How fee-for-service stymies promising, cost-saving dementia care programs

When a patient whose wife had dementia challenged gerontologists at the University of California, Los Angeles to come up with a better way to deliver her care, UCLA Health decided to try something different.

After securing donations and earning one of the first Center for Medicare and Medicaid Innovation Health Care Innovation grants, the health system now houses a program that’s helped thousands of patients and saved Medicare money over the last nine years.
Now, groups including the Alzheimer’s Association are pushing CMMI to explore a nationwide comprehensive dementia care demonstration that offers value-based payment to providers.
The current standard for dementia care is fee-for-service payment. Providers bill Medicare for each reimbursable service they deliver, and there isn’t any incentive to provide non-billable services that might enhance treatment. Unpaid family caregivers often end up shouldering most care-coordination burdens.
The stakes are high for finding a better way to care for dementia, experts say. Alzheimer’s disease—the most common cause of dementia—is projected to affect 7.2 million people by 2025, according to a 2021 report from the Alzheimer’s Association. That’s a nearly 16% increase from the disease’s prevalence in 2021.
The Alzheimer’s Association estimated dementia would cost Medicare $181 billion in 2021, and experts predict Aduhelm, Biogen’s newly approved and controversial Alzheimer’s therapy, will cost the program up to $29 billion a year if Medicare decides to cover it. Medicaid is projected to spend $59 billion on the disease in 2021.
“If they do nothing, then we’re guaranteed that the costs are going to skyrocket,” said Nora Super, executive director of the Milken Institute Alliance to Improve Dementia Care.
The UCLA Alzheimer’s and Dementia Care Program is one of several innovative models already set up around the country. At UCLA Health, a nurse practitioner coordinates care for patients referred by their primary care providers. Every patient gets a personalized care plan and is placed into categories based on their stability. Stable patients get check-in calls every couple months, while critical patients receive multiple calls a week, said Dr. David Reuben, the program’s director. Caregivers also get support from program staff.
The Alzheimer’s Association envisions a comprehensive care management model similar to UCLA Health’s that provides care coordination services, caregiver education, psychosocial interventions, medication review and other services to help enhance care. Patients are placed on treatment plans according to the complexity of their condition. Providers get paid a flat rate per beneficiary, with reimbursement adjustments made in relation to patients’ care pathways.
Studies point to better health outcomes and program savings from comprehensive dementia care. UCLA Health’s program reduced nursing home stays by about 40% and saved Medicare $2,404 per patient per year, according to a 2018 study. A 2020 paper found emergency room visits and length of hospital stays also went down, although hospitalizations and intensive care unit stays didn’t decline.
But there are barriers to expanding these models. Upfront costs such as hiring personnel make starting these programs nearly impossible for many interested providers, and health systems can even lose money with the way reimbursement is structured, Reuben said. Since UCLA Health’s CMMI grant ended in 2015, the health system has sustained the program mostly through philanthropy, foundation grants and its own funds. The program bills Medicare but reimbursements cover only a small portion of the costs, Reuben said.
“We can’t do it on what Medicare pays,” Reuben said.
Despite early data showing savings and improved outcomes, CMMI hasn’t yet made any moves to create a nationwide demonstration. CMMI may be influenced by Medicare Payment Advisory Commission recommendations to implement fewer, more coordinated alternative payment models, Super said.
CMMI doesn’t currently support any models that focus on dementia care but prioritizes demonstrations that drive accountable care, advance health equity, support care innovations, address affordability and help with system transformation, a CMS spokesperson said.

The Alzheimer’s Association is lobbying CMMI to reconsider and endorsed the Comprehensive Care for Alzheimer’s Act, which would encourage the agency to adopt a dementia care model like UCLA Health’s, said Rachel Conant, vice president of political affairs. The bill’s cosponsors include members of the House Energy and Commerce Committee, House Ways and Means Committee and Senate Finance Committee, which each has jurisdiction over Medicare policy.

In the meantime, Medicare Advantage plans seem a logical place to experiment with innovative dementia care through supplemental benefits. Heather Dobbert, a memory care specialist for the insurer Fallon Health educates caregivers on dementia and helps them plan for later disease stages. Fallon Health’s Program of All-inclusive Care for the Elderly, its Medicare Advantage plan and its dual-eligible, special needs plan refer patients for Dobbert’s services.
“The Medicare Advantage folks are the ones that I really want to work at connecting with more because these are folks that are not typically connected with any type of a care team,” Dobbert said.

Medicare Advantage carriers have been slow to adopt comprehensive dementia care models, Reuben said. However, CMS incorporated new codes for dementia diagnoses into the Medicare Advantage risk adjustment model in 2020 so there’s now a financial incentive for more people to be diagnosed with dementia. That could lead insurance companies to design more specific services for these patients, Super said.
Comprehensive care management and related alternative payment models are just one innovation that dementia advocates want to see. The Health and Human Services Department announced a goal in 2012 to cure Alzheimer’s by 2025.
But research over the past couple years has shown that dementia is complex and unlikely to be cured by a magic pill. That only heightens the importance of improving people’s quality of life while they have dementia, Super said.
“My pipe dream is one day when there’s a social worker in every primary care practice that has a solid knowledge base of dementia,” Dobbert said. “There’s just so much that needs to be done. But we’re getting there.”


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