How Much Do Persons with Alzheimer's Disease Cost Medicare?

BACKGROUND: Medicare claims are increasingly being used to identify persons with chronic diseases such as Alzheimer's disease (AD) for the purpose of determining the cost to Medicare of caring for such persons. Past work has been limited by the use of only 1 or 2 years of claims data to identify cases, leading to worries that this might lead to an undercount of prevalent cases and bias cost findings. OBJECTIVES: To analyze the average total cost to the Medicare program in 1994 of persons with a claims‐based diagnosis of AD, using a 12‐year period of claims history to identify prevalent cases, and to investigate the effect on cost of time since diagnosis. DESIGN: A cross‐sectional design with a 12‐year retrospective period to identify persons with AD. SETTING: Medical care practices, hospitals, and other providers of services to Medicare beneficiaries in the US in 1994. SUBJECTS: Respondents to the screener (n = 10,858) and community (5429) and institutional (n = 1341) questionnaire of the 1994 National Long Term Care Survey, with and without a claims‐based diagnosis of AD. MEASUREMENTS: Average total cost to Medicare in 1994, measured as the actual amount Medicare paid for inpatient, outpatient, home health, skilled nursing facility, hospice, and Part B services, including payments to physicians, and other items such as durable medical equipment. We also measured disability in a variety of ways, including cognition, activity limitations, and residence in a nursing home. RESULTS: The average total cost to Medicare of persons with a claims‐based diagnosis of AD was $6021 versus $2310 (P < .001) for persons without a diagnosis. When adjusting for patient characteristics, the ratio of cost between persons with AD and those without was reduced to about 1.6 to 1. Time since diagnosis was an important predictor of average total cost in 1994, with each additional year since diagnosis resulting in a $248 (P = .04) decrease in total cost (about 10% of the total sample mean cost of $2426). There was mixed evidence that persons with a diagnosis of AD incurred less cost than otherwise similarly disabled Medicare beneficiaries. CONCLUSIONS: Time since diagnosis with AD is an important predictor of cost and one that should be explicitly included in any rate‐setting formula. Expanding the period used to identify cases resulted in an increase in the unadjusted ratio of cost of a Medicare beneficiary with AD relative to one without primarily because our control group costs