Medicaid spending accounts for a hefty portion of state budgets and an increasing number of county budgets. Twenty states now require counties to pay some share of Medicaid costs, which are often substantial, even after the federal government pays about half of the Medicaid costs that states' incur.

For populous states like New York, which annually spends about $48 billion to cover Medicaid program costs, the counties' financial burden is daunting. Medicaid costs on average have been increasing at a double-digit rate since the late 1990s, said Stephen Acquario, executive director of the New York State Association of Counties (NYSAC), a nonprofit association representing 57 counties and New York City. Medicaid spending is also one of the primary reasons that taxes in New York, which are 72 percent higher than the national average, have escalated in the past decade, Acquario said.

Such numbers have some county financial planners scurrying to take control of the Medicaid program. Last year, Chemung County, N.Y., began using data-mining and analysis technology to gain control of its health care costs. Data mining has given financial officers and health care insurance administrators a tool for analyzing the county's Medicaid billing records. Now they can more easily determine how the county spends Medicaid dollars, and they are better equipped to discover waste, fraud and abuse, which by some estimates accounts for as much as 30 percent of the state's health care costs.

Chemung County has been using Salient's Muni-Minder data analysis software. Because of the county's positive results, NYSAC has endorsed Muni-Minder as a tool counties can use to control Medicaid costs and manage health care programs and general government services.

Spiraling costs

Tom Santulli, Chemung's county executive, said local government officials statewide have been dealing with Medicaid's spiraling costs for several years. Although the county successfully lobbied the state to cap local governments' share of Medicaid spending during the next three years, that did little to mitigate the increasing financial burden of Medicaid spending, Santulli said.
"Everyone is concerned about health care for the indigent," Santulli said. "That's never been an issue. What is an issue is the fact that the state has a massive program. It's caused taxes to be so high upstate."

Chemung County, located in southwestern New York, has a population of 90,000. About 20 percent of the population, or 17,000 people, are enrolled in the Medicaid program. Federal, state and local Medicaid spending in Chemung costs about $110 million per year. "In this county, we raise roughly $22 million in property taxes, [of which] about 96 percent goes to pay for the local share of Medicaid," Santulli said.

Representatives from the county and Salient, also based in Chemung, started working on the Medicaid problem more than a year ago. The county paid Salient about $50,000 to adapt Margin Minder, its business intelligence software, for analyzing Medicaid billing.

Salient created Muni-Minder, which analyzes information from a variety of state and county data sources and graphically displays the results. County officials said the software has enabled them to gain new insights into their Medicaid spending.

For example, officials found that in a one-year period, 90 percent of the population in the county had a Medicaid-paid procedure - a pharmaceutical, inpatient, outpatient, hospitalization or other service - an average of 46 times. Some people used Medicaid 280 times, and others probably used it eight to 10 times, Santulli said. "We see people all over the map because there's no real managed care," he said.

Salient President Guy Amisano said an analysis of Chemung's Medicaid billings showed that of 2,740 medical service providers, the top three submitted 12 percent of all billings. Those same three providers also accounted for more than 15 percent of the county's drug bill, he said.

The software can display which drugs physicians prescribed and whether generic alternatives exist. In 2004 the county spent about $1.8 million on brand-name drugs for which generic drugs were available, he said. Government employees can use Muni-Minder's data-mining techniques to analyze various aspects of health care service costs. "We designed it around people who aren't analysts," Amisano said. "Everything was made simple."

Mining beyond Medicaid

Acquario said he sees a role for Muni-Minder in helping New York counties analyze their spending on other government services programs. For example, Suffolk County plans to use Muni-Minder to view claims data from its child welfare program. Suffolk officials want to see if any unusual patterns of behavior appear between providers and recipients. They also want to measure whether health care organizations are meeting goals. "If not, that will allow the policy-makers to ask, 'Well, why not?' " Acquario said.

Currently, Salient has contracts with three New York counties to use Muni-Minder for Medicaid and Welfare-to-Work programs. It is in final negotiations with three other counties in the state.
Linda Huffner, Chemung County's commissioner of human services, said the department is using Muni-Minder to help employees at all levels improve management. It has been using the software for about a year to analyze performance indicators, such as participation rates in the county's cash assistance and employment programs. The software has enabled officials to look at how a particular unit is performing and compare statistics from one quarter to the next.

"I didn't have a tool to help me look at pre- and post-initiatives to see if the impacts that we expected were actually realized," Huffner said. "The Salient product allowed us to look at data that was available to us in a different way. It created more visibility and allowed us to drill into the data in ways that we weren't able to before."

Acquario said NYSAC intends to form a group of chief financial officers and information technology and elected officials who will establish best practices and monitor counties' progress using Muni-Minder. Members will publish papers and hold workshops and statewide conferences. Next they will explore ways to use similar techniques to improve outcomes in other programs, such as Enhanced 911 services, public works, law enforcement, tax collection and election campaigns.