In 2020, spending for conventional Medicare beneficiaries declined for the primary time in additional than twenty years. The drop in spending adopted the sharp decline in the usage of well being care providers throughout the preliminary months of the COVID-19 pandemic, and displays a lower in spending amongst conventional Medicare beneficiaries on most well being care items and providers. The decrease spending in conventional Medicare contributed to the comparatively slower progress in Medicare spending total in 2020. Nevertheless, whole Medicare spending elevated in 2020 as a result of federal funds per Medicare Benefit enrollee rose 6.9%. Medicare Benefit funds had been decided in mid-2019 previous to the pandemic, and due to this fact, didn’t replicate the decrease utilization that occurred in 2020.
This evaluation makes use of not too long ago launched knowledge from the Facilities for Medicare & Medicaid Providers (CMS) to look at developments in spending and utilization by kind of well being care service between 2010 and 2020 for Medicare beneficiaries who had been enrolled in each Half A and Half B of conventional Medicare. (Related knowledge for beneficiaries enrolled in Medicare Benefit or for prescription drug spending will not be out there.) The info embody each Medicare and beneficiary out-of-pocket spending on Half A and Half B coated providers, however not Half D prescription drug spending. Understanding how spending and utilization modified throughout several types of providers in 2020 is helpful for figuring out areas the place beneficiaries delayed or skipped care in response to the pandemic, which might have longer-term implications for well being outcomes and Medicare spending.
We discover that Medicare spending declined throughout most, however not all, varieties of providers, as a smaller share of beneficiaries used most varieties of Medicare-covered well being care providers in 2020 in comparison with 2019. Particularly:
- Whole spending on Half A and Half B providers for conventional Medicare beneficiaries was $348.0 billion in 2020, a lower of 5.8% ($21.4 billion) from 2019.
- Spending per conventional Medicare beneficiary for Half A and Half B providers fell 3.6%, or $402, to $10,739 per particular person in 2020, in comparison with $11,142 per particular person in 2019.
- The decline in conventional Medicare spending displays decreases in spending for many varieties of providers, starting from 0.1% much less for sturdy medical tools to 13.1% much less for procedures, in comparison with 2019. Solely spending on expert nursing services, Half B medicine, and hospice elevated in 2020
- Use of practically all varieties of providers by conventional Medicare beneficiaries was decrease in 2020 in comparison with 2019. Solely three varieties of providers had will increase throughout all measures of utilization: hospice, dialysis, and Half B medicine. Expert nursing services had decrease use however increased spending (see KFF evaluation, Amid the COVID-19 Pandemic, Medicare Spending on Expert Nursing Services Elevated Greater than 4% Regardless of an General Decline in Utilization).
- Amongst conventional Medicare beneficiaries, common spending per consumer elevated for 12 of the 17 varieties of providers examined.
whole Spending fell 5.8%, or $21.4 billion, for conventional medicare beneficiaries in 2020
Whole spending for conventional Medicare beneficiaries was $348.0 billion. That’s $21.4 billion, or 5.8%, decrease than in 2019 and represents the one year-over-year decline since 2010 (Determine 1).
Conventional medicare spending per particular person was 3.6%, OR $402, decrease in 2020 than 2019
The decline in whole spending for conventional Medicare beneficiaries was pushed by a lower in spending per particular person, which fell 3.6%, or $402, in 2020 in contrast 2019 ($10,739 vs. $11,142) (Determine 2). Though spending per particular person additionally declined in 2012 and 2014, the lower in these years was comparatively small ( -0.2% in 2012 and -0.1% in 2014). As well as, there was a small drop within the variety of beneficiaries enrolled in conventional Medicare in 2020 (knowledge not proven), persevering with a pattern of declining enrollment in conventional Medicare because the share of Medicare beneficiaries choosing Medicare Benefit has grown.
Conventional medicare spending fell throughout most varieties of providers in 2020
The lower in Medicare spending displays a decline in spending for nearly all varieties of Medicare-covered providers between 2019 and 2020. The biggest declines in greenback phrases had been for the biggest classes of spending: inpatient hospital spending fell $7.9 billion (from $117.1 billion to $109.2 billion, 37.0% of whole), outpatient hospital spending fell $5.1 billion (from $60.5 billion to $55.4 billion, 24.1% of whole) and analysis & administration (workplace go to) spending fell $3.7 billion (from $34.3 billion to $30.6 billion, 17.2% of whole) (Determine 3 and Desk 1).
As a % of 2019 spending for the respective service classes, spending on procedures declined probably the most, falling 13.1% (from $23.7 billion to $20.6 billion), adopted by spending on imaging (-12.9%, from $7.9 billion to $6.9 billion) and spending on Federally Certified Well being Facilities/Rural Well being Facilities (-11.7%, from $2.1 billion to $1.8 billion). In distinction, spending elevated for expert nursing services, Half B medicine and hospice (Desk 1).
