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Medicare spending on physician services declined $13.9 billion in 2020

Press releases may be edited for formatting or style | December 03, 2021 Insurance
CHICAGO — A new report from the American Medical Association (AMA) documents unprecedented changes in Medicare spending as people decided to delay or forgo health care services during the onset of the COVID-19 pandemic.

The new AMA report, “Impacts of the COVID-19 Pandemic on 2020 Medicare Physicians Spending” (PDF) analyzed Medicare claims data exclusive to physician services and found spending fell an estimated $13.9 billion (14%) below expected levels in 2020. Despite a mid-year rebound after sharp declines early in the year, Medicare spending on physician services during 2020 never recovered to its pre-pandemic trend.

“Physicians experienced a significant and sustained drop in Medicare revenue during the first 10 months of the pandemic,” said AMA President Gerald E. Harmon, M.D. “Medical practices that have not buckled under financial strain continue to be stretched clinically, emotionally, and fiscally as the pandemic persists. Yet physicians face an array of planned cuts that would reduce Medicare physician payments by nearly 10% for 2022. As struggling physician practices face a difficult and precarious road to recovery, now is the time for financial stability in Medicare and the AMA is strongly urging Congress to avert the planned payment cuts.”

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

Spending by service type
Evaluation and management (E/M) spending fell nearly 50% by late March of 2020.
Spending for imaging, procedures and tests continued to drop until mid-April, falling as much as roughly 65% to 70% below expected 2020 spending.
Spending recovered quickly across the board from April lows, and throughout the second half of 2020 impacts were similar for all four major types of services.
Spending by setting or specialty
Spending lows reached in April by all major settings ranged from a 26% decline for skilled nursing facilities to a 90% decline for ambulatory surgical centers.
Spending rebounded for all major settings in the second half of 2020 but remained 4% to 15% below expected 2020 spending.
Reductions in cumulative spending for 2020 varied among specialties, ranging from a 4% decline for nephrologists to a 28% decline for physical therapists.

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