The drop followed the decline in use of healthcare services during the early stages of the COVID-19 pandemic.
For the first time in more than two decades, traditional Medicare spending fell in 2020 in the wake of COVID-19's arrival, according to a Kaiser Family Foundation report.
As healthcare services experienced a significant decline in the early months of the pandemic, the study found that spending among traditional Medicare beneficiaries on Part A and Part B services in decreased 5.8% from 2019 to 2020 ($369.5 billion to $348 billion).
Medicare spending per beneficiary fell 3.6% to $10,739 per person, compared to $11,142 in 2019.
Total Medicare spending increased, however, due to federal payments per Medicare Advantage (MA) enrolee rising 6.9%, according to the analysis, which used data from CMS. MA payments did not reflect the lower utilization of 2020 as they were determined in mid-2019 before the pandemic.
"Understanding how spending and utilization changed across different types of services in 2020 is useful for identifying areas where beneficiaries delayed or skipped care in response to the pandemic, which could have longer-term implications for health outcomes and Medicare spending," the authors of the study stated.
Only three types of Medicare services saw increases in usage in 2020: hospice, dialysis, and Part B drugs. The increase was by less than one percentage point though.
Meanwhile, the largest drops in usage were for imaging services, which fell 5.5%, followed by outpatient hospital services, which declined 4.8%.
Spending for most services decreased, ranging from 0.1% less for durable medical equipment to 13.1% less for procedures. Only spending on skilled nursing facilities, Part B drugs, and hospice increased from 2019.
It's unclear to what extent the decrease in usage affected Medicare beneficiaries, but the authors write that "it is possible that the decline in use could have negative implications for future health if people delayed routine care and screenings or were unable to schedule procedures in a timely manner, missing the opportunity for early diagnosis and treatment.
"The drop in utilization also has the potential to lead to higher future health care spending if more health care services are required or if treatments are more intensive."
While 2020 marked the first time Medicare spending declined since 1999, the study attributes the aberration to the pandemic and projects spending to rebound and continue growing.
The authors conclude: "There is a question of whether any of the changes in spending and use will be sustained, though the expectation is that these were most likely one-time, or otherwise short-lived, changes."
Jay Asser is the contributing editor for strategy at HealthLeaders.