Projection of budgetary savings to US state Medicaid programs from reduced nursing home use due to an Alzheimer's disease treatment

Lam, Jenny; Jun, Hankyung; Cho, Sang Kyu; Hanson, Mark; Mattke, Soeren

INTRODUCTION: The approval of a disease‐modifying Alzheimer's disease (AD) treatment could provide relief to US state budgets that were hit hard by the COVID‐19 pandemic, as mostly Medicare would cover treatment cost, whereas Medicaid would see savings from reduced nursing home use. METHODS: We project savings from 2021 to 2040 with a simulation model from the perspective of state Medicaid programs. RESULTS: Assuming a 40% and 22% relative reduction of disease progression rates with treatment, Medicaid would avoid payments of $186.2 and $93.5 billion for around 1.11 and 0.57 million nursing home patient‐years, respectively. The savings correspond to a 5.06% and 2.49%, respectively, relative reduction of Medicaid spending on nursing home care. Higher per capita savings were projected for older states, those with higher Medicaid payment rates, those with more nursing home residents covered by Medicaid, and those with a lower federal contribution. DISCUSSION: States stand to realize substantial savings from a potential AD treatment. A state's health system preparedness to handle the large number of patients will influence the actual magnitude of the savings and how fast they will accrue.