Comparing the Cost of Caring for Medicare Beneficiaries in Federally Funded Health Centers to Other Care Settings

ObjectiveTo compare total annual costs for Medicare beneficiaries receiving primary care in federally funded health centers (HCs) to Medicare beneficiaries in physician offices and outpatient clinics. Data Sources/Study SettingsPart A and B fee-for-service Medicare claims from 14 geographically diverse states. The sample was restricted to beneficiaries residing within primary care service areas (PCSAs) with at least one HC. Study DesignWe modeled separately total annual costs, annual primary care costs, and annual nonprimary care costs as a function of patient characteristics and PCSA fixed effects. Data CollectionData were obtained from the Centers for Medicare & Medicaid Services. Principal FindingsTotal median annual costs (at $2,370) for HC Medicare patients were lower by 10 percent compared to patients in physician offices ($2,667) and by 30 percent compared to patients in outpatient clinics ($3,580). This was due to lower nonprimary care costs in HCs, despite higher primary care costs. ConclusionsHCs may offer lower total cost practice style to the Centers for Medicare & Medicaid Services, which administers Medicare. Future research should examine whether these lower costs reflect better management by HC practitioners or more limited access to specialty care by HC patients.