Dementia and Medicare at Life's End

Alzheimer's disease and related dementias (ADRD) affect 3–11 percent of the United States elderly (Leon, Cheng, and Neumann 1998; Hill et al. 2002), and prevalence increases dramatically with age such that more than 47 percent of persons aged 85+ years are estimated to have ADRD (U.S. General Accounting Office 1998). Rates of dementia among the elderly appear to be rising (Foley, Brock, and Lanska 2003; Taylor, Sloan, and Doraiswamy 2004) due to population aging and improved diagnoses. Education has a protective effect in that persons with higher levels of education are less likely to experience cognitive decline (Cagney and Lauderdale 2002; Lee et al. 2003). Some studies indicate that women have higher rates of dementia, particularly of the Alzheimer's type (Gao et al. 1998;Barnes et al. 2005), primarily due to longer life expectancy (Hebert et al. 2001). African Americans have higher rates of dementia diagnoses, higher rates of health services use, and lower scores on cognitive tests, in part because of higher prevalence of hypertension and stroke and lower educational attainment levels (Husaini et al. 2003; Sloan and Wang 2005). Dementia imposes substantial costs on Medicare (Weiner et al. 1998; Taylor and Sloan 2000; Bynum et al. 2004) and other payment sources, e.g., for formal and informal health care (Menzin et al. 1999; Taylor et al. 2001). Persons with ADRD typically have more comorbidities (McCormick et al. 2001; Hill et al. 2002) and are more likely to use long-term nursing home care (Magaziner et al. 2000; Smith, Kokmen, and O'Brien 2000), particularly at the end of life. It is difficult to evaluate the impact of ADRD on health expenditures because estimated medical costs attributable to dementia vary widely depending on study methodology (Bloom, de Pouvourville, and Straus 2003), with the largest variation reported in studies of ADRD costs without control populations. With some exceptions (e.g., Kinosian et al. 2000), most studies are based on cross-sectional data. Uncontrolled studies of medical expenditures for persons with ADRD can be useful for estimating current and projected costs associated with the dementia for persons with this diagnosis. However, such estimates give no indication of any added burden of dementia diagnosis on Medicare and other health care expenditures. Studies only including persons with dementia cannot address confounding characteristics, such as comorbidities, which may be associated with higher medical costs regardless of dementia diagnosis. Several U.S. studies have compared differences in annual medical costs between demented and nondemented elderly, using data from managed care organizations (MCOs) (Richards et al. 2000; Hill et al. 2002), Medicare files (Weiner et al. 1998; Newcomer et al. 1999; Bynum et al. 2004), and nationally representative surveys with linked Medicare files (Taylor and Sloan 2000; Taylor et al. 2001). Such studies match demented and nondemented persons on characteristics, such as age and gender, and estimate medical expenditure differences with nonparametric statistics, or estimate hazard or other regression models controlling for covariates. Most studies using control groups have found annual Medicare expenditures to be roughly 1.6 times higher for persons diagnosed with dementia. In all studies, higher costs were primarily due to significantly higher hospitalization costs. Other Medicare services contributing to higher ADRD costs include skilled nursing facility (SNF) and physician services. Most research comparing costs incurred by ADRD and non-ADRD persons is cross-sectional. Dementia is a major predictor of death among the elderly (Tschanz et al. 2004), and survival time after onset is reduced with increased levels of severity (Larson et al. 2004; Tschanz et al. 2004). If a diagnosis of dementia occurs near death, medical expenditures would be likely to be relatively higher (Hogan et al. 2001). Cross-sectional data are likely not to capture such effects on expenditures unless data collection is explicitly oriented to capturing events and costs at the end of life or controlling for higher risks of mortality (Newcomer et al. 2005). Indeed, most of these studies did not explicitly consider proximity to death. Thus, the subjects may be in different stages of illness, even when controlling for age, as health care costs are more correlated with time to death rather than age (Yang, Norton, and Stearns 2003). Few studies have compared medical costs for demented and nondemented persons at the end of life. McCormick et al. (2001) examined end-of-life Medicare costs for patients in an established MCO. Their sample consisted of persons already diagnosed with AD or with other dementias 3 years before death and a comparison sample of nondemented persons. They found no or lower Medicare cost differences for both demented groups compared with the nondemented during the last 3 years and the last year of life. McCormick et al. did not control for timing of ADRD diagnosis, and thus did not consider the health care cost effects of a dementia diagnosis within the last few years of life, particularly in the last year of life when health care costs soar. However, their research does indicate that a long-term ADRD diagnosis is associated with reduced Medicare cost differences. The current study addresses some of the issues raised in previous research. The purpose of our study is to compare ADRD and non-ADRD Medicare fee-for-service expenditures to estimate the effect of any ADRD diagnosis on expenditure differences during the last 5 years of life. A second goal is to assess whether having a dementia diagnosis for a longer period before death reduces Medicare fee-for-service expenditure differences, as McCormick et al. (2001) found using MCO data. A third goal is to extend such results to evaluate the impact of ADRD onset in the last few years of life on Medicare expenditure differences at the end of life.