Physician Specialties Hit Hardest by Medicare Spending in 2020

Medicare spending on physician services decreased by $9.4 billion, or 19 percent, in the first half of 2020 because of the COVID-19 pandemic, according to a new analysis from the American Medical Association (AMA).

The analysis of Medicare Physician Fee Schedule claims from January to June last year found that Medicare spending dropped by as much as 57 percent below expected pre-pandemic levels, with the largest reduction observed in April 2020.

Spending levels had recovered to about 12 percent below pre-pandemic levels by June.

But the reduction in Medicare spending in the first half of 2020 significantly varied by physician specialty, service type, and setting, with some seeing more substantial losses than others.

For physician specialties, in particular, the impact ranged from a 6 percent reduction in cumulative Medicare spending for nephrology to low of 34 percent for physician therapy during the period.

Notably, primary care specialties fared slightly better than the average, with internal medicine and family medicine reporting a decrease of 14 percent and 16 percent, respectively.

Based on the AMA analysis, here are the physician specialties that were hit the hardest financially in the first half of 2020 in order of cumulative reduction in Medicare Physician Fee Schedule spending compared to pre-pandemic levels:

• Physician therapy, -34 percent
• Ophthalmology, -29 percent
• Dermatology, -24 percent
• Podiatry, -23 percent
• Diagnostic radiology, -22 percent
• Orthopedic surgery, -22 percent
• Anesthesiology, -21 percent
• Physician assistant, -21 percent
• General surgery, -20 percent
• Cardiology, -19 percent

For these physician specialties—and all others included in the AMA analysis—these reductions in Medicare spending translated to multi-million-dollar losses. The impact of cumulative reductions in Medicare spending ranged from -$48 million for clinical psychologists to -$766 million for ophthalmology.

In addition to ophthalmology, physician specialties with the largest reduction in Medicare Physician Fee Schedule spending by dollar amount also included:

• Physical therapists, -$706 million
• Internal medicine, - $648 million
• Diagnostic radiology, -$627 million
• Cardiology, -$506 million
• Dermatology, -$475 million
• Family medicine, -$452 million
• Orthopedic surgery, -$415 million
• Nurse practitioner, -$373 million
• Emergency medicine, -$290 million

These losses were the difference between actual Medicare Physician Fee Schedule spending on the specialty in the first half of 2020 and expected Medicare spending during that period.

The analysis also found that the economic impact of COVID-19 on Medicare Physician Schedule spending significantly varied by service type and setting. Evaluation and management (E/M) spending, for example, decreased by almost 50 percent by late March before rebounding, while spending on imaging, procedures, and tests decreased as much as 65 percent to 70 percent through mid-April.

By June though, Medicare spending on E/M and imaging services was down by just 10 percent compared to expected 2020 levels, and slightly more for procedure and tests, AMA reported.

Telehealth services are defined as procedures codes on Medicare’s telehealth list, including those added in 2020 because of the pandemic. The analysis showed that these services increased dramatically at the start of 2020.

Telehealth services represented less than 0.1 percent of total Medicare Physician Fee Schedule spending prior to the pandemic, then spending on the services increased to more than 16 percent by mid-April, the analysis showed.

Medicare spending on physician telehealth services had levelled out to about 6 percent by the end of June.

Notably, established patient office visits accounted for about half of Medicare spending on telehealth services from March 16 through June 30, representing $912.5 million at the time.

Telephone E/M services and mental and behavioral health services also made up a disproportionate amount of telehealth Medicare spending at the start of 2020.

Despite this uptick in new virtual services, overall spending was still down across settings. For instance, spending decreased by 90 percent for ambulatory surgical centers by April 2020 as providers delayed elective procedures including cataract surgery and colonoscopy.

Medicare spending in the office setting—which accounts for more than half of total Medicare Physician Fee Schedule spending—also declined as much as 63 percent.

However, spending across all major settings had returned to within 10 percent to 20 percent of expected 2020 spending by the end of June.

“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 R. Bailey, MD, president of AMA, in a press release. “For practices that have struggled to remain viable as the pandemic stretches on, many will face a difficult and precarious road to recovery.”