Variation in Medicaid and Medicare payment rates to community health centers, 2023

In recent years, community health centers (CHCs) have struggled to meet the needs of underserved communities because of limited resources and growing demand. Medicaid and Medicare use prospective payment systems (PPSs) to reimburse CHCs at enhanced rates to safeguard their financial stability by providing consistent and predictable payments. However, whether and how these rates vary across centers is unknown. In this study, we conducted the first known analysis of Medicaid and Medicare PPS rates across CHCs by compiling a novel data set from forty-two states and Washington, D.C. We found that Medicaid PPS rates were 23 percent higher, on average, than Medicare PPS rates in 2023. Concerningly, centers that served more patients who identified as non-Hispanic Black, were uninsured, or had more chronic conditions received lower PPS rates. Overall, we observed that payment rates were generally insufficient to offset the average per visit cost of care delivered in CHCs. Standardized policies concerning how public insurance payers reimburse CHCs are needed to promote equity and sustainability in the health care safety net.