Medicare Claims Data Show Health Disparities in COVID-19 Patients

June 02, 2021 - Researchers found significant disparities in Medicare fee-for-service beneficiary spending in an analysis of Medicare claims data relating to COVID-19, according to a Centers for Disease Control and Prevention (CDC) study published in the Annals of Internal Medicine. The study revealed that rural residency, non-White race and ethnicity, and male sex were all correlated with higher medical spending.

Researchers analyzed 2020 administrative claims data from CMS, focusing on patients 65 or older who had a hospitalization or outpatient visit claim between April and December of 2020.

Of the 28.1 million Medicare fee-for-service beneficiaries who met inclusion parameters, 4.2 percent received care for COVID-19, the study stated. Medicare fee-for-service beneficiaries made up 62 percent of total Medicare participants.

“Understanding the medical costs specific to COVID-19 is crucial, particularly for health care providers, insurance payers, and U.S. health care systems, because it provides information needed to plan and allocate resources to treat patients with COVID-19 and also provides insights into the financial sustainability of the U.S. health care system in combating the pandemic,” the study stated. 

The majority of Medicare fee-for-service beneficiaries who sought COVID-19 care were female (57 percent), 79.6 percent were non-Hispanic White, and 77.2 percent resided in urban counties. Non-Hispanic White patients incurred the lowest costs for outpatient visits and hospitalization costs, compared to any other race or ethnicity.

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Total Medicare fee-for-service costs for COVID-19 were $6.3 billion, and the mean hospitalization cost was $21,752. Hospitalizations were more common for patients over 75 years old, but younger patients tended to incur higher costs.

Researchers defined medical costs as “the sum of patients’ cost sharing (deductibles, coinsurance, and copayments) and Medicare reimbursements for inpatient and outpatient services.” Prescription drug long-term care facility costs were not considered.

Of the 4.2 percent of beneficiaries who sought care for COVID-19, 77 percent had only outpatient visits, and 97 percent of hospitalized patients also had outpatient visits. Among hospitalized patients, 18.5 percent died in the hospital, and eight percent needed ventilator support. However, 68.1 percent of hospital deaths did not involve ventilator support. 

The results indicated that the non-Hispanic Black and Hispanic patient populations experienced hospitalizations and inpatient deaths at a rate that exceeded their share of the patient population overall.

“Our findings suggest that identifying effective strategies to promote COVID-19 vaccine uptake among disproportionately affected racial and ethnic minority populations is critical,” the study continued.

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In addition, urban residents were less likely to be hospitalized than rural residents by 2.2 percentage points. A total of $466.8 million went towards outpatient visits, and $5.8 billion on hospitalizations. Hospitalizations that required ventilator support cost another $1.1 billion, and hospitalizations that resulted in death cost $1.6 billion, the study explained. 

“The researchers' analysis indicated, perhaps surprisingly, that COVID-19 did not have a major financial impact on Medicare in 2020,” explained an accompanying article published in Annals of Internal Medicine.

“They found that the average cost of treatment was considerable among those who were hospitalized, but the costs for milder cases—which represented the majority—were relatively small.”

The article's authors pointed out that the study did not consider Medicare spending for rehabilitative care after hospitalization, which could be adding significantly to total Medicare spending. Yet they acknowledged that even if additional spending from rehabilitative care caused the per capita Medicare expenditures to double, COVID-19 still would have only accounted for three percent of Medicare spending in 2020.

Previous research showed that the pandemic revealed severe racial health disparities. A recent study used linear regression analysis and found that racial disparities in COVID-19 deaths may be worse than prior research suggested. The Medicare claims data study results bolstered previous conclusions, adding to the evidence of growing racial disparities in healthcare.

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“An added benefit of the study is that it confirms patterns observed in epidemiologic data,” the accompanying article said. “It adds to the substantial evidence that people of color accounted for a disproportionate share of hospitalizations and deaths during the pandemic.”

While Medicare claims data is limited in its usefulness for tracking health emergencies in real-time, Blumenthal and Jacobson noted that the data can shed light on the estimated costs of treating and preventing illness. This allows for a more informed allocation of funds.

Preliminary findings show that the US saw a significant decline in 2020, with a seven percent decline in hospital care spending, according to a recent AMA report. In addition, 2020 saw an estimated 4.2 percent decline in spending on physician and clinical services, and a 20.2 percent drop in dental services spending.

While costs are lower than expected across the board, the pandemic shed light on the disproportionate health risks and financial burden on vulnerable communities.