After Risk-Adjustment Change, Dementia Diagnoses Increased In Medicare Advantage Relative To Traditional Medicare

In 2020, the Centers for Medicare and Medicaid Services reintroduced Alzheimer's disease and related dementias to its risk-adjustment payment model for Medicare Advantage (MA) plans. Using 2017-20 data for 100 percent of community-dwelling beneficiaries enrolled in Medicare, we evaluated how the reintroduction of dementia to the risk-adjustment model affected rates of new (incident) dementia diagnoses among beneficiaries enrolled in MA relative to those enrolled in traditional Medicare. In response to the payment change, annual incident dementia diagnosis rates in MA increased by 11.5 percent relative to traditional Medicare. This increase was concentrated among beneficiaries who were more likely to have undiagnosed dementia-specifically, beneficiaries who were Hispanic or Black, were ages eighty-five and older, or were dually eligible for Medicaid or received a Part D low-income subsidy. Only a third of the increase came through chart reviews. Financial incentives to detect dementia increased dementia diagnoses, particularly among beneficiaries at high risk for dementia and undetected dementia, but questions remain about potential overdiagnosis or upcoding.