By John Mach, MD

Accountable Care Organizations (ACOs) are tasked with improving care and reducing costs for Medicare populations, and dementia care represents one of the most significant opportunities to achieve both goals. Dementia is associated with high healthcare costs, often driven by frequent, yet preventable, hospitalizations. These hospitalizations are not only costly but also detrimental to patient health, accelerating cognitive and physical decline. Given the high prevalence of dementia and its associated costs, it is likely that dementia-related care drives up to 20-25% of Medicare’s total cost of care. Improving care for this population should be a top priority for ACOs looking to lower costs while improving patient outcomes.

The Hidden Costs of Dementia

Medicare costs related to dementia are only now being fully understood. The true financial burden has been obscured due to underdiagnosis, challenges in pulling claims data, and the ways in which dementia complicates the identification of underlying causes of hospitalizations. Patients with dementia often have overlapping chronic conditions that lead to hospitalization, but the root causes of these admissions are frequently not linked to the dementia diagnosis itself. Instead, they may stem from treatable conditions such as infections, medication side effects, or worsening chronic diseases. These factors drive unnecessary hospitalizations that could otherwise be avoided with better management and support.

Given that dementia likely drives up a large proportion of Medicare’s total cost of care, managing these patients effectively presents a substantial cost-saving opportunity. ACOs that are able to address the challenges of dementia care can significantly reduce their overall spending while improving care outcomes.

Hospitalizations and Their Impact on Dementia Patients

Hospitalizations are particularly harmful to patients with dementia. The disorientation that accompanies a hospital stay can exacerbate cognitive decline, increase the risk of delirium, and lead to functional impairments that make it difficult for patients to return to their baseline level of independence. Frequent hospitalizations also lead to higher long-term costs, as each admission increases the likelihood of further health complications and rapid physical deterioration.

Despite these risks, traditional complex care programs have largely failed to effectively manage dementia patients, who rarely get enrolled or are not appropriately supported once they are part of such programs. As a result, there is a growing recognition that dementia-specific care models are needed to better serve this population and reduce unnecessary hospitalizations.

Neurologists, Primary Care, and the Role of Caregivers

Neurologists play an essential role in diagnosing dementia and evaluating patients for reversible causes of cognitive decline, such as vitamin deficiencies or thyroid disorders. However, most of the excess hospitalizations in dementia patients are not directly tied to the neurological diagnosis but rather to secondary medical conditions like chronic disease exacerbations, infections, or medication mismanagement.

Primary care physicians (PCPs), who manage these broader health issues, are better suited to handle the ongoing, long-term care of dementia patients. However, given the complexity of dementia care and the critical importance of early intervention, it is the family caregiver who often plays the most pivotal role in preventing hospitalizations. Caregivers are typically the first to notice subtle changes in the patient’s health, such as changes in sleep, appetite, or mood, which may indicate a developing medical issue. Caregivers who are trained and empowered to detect these early signs can alert healthcare providers in time to prevent hospital admissions.  Being a more effective advocate includes the caregiver learning how to effectively interact and communicate with their loved one’s PCP, which will result in a more thorough and effective encounter.

Going Beyond Resource Lists: Activating Caregivers for Better Outcomes

Traditional complex care management programs that provide caregivers with a list of community resources are insufficient for dementia patients. Instead, ACOs should implement programs that focus on training, enabling, and activating caregivers to understand dementia and to detect and act upon changes in the patient’s condition. These programs must go beyond simply managing chronic diseases that nominally involve caregivers and include caregivers as central partners in care. Nurse- and social worker-led interventions have proven to be cost-effective in supporting caregivers, providing them with the skills and tools to manage the health of their loved ones effectively. Studies, including those from UCSF and Ceresti Health, demonstrate the value of structured caregiver support in reducing hospitalizations and healthcare costs while improving patient outcomes​​

CMS GUIDE Program: A Pathway for ACOs to Engage

Recognizing the need for more focused dementia care, the Centers for Medicare & Medicaid Services (CMS) recently introduced the GUIDE program (Guiding an Improved Dementia Experience) for Medicare beneficiaries. The GUIDE program integrates caregiver support into care models, emphasizing the longitudinal relationship between the care team and the caregiver. This program provides a structure that ACOs can leverage to improve care for their dementia patients. However, it is essential for ACOs to proactively engage in the GUIDE program, as patients can be enrolled in GUIDE without the ACO’s knowledge. The costs of such enrollment are added to the ACO’s total cost of care calculations, and the management of dementia requires tailored programming.

ACOs should evaluate whether to insource dementia care management or partner with a trusted vendor. Outsourcing may offer faster implementation, reduce financial risk, and allow the ACO to leverage outside technology and best practices. In choosing a vendor, ACOs should prioritize those with a proven track record of finding and engaging dementia patients, reducing costs, and improving caregiver satisfaction. Successful vendors will be those that share financial risk, provide programs that empower caregivers, and have a continuous improvement mindset.

Conclusion: A Top Opportunity for ACOs

For ACOs, improving the care of dementia patients represents one of the top opportunities to lower costs and improve quality of care for Medicare populations. By recognizing the hidden costs of dementia-related hospitalizations, supporting caregivers through nurse- and social worker-led interventions, and engaging with programs like CMS’s GUIDE, ACOs can better manage this complex patient population. Whether through insourcing or partnering with an external vendor, implementing dementia-specific programming that trains, empowers, and activates caregivers will be crucial to the success of these efforts. By taking proactive steps to improve dementia care, ACOs can achieve significant cost savings, reduce hospitalizations, and ensure better long-term outcomes for patients and their families.

John Mach is Chief Medical Officer for Ceresti Health

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