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Cost-efficiency Study Demonstrates Michigan Health Centers Save the State Money

Monday, December 8, 2014  
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According to an evaluation of Medicaid managed care and fee-for-service claims from 2011 and 2012, Michigan Health Centers (also known as Federally Qualified Health Centers and FQHC Look-Alikes) are 8% more cost efficient at providing services to adult Medicaid beneficiaries than are other Medicaid providers.

Michigan Primary Care Association (MPCA) contracted with the Institute for Health Policy (IHP) at Michigan State University to conduct the evaluation. The results are presented in the report, An Evaluation of the Cost Efficiency of Federally Qualified Health Centers (FQHCs) and FQHC 'Look-Alikes' Operating in Michigan. (Click here for the Executive Summary.) The report demonstrates that Michigan’s Health Centers save the State of Michigan $12 per member per month, or $144 per beneficiary per year, in Medicaid expenditures. This equates to a projected total savings of $15.9 million annually to the Medicaid program based on the number of adult Medicaid beneficiaries that Michigan Health Centers serve.


Generally, the lower costs of Health Center services are due to reduced utilization of more expensive Medicaid services, such as inpatient hospital services, likely attributable to Health Center patients using their local Health Center as their principal source of primary and preventive care.


IHP’s evaluation compares the utilization of Medicaid services by adult (18-64 years) Michigan Medicaid beneficiaries who received health care services at a Michigan Health Center during the two-year study period with those served by other Medicaid providers. The study also compares the total costs of services provided to these two categories of adult Medicaid beneficiaries—FQHC patients and non-FQHC patients. A FQHC patient is one who used the services of a Michigan Health Center for a qualifying office visit within the study period. A non-FQHC patient is one who did not use a Michigan Health Center service in the two-year period under review.


FQHC wrap around payments (Prospective Payment System rates, also known as PPS rates) were included in calculating the Health Center cost of care in this study. The PPS, established by federal law in 2001, is intended to ensure Health Centers receive adequate payment for their comprehensive services, including medical, dental, behavioral health, and pharmacy services, as well as services that facilitate access to care such as transportation, translation, and insurance enrollment assistance. These Health Center services are available to everyone who walks through the doors, regardless of insurance status or income level. When Health Centers are adequately reimbursed for providing Medicaid services, funding is available to help cover the costs of caring for the uninsured.


Today, 40 Michigan Health Center organizations provide quality, affordable, comprehensive health care to more than 600,000 Michiganders at over 240 delivery sites across the state. 


Executive Summary   |   Full Report

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