AMA: Physical Therapy Saw the Largest Drop in Medicare Use in First Half of 2020

Most PTs and PTAs well understand that the profession was hard-hit by the COVID-19 pandemic, but a new report from the American Medical Association frames the damage in especially stark terms: according to AMA analysis, physical therapy was the most severely impacted specialty when it came to payment through the Medicare physician fee schedule, with an estimated drop of 34% in spending from January to June of 2020.

The findings are part of an AMA report on changes in Medicare spending during the COVID-19 pandemic, which tracked Medicare fee-for-service spending during the first six months of 2020. The analysis compares actual spending with projected spending during the same time, arrived at by adjusting 2019 spending figures by the year-over-year rate of change before the pandemic.

According to the report, overall Medicare spending was 19% below projections, at $39 billion. It reached its lowest level during the week of April 10 at $845 million, a fraction of the nearly $2 billion projected for that time period. Although spending recovered, it was still 'well below' projections by June 2020, at $1.6 billion a week.

However, the spending drops didn't affect specialties equally: physical therapy experienced an estimated 34% drop in spending associated with the Medicare physician fee schedule between January and June - the most dramatic drop among the specialties studied. Optometry (33%), ophthalmology (29%), dermatology (24%), and podiatry (23%) were also among the most severely affected specialties included in the report.

Other specialties experienced less dramatic spending changes. Nephrology and radiation oncology were the least affected, with both seeing drops in the single digits, at 6% and 8% respectively.

Types of services were affected in similar ways. Procedures, the type of service most often associated with physical therapy, saw a payment drop of close to 65% by mid-April. Evaluation and management fared slightly better, dipping by 50% at about the same time.

Among service settings, skilled nursing facilities saw the least impact, dropping by 25% by mid-April. Ambulatory surgical centers were the most dramatically affected, experiencing a decrease of nearly 90% in spring of 2020. Office settings were somewhere in between, with an average decrease of about 62% during mid-April. Payment to all settings began climbing in late April, and by June they were better but still 9% to 19% below projections.

Not surprisingly, fee schedule spending related to telehealth followed an inverse trend, rapidly rising from March to mid-April 2020 before tapering off to lower levels, albeit levels significantly higher than before the public health emergency. At its height, telehealth was associated with nearly 17% of payments; by late June, it had dropped down to 6%. Spending related to telehealth therapy services rose from practically nothing between Jan. 1 and March 15 to $16.1 million between March 16 and June 30. Between mid-March and end of June, nearly 3% of therapy services were billed as telehealth.

The AMA report largely echoes finding from an APTA report on the pandemic's impact on physical therapy, which found that 72% of practice owners experienced revenue losses of 50% or more at some point during the pandemic. The APTA report also found levels of telehealth adoption that are consistent with the AMA findings.

The latest statistics from AMA underscore the idea that CMS efforts to reduce payment to PTs and some three dozen other professions is a bad idea with even worse timing, according to Carmen Elliott, APTA vice president of insurer relations. Those cuts, estimated at 9%, were buffered through advocacy and legislative action and now are closer to 3%, but Elliott believes they need to be walked back entirely.

'This is a patient access issue - analysis after analysis points to the same devastating effects caused by the pandemic that are making it harder for PTs to provide needed services,' Elliott said. 'The idea that CMS would continue to think that now is an opportune time to reduce payment to PTs and other clinicians already struggling is hard to comprehend, especially in terms of patients receiving necessary care.'

Elliott points out that the CMS cuts aren't the only additional pressure: Next year, CMS will implement a 10% 'de minimis' payment system that will reduce payment to 85% of fee schedule amounts of timed or untimed codes when 10% or more of a service is provided by a PTA. The differential system was required by law passed in 2018.

'Public health crises and binding legislation are challenges we simply had to deal with, but there are ways to avoid and even reverse this cut,' Elliott said. 'We've made some headway in Congress, but we need to continue the fight.'