Health Centers Reduce Spending by 24% for Medicaid Beneficiaries

Under the Affordable Care Act, health centers received federal funding to provide comprehensive primary care to patients in underserved communities. An analysis of Medicaid claims data in 13 states has found that these health centers reduced spending by 24% per Medicaid patient.

The study, published in the American Journal of Public Health, compared claims of patients receiving the majority of their primary care in these health centers and compared them with patients receiving primary care in other settings. The states included in the study were Alabama, California, Colorado, Connecticut, Florida, Iowa, Illinois, Mississippi, Montana, North Carolina, Texas, Vermont, and West Virginia.

“This study confirms with hard data what has long been assumed—that Community Health Centers’ unique model of care leads directly to significant cost savings in the Medicaid program,” Dan Hawkins, senior vice president for policy and research at the National Association of Community Health Centers, said in a statement. “It adds to the wealth of research documenting the tremendous cost-savings that health centers generate across the healthcare delivery system for a comparatively modest federal investment.”

According to the authors of the study, these health centers are well suited to the complex needs of Medicaid patients and can provide services that may result in physical and mental health issues being addressed earlier with better coordination.

Previous studies have found that a correlation between Medicaid patients receiving primary care in health centers and reduced healthcare utilization. In this study, the researchers determined that patients of health centers had lower use and spending across all services compared with patients of other healthcare settings.

Specifically, patients at health centers had 22% fewer visits, 33% lower spending on specialty care, 25% fewer hospital admissions, and 27% lower spending on in-patient care. Overall, use of health centers reduced total spending by 24%.

There were states that had results that varied from the trend. For instance, health center patients had higher primary care use or spending in Connecticut, Illinois, and Texas.

“The general consistency of these findings suggests that there may be a distinct association between health center primary care setting and health care use and spending because each state administers the Medicaid program independently, with variation in financing, management, and care programs,” the authors concluded.