Five-year cost of dementia to Medicare

According to a study, published in Health Services Research, and reported by Penn Medicine, researchers examined survival and Medicare expenditures in older adults with and without dementia to estimate dementia’s incremental costs to Medicare in the five years after diagnosis. Patients with dementia had significantly higher expenditures in the 12 months prior to diagnosis than patients without dementia ($17,116 vs. $10,085).

Norma Coe, Associate Professor, Medical Ethics and Health Policy, Perelman School of Medicine and her team looked at a sample of 4,010 older adults with dementia from the longitudinal Health & Retirement Survey, along with Medicare part A and B expenditures from 1991-2012, 12 months before and up to 60 months after diagnosis. They then estimated 5-year costs for those with a dementia diagnosis and for the same participants in the absence of dementia. Changes in survival and service use attributable to dementia was accounted for.  

The scientists found that most of the costs for treating patients with dementia are spent in the first year after diagnosis and that spending was nearly zero by year five.

Half of costs occurred in the first year, according to the report, and decreased each year until the difference in the presence and absence of a dementia diagnosis was nearly zero by the fifth year.

Implications from these results, according to the team:

·   Dementia’s incremental costs to Medicare are significant: the 480,000 patients newly diagnosed with Alzheimer’s in 2017 will add $3.2 billion to Medicare spending in the next five years.

·   Given lower costs in the last month of life, policies to reduce end-of-life costs for dementia patients may not be effective in reducing overall Medicare expenditures.

·    Forty percent of the sample was diagnosed in an inpatient setting, leading to high costs around the time of diagnosis. Future work should examine what role early detection could play in reducing these costs.

·   Subsequent research should explore sociodemographic differences in dementia costs and how to reduce preventable Part A service use.

"Dementia's cost to the traditional Medicare program is significant. Interventions that target early identification of dementia and preventable inpatient and post‐acute care services could produce substantial savings," stated the authors.