Medicare expenditures attributable to dementia

Objective To estimate dementia's incremental cost to the traditional Medicare program. Data Sources Health and Retirement Study ( HRS ) survey‐linked Medicare part A and B claims from 1991 to 2012. Study Design We compared Medicare expenditures for 60 months following a claims‐based dementia diagnosis to those for a randomly selected, matched comparison group. Data Collection/Extraction Methods We used a cost estimator that accounts for differential survival between individuals with and without dementia and decomposes incremental costs into survival and cost intensity components. Principal Findings Dementia's five‐year incremental cost to the traditional Medicare program is approximately $15 700 per patient, nearly half of which is incurred in the first year after diagnosis. Shorter survival with dementia mitigates the incremental cost by about $2650. Increased costs for individuals with dementia were driven by more intensive use of Medicare part A covered services. The incremental cost of dementia was about $7850 higher for females than for males because of sex‐specific differential mortality associated with dementia. Conclusions Dementia's cost to the traditional Medicare program is significant. Interventions that target early identification of dementia and preventable inpatient and post‐acute care services could produce substantial savings.