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Two Republican lawmakers have previewed a bill they say would prevent $770 million in Medicaid costs over seven years by changing how health care providers are paid.

Sen. Dan Liljenquist of Bountiful and Rep. Dean Sanpei of Provo say their goal is to curb the percentage of money that Medicaid takes from the state's budget, not to slash the Medicaid budget. Costing $1.8 billion, the subsidized health insurance program consumes 9 percent of the state's general and education funds and is expected to eat up 13 percent by 2020, even without the program's expansion required by federal health reform in 2014.

If the state can't curb the growth in costs, it will have to take the money from other areas, including schools, Liljenquist said.

The bill would require the Utah Department of Health to apply for waivers from the federal government to change the way doctors and hospitals are reimbursed for caring for Medicaid patients. Seeking the waiver would take up to 18 months, he said.

Instead of the incentives to treat patients at their sickest, it will give providers incentives to prevent illnesses. For example, under the current model, providers get more money when their diabetic patients have kidney failure. "Nobody has incentive to manage the long-term care of the diabetic population," he said.

The bill says payments would be required to be restructured to "reward medical care providers for delivering the most appropriate services at the lowest cost" and without sacrificing the patient's health. Patients would be rewarded for their efforts to maintain their health, though details weren't available. It would initially apply to urban counties.

The Utah Hospitals & Health Systems Association supports the bill, even though hospitals would stand to lose money if fewer patients need their care. Liljenquist said that's because the alternative is to reduce reimbursement rates to providers or opt out of Medicaid.

The bill will be released next week.