Variation In Medicaid And Medicare Payment Rates To Community Health Centers, 2023.

Area of Science:

• Health Services Research
• Health Economics
• Public Health Policy

Background:

• Community Health Centers (CHCs) are vital for underserved populations but face resource limitations and increasing demand.
• Medicaid and Medicare employ prospective payment systems (PPSs) to ensure CHC financial stability through predictable reimbursement.
• Significant variations in PPS rates across CHCs and their impact on financial sustainability remain largely unexamined.

Purpose of the Study:

• To conduct the first known analysis of Medicaid and Medicare PPS rate variations across CHCs.
• To identify factors associated with disparities in PPS rates among CHCs.
• To assess the adequacy of current PPS rates in covering the average per-visit cost of care.

Main Methods:

• Compilation of a novel dataset on Medicaid and Medicare PPS rates from 42 states and Washington, D.C.
• Comparative analysis of average PPS rates between Medicaid and Medicare in 2023.
• Statistical examination of the relationship between patient demographics (race, insurance status, chronic conditions) and PPS rates.

Main Results:

• In 2023, average Medicaid PPS rates were 23% higher than Medicare PPS rates.
• CHCs serving higher proportions of non-Hispanic Black patients, uninsured patients, or patients with more chronic conditions received lower PPS rates.
• Overall, observed PPS rates were insufficient to cover the average per-visit cost of care provided by CHCs.

Conclusions:

• Significant disparities exist in PPS rates across CHCs, impacting financial stability.
• Current reimbursement levels are generally inadequate to offset the cost of care, threatening the sustainability of the healthcare safety net.
• Standardized reimbursement policies for public insurance payers are necessary to promote equity and ensure the viability of CHCs.