Cost of Alzheimer's disease and related dementia in managed-medicare.

Background: Managed care organizations (MCOs) will have increased responsibility for the care of large numbers of persons with dementia. There are, however, few studies that inform about decisions of healthcare utilization and expenditures for individuals with dementia in managed care.

Objectives: To examine in a large MCO whether people diagnosed with dementia have higher healthcare utilization and costs than enrollees without dementia.

Design: A retrospective study of medical and prescription claims.

Setting: An MCO covering more than 80,000 Medicare enrollees in four geographical locales between January 1, 1996, and March 31, 1998.

Subjects: There were 677 paired cases with and without dementia. Controls were selected randomly and matched to cases on age, gender, and region.

Measurements: Summed total costs and number of claims accrued during the study period, as well as a breakdown of costs and claims with respect to place of service, were annualized and adjusted for age, gender, and comorbid conditions. Costs and claims were broken down by place of service.

Results: Dementia prevalence was 0.83%. Mean total costs were 1.5 times higher for patients with dementia relative to controls ($13,487 vs $9,276, P < .001) when annualized and adjusted for level of comorbidity. Almost 75% of the higher costs among cases were linked to inpatient expenses.

Conclusions: Higher costs for individuals with dementia and disproportionate inpatient costs in this MCO parallel patterns among Medicare enrollees in fee-for-service. The high prevalence of dementia among the oldest old coupled with the high costs of dementia care create very significant clinical and financial incentives for managed care plans to improve the care of members suffering from dementia.