Medicare spending plummeted for physician services in first half of 2020
DURING THE FIRST SIX MONTHS of 2020, physicians reported $9.4 billion less in Medicare claims than expected at the start of the year, with spending down 19% as seniors deferred care during the COVID-19 pandemic, according to a new report by the American Medical Association.
The amount of Medicare spending dropped by as much as 57% during the height of the COVID-19 crisis in April, an analysis of physician services’ claims data revealed. Spending reached its lowest levels in April, before rebounding to declines of 10% for evaluation, disease management, and imaging services, and 15% for procedures and tests, in June.
As the pandemic raged, many providers turned to telehealth as a means to see their patients. Virtual visits among Medicare enrollees rose from 0.1% at the start of 2020 to 6% of all encounters in June. Telehealth spending hit $1.8 billion during the first half of the year, a 16% rise. Technology did not ultimately bridge the gap in Medicare revenue for physicians. During the first half of 2020, Medicare spending reached $39 billion, or 12% below pre-pandemic expectations.
Because researchers only analyzed traditional Medicare enrollees, the report noted that the decline in physician spending could be much higher since the study excluded Medicare Advantage members, who comprise 40% of the Medicare population (See related story, page 16).
Dr. Susan Bailey, president of the American Medical Association, noted that Medicare providers’ drop in revenue reflected the struggles physicians across the industry faced, regardless of who they served.
The Bureau of Economic Analysis estimates that spending on physician services fell 40% by April before rebounding to 10% below normal levels at the end of June.
“The economic impact of the COVID-19 pandemic has placed significant financial stress on medical practices as expenses have spiked and revenues have dropped,” Bailey said in a statement. “For practices that have struggled to remain viable as the pandemic stretches on, many will face a difficult and precarious road to recovery.”
Researchers found that the pandemic’s impact on Medicare physicians’ claims varied by provider specialty, site of service and geographic region.
As elective procedures like cataract surgeries and colonoscopies halted, Medicare spending in ambulatory surgical centers fell by as much as 90% in April, before rebounding to 10% below expected levels in June. Spending at physicians’ offices dropped by 63% and outpatient hospitals by 70% in April, before recovering to 9% below normal market rates at the mid-point of 2020. Spending for services at skilled-nursing facilities declined the least among the sites studied but also displayed the weakest recovery, with spending still down 19% in June.
The location of physician offices also dictated the decline in Medicare revenue.
The largest reductions in patient expenditures occurred in the upper Midwest and Northeast parts of the country, with total Medicare spending dropping 27% in New York during the first six months of the year. The South and Southeast experienced moderate declines. Oklahoma reported the smallest drop in patient spending, down 13% through June 2020. The report noted that these states reported the smallest amount of cases at the start of the pandemic, but were also the slowest to implement preventive measures like social distancing.
Providers’ specialty also dictated how much of a drop they experienced in Medicare patient revenue.
Physical therapists reported the greatest decline in patient spending at 34%, while nephrologists reported revenue just 6% lower than expected levels. General surgeons’ average payments were 20% less than expected for the first half of 2020. The report noted that specialties with the smallest reductions in spending were those that provided care that was difficult to delay or that used telehealth. Indeed, providers who could see their patients virtually did: From March to June, nearly 25% of all established patient office visits were conducted through a computer screen, bringing in $912.5 million for providers. ●
“For practices that have struggled to remain viable as the pandemic stretches on, many will face a difficult and precarious road to recovery.” Dr. Susan Bailey, president of the American Medical Association