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

Keywords: Federally funded health centers; costs; primary care; specialty care; Medicare.

Objective: To 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 Settings: Part 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 Design: We 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 Collection: Data were obtained from the Centers for Medicare & Medicaid Services.

Principal Findings: Total 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.

Conclusions: HCs 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.

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