TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter I. THE OBJECTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Medical Assistance Goals Management Information System Concepts

II. BACKGROUND INFORMATION . . . . . . . . . . . . . . . 12

The Manual System Program Alternatives

III. DEVELOPMENT OF THE PMIS . . . . . . . . . . . . . . . . 29

The Model System The New Design The Reporting System

IV. A SECOND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . 40 Governmental Behavior PMIS Behavioral Analysis Conclusion

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

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INTRODUCTION

By December 1975, the Suffolk County unemployment rate reached 9.7 percent. There were over 18,000 public assistance cases; up 3,300 cases or 22.4 percent from December 1974. This represented 57,300 adults and children on public assistance. The total eligible Medicaid population, which includes both public assistance and non-public assistance cases, increased from 72,847 in December 1974 to 80,485 in December 1975; an increase of over 7,600 cases or 10.5 percent. 1

The 1976 Suffolk County Budget of $535 million could not by itself have supported the $201 million or 38 percent to be spent by Social Services. 2 Since Medicaid expenditures alone represented $89.1 million in 1976, a major effort had to directed toward cost containment procedures for medical assistance. 3 Although the reimbursement varies between programs, on the average Suffolk County receives fifty percent Federal and twenty-five percent State aid. 4 Even though the majority of this money is transferred back into the local economy through recipient purchases and medical bills paid by Medicaid, the locality is still mandated to spend more than it receives in transfer payments. The local taxpayers must therefore, both directly and indirectly carry this tax burden. The fact that there is a multiplier effect working to benefit the local economy was of little consolation and Suffolk County realized that some very serious consideration would have to be given toward the containment of Medicaid expenditures. 5

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In addition to these fiscal problems, the Suffolk County Medicaid program was also faced by a continual increase in the number of claims submitted for Medicaid services. It was therefore hoped that the automated Monroe County Model Medicaid System could be used in Suffolk County to handle the growing claims volume. Although most of the medical and dental services would continue to require manual review in the model system, it was believed that the automated drug price file could be used to process the majority of drug claims. Since drug claims represented nearly half the total Medicaid claims volume, and drug expenditures increased by eleven percent in 1974 to $3.5 million, it was hoped that the Model System would offer some much needed relief for the strain being placed upon the manual pharmacy system which existed at that time. 6

The primary question facing the Medical Assistance Pharmacy Unit was whether or not it would be possible to implement and maintain an effective automated pharmacy program at the local county government level. This study will therefore be concerned primarily with the development of the current pharmacy management information subsystem. It will try to show that the current program fulfills both the objectives of a Management Information System (MIS) and the objectives of the Suffolk County Medical Assistance Administration (MAA) by emphasizing the influence the system has had upon: (1) cost containment, (2) claims processing, and (3) the availability of program information.

The beginning chapter will present overall objectives and will be divided into two main sections. The first section will present the goals and legal mandates governing the medical assistance program. The second section of the chapter will be concerned with the definitions and concepts of management information systems.
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CHAPTER I

THE OBJECTIVES

Medical Assistance Goals

Legal Basis and Enabling Legislation

The Suffolk County Department of Social Services was created under the County Charter and the New York State Social Services Law. The Department must function within the guidelines of the Federal Social Security Act of 1935 and its amendments. It also comes under the jurisdiction of the United States Department of Health and Human Services, and the New York State Department of Social Services. 1

Within the Department of Social Services, the Medicaid Program is designed to provide comprehensive health care for needy persons who are unable to purchase such care for themselves. The Medical Assistance (MA) Division functions pursuant to Title XIX of the Social Security Act; Title XVIII of the New York Codes, Rules and Regulations, Section 515; the New York State Medical Handbook; and the Medical Assistance Contract with the New York State Department of Health. 2

Combined, these laws define the Medicaid Program's scope of services and eligible population. Since failure to follow these regulations would result in the loss of Federal and State reimbursement to the County, it can readily be seen how important it is to adhere to these mandates so that maximum reimbursement can be obtained. The use of federal and state funding requires these programs to be implemented in conformity with the original guidelines. The possibility of a reduction in the reimbursement rate or the application of penalty charges is used as a lever to assure such conformity, especially since these programs would not be possible without the larger tax resources of the federal and state governments. Local districts may not propose alternatives to minimize the cost of medical care by simply writing new policy, since it is not possible at the local level to reduce either the program's scope of service or the groups eligible for participation. Changes of this nature require either federal or state enabling legislation and adjustments in the state plan. 3