Community Health Centers Are Increasingly Important to Medicare Beneficiaries

Medicare Beneficiaries Represent a Growing Number of Community Health Center Patients

During the five-year period 2019-2023, the number of Medicare patients served by CHCs increased by 500,000, including 200,000 people who were dually eligible for Medicare and Medicaid (Figure 1).

CHCs serve all patients regardless of health insurance coverage or ability to pay. Most CHC patients have very low incomes, and Medicare patients are no exception.⁶ Older adults who seek care at CHCs are more likely to be affected by economic instability and social isolation, which in turn negatively impact health outcomes.⁷

The dual-eligible population is especially disadvantaged: nationally, 87% of dual enrollees had annual incomes of less than $20,000, compared to 20% of Medicare beneficiaries without Medicaid. They are also in poorer health and have greater health care needs than those with Medicare only.⁸ Thus, while health centers provide opportunities for better and lower-cost care, the growing Medicare population and increasing proportion of dual eligibles may present operational and resource challenges because of their patients’ clinical complexities and needs for social support.

Health Center Medicare Beneficiaries Are More Likely to Live in Rural Areas Compared to the General Medicare Population

More than one-quarter of CHC Medicare patients (27.4%) reported living in a rural area in 2022,⁹ compared to only 17.5% of the Medicare population nationwide.¹⁰ In 2023, health centers that served the highest proportion of Medicare patients—with Medicare accounting for 13-18% of their total patients—were located in the most rural states,¹¹ including Vermont, Maine, West Virginia, New Hampshire, and Montana. 

For many older residents of rural communities, health centers are the closest, most convenient, and most appropriate source of care. Rural CHCs generally serve a poorer and sicker population compared to that of urban areas. Nationally, rural residents have higher rates of hypertension and obesity, and experience higher mortality rates from heart disease, stroke, chronic lower respiratory disease, and unintentional injury.¹² In some rural areas, CHCs are effectively the only source of accessible care¹³ for a growing, at-risk, older population. While they fill an increasingly important role in providing preventive and primary care to rural Medicare recipients, rural CHCs face greater challenges compared to their urban counterparts. These include the shortage and maldistribution of primary,  geriatric  and specialty care providers¹⁴ and the spillover effects of rural hospital closures over the last decade,¹⁵ which make it harder to meet the full range of patients’ needs. 

Health Center Medicare Beneficiaries Tend to be in Poorer Health than the General Medicare Population

Compared to the general Medicare population nationally, health center Medicare patients reported twice the rate of depression,¹⁶ blindness/difficulty seeing that was four times higher,¹⁷ deafness/difficulty hearing more than two times higher,¹⁸ rates of obesity at nearly 50% compared to 34%,¹⁹ and much higher smoking rates (Table 1).²⁰
 

HCPS data also showed that CHC Medicare beneficiaries are poorer, have less education, and are less likely to be married than the general Medicare population (Table 2), each of which negatively impact health and well-being.^{21 22}

These  stark differences in reported health conditions and socioeconomic characteristics underscore the importance of health center services for Medicare beneficiaries, who have greater disease burden, fewer financial resources, and greater risk of loneliness and isolation compared to the general Medicare population. In addition to clinical care, community health centers provide enabling services such as health education, case management, and transportation, which support access and allow patients to benefit more fully from available care. For example, some Medicare patients need assistance to access healthy food options, while others may require assistance with transportation or more staff time to find appointments with medical specialists. The on-site availability of enabling services also promotes the use of needed comprehensive clinical care.   

An Increasing Number of Medicare Beneficiaries Are Enrolled in Managed Care Plans

Increasingly, and consistent with national trends, more health center Medicare patients are enrolled in managed care plans (also known as Medicare Advantage plans). UDS data show that from 2019-2023, CHC managed care participation increased from 5.2 million member months (defined as one individual being enrolled for one month in a managed care plan) to 8 million. The increase has significant implications for health centers and patient care. Unlike traditional Medicare, which offers a  broad network of providers, Medicare Advantage (MA) plans typically cover in-network provider services only. Health center patients may enroll in MA plans without understanding the limitations of their provider network, and provider directories may be outdated or otherwise inaccurate.²⁶ CHCs and their MA-enrolled patients must contend with MA plans’ prior authorization provisions, which are generally not required under traditional Medicare. These requirements may delay access to care, result in coverage denials for necessary services, and add to the administrative burden for both the patient and the health center.²⁷

Medicare Advantage requirements can also present challenges for access to specialty and referral care outside the health center. As primary care health hubs, health center staff frequently help their patients access specialty, therapeutic, and other services beyond the scope of health center care. Restrictive MA networks, especially in provider shortage areas, limit options for referrals to community-based  providers. This problem can be especially acute in rural areas.²⁸ Understanding the extent to which typical Medicare Advantage provisions result in reduced access or quality is hampered by a lack of data transparency compared to traditional Medicare.

Health Center Medicare Revenue is Increasingly Driven by Medicare Managed Care

The growth in MA participation is reflected in revenue trends. UDS data show an increase in Medicare Advantage revenue since 2019 (Figure 2). Capitated managed care plans, which pay health centers a fixed amount per enrollee regardless of services provided, represented one-third of health centers’ total managed care revenue in 2023. Compared to fee-for-service plans that reimburse for each service provided, capitated managed care plans  may increase financial risk for health centers when costs exceed monthly fixed payment.²⁹ This can add to the burden for health centers  which are operating on alarmingly slim margins as costs generally outpace revenue.³⁰ Additionally, health centers that contract with multiple managed care plans may face increased operational costs due to the administrative burdens associated with service pre-authorizations and appeals of denied claims. Claim denials may also delay reimbursement, which negatively affects cash flow.³¹