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OBJECTIVE: To assess racial and ethnic disparities in care for Medicare fee‐for‐service (FFS) beneficiaries and whether disparities differ between health system‐affiliated physician organizations (POs) and nonaffiliated POs. DATA SOURCES: We used Medicare Data on Provider Practice and Specialty (MD‐PPAS), Medicare Provider Enrollment, Chain, and Ownership System (PECOS), IRS Form 990, 100% Medicare FFS claims, and race/ethnicity estimated using the Medicare Bayesian Improved Surname Geocoding 2.0 algorithm. STUDY DESIGN: Using a sample of 16 007 POs providing primary care in 2015, we assessed racial/ethnic disparities on 12 measures derived from claims (2 cancer screenings; diabetic eye examinations; continuity of care; two medication adherence measures; three measures of follow‐up visits after acute care; all‐cause emergency department (ED) visits, all‐cause readmissions, and ambulatory care‐sensitive admissions). We decomposed these “total” disparities into within‐PO and between‐PO components using models with PO random effects. We then pair‐matched 1853 of these POs that were affiliated with health systems to similar nonaffiliated POs. We examined differences in within‐PO disparities by affiliation status by interacting each nonwhite race/ethnicity with an affiliation indicator. DATA COLLECTION/EXTRACTION METHODS: Medicare Data on Provider Practice and Specialty identified POs billing Medicare; PECOS and IRS Form 990 identified health system affiliations. Beneficiaries age 18 and older were attributed to POs using a plurality visit rule. PRINCIPAL FINDINGS: We observed total disparities in 12 of 36 comparisons between white and nonwhite beneficiaries; nonwhites received worse care in 10. Within‐PO disparities exceeded between‐PO disparities and were substantively important (>=5 percentage points or>=0.2 standardized differences) in nine of the 12 comparisons. Among these 12, nonaffiliated POs had smaller disparities than affiliated POs in two comparisons (P