Steep but Short: COVID-19 Pandemic-Related Spending Drop for Medicare Beneficiaries with Chronic Conditions

Jing Dong
Tracy Haidar
Ilene Harris
Older male patient with doctor, both wearing masks

The COVID-19 pandemic has placed unprecedented strains on the U.S. health care system, contributing to significant disruptions of care, including missed follow-up care for patients, decreased medication adherence, delayed appointments, and intentional avoidance or delaying of care.

After a steep drop early in the pandemic, spending rebounded to pre-pandemic levels by the end of 2020 for most Medicare fee-for-service beneficiaries aged 65 and older with hypertension, congestive heart failure, diabetes, asthma, or chronic obstructive pulmonary disease, according to a new study by AIR.

This study examined how spending for different categories of Medicare services—inpatient, hospital outpatient, and professional providers, including physicians, physician assistants, clinical social workers, and nurse practitioners—changed from the start of the pandemic through the end of 2021. 

Exhibit 1: Average Per-Beneficiary, Per-Quarter Medicare Spending for Ambulatory and Inpatient Services for Beneficiaries with a Select Ambulatory Care Sensitive Condition, 2017–2021

Key Findings

  • Spending for ambulatory and inpatient care dropped precipitously in 2020 Q2 for Medicare beneficiaries aged 65 and older with ACSCs but largely rebounded to pre-pandemic levels by the end of 2020, indicating the pandemic caused a large but short-lived disruption to care.
  • Ambulatory and inpatient visit rates decreased early in the pandemic, with ambulatory visit rates returning to pre-pandemic levels within a year, but inpatient visit rates remaining below pre-pandemic levels through 2021.
  • Ambulatory spending for Black and Hispanic beneficiaries with ACSCs did not rebound as quickly as other racial and ethnic groups, suggesting they had more sustained care disruptions and a slower recovery from pandemic impacts.
  • Beneficiaries diagnosed with COVID-19 experienced no change in ambulatory spending and a significant increase in inpatient spending, whereas those without a COVID-19 diagnosis saw decreased ambulatory and inpatient spending.