Matthew Baumgart

Matthew Baumgart

Vice President of Health Policy

Caring for an individual with Alzheimer's or other dementias poses unique challenges. According to the Centers for Medicare and Medicaid Services (CMS), more than 95% of individuals with dementia have one or more other chronic conditions, such as hypertension, heart disease, and diabetes. And a person with dementia is 4.4 times more likely to have six or more other chronic conditions as someone without dementia.

Managing these chronic conditions is impeded by an individual's cognitive impairment. As a consequence, health care utilization is significantly higher among seniors with dementia than among seniors without dementia. The annual hospitalization rate is twice as high; the use of skilled nursing facilities is nearly four times higher; and hospital/skilled nursing facility stays are nearly four times longer. In addition, on average, a senior with dementia will visit the emergency room more than once each year.  

All of this quickly adds up. A senior with diabetes and Alzheimer's, for example, costs Medicare 81% more each year than a senior who has diabetes but not Alzheimer's. Similarly, a person with both dementia and heart disease costs Medicare 60% more than a senior with only heart disease. In total, average per-person Medicare spending on seniors with Alzheimer's and other dementias is more than three times higher than for seniors without Alzheimer's and other dementias.

Many of these costs are simply unnecessary and could be avoided - if care was properly managed, and if people with dementia and their caregivers were not forced to fend for themselves through the complicated maze that is our health care system. Proper care for those diagnosed with dementia includes better coordination of care, seamless navigation across the multitude of providers, and timely access to care and interventions.

Fortunately, we know how to do this. Over the last decade, the Center for Medicare and Medicaid Innovation (CMMI) funded dementia care management pilot projects, including the University of California-Los Angeles's Alzheimer's and Dementia Care (ADC) program, the University of California-San Francisco's Care Ecosystem, and Eskenazi Health and Indiana University's Aging Brain Care (ABC) program. These models demonstrated that managing the care of people with dementia can reduce hospitalizations and emergency department visits and delay nursing home placement, thus improving outcomes and reducing total costs.

Despite their success, however, dementia care management programs are unlikely to develop organically under the current Medicare fee-for-service (FFS) system. Many practices are often operating at the margin and are unable to incur the upfront costs of developing, implementing, and sustaining a dementia care management program - especially because Medicare FFS does not provide reimbursement for many of the patient and caregiver services that are key to the program's success. Thus, while dementia care management has proven to save Medicare money, unless it is undertaken by a large, integrated health system, it is a money-losing proposition for those running the programs. That is, those providers incurring the costs of the dementia care management on the front end do not usually reap the savings on the back end. Small practices, rural practices, and inner-city community health centers will all find it difficult to provide a well-run, effective dementia care management program - which, in turn, will limit access for many diverse communities.

We need a different way of paying for these services if they are to become widely available.

Alternative payment models (APMs) are an approach to paying providers differently - including with incentive payments - for providing high-quality and cost-efficient care. While fee-for-service reimbursement focuses on the volume of care, APMs focus on - and pay providers for - the value of the care provided. CMS has implemented and CMMI is piloting a variety of APMs.

Two years ago, the Alzheimer's Association and the Alzheimer's Impact Movement started talking to experts in the field to figure out how we could develop an APM for dementia care management. We've spent the last year working with those experts in putting together a proposal that could readily be piloted by CMMI.

Our proposal utilizes the delivery framework of the dementia care management pilot programs previously funded by CMMI and creates a capitated and performance-based payment structure for reimbursing providers. The key elements of our proposed Dementia Care Management APM are:

Coordinated Care Management. The proposal uses an interdisciplinary care team of providers with expertise in dementia care management who employ a comprehensive, person-centered care management approach. Team members could include primary and specialty-care physicians, physician assistants, and advance practice nurses. The team would work collaboratively with a patient's health care providers as well as non-medical community-based organizations that provide support services for people with dementia and their caregivers.

Widespread Applicability. To increase the number of individuals able to participate in the program, including individuals from diverse communities, the model is designed so that it could be adopted by a variety of practice types, including individual practices, Federally Qualified Health Centers, and Rural Health Clinics. For example, "dementia care expertise" could be provided by physician assistants or advanced practice nurses rather than just physician specialists, and the program could employ telehealth services to extend its reach.  

Patient Access. Individuals with dementia would have increased access to care, community-based services, and resources. At a minimum, a patient would receive a continually-modified dementia care plan, evidence-based medication review, evaluation of caregiver supports and resources, care coordination and navigation services, and an environmental and behavioral safety and needs assessment.

Caregiver Inclusion. We propose several waivers to current Medicare policy - such as for caregiver support and cost sharing for caregiving services - to ensure that caregivers, who are an integral part of the care of a person with dementia, participate in the process and are appropriately supported.

Capitated Payment. Although the model would be delivered to those enrolled in Medicare FFS, we propose shifting away from the traditional FFS payment model to provide additional support and resources necessary for caring for this high-needs patient population. For each individual enrolled in the DCM APM, providers would receive a monthly per-patient fee based on case complexity and an individual's needs and resources.  

Outcomes-Based Approach. Provider performance would be assessed with meaningful quality indicators, encompassing both outcome and process measures as well as caregiver outcome measures. Among the indicators we suggest are reduced inpatient hospitalization, reduced emergency department visits, medication review, screening for fall risk, and caregiver stress. We propose a quality payment bonus for providers based on performance against the measures.

Our full proposal is available here.

While designed as an APM for CMMI to pilot in Medicare FFS, we also believe our proposal could easily be adopted by Medicare Advantage (MA) plans. While the payment methodology would not be relevant to MA plans that are completely integrated delivery systems, such as Kaiser Permanente, such systems are structured in a way that makes it relatively easy to institute a dementia care management program as outlined here. For MA plans that act as fee-for-service payers to their provider networks, such as UnitedHealthcare, they could adopt the proposal wholesale, including the alternative payment methodology for providers who undertake a dementia care management program. In both cases, the MA plans would save on the back-end costs through fewer hospitalizations and emergency room visits.

Much of the public discussion surrounding Alzheimer's disease has focused, importantly, on the need for biomedical research to find preventions and treatments. But we must not forget that millions of people living with Alzheimer's and other dementias need better care. There are proven ways to improve their quality of care and quality of life - and reduce Medicare spending - if we can break down the payment barriers standing in the way.


Centers for Medicare & Medicaid Services. Chronic Conditions Charts: 2017. Available at Accessed July 20, 2020.

Unpublished tabulations based on data from the National 5% Sample Medicare Fee-for-Service Beneficiaries for 2014. Prepared under contract for the Alzheimer's Association by Avalere Health, January 2016.

Alzheimer's Association. 2020 Alzheimer's Disease Facts and Figures. Alzheimers Dement 2020;16(3):391-460.

Jennings LA, Laffan AM, Schlissel AC, et al. The Effects of Dementia Care Co-Management on Acute Care, Hospice, and Long-Term Care Utilization. J Am Geriatr Soc June 23, 2020. Online ahead of print. doi: 10.1111/jgs.16667.

Possin KL, Merrilees JJ, Dulaney S, et al. Effect of Collaborative Dementia Care Via Telephone and Internet on Quality of Life, Caregiver Well-Being, and Health Care Use. JAMA Intern Med 2019;179(12):1658-1667.

French DD, LaMantia MA, Livin LR, et al. Healthy Aging Brain Center Improved Care Coordination and Produced Net Savings. Health Aff 2014;33(4):613-618.