AMA analysis shows pandemic Medicare spending changes

The COVID-19 pandemic has disrupted many parts of the health care industry and upended projected patterns of spending in the sector.

According to a news release, the American Medical Association (AMA) report, “Changes in Medicare Physician Spending During the COVID-19 Pandemic,” Medicare spending on physician services dropped by as much as 57 percent below the expected pre-pandemic level in April 2020. Spending levels rebounded but were still 12 percent less than expected by the end of June. The total estimated reduction in Medicare spending on physician services was $9.4 billion, or 19 percent, in the first half of 2020.

“The economic impact of the COVID-19 pandemic has placed significant financial stress on medical practices as expenses have spiked and revenues have dropped,” AMA President Susan R. Bailey, MD, says in the release. “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.”

Unsurprisingly, the pandemic has driven Medicare spending on telehealth services from less than 0.1 percent of total spending prior to the pandemic to more than 16 percent in April. Established patient office visits accounted for half of all Medicare telehealth spending from the start of the pandemic through the end of June, the release says.

The decline in Medicare spending was felt among multiple service types with evaluation and management spending falling nearly 50 percent by late-March 2020 before leveling off. Meanwhile spending for imaging, procedures, and tests continued to drop until mid-April falling to about 65 percent to 70 percent. The end of June saw the evaluation and management spending down by 10 percent, but only slightly more for procedures and tests, the release says.

Primary care specialties fared better than the average with cumulative spending for internal medicine down by 14 percent and for family medicine down by 16 percent, according to the release.