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Physician practices around the country took an unprecedented financial hit with the arrival of the COVID-19 pandemic in March 2020. Recent research from the American Medical Association (AMA) reveals an estimated pandemic-related shortfall in Medicare physician fee spending of $13.9 billion, or a 14% reduction, across all states and all major specialties in 2020.
While the report pointed to a “strong recovery” in May and June, that recovery stalled in the second half of 2020, and spending never returned to pre-COVID-19 levels.
“Physicians experienced a significant and sustained drop in Medicare revenue during the first 10 months of the pandemic,” said AMA President Gerald Harmon, MD, in a statement. “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.”
The reduction in the Medicare physician fee schedule payments means providers may face payment cuts of more than 9% starting January 1, 2022, when the cuts take effect. That is, unless Congress makes changes.
Medicare physician fee schedule spending on telehealth stood at $4.1 billion, or 5% of the total Medicare spent in 2020. From March 16 to June 30, $1.8 billion of this amount was on telehealth, while $1.1 billion came in during third and fourth quarters of 2020, respectively, per the report.
According to AMA’s research:
Medicare physician fee schedule spending for 2020, relative to expected 2020 spending, dipped 32% between March 16 and June 30; spending was down during the last 6 months of the year by between 9% and 10%.
The care settings hit the worst were ambulatory surgical centers, outpatient hospitals, and physician offices; the next worst off were hospital emergency departments, inpatient hospitals, and skilled nursing facilities.
The specialties that fared worst included physical therapists (-28%), opthamologists (-19%), podiatrists (-18%), and dermatologists (-18%).
Cumulative spending was down the most in Minnesota (-22%), Maine (-19%), and New York (-19%); less affected states included Idaho (-9%), Oklahoma (-9%), and South Carolina (9%).
AMA: Budget Neutrality Hurting Physicians’ Financial Stability
Harmon is calling for financial stability in Medicare spending. In particular, the AMA is “strongly urging Congress to avert the planned payment cuts,” he said in a statement.
The challenge: the Medicare physician fee schedule is currently “budget neutral,” meaning that the budget is fixed, Harmon, a family medicine specialist in South Carolina, told Medscape Medical News.
“If you rob from Peter to pay Paul, Paul is going to be less efficient or less rewarded. It continues to be that there’s always a ‘pay for’ in these things. So budget neutrality is probably one of the first things we need to address,” he said.
Lack of Routine Care Expected to Affect Health Outcomes
The result of reduced screening and treatment during the pandemic could be as many as 10,000 excess deaths due to cancers of the breast and colon during the next 10 years, wrote Norman Sharpless, MD, director of the National Cancer Institute, in Science in June. Combined, breast cancer and colon cancer account for one sixth of all cancers in the US, he wrote.
In addition, blood pressure control has gotten worse since the start of the pandemic, said Michael Rakotz, MD, FAHA, FAAFP, vice president of improving health outcomes at the AMA, in an AMA blog post.
Harmon’s advice for physician practices on getting patients in for routine care:
Educate the area’s largest employers to encourage their employees;
Engage with hospital employees since hospitals are often the largest employers in many communities;
Partner with health insurers; and
Show up at athletic events, which is a particularly good fit for “small town America,” said Harmon.
The AMA’s research doesn’t consider reimbursement from other public and private payers. It also doesn’t account for funding sources such as Provider Relief Fund grants, Paycheck Protection Program loans, and the temporary suspension of the Medicare sequester, per the report.
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