IMPACT OF ACCOUNTABLE CARE ORGANIZATIONS ON MEDICARE COSTS AND HEALTHCARE QUALITY FOR PEOPLE WITH ALZHEIMER’S DISEASE AND RELATED DEMENTIAS

Abstract

Alzheimer’s disease and related dementias (ADRD) is one of the costliest health conditions, with total annual payments reaching $360 billion in 2024. With an accelerated aging population in the US, the number of people affected by ADRD is projected to double by 2060, significantly increasing pressure on the healthcare system. Accountable Care Organizations (ACOs) have the potential to save costs and improve the quality of care for high-need, high-cost beneficiaries, including those with ADRD. Despite the potential benefits of improved care coordination and chronic condition management, ACOs are unevenly distributed, and ADRD patients are less likely to enroll in ACOs. Using retrospective longitudinal cohort datasets, this dissertation aimed to examine the impact of ACO enrollment on total and subtypes of healthcare costs and how this effect varies by ACO quality among fee-for-service (FFS) beneficiaries with ADRD. Three independent studies are presented in this dissertation: the first examines the impact of ACO enrollment on total healthcare costs, focusing on neighborhood social vulnerability and its subcategories; the second examines the effect of ACO enrollment on prescription drug and non-drug costs, with a focus on comorbidity burden; and the third explores the role of ACO quality in reducing drug and non-drug costs among ACO enrollees with ADRD. Several important findings were identified. First, ACO enrollment was associated with reduced total costs across specific indicators of neighborhood social vulnerability. The highest cost savings from ACO enrollment were found among beneficiaries living in neighborhoods with high proportions of racial and ethnic minorities, highlighting the need to expand ACO enrollment to these vulnerable populations. Second, despite increasing cost trends in prescription drug spending, ACO enrollment was significantly associated with reduced drug and non-drug costs, particularly among ADRD patients with multiple coexisting comorbidities. This result suggests that higher medication costs in ACOs can more than offset non-drug costs and generate net cost savings for complex and high-cost ADRD patients. Finally, improving ACO quality was linked to reduced total, drug, and non-drug costs. These findings suggest that quality improvement and cost reduction can be achieved simultaneously, potentially due to improved care coordination and systematic efficiency.