The Finance Of Aging

Alzheimer's Disease Is Not Bankrupting Medicare...

… But it’s taking a huge toll on State Medicare programs, and family caregivers

A Medicare Claims Study Conducted by the Alliance for Aging Research and Milliman, Published in the Journal of Managed Care and Specialty Pharmacy, Finds that Families and State Medicaid Programs, Not Medicare, Are Burdened with the Costs of Alzheimer’s Disease. Visit here for more information.

Jun 25, 2019 — The results of a Medicare claims study which found that families and state Medicaid programs, not Medicare, are burdened with the majority of costs associated with Alzheimer’s disease (“Alzheimer’s”, or AD). The study, conducted by the Alliance and Milliman, was published in the July issue of Journal of Managed Care and Specialty Pharmacy. The results, which will be discussed in-depth this Thursday at an event in Washington, D.C., demonstrate the importance of better diagnosis, treatment, and care of individuals with Alzheimer’s, which could lead to more favorable patient outcomes and improved costs for state Medicaid programs and caregivers.

The study, titled “The Real-World Medicare Costs of Alzheimer’s Disease: Considerations for Policy and Care,” found that even though many Medicare beneficiaries are impacted by Alzheimer’s disease, Medicare spending on Alzheimer’s disease is low. Medicare covers medical screening, diagnosis, treatment and only limited short-term care associated with Alzheimer’s disease. It is families and state Medicaid programs who bear the brunt of the remaining costs of this expensive disease. The study results highlight that it is not too early to consider how to better integrate Medicare and state Medicaid programs to fund and improve patient outcomes, which will likely involve better diagnosis, treatment, and care coordination.

Need To Integrate Medicare and state Medicaid

“Contrary to what you might read in the media, Alzheimer’s disease is not bankrupting Medicare. While most patients with Alzheimer’s disease are beneficiaries of Medicare, it is state Medicaid programs and families that are facing most of the costs,” said Susan Peschin, MHS, President and CEO of the Alliance for Aging Research. “This study highlights the importance of more efficiently integrating Medicare and state Medicaid programs to improve patient outcomes when it comes to Alzheimer’s disease and dementia. We encourage the establishment of more support services for caregivers of Alzheimer’s and dementia patients, which have been shown to save money for patients and their caregivers.”

The study examined almost 340,000 Medicare beneficiaries using nine years of Medicare claims data and compared end of life costs in the years prior to the death of individuals with Alzheimer’s disease and dementia to individuals without dementia. At the time of death, approximately 21 percent had Alzheimer’s, 18 percent had general dementia, 54 percent had no dementia, and 11 percent had Parkinson’s disease or another specific dementia at death.

Lead author Bruce Pyenson, an actuary, said that both the findings and methodology could change the discussion of Alzheimer’s disease. “Our findings based on data from tens of thousands of Medicare beneficiaries with dementia demonstrate that Alzheimer’s disease is not bankrupting Medicare. By using Medicare’s risk adjustment methodology and by examining the pattern of costs in the years before death, our methodology avoided attributing costs to Alzheimer’s that were from unrelated conditions.” Pyenson noted that using big data for Alzheimer’s research is promising. “We were able to find that poverty is an important influence on the subsequent diagnosis of Alzheimer’s disease, and the diverse patterns of diagnosis may support the view that Alzheimer’s has multiple causes.”

Last 8 Years of Life

By using Medicare's risk adjustment methodology and by examining the pattern of costs in the years before death, our methodology avoided attributing costs to Alzheimer's that were from unrelated conditions...

In the last eight years of life, the average annual Medicare cost for Alzheimer’s disease was $19,211, compared to $17,110 for individuals without dementia. In beneficiaries’ last year of life, Medicare spending for Alzheimer’s disease patients was $1,342 lower than other beneficiaries’. Much of the cost associated with Alzheimer’s disease is not covered by Medicare, reinforcing the importance of policy and programs to better diagnose and treat Alzheimer’s.

The authors of the study include: Bruce Pyenson, FSA, MAAA; Tia Goss Sawhney, DrPH, FSA, MAAA; Charles Steffens, ASA, MAAA; David Rotter, PhD; Susan Peschin, MHS; James Scott, JD; and Ellen Jenkins, BS.

“There are still far too many people whose dementia diagnoses are either missed entirely or identified in a general way, without confirming the cognitive issue,” said Jim Scott, President, Applied Policy. “Despite the availability of PET imaging which has been shown to detect the presence or absence of amyloid plaques in the brain, one of the hallmarks of Alzheimer’s, Medicare will not cover the test for the vast majority of people who could benefit from it. Study findings show that physicians change the clinical management of more than 60 percent of patients who get the test. In many cases, people previously diagnosed with Alzheimer’s are found not to have the dreaded disease and actually have a treatable condition.”

This study was funded by the Alliance for Aging Research, which received funding from Biogen, Eli Lilly, and Janssen Pharmaceuticals. The full study is available on the Journal of Managed Care and Specialty Pharmacy website.




For more information about the Alliance for Aging Research’s work on Alzheimer’s disease, click here.
About the Alliance for Aging Research
The Alliance for Aging Research is the leading nonprofit organization dedicated to accelerating the pace of scientific discoveries and their application to vastly improve the universal human experience of aging and health. The Alliance was founded in 1986 in Washington, D.C., and has since become a valued advocacy organization and a respected influential voice with policymakers.
About Milliman
Milliman is among the world’s largest providers of actuarial and related analytics. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit