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Objective. To provide a descriptive analysis of asthma prevalence and costs in a Medicaid population and gauge the degree of adherence with expert guidelines for asthma medication management from the National Asthma Education and Prevention Program. Data Sources. Kentucky Medicaid administrative data for 1996. Study Design. A cross-sectional retrospective analysis was used to determine adherence with asthma medication guidelines and utilization of asthma-related health care services and costs. Multivariate logistic regression was used to determine the relationship between nonadherence with the guidelines and utilization of health care services. Principal Findings. Of the 530,000 Medicaid recipients, 24,365 (4.6 percent) were identified as having asthma. Average annual asthma-related costs (&dollar;616) accounted for less than 20 percent of total health care costs (&dollar;3,645). Nonadherence to the guidelines was prevalent. Less than 40 percent of the patients received a prescription for a rescue medication, and fewer than 10 percent of the patients who received daily inhaled short-acting beta-&sub2 agonists were regular users of inhaled steroids. Nonadherence to the guidelines was associated with an increased risk of an asthma-related hospitalization (odds ratio= 1.5,p<.05). Conclusions. Guideline nonadherence was widespread and associated with an increase in exacerbations of asthma that resulted in hospitalizations. Asthma prevalence and utilization of health care services in a Medicaid population were similar to previous estimates reported nationally and in health maintenance organizations. [ABSTRACT FROM AUTHOR]