose between a Basic plan, which was less generous than traditional Medicaid, or an Enhanced plan, which was more generous but required additional enrollment steps. Data Collection Data were obtained from the West Virginia Bureau for Medical Services. Principal Findings We found that contrary to intentions, the MHC program increased ED visits. Those who selected or defaulted into the Basic plan experienced increased overall and preventable ED visits, while those who selected the Enhanced plan experienced a slight reduction in preventable ED visits; the net effect was an increase in ED visits, as most individuals enrolled in the Basic plan.