States Receive $300 Million From U.S. to Trim Health Costs

Arkansas, Maine and Oregon are among 25 states that will split as much as $300 million from the federal government to test new ways to pay for medical care in an experiment funded by the 2010 health-care law.

The three states, plus Massachusetts, Minnesota, and Vermont will get most of the money, or about $250 million, the U.S. Department of Health and Human Services said today in a statement. The six are testing programs intended to lower health-care costs “while maintaining or improving quality of care” in government programs including Medicaid and Medicare, according to a website for the project.

The grants come from the Innovation Center at the U.S. Centers for Medicare and Medicaid Services, which has $10 billion to spend on health-care experiments under the Affordable Care Act. The center in the past has funded an effort to cut medical errors as well as a plan that paid doctors and hospitals flat fees for treating patients, instead of separate payments for specific services.

“As a former governor, I understand the real sense of urgency that states feel to improve the health of their populations while also reducing total health care costs,” Kathleen Sebelius, the U.S. health secretary and a former Kansas governor, said in the statement. “It’s critical that the many elements of health care in each state -- including Medicaid, public health, and workforce training -- work together.”

Medicare is the federal health program for the elderly and disabled, and Medicaid is the state-run insurance program for the poor.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net