The Real-World Medicare Costs of Alzheimer Disease: Considerations for Policy and Care

Abstract

Background: Headlines in popular media suggest that Alzheimer disease will bankrupt the Medicare program. Indeed, Alzheimer disease affects more than 5 million older Medicare beneficiaries.

Objective: To compare total Medicare-covered (allowed) costs of patients with Alzheimer disease with the risk adjusted costs of beneficiaries without dementia over their last years of life, using claims data.

Methods: Using the Medicare 5 Percent Limited Data Set claim files from 2006-2015, we conducted a cost impact analysis of costs for up to 8 years before the year of death. Risk adjustment was performed at a beneficiary level using Medicare's 2015 Hierarchical Condition Categories. Beneficiaries were classified into dementia categories based on their diagnoses during the last 3 years of life. Costs were trend adjusted to 2015.

Results: This study found that 40% of deceased beneficiaries have Alzheimer disease or unspecified dementia diagnoses in their claims history. In their last 9 years of life, Alzheimer disease added about 11% to the average $17,000 per year Medicare cost for same-risk beneficiaries without dementia.

Conclusions: Like many diseases, Alzheimer disease and dementia are associated with aging, but unlike other diseases, families and Medicaid, rather than Medicare, bear most of the substantial cost burden. As research continues into Alzheimer treatments, it is not too early to consider how to better integrate Medicare and Medicaid to fund and improve patient outcomes, which will likely involve better diagnosis, treatment, and care coordination.

Disclosures: Funding for this project was provided by the Alliance for Aging Research, which received funding from Biogen, Eli Lilly, and Janssen Pharmaceuticals. Peschin and Jenkins are employed by the Alliance for Aging Research. Scott was employed by the Alliance for Aging Research at the time of this study and also reports consulting fees from Piramal Imaging, General Electric, and Allergan, outside of this study. Scott is chair of the Board of Directors for the Alliance for Aging Research, which is a volunteer position, and is also president of Applied Policy, a health policy and reimbursement consultancy. Pyenson and Steffens are employed by Milliman, which was contracted to work on this study. Goss Sawhney and Rotter were employed by Milliman at the time this work was performed. Milliman is a consultant to thousands of organizations in the health care industry.

FIGURE 1

Medicare Yearly Cost Differentials Relative to No Dementia Beneficiaries^a

FIGURE 2

Percentage of Beneficiaries Who Are Dual Eligible by Year Before Death and Dementia Classification^a