Medicare spending for physician services drops $9.4B in first half of 2020

CHICAGO – Medicare spending for physician services dropped as much as 57% below expected pre-pandemic levels in April of 2020, according to a new report from the American Medical Association. 

During the first half of 2020, the cumulative estimated reduction in Medicare physician spending associated with the pandemic was $9.4 billion, the report says.  

“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 Susan Bailey, M.D., president of the AMA. “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.” 

Medicare spending partially recovered from the April low but was still 12% less than expected by the end of June 2020, according to the report. 

When compared to expected 2020 Medicare spending on physician services, the report found that actual spending for the first six months of 2020 declined regardless of service type, setting or specialty, and state or region, and that the severity of the impacts varied substantially. 

The report also found telehealth spending increased dramatically during the study period, from 0.1% to 16% of total Medicare spending on physician services, but it was concentrated in a handful of service categories. Established patient office visits accounted for one-half of telehealth spending.