The cost of Alzheimer's disease in managed care: a cross-sectional study.

Background: The number of people with Alzheimer’s disease (AD) is expected to grow as the US population ages. Given the increasing enrollment in managed care organizations, growth in the number of managed care patients with AD is a certainty. To our knowledge, no study to date has focused on the cost of care of community-dwelling AD patients receiving care through a health maintenance organization (HMO) system. Methods: One hundred and fifty patients were recruited from 4 managed care sites from July through December 1996. Staff at each site clinically confirmed patients’ AD diagnosis, AD severity, and ascertained patients’ comorbidities. Demographic, quality of life, and service utilization data were collected from proxy respondents. Costs of hospitalization, medications, doctor visits (formal costs), and caregiver assistance (informal costs) were analyzed separately. Results: The average total (formal and informal) per-patient costs in the 4 settings in 1996 were $18,804. Costs increased with cognitive impairment. For patients with mild, moderate, and severe AD, annual total costs were $14,904, $19,272, and From Project Hope, Center for Health Affairs, Bethesda, MD (J.L.) and the Department of Health Policy and Management, Harvard School of Public Health, Boston, MA (P.N.). This research was supported by Outcomes Research Group, Pfizer, Inc, New York, NY. Address correspondence to: Joel Leon, PhD, Senior Research Director, Project Hope, Center for Health Affairs, 7300 Old Georgetown Road, Suite 600, Bethesda, MD 20814-6133. Alzheimer’s disease (AD) afflicts 5.7% to 10% of the US population older than 65 years of age, and its prevalence increases dramatically with each succeeding decade of life.1 Estimates indicate that 25% to 45% of the elderly who are 85 years old or older have AD.1-3 As the population of the United States ages, the number of people with AD is expected to grow. AD is a brain disorder characterized by a progressive dementia that occurs in middle or late life.4,5 AD patients often require progressively more supportive services such as personal care assistance and homemaking as their ability to carry on basic and instrumental activities of daily living (ADLs and IADLs) becomes more impaired.6 Inevitably, neurodegeneration ultimately leads to the breakdown of most $25,860, respectively. Annual direct costs were $5520, $7044 and $10,992, respectively. Conclusion: Across all severity levels, we calculated a total annual cost of $8.8 billion for managed care enrollees older than 65 years in the United States. We did not estimate these costs for the population younger than 65 years because of the variability in AD prevalence estimates. Due to the increased costs for patients with more severe AD, interventions that would reverse or delay progression may result in significant cost savings. (Am J Manag Care 1999;5:867-877) basic biological functions, resulting in the need for palliative care as well as aggressive medical treatment.7 The amount of informal care (ADL assistance) and formal care (medical treatment) AD patients require increases as the severity of the disease worsens.8 Care at all severity levels is typically provided by families and friends when available. For patients remaining in the community, informal care is generally supplemented through formal services— paid for through various public and private insurance programs and by out-of-pocket payments made by patients and their families. Increasingly, people older than age 65 are electing to enroll in Medicare health maintenance organizations (HMOs) that may offer lower out-of-pocket expenses9 and additional benefits, such as prescription drug coverage not provided by Medicare.10 In 1994, 8.1% of Medicare-eligible persons were enrolled in an HMO plan; in 1996 this figure had increased to 12.7%, or 4.9 million people.10 Given the increasing number of elderly people entering managed care organizations (MCOs) under Medicare and Medicaid mandates, further growth in the number of MCO patients with AD is likely.11 Therefore, knowledge of how MCOs care for AD patients and the cost of that care is critical. Since the inception of Medicare in 1965, its mental health policies have changed. Formerly its reimbursement policies focused on inpatient care and provided limited outpatient services—especially for mental health.12 Until 1988, outpatient mental health expenditures were covered up to $500 annually, with a 50% copayment.13 Reimbursement reforms under the Omnibus Budget and Reconciliation Acts (OBRA) of 198714 and 198915 resulted in a 20% increase in the number of covered outpatient mental health services, removal of the annual cap for outpatient mental health services,16,17 and extension of provider status to social workers and psychologists.12 Despite these improvements, the majority of elderly patients with mental disorders still lack adequate services and reimbursement.16,18 Federal and state reimbursement remains limited or nonexistent for adult day care, assisted living, residential care, and respite services that are essential dementia care services.19 To date, little has been published on the informal and formal costs of AD in managed care. This study has 2 principal objectives: (1) to estimate the impact of AD on managed care patient outcomes, including health-related quality of life (HRQOL), and service utilization, and (2) to provide cost estimates of formal and informal service consumption for mildly, moderately, and severely impaired AD patients in MCOs.