Study: Medicare Spending Could Reach $115 Billion on COVID-19 Care

• by Christian Worstell
• February 5, 2021

Published March 27, 2020

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The novel coronavirus (COVID-19) pandemic has the potential to inflate Medicare spending by up to $115 billion over the next year, according to a recent study released by the National Association of Accountable Care Organizations (NAACOS).¹

The study analyzed inpatient admission rates for COVID-19 incidents, the potential spread of infection and the average cost for a 90-day hospital stay due to pneumonia, which is among the deadly complications of COVID-19.

The data included costs for hospitalization, rehabilitation, skilled nursing care, home health care and ambulatory services.   

COVID-19 effects on doctors and hospitals

Accountable care organizations (ACOs) may bear the brunt of COVID-19 treatment costs.

An accountable care organization is a network of doctors and hospitals that share a financial and medical responsibility for providing coordinated care to patients. ACOs are created in an effort to limit unnecessary health care spending.

ACOs typically feature a primary care physician (PCP) who coordinates patient care with various specialists throughout the organization’s network. Some types of Medicare Advantage plans (Medicare Part C) operate as an ACO.

The ACO model encourages quality of care by reimbursing providers on a basis of patient outcome as opposed to the number of services rendered. 

ACO’s must meet a benchmark spending target. If they stay under that benchmark, they receive a share of the cos savings. But if they exceed the benchmark spending, they must reimburse Medicare for the difference. 

Doctors and hospitals in ACOs will most likely face unprecedented treatment costs due to the ongoing COVID-19 outbreak.

The Centers for Medicare & Medicaid Services (CMS) announced several measures of regulatory relief for ACOs and other value-based programs during the COVID-19 outbreak, including the extension of deadlines for quality-of-care reporting.

Notes on the NAACOS study

The NAACOS study authors noted a few caveats to their data:

• While the high end of the treatment costs estimate was $115 billion, the low end was $38 billion. The COVID-19 outbreak remains a fluid situation, and its full potential effects remain unknown at this time.
  
  
• Because the outbreak is still in its relative infancy, there is only a limited amount of data pertaining to health care utilization due to the disease.
  
  
• Estimates are based on how other countries, like China, have dealt with the disease. Those practices could differ from how patients are treated in the U.S. 

The adoption of extreme social distancing measures could also potentially affect infection rates and treatment costs.

About the author

Christian Worstell is a senior Medicare and health insurance writer with MedicareAdvantage.com. He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christian has written hundreds of articles for MedicareAvantage.com that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at Mike@tzhealthmedia.com.

 

 

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