Taking Pulse of Medicaid Costs

Guy Amisano’s soda company sold cases of Pepsi all over Western New York, but he never could put his finger on which sales were the most profitable or whether his price discounts paid off.

So, in the 1980s, Amisano hired some computer geeks to build a software program to track sales and costs in real time.

“I was able to see precisely what and to whom I should sell and at what price to achieve optimal profitability without losing volume,” Amisano said.

His profits rose 20 percent and his company grew significantly.

Over the next 14 years, Amisano ran Pepsi-Cola Elmira Bottling Co. while selling his computer program on the side. More than half of the beverage industry bought it.

In 2000, his family sold the Horseheads-based bottling company to focus on the visual datamining software under a business called Salient Management Company.

Now New York’s Medicaid system — the largest in the nation — uses Salient’s software to track the public health program’s $52 billion annual budget, 4.7 million recipients and 60,000 health care providers. Medicaid is the public health insurance program for low-income and disabled people. For the first time, top health officials say they can see where Medicaid costs are going in real time.

“It’s a culture change for us,” said Jason Helgerson, the state Medicaid director.

When Amisano got out of the soda business, he repackaged Salient’s software into a generic shell that he could sell to any industry. During the same period, Amisano’s own community was being crushed by Medicaid costs. The Chemung County executive placed an electronic ticker at the local mall to show residents how much money they were spending on Medicaid. Amisano saw the sign and called the executive.

“I said I think I can help with this,” he said.

That was the day that Amisano took his first step into health care. Chemung County bought Salient’s software and began tracking Medicaid costs at a new level of precision. A dozen other counties, including Albany and Rensselaer, purchased the software, and the state Office of the Medicaid Inspector General (OMIG) installed it in 2009.

With Salient’s program, Monroe County discovered a drug ring that wrote 40,000 prescriptions under one doctor’s name without the doctor’s knowledge.

OMIG investigators found fraudulent billing. An investigator discovered suspicious activity by looking for medical charges on one snowy day in New York City where every other doctor’s office closed.

Some see the software as a tool to fight fraud and abuse, but the program’s main purpose is to find efficiencies. Medicaid leaders saw that.

Gov. Andrew Cuomo took office in January and charged the new Medicaid Redesign Team with cutting more than $2 billion from the budget. The redesign team started asking tough questions about the system, but realized there were only a half dozen people at the Department of Health that had the technical skills to pull information out of the massive Medicaid costs data warehouse to get the answers

“We became acutely aware that we needed to become far more sophisticated in our ability to track expenditures,” Helgerson said.

They tested Salient and were amazed. “I’ve never seen anything quite like this,” said Helgerson, who previously ran the Wisconsin Medicaid system.

One of the 70 cost-saving initiatives adopted by the redesign team was restricting reimbursement for enteral formula, a nutritional liquid delivered by feeding tube. When the restriction went into effect, the state immediately saw a rise in claims for pediatric enteral formula, a backdoor around the limit. Salient traced it to one pharmacy, which is now being investigated by the inspector general.

Salient has the user-friendly interface of an Excel spreadsheet, but with a single click, a user can toggle to charts that visualize the data.

It uses an associative-database model that allows access to five years worth of records instantly. More traditional databases only access a small scope of data. Also, most databases process queries on the hard drive, but Salient’s servers use random access memory, or RAM. A computer can access anything on RAM almost instantly, while items on the hard drive need to be located, read and then sent to RAM for processing.

“We built this system with almost an insane focus on speed,” said Jack Bloise, general manager of Salient’s healthcare unit.

Previously, a Medicaid leader had to submit a data request and wait days or weeks to receive the information. Now managers find the answer on their own desktop computer in seconds.

Salient, which DOH is paying $1.4 million over three years, has trained 30 DOH workers on the program and plans to train 100 more.

A privately held company, Salient has 265 clients and 130 employees, including 13 who work in the company’s new healthcare unit based in Albany. Salient doubled the Albany office space and are talking with Medicaid and health care providers in other states.

“We see it as a wonderful, growing market,” Amisano said.

Reach Crowley at 454-5348 or ccrowley@timesunion.com. Visit her blog at http://blogs.timesunion.com/healthcare.

By the numbers:

The Salient computer program sifts through massive amounts of data and provides answers to queries within seconds. Here’s a look at the Medicaid data in the system:

5 years worth of records

$284 billion in claims

10 million recipients

4 billion transactions

60,000 providers

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