Medicare Spending Associated with a Dementia Diagnosis Among Older Adults

Background: Over 6 million Americans have Alzheimer's Disease or Related Dementia (ADRD) but whether spikes in spending surrounding a new diagnosis reflect pre-diagnosis morbidity, diagnostic testing, or treatments for comorbidities is unknown.

Methods: We used the 1998-2018 Health and Retirement Study and linked Medicare claims from older (≥65) adults to assess incremental quarterly spending changes just before versus just after a clinical diagnosis (diagnosis cohort, n = 2779) and, for comparative purposes, for a cohort screened as impaired based on the validated Telephone Interview for Cognitive Status (TICS) (impairment cohort, n = 2318). Models were adjusted for sociodemographic and health characteristics. Spending patterns were examined separately by sex, race, education, dual eligibility, and geography.

Results: Among the diagnosis cohort, mean (SD) overall spending was $4773 ($9774) per quarter - 43% of which was spending on hospital care ($2048). In adjusted analyses, spending increased by $8400 (p < 0.001), or 156%, from $5394 in the quarter prior to $13,794 in the quarter including the diagnosis. Among the cohort in which impairment was incidentally detected using the TICS, adjusted spending did not change from just before to after detection of impairment, from $2986 before and $2962 after detection (p = 0.90). Incremental spending changes did not differ by sex, race, education, dual eligibility, or geography.

Conclusion: Large, transient spending increases accompany an ADRD diagnosis that may not be attributed to impairment or changes in functional status due to dementia. Further study may help reveal how treatment for comorbidities is associated with the clinical diagnosis of dementia, with potential implications for Medicare spending.