Alzheimer's Disease Under Managed Care: Implications from Medicare Utilization and Expenditure Patterns

BACKGROUND: Little information is available about the costs, utilization patterns, and the delivery system used by Medicare beneficiaries with chronic illnesses. This information will become increasingly important as more Medicare beneficiaries with chronic illness enroll in managed care plans and delivery systems must be developed to meet their needs. OBJECTIVES: To analyze health care expenditures and utilization patterns for Medicare beneficiaries with dementia of the Alzheimer type (DAT) and compare them with those of all Medicare beneficiaries. DESIGN: A cross-sectional study. SETTING: Practices providing services to Medicare beneficiaries in the U.S. SUBJECTS: Aged Medicare beneficiaries with DAT in fiscal year (FY) 1992. MEASUREMENTS: Medical expenditures and utilization patterns. RESULTS: In FY 1992, per capita Medicare expenditures for 9323 patients with DAT were $6208, or 1.9 times the per capita expenditure for all 1,221,615 beneficiaries in our sample. Inpatient care accounted for 62.7% of expenditures. Internal medicine was the specialty identified with the largest proportion of expenditures, but no single specialty accounted for the majority of care. Payments increased with comorbid conditions such as heart failure, chronic pulmonary diseases, and cerebrovascular disease. CONCLUSION: Current Medicare capitation payments to managed care plans may not meet the higher expected annual costs of care for beneficiaries with DAT. In turn, physicians (or physician groups) who accept capitation for Medicare beneficiaries with DAT should also consider how capitation rates are established by managed care plans and should learn ways to reduce financial risk.