Decomposing Medicare Total, Part D, and Part B Drug Payments among People with Alzheimer’s Disease and Related Diseases

Introduction This study aims to examine the extent to which health status, socioeconomic characteristics, and access to needed medications contribute to differences in total Medicare costs and drug spending among beneficiaries with and without Alzheimer’s disease and related dementias (ADRD). Methods We used Medicare fee-for-service (FFS) claims data from 2018, 2019, 2021, and 2022, linked with the CAHPS survey, to examine factors associated with total Medicare spending, Part D drug spending, and Part B drug costs. Decomposition analysis was conducted to quantify the contribution of individual characteristics to observed cost differences by ADRD status. Results Our model explained 48% of the total Medicare spending difference and 80% of the Part D drug cost gap between beneficiaries with and without ADRD. Depression, heart disease, self-reported poor health, and functional limitations were major contributors to total spending differences. Dual eligibility was a primary driver of higher Part D costs. However, the model did not adequately explain differences in Part B drug costs. Conclusion These findings underscore the need for targeted interventions in mental health, cardiovascular care, and pharmaceutical policy. Further research is needed to better understand unmeasured drivers of Medicare spending, especially physician-administered drug costs under Part B, among beneficiaries with ADRD.