The American Medical Association (AMA) recently published a report, “Changes in Medicare Physician Spending During the COVID-19 Pandemic,” analyzing Medicare claims data for physician services during the pandemic. The report found that spending dropped as much as 57% below expected pre-pandemic levels in April 2020 and while spending partially recovered after April, it was still 12% less than expected by the end of June 2020.
The report also found that for the first half of 2020, the cumulative estimated reduction in Medicare physician spending associated with the COVID-19 pandemic was 19%, or $9.4 billion. Interestingly, Medicare spending on physician services for those first six months declined irrespective of service type, setting or specialty, and state or region, but the severity varied substantially.
Spending by Service Type
For spending by service type, evaluation and management spending fell almost 50% by late March before leveling off whereas spending for images, procedures and tests continued the drop until mid-April, falling as much as 65 to 70% below the expected spend level.
By the end of June, the spending had somewhat recovered for evaluation and management and imaging (only down 10%) but only slightly more for procedures and tests.
Spending by Setting or Specialty
In April, all major settings had reached spending lows, ranging from a 25% reduction for skilled nursing facilities to a 90% decline for ambulatory surgical centers. All major settings did make a recovery from their spending lows, but still remained anywhere from 9 to 19% below the expected 2020 spend at the end of June 2020.
Reductions in cumulative spending over the first half of 2020 varied among specialties, ranging from a 6% decline for nephrology to a 29% decline for ophthalmology and a 34% decline for physical therapists.
As one might expect, primary care specialties tended to fare better than average. The cumulative spending for internal medicine was down 14% and cumulative spending for family medicine was down 16%.
Spending by State or Region
As different parts of the country saw spikes of COVID at different times throughout the year, it makes sense that reductions in cumulative spending would vary throughout the country and year, as well. The report found that there was a strong regional pattern to the impacts with the largest reductions concentrated in the Northeast and Upper Midwest. The smallest impacts were found in the South and Southwest.
Telehealth Spending
Of course, you cannot review physician spending in 2020 without reviewing the spend on telemedicine. The AMA report found that telehealth increased from a paltry 0.1% of total Medicare spend on physician services prior to the COVID-19 pandemic but had jumped to more than 16% in April 2020.
The report also noted that established patient office visits accounted for half of Medicare telehealth spending on physician services from the start of the pandemic through the end of June 2020.
COVID-19 Financial Impact
The AMA also performed a nationwide surgery of physicians in July and August 2020 to understand the financial impacts COVID-19 had on their practices. According to that study, 81% of physicians surveyed still had lower than pre-pandemic revenue, with the average drop in revenue at 32%.
AMA Reaction
“The economic impact of the COVID-19 pandemic has placed significant financial stress on medical practices as expenses have spiked and revenues have dropped,” said AMA President Susan R. Bailey, M.D. “For practices that have struggled to remain viable as the pandemic stretches on, many will face a difficult and precarious road to recovery. The AMA report adds new insight on the economic impact of the pandemic that has threatened the viability of physicians who participate in Medicare.”