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Federally Qualified Health Centers (FQHCs) serve as regular sources of preventive and primary care for low-income families within their communities and are key parts of the health care safety net.Compare admissions and emergency room visits for ambulatory care sensitive conditions (ACSCs) among Medicaid beneficiaries relying on FQHCs to other Medicaid beneficiaries.Retrospective analysis of 1992 Medicaid claims data for 48,738 Medicaid beneficiaries in 24 service areas across five states.Medicaid beneficiaries receiving more than 50% of their preventive and primary care services from FQHCs are compared with Medicaid beneficiaries receiving outpatient care from other providers in the same areas. Exclusions—managed care enrollees, beneficiaries more than age 65, dual eligibles (Medicaid and Medicare), and institutionalized populations.Admissions and emergency room (ER) visits for a set of chronic and acute conditions, known in the literature as ambulatory care sensitive conditions (ACSCs).Medicaid beneficiaries receiving outpatient care from FQHCs were less likely to be hospitalized (1.5% vs. 1.9%, P <0.007) or seek ER care (14.9% vs. 15.7%, P <0.02) for ACSCs than the comparison group. Controlling for case mix and other demographic variables, the odds ratios were, for hospitalizations, OR, 0.80; 95% CI, 0.67 to 0.95;P <0.01, and for ER visits, OR, 0.87; 95% CI, 0.82 to 0.92;P <0.001.Having a regular source of care such as FQHCs can significantly reduce the likelihood of hospitalizations and ER visits for ACSCs. If the reported differentials in ACSC admissions and ER visits were consistently achieved for all Medicaid beneficiaries, substantial savings might be realized.