Medicare Spends Three Times More on Patients with Dementia

Alzheimer's Association
Thursday, 12 June 2003

Medicare's failure to pay for coordinated care for people with Alzheimer's disease drives up costs to a level three times higher than for other beneficiaries. That is the conclusion drawn from the first-ever analysis of Medicare fee-for-service claims data that connects Medicare costs to dementia and other chronic health conditions.

As a program designed to ensure against acute episodes requiring care, Medicare is structured to intervene when a health crisis occurs. It is organized around specific episodes of illness and narrow concepts of prevention, not the kind of ongoing monitoring and consultation required to improve outcomes for Alzheimer's patients.

"Medicare is spending too much money on the wrong kind of health care for beneficiaries who have complex chronic illness," said Stephen McConnell, senior vice president for the Alzheimer's Association. "The cost of already-expensive conditions like coronary heart disease, congestive heart failure or diabetes doubles when Alzheimer's disease is present. It's fair to say Alzheimer's is increasingly the cost driver in Medicare."

The analysis, researched by the Alzheimer's Association finds:

• Nearly 10 percent of elderly Medicare beneficiaries have dementia. They are costing Medicare three times more than other elderly beneficiaries ($13,207 versus $4,454 annually).
• The differences are most dramatic for younger beneficiaries. For those 65 to 74 years old, average costs for beneficiaries with dementia are 4.2 times higher.
• The largest part of this cost is for hospital care. Beneficiaries with dementia are in the hospital 3.4 times more often than other elderly beneficiaries, at 3.2 times the cost.
• Patients with dementia see their doctors at the same rate as others, but have hospital, home health and skilled nursing facility costs at least three times higher - indicating they have more acute health episodes.

This suggests beneficiaries with Alzheimer's disease are not getting the ongoing care management they need.

"Medicare assumes that patients with chronic illness will be able to direct their own care, but this cannot work for someone with dementia," said McConnell. "Almost all beneficiaries with Alzheimer's or other dementias (95 percent) have at least one other chronic health condition, but their impaired memory, judgment and reasoning ability make it impossible for them to follow medication instructions or nutritional regimens, or to recognize signs that their condition is getting out of control. They wind up in the hospital getting the most expensive kind of care."

That could change, McConnell said, if Medicare were to include a targeted care coordination benefit for beneficiaries with complex chronic conditions that put them at risk of poor health outcomes and high care costs, especially those with dementia. He noted that such a benefit has been included in a number of pending Medicare proposals, including the Geriatric Care Act.

"Even simple interventions - early identification of dementia, consultation among care providers, education and ongoing support for caregivers - can reduce hospitalization and delay nursing home placement, lowering costs and improving health results for the patients and those who care for them," said McConnell.

The Alzheimer's Association calls for the following changes in the Medicare program to improve health outcomes for beneficiaries with dementia and to control the high cost of their care:

• A targeted care coordination benefit for those with complex chronic conditions that put them at risk of poor health outcomes and high care costs, including those who cannot manage their own care due to Alzheimer's disease or another dementia. The benefit would include payment to the beneficiary's primary health care provider for an initial assessment and development of a coordinated care plan, and a monthly payment to the provider for core activities that include:
  • coordination of clinical care across health care providers
  
  
  • multidisciplinary care conferences
  
  
  • management of transitions of care across practice settings and between providers
  
  
  • medication management, review and oversight
  
  
  • education, counseling and ongoing consultation with the patient and family
  
  
  • referral to and coordination with community resources
  
  
  • information about and assistance with end-of-life decision-making, including hospice and palliative care
• A limited home visit benefit, allowing visits by a nurse or other health care professional to monitor health status and managing a change in condition or treatment regimen, or during transitions in care settings
• An affordable prescription drug benefit combined with effective medication management to prevent over- or under-utilization of drugs and adverse drug interactions.

For the long term, McConnell noted, the future of Medicare depends on finding a way to check the explosion of Alzheimer's disease, which is now projected to affect 14 million beneficiaries by mid-century, when the babyboomers reach the age of maximum risk. McConnell said that science is on track to find a way to slow or prevent onset and progression of the disease. "

If we can get treatments in place by 2010, we could reduce the numbers with the disease by one-third," he said. "Equally important to Medicare, among those who still get the disease, we could reduce the number in the moderate to severe stages - those who cannot manage their own care - by 60 percent." The Alzheimer's Association is calling for a $1 billion annual investment in Alzheimer research at the National Institutes of Health.

For more information, or to contact Alzheimer's Association, see their website at: www.alz.org