The Relationship between a Dementia Diagnosis, Chronic Illness, Medicare Expenditures, and Hospital Use

OBJECTIVES: To determine whether dementia increases medical expenditures, the probability of hospitalization, and potentially preventable hospitalization, controlling for variables including age and comorbidity. DESIGN: Cross-sectional analysis of 1 year of claims data comparing usage by patients with claims for dementia with usage by those without dementia. SETTING: A nationally representative 5% random sample of Medicare beneficiaries in 1999. PARTICIPANTS: Medicare beneficiaries aged 65 and older with fee-for-service Medicare Parts A and B coverage for 1999 (N = 1,238,895; dementia patients n = 103,512). MEASUREMENTS: Per capita expenditures, rate of all-cause hospitalization, rate of preventable hospitalization as defined using ambulatory-care sensitive condition (ACSC) admissions, and dementia identified using International Classification of Diseases, 9th Edition, codes 290, 294, and 331. RESULTS: Prevalence of dementia was 8.3%. In a model of expenditures in those who survived the year adjusting for age, sex, race, and comorbidity, dementia was associated with an incremental cost of $6,927, or 3.3 times greater total expenditures than in nondementia patients (P<.001), with higher expenditures for each specific type of Medicare service. Hospitalization accounted for 54% of adjusted costs. The adjusted odds of hospitalization associated with dementia were 3.68 (95% confidence interval (CI) = 3.62-3.73) and adjusted odds of ACSC hospitalization were 2.40 (95% CI = 2.35-2.46). In those who died, the associations were positive but of smaller magnitude. CONCLUSION: In a nationally representative sample, higher Medicare expenditures associated with a diagnosis of dementia are in large part due to increased hospitalization. Further study is needed into the factors associated with high rates of hospitalization in dementia patients including aspects of ambulatory management that may be improved.