New Analysis Shows Medicare Spending Patterns Upended by COVID-19 Pandemic

Mar 03, 2021 at 08:36 pm by pj




Medicare spending on physician services declined an estimated $9.4 billion between Jan. and June 2020

The COVID-19 pandemic upended projected patterns of spending for physician services in the United States and a new report from the American Medical Association (AMA) documents these unprecedented changes in the Medicare program during the first six months of 2020.

The new report “Changes in Medicare Physician Spending During the COVID-19 Pandemic” analyzed Medicare claims data exclusive to physician services and found spending dropped as much as 57% below expected pre-pandemic levels in April of 2020. Medicare spending on physician services partially recovered from the April low but was still 12% less than expected by the end of June 2020. During the first half of 2020, the cumulative estimated reduction in Medicare physician spending associated with the pandemic was $9.4 billion (19%).

“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.”

When compared to expected 2020 Medicare spending on physician services, the AMA report found that actual Medicare spending on physician services for the first six months of 2020 declined regardless of service type, setting or specialty, and state or region. The severity of the impacts varied substantially. Telehealth spending increased dramatically during the study period but was concentrated in a handful of service categories.

Spending by service type

  • Evaluation and management (E/M) spending fell nearly 50 percent by late March before levelling off.
  • Spending for imaging, procedures and tests continued to drop until mid-April, falling as much as roughly 65% to 70% below expected 2020 spending.
  • By the end of June spending was down 10% for E/M and imaging, but only slightly more for procedures and tests.


Spending by setting or specialty

  • Spending lows reached in April by all major settings ranged from a 25% decline for skilled nursing facilities to a 90% decline for ambulatory surgical centers.
  • All major settings recovered from these spending lows but remained 9 to 19% below expected 2020 spending at the end of June.
  • 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.
  • Primary care specialties fared slightly better than average with cumulative spending for internal medicine and family medicine down 14% and 16%, respectively.


Spending by state or region

  • Reductions in cumulative spending ranged from a 13% decline for Oklahoma to a 27% decline for New York.
  • There was a strong regional pattern to the impacts, with the biggest reductions concentrated in the Northeast and Upper Midwest and the smallest impacts in the South and Southwest.


Telehealth spending

  • Telehealth increased from less than 0.1% of total Medicare spending on physician services prior to the pandemic to more than 16% in April 2020 but was concentrated in a handful of service categories.
  • Established patient office visits accounted for one-half of Medicare telehealth spending on physician services after the start of the pandemic through the end of June 2020.


The new report on changes in Medicare physician spending builds on the AMA’s insight into the precarious trends and realities that physicians face as they continue to respond to the COVID-19 pandemic. A nationwide physician survey conducted in July and August of 2020 found medical practices have been economically stressed by the public health crisis with 81% of physicians indicating that revenue was still below pre-pandemic levels and PPE costs up an average of 57%.

The AMA offers private practices a growing list of tools and resources to support physicians as the COVID-19 pandemic evolves. Additional details on clinical information, guides, advocacy and medical ethics are available at the AMA COVID-19 Resource Center.