Health Care Costs and Financing

Medicare expenditures among residents of assisted living facilities are similar to those of community-dwelling elderly

Medicare-insured elderly people residing in assisted living facilities (ALFs) incur Medicare expenditures similar to those incurred by their counterparts living in the community, concludes a preliminary study of national data. Charles D. Phillips, Ph.D., M.P.H., and colleagues, supported in part by the Agency for Healthcare Research and Quality (HS10606), analyzed data from the National Study of Assisted Living for the Frail Elderly, which was conducted in 1998-1999. The investigators collected baseline individual and facility data from interviews with residents and staff at ALFs that offered more than minimal levels of services and privacy. They used Medicare claims data to determine health care use and expenditures.

ALF residents incurred annual Medicare costs of about $4,800. Just less than 15 percent of ALF residents accounted for over 75 percent of total Medicare costs for the sample, a figure similar to that for the general Medicare population. The annual average was about $5,800 for those beneficiaries using services. This was similar to the average Medicare program payment of $5,635 for community-dwelling elders who used services in 1999.

Individual characteristics had much more of an impact on Medicare utilization than ALF characteristics, with one exception. Residents in smaller ALFs were not more or less likely to use Medicare services, but, among those using services, care costs were lower. In smaller facilities, staff may know their residents better than staff in larger facilities. This familiarity may allow them to identify changes in resident status that reflect the onset of illness (for example, confusion, incontinence, or functional decline) more quickly than staff in larger ALFs, thus reducing the overall cost of treatment.

See "Medicare expenditures for residents in assisted living: Data from a national study," by Dr. Phillips, Scott Holan, Ph.D., Michael Sherman, Ph.D., and others, in the April 2005 HSR: Health Services Research 40(2), pp. 373-388.

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