News: Early months of COVID-19 caused nearly $14 billion decline in Medicare spending

A decline of physician services in early 2020 due to COVID-19 is responsible to a drop of $13.9 billion in Medicare spending, equaling a 14% in Medicare claims, according to a report published by the American Medical Association (AMA). Although there was a bounce back during May and June of 2020, Medicare spending on physician services has yet to return to pre-pandemic levels.

The report noted that Medicare spending on all types of physician services faced a decline, though several variables, including service type, setting or specialty, and state or region of the country, affected the decline.

Particularly, evaluation and management (E/M) spending dropped 50% lower than expected by the end of March 2020, and services including imaging, procedures, and tests declined until mid-April 2020. At this point spending dropped between 65% and 70% below the expected yearly spending.

Skilled nursing facilities faced a 26% decline in April, ambulatory surgical centers faced a 90% drop in Medicare spending, and inpatient hospitals and emergency rooms saw a 40% drop in spending. Spending rebounded in the second half of 2020 but was still between 4% and 15% below expected.

Primary care facilities have a slightly better average with internal medicine down 10% and family medicine down by 12%.

Up, however, was spending on telehealth services, making up 1% of the Medicare Physician Fee Schedule spending prior to 2020, and in the pandemic accounting for 5% of that same spending.

Mental health services accounted for the most significant share of telehealth spending, with clinical social workers accounting for 50%, clinical psychologists accounting for 38%, and psychiatrists at 31%.

Editor’s note: The full AMA published study can be found here.