Use of practically all varieties of providers fell between 2019 and 2020
The share of conventional Medicare beneficiaries utilizing particular varieties of providers fell throughout most classes and was usually accompanied by a decline within the whole variety of providers offered (Desk 2). For instance, the biggest drop within the share of conventional Medicare beneficiaries utilizing a specific kind of service was for imaging providers, which was 5.5 proportion factors decrease in 2020 in comparison with 2019 (64.7% vs 70.2%). According to this decline, conventional Medicare beneficiaries had 574 fewer imaging occasions per 1,000 beneficiaries in 2020 than in 2019. Outpatient hospital providers had the following largest drop within the share of beneficiaries utilizing the service, declining 4.8 proportion factors in 2020 in comparison with 2019 (from 66.4% to 61.6%). There was a corresponding lower within the variety of outpatient hospital visits, which declined by 702 visits per 1,000 beneficiaries in 2020 in comparison with 2019. See Appendix desk for full 2019 and 2020 utilization knowledge by service class.
use elevated for hospice, dialysis and half b medicine
Whereas use of Medicare-covered providers usually declined, the share of beneficiaries utilizing hospice, dialysis and Half B medicine elevated very modestly, by lower than 1 proportion level, between 2019 and 2020. There was additionally a rise within the variety of hospice stays (+2 stays per 1,000 beneficiaries) and days (+58 days per 1,000 beneficiaries) and the variety of dialysis visits (+9 visits per 1,000 beneficiaries) in 2020 in comparison with 2019 (see Appendix). (The info don’t embody the variety of occasions beneficiaries used Half B medicine due to reported problem in developing a standardized measure.)
Spending Per Person
spending per consumer elevated Throughout 12 of the 17 service classes
Whereas each spending and utilization declined throughout most varieties of providers between 2019 and 2020, common spending per consumer elevated for 12 of the 17 classes. In greenback phrases, the biggest will increase had been for long-term care hospitals (+$4,364, 10.2%), expert nursing services (+$2,724, 16.3%), inpatient rehabilitation services (+$2,269, 9.7%), and inpatient hospital (+$1,825, 8.5%). These will increase point out that the beneficiaries who used inpatient hospital and post-acute care providers in 2020 required extra intensive, and due to this fact expensive, care than beneficiaries who used these providers in 2019. The biggest lower per consumer was for dialysis (-$431, -1.6%), which additionally noticed a rise within the variety of customers and variety of visits, suggesting that each one else equal, the brand new use was comparatively decrease price.
Whole spending among the many 32 million conventional Medicare beneficiaries with each Half A and Half B fell in 2020, the primary 12 months of the COVID-19 pandemic, comparable to decrease service use throughout most varieties of Medicare-covered well being care providers in comparison with 2019. The decrease spending in conventional Medicare contributed to the comparatively slower progress in Medicare spending total in 2020. Nevertheless, as a result of spending on Medicare Benefit continued to develop, whole Medicare spending rose barely in 2020. Funds to Medicare Benefit plans are decided previous to the plan profit 12 months (in mid-2019 for 2020) and so didn’t incorporate the results of the pandemic on well being care utilization, although plans have traditionally been paid extra per enrollee, on common, than related beneficiaries would have price in conventional Medicare. According to increased funds and decrease utilization, Medicare Benefit plans had increased gross margins and decrease medical loss ratios, on common, in 2020 in comparison with 2019, suggesting that they turned extra worthwhile throughout the pandemic. Enrollment in Medicare Benefit has grown quickly during the last decade, reaching practically 40% of all Medicare beneficiaries in 2020, and is projected to exceed 50 % of whole Medicare inhabitants by 2025. That progress in enrollment, and the upper progress in spending per Medicare Benefit enrollee in comparison with conventional Medicare, has contributed to Medicare Benefit accounting for an growing share of Medicare spending, and contributed to will increase in whole Medicare spending.
It isn’t but identified the extent to which the decline in use throughout most varieties of well being care providers could have affected well being outcomes of conventional Medicare beneficiaries. The Medicare inhabitants is vulnerable to having unfavourable results from delaying or forgoing care as a result of they’ve comparatively excessive well being wants. Multiple-fifth of Medicare beneficiaries have 5 or extra power circumstances and virtually one-third have no less than one useful impairment. It’s attainable that the decline in use might have unfavourable implications for future well being if folks delayed routine care and screenings or had been unable to schedule procedures in a well timed method, lacking the chance for early prognosis and therapy. The drop in utilization additionally has the potential to result in increased future well being care spending if extra well being care providers are required or if therapies are extra intensive. As well as, Medicare beneficiaries had been hit onerous by COVID-19, with folks age 65 and older accounting for a disproportionate share of circumstances and deaths. Whereas the long-term results of COVID-19 will not be but identified, they’re prone to have a larger affect on folks ages 65 and older, together with corresponding well being care use and Medicare spending.
Whereas use of well being care providers declined sharply in 2020, that didn’t essentially translate right into a lack of income for many suppliers due to insurance policies adopted by Congress, states, and each the Trump and Biden Administrations. For instance, Congress established the Supplier Reduction Fund, which licensed $178 billion in funding, practically all of which has been disbursed, to compensate suppliers for misplaced income and sudden prices because of the pandemic.
The decline in spending for conventional Medicare beneficiaries in 2020 represents the primary lower in spending since 1999. The earlier decline was primarily a results of modifications to Medicare supplier funds enacted as a part of the Balanced Funds Act of 1997. In distinction, the lower in 2020 was pushed by decrease use of well being care providers amid the COVID-19 pandemic. There’s a query of whether or not any of the modifications in spending and use might be sustained, although the expectation is that these had been most definitely one-time, or in any other case short-lived, modifications. Whereas precise knowledge for 2021 will not be but out there, Medicare spending is projected to have rebounded and is anticipated to proceed to develop in coming years.
This work was supported partly by Arnold Ventures. We worth our funders. KFF maintains full editorial management over all of its coverage evaluation, polling, and journalism actions.