Incremental Dementia-Related Expenditures in a Medicaid Population

Objectives: With the growing number of older adults, understanding expenditures associated with treating medical conditions that are more prevalent among older adults is increasingly important. The objectives of this research were to estimate incremental medical encounters and incremental Medicaid expenditures associated with dementia among Indiana Medicaid recipients 40 years or older in 2004. Methods: A retrospective cohort design analyzing Indiana Medicaid administrative claims files was used. Individuals at least 40 years of age with Indiana Medicaid eligibility during 2004 were included. Patients with dementia were identified via diagnosis codes in claims files between July 2001 and December 2004. Adjusted annual incremental medical encounters and expenditures associated with dementia in 2004 were estimated using negative binomial regression and zero-inflated negative binomial regression models. Results: A total of 18,950 individuals (13%) with dementia were identified from 145,684 who were 40 years or older. The unadjusted mean total annualized Medicaid expenditures for the cohort with dementia ($28,758) were significantly higher than the mean expenditures for the cohort without dementia ($14,609). After adjusting for covariates, Indiana Medicaid incurred annualized incremental expenditures of $9,829 per recipient with dementia. Much of the annual incremental expenditure associated with dementia was driven by the higher number of days in nursing homes and resulting nursing-home expenditures. Drug expenditures accounted for the second largest component of the incremental expenditures. On the basis of disease prevalence and per recipient annualized incremental expenditures, projected incremental annualized Indiana Medicaid spending associated with dementia for persons 40 or more years of age was $186 million. Conclusions: Dementia is associated with significant expenditures among Medicaid recipients. Disease management initiatives designed to reduce nursing-home use among recipients with dementia may have much potential to decrease Medicaid expenditures associated with dementia. (Am J Geriatr Psychiatry 2012; 20: 73-83)