Postoperative neurocognitive disorders (PNDs) after surgical procedures are common and may be associated with increased health care expenditures. To quantify the economic burden associated with a PND diagnosis in 1 year following surgical treatment among older patients in the United States. This retrospective cohort study used claims data from the Bundled Payments for Care Improvement Advanced Model from 4285 hospitals that submitted Medicare Fee-for-service (FFS) claims between January 2013 and December 2016. All Medicare patients aged 65 years or older who underwent an inpatient hospital admission associated with a surgical procedure, did not experience a PND before index admission, and were not undergoing dialysis or concurrently enrolled in Medicaid were included. Data were analyzed from October 2019 and May 2020. PND, defined as an International Classification of Diseases, Ninth or Tenth Revision, diagnosis of delirium, mild cognitive impairment, or dementia within 1 year of discharge from the index surgical admission. The primary outcome was total inflation-adjusted Medicare postacute care payments within 1 year after the index surgical procedure. A total of 2 380 473 patients (mean [SD] age, 75.36 (7.31) years; 1 336 736 [56.1%] women) who underwent surgical procedures were included, of whom 44 974 patients (1.9%) were diagnosed with a PND. Among all patients, most were White (2 142 157 patients [90.0%]), presenting for orthopedic surgery (1 523 782 patients [64.0%]) in urban medical centers (2 179 893 patients [91.6%]) that were private nonprofits (1 798 749 patients [75.6%]). Patients with a PND, compared with those without a PND, experienced a significantly longer hospital length of stay (mean [SD], 5.91 [6.01] days vs 4.29 [4.18] days; P < .001), were less likely to be discharged home (9947 patients [22.1%] vs 914 925 patients [39.2%]; P < .001), and had a higher incidence of mortality at 1 year after treatment (4580 patients [10.2%] vs 103 767 patients [4.4%]; P < .001). After adjusting for patient and hospital characteristics, the presence of a PND within 1 year of the index procedure was associated with an increase of $17 275 (95% CI, $17 058-$17 491) in cost in the 1-year postadmission period (P < .001). The findings of this cohort study suggest that among older Medicare patients undergoing surgical treatment, a diagnosis of a PND was associated with an increase in health care costs for up to 1 year following the surgical procedure. Given the magnitude of this cost burden, PNDs represent an appealing target for risk mitigation and improvement in value-based health care.