Decomposing Medicare Costs for Alzheimer's Disease and Related Dementias

Strategic Insights -

A recent study published in the Health Affairs Scholar journal has shed light on the factors contributing to differences in total Medicare costs and drug spending among beneficiaries with and without Alzheimer's disease and related dementias (ADRD). Utilizing Medicare fee-for-service claims data from 2018, 2019, 2021, and 2022, linked with the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey, the researchers aimed to examine the role of health status, socioeconomic characteristics, and access to needed medications in influencing Medicare spending.

Key Takeaways:

  • The study found that depression, heart disease, self-reported poor health, and functional limitations were major contributors to total spending differences among beneficiaries with ADRD, explaining 48% of the total Medicare spending difference.
  • Dual eligibility was a primary driver of higher Part D costs, but the model did not adequately explain differences in Part B drug costs.
  • The research emphasized the need for targeted interventions in mental health, cardiovascular care, and pharmaceutical policy to mitigate unmeasured drivers of Medicare spending among beneficiaries with ADRD.
  • The study highlighted the importance of decomposing Medicare payments to understand the complex factors influencing healthcare costs for individuals with Alzheimer's disease and related dementias.
  • The researchers noted that further research is needed to better understand unmeasured drivers of Medicare spending, especially physician-administered drug costs under Part B.
  • The University of Maryland team's findings underscore the critical need for targeted interventions in mental health, cardiovascular care, and pharmaceutical policy to address the complexities of healthcare costs for individuals with ADRD.

Statistics:

  • Total Medicare spending difference between beneficiaries with and without ADRD was explained by 48% of the model.
  • Part D drug cost gap between beneficiaries with and without ADRD was explained by 80% of the model.
  • Dual eligible beneficiaries had higher Part D costs compared to those who were not dual-eligible.
  • The model did not adequately explain differences in Part B drug costs.
  • The study analyzed Medicare fee-for-service claims data from 2018, 2019, 2021, and 2022.

Sources:

  • Research study: Decomposing Medicare total, Part D, and Part B drug payments among people with Alzheimer's disease and related diseases. Health Affairs Scholar, 2025;3(9).
  • Department of Health Policy and Management, School of Public Health, University of Maryland, College Park, MD 20742, United States.
  • NewsRx. Researchers at University of Maryland Target Alzheimer Disease (Decomposing Medicare total, Part D, and Part B drug payments among people with Alzheimer's disease and related diseases). Health & Medicine Week. October 17, 2025; p 97.