Revenue Management: Focus on Prevention

As a person who is completely committed to the Cognitive Disabilities Model developed by Claudia Allen, you could say I am a bit biased as to the many benefits. And perhaps I am. But I can't help but to be more convinced than ever that all geriatric patients must have an Allen level identified when they enter the health care system (home health care, hospital, nursing home, etc).


Much is being written and researched regarding the increased costs to care for persons with Alzheimer's and related dementias. Some of the increase in costs is related to the health complications that often occur and lead to hospitalization. Other costs are related to the increase in functional dependency.


My belief is that the identification of a geriatric patient's Allen Cognitive Level should be an essential piece to the package of services the person receives. The benefits to identifying the patient's cognitive status initially and throughout care are:

  • Reducing the likelihood of a health complication arising such as a fall, infection or dehydration which are frequent precipitating factors for ER visits and hospitalization.
  • Maximizing the level of function possible for the person in order to decrease care time and other costs associated with daily care of a person with greater care needs.

The argument is growing louder for management of revenue through reduction in costs for persons with dementia. If every therapist was capable of identifying their patient's Allen Cognitive Level, plans would be designed to help identify high risks and corresponding prevention intervention plans and to maximize the level of independence possible in order to reduce care time and costs.


It Costs More to Care for People Who Are More Dependent
One recent study looked at the relationship between dependence and functional capacity to medical and informal costs. The study found that the patient's dependence as measured by the Dependent Scale (DS) and their functional capacity as measured by the Blessed Dementia Rating Scale (BDRS) were associated with higher total costs.


A 1-point increase in DS was associated with a:

  • $1,832 increase in total cost
  • $1,690 increase in informal cost
  • 5.7% increase in medical cost, a 10.5% increase in nonmedical cost, and a 4.1% increase in caregiving time

A 1-point increase in BDRS was associated with a:

  • $3,333 increase in total cost
  • $1,406 increase in direct medical cost
  • 7.6% increase in medical cost, a 3.9% increase in nonmedical cost, and an 8.7% increase in caregiving time

In summary, both functional impairment and patient dependence were associated with higher costs of care and caregiving time. [1,2]


People With Dementia Are Hospitalized More Often
Several studies have found that those with Alzheimer's disease (AD) tend to be sicker and hospitalized more often than those without AD. Below is a sampling of these recent studies:

  • AD patients are sicker and more expensive than demographically matched controls. Even after adjusting for differences in illness burden, costs remain higher for AD patients. [3]
  • A study was conducted looking at data from a US administrative claims database in 2003 and 2004 to evaluate the effect of AD on direct healthcare costs and utilization. It showed that Alzheimer's disease patients incur excess ER visits and inpatient admissions. In particular, AD patients were far more likely to be hospitalized for infections, pneumonia and falls (hip fracture, syncope, collapse). Patients with AD have significantly more co-morbid medical conditions and higher healthcare costs and utilization than demographically-matched Medicare beneficiaries. Even after adjusting for differences in co-morbidity, AD patients incur excess ER visits and inpatient admissions. [4]
  • More dementia patients were admitted as emergency cases compared to controls. The proportion of patients admitted for dementia as their primary diagnosis was small. Primary diagnoses such as syncope and collapse, bronchopneumonia, urinary tract infection and dehydration were more frequent in all dementia patients than controls. Dementia patients are frequently admitted as emergency cases, but dementia itself is often not the primary diagnosis. Earlier detection of the specific conditions mentioned above may reduce emergency hospital admissions amongst dementia patients. [5]

Unless we develop effective plans to prevent health complications and excess disability Medicare is going to be extremely stressed as the large number of seniors with Alzheimer's and related dementias (ADRD) is growing rapidly.


Payment Systems May Be Changing
We are reading more about the need for evidence-based interventions and intervention designed to prevent problems from occurring that lead to the drain on the reimbursement system. A recent article in the Wall Street Journal described challenges within our health care system. One of the suggestions by the author to improve our system was to:


"Change the reimbursement system to reward preventative care and evidence-based care and extend government efforts to no longer reimburse inappropriate, unsafe or wasted care. Move Medicare to a pay for value model. Define and measure desirable outcomes for most common diseases."


We are naïve if we think that our outcomes are not important. Simply picking a person with dementia up on our caseload is not enough. We must have good documentation to demonstrate our immediate outcomes (such as an increase in independence and safety or a reduction of functional limitation) as they correspond to the current Medicare reimbursement guidelines. In addition, we should be collecting data over time to identify the long-term prevention benefits of maintenance programs and other interventions.


An ounce of prevention is worth a pound of cure. I am excited to think that Dementia Therapists could be poised to help shape the future services and reimbursement guidelines for those with dementia. The time is NOW to obtain Allen levels on all of your geriatric patients and to document the outcomes such as the change in the level of independence, the reduced risk for functional decline, or reduced risk of health complications that lead to ER visits and hospitalizations.


Do you or your colleagues need yet another reason to learn the Allen level of every geriatric therapy patient you serve? Here is an important one . . . because it is the right thing to do. The person with ADRD can not thrive and lead a quality life without activities presented at "the just-right challenge" level. At this time Medicare does not reimburse therapy to design plans to improve a patient's quality of life but who knows, maybe through your efforts, one day they will. Wouldn't that be cool?



  1. J Am Geriatr Soc. 2008 Aug;56(8):1497-503. Epub 2008 Jul 24.
    The effects of patient function and dependence on costs of care in Alzheimer's disease. Zhu CW, Leibman C, McLaughlin T, Scarmeas N, Albert M, Brandt J, Blacker D, Sano M, Stern Y.
  1. Dement Geriatr Cogn Disord. 2008;26(5):416-23. Epub 2008 Oct 22. Patient dependence and longitudinal changes in costs of care in Alzheimer's disease. Zhu CW, Leibman C, McLaughlin T, Zbrozek AS, Scarmeas N, Albert M, Brandt J, Blacker D, Sano M, Stern Y.
  1. Med Care. 2008 Aug;46(8):839-46. Implications of comorbidity on costs for patients with Alzheimer disease. Kuo TC, Zhao Y, Weir S, Kramer MS, Ash AS.
  1. BMC Health Serv Res. 2008 May 22;8:108. Healthcare costs and utilization for Medicare beneficiaries with Alzheimer's. Zhao Y, Kuo TC, Weir S, Kramer MS, Ash AS.
  1. Dement Geriatr Cogn Disord. 2008 Nov 13;26(6):499-505. Reasons for Hospital Admissions in Dementia Patients in Birmingham, UK, during 2002-2007. Natalwala A, Potluri R, Uppal H, Heun R.

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