Potential Alzheimer’s disease treatments could lead to significant state Medicaid savings

New disease-modifying treatments would help Medicaid avoid paying $186 billion from 2021 to 2040, a new USC study has found.

April 05, 2021 Jenesse Miller

Alzheimer’s disease treatments that slow progression of the disease could significantly reduce the financial burden on U.S. state budgets, according to a new USC study.

The study outlines how states — which have been hit particularly hard by the COVID-19 pandemic — would see relief: Medicare would cover the costs of treating the disease, while Medicaid expenditures would be reduced due to fewer patients entering nursing homes.

Assuming a 40% relative reduction of Alzheimer’s disease progression rates with treatment, researchers projected two decades of savings beginning in 2021, using a simulation model of state Medicaid programs. They forecast annual savings for Medicaid programs of $7.4 billion in 2030; by 2040, the annual savings would be more than $22 billion.

All told, the researchers calculated that disease-modifying treatments would help Medicaid avoid paying $186 billion from 2021 to 2040 by preventing over 1 million patient-years of nursing home use. The study was published in Alzheimer’s & Dementia: Diagnosis, Assessment and Disease Monitoring.

“With the introduction of an Alzheimer’s disease-modifying drug, Medicaid programs would be in a position to reap significant savings from avoided or delayed nursing home admissions because of reduced dementia progression and dependency on care,” said lead author Soeren Mattke, a research professor of economics at the Center for Economic and Social Research in the USC Dornsife College of Letters, Arts and Sciences.

The model assumes treatment would begin in the mild cognitive impairment or mild dementia disease stages and delay progression to more advanced stages. Delayed progression will not only improve quality of life for patients and caregivers but will also allow patients to live independently in their homes and communities longer, reducing the number of years which they would otherwise spend in nursing homes.

The study projected higher per capita savings for states with an older population, those with higher Medicaid payment rates, those with more nursing home residents covered by Medicaid and those with a lower federal contribution to their Medicaid programs.

State’s COVID-19 costs could be counterbalanced with savings from Alzheimer’s treatments

The researchers say an important consideration is that states will only realize the projected savings if patients are diagnosed and treated in a timely manner, which is challenging because of the large number of patients and the subtle nature of early-stage cognitive decline.

“How prepared each state’s health system will be to handle the large number of patients seeking treatment will influence the magnitude of the savings — and how fast they will accrue,” Mattke said. “The COVID-19 pandemic has taught us the need to plan ahead, and that is exactly what states need to do now.”

The study authors documented the devastating effect of the COVID-19 pandemic on U.S. state coffers. Sweeping budget cuts in many states are inevitable; at the same time, Medicaid enrollment is expected to increase.

However, the researchers said, an unexpected source of savings to states may be on the horizon with disease-modifying treatments for Alzheimer’s disease. For example, the FDA is reviewing an application for the first disease-modifying treatment, with a decision expected in early June. Applications for similar drug candidates may be forthcoming.

Additional authors include Jenny Lam, Hankyung Jun, Sang Kyu Cho, and Mark Hanson of USC.

The study was funded through a research contract from Biogen, Inc. to USC. The sponsor provided editorial suggestions on an earlier draft of the manuscript and had no other involvement in the study design, analysis and decision to submit. Soeren Mattke serves on the board of directors of Senscio Systems, Inc., and the scientific advisory board of AiCure Technologies and Boston Millennia Partners. He has received consulting fees from AARP, Biotronik, Bristol-Myers Squibb and Defined Health. The other authors report no potential conflicts.