Bright yellow envelopes being delivered to more than 37,000 of Hawai'i's senior citizens and people with disabilities may hold the key to the state's goal of improving their health.

The state hopes to possibly reduce the more than $400 million annually it spends on Medicaid for these residents while increasing the use of healthcare services by people in those groups.

The mailings are a key part of a new Medicaid program from the state Department of Human Services. It tells recipients their old fee-for-service Medicaid system is being scrapped in favor of a new managed-care system.

Medicaid clients are being asked to choose from two health plan programs within the next two months. If people don't, the state will assign them to one of the plans based on what it believes best matches their needs.

Service under the new Medicaid Expanded Access model, called QEaX, will begin in February. The program won't involve changes to the state's longtime Quest program, which serves younger people and others.

The new offering is known as Quest Expanded Access and is the culmination of work started in 1994 to provide managed care services for Medicaid clients who are either low-income senior citizens who are 65 or older along with people of all ages with permanent disabilities and blindness. Under the current fee-for-services system this group is free to access medical services as needed.

"If they're fortunate, they get everything they need," said Human Service Director Lillian Koller, noting the new offering will have people helping coordinate care and making sure they get everything they need.

The state hopes to do that with service coordinators. It also increases the amount of medical care covered, including disease-management programs for diabetes, obesity and depression. Cognitive rehabilitation for stroke victims or people with brain injuries has been added.

The coverage also is expanding to include personal assistance services to help people who want to remain at their homes but need some assistance.

"We wanted a full continuum of care to be available," Koller said. The state is hoping that by stressing preventative care and more services, ... people will utilize them more, be healthier and have fewer costly hospital stays.

That in turn should bring down Medicaid costs for the group. The federal government kicks in a little more than 55 percent of the more than $400 million tab, while the state picks up the remainder.

"We have an expectation that it will be better than budget-neutral."

The state has appointed Patti Bazin, state Health Care Services Branch administrator, as administrator and hired Dr. Kenneth Fink away from the Centers for Medicare & Medicaid Services to help run the program that's being called QExA for short.

"We take this very seriously," said Koller, who is appearing in television commercials touting the new program. Radio advertising also will alert senior citizens and people with disabilities about the change. Koller's tagline for the advertising: "QExA is a prescription for healthy long-term living."

The program isn't without risks, and the state acknowledges managed-care plans can have problems. Hawai'i delayed the start of the program from November to February and was sidetracked briefly when AlohaCare, a Honolulu-based nonprofit health plan, challenged the award of the contracts to two companies with headquarters on the Mainland.

An AlohaCare lawsuit alleged the bidding process was flawed, but the case was dismissed. At stake was the more than $1.2 billion in contracts over the life of the three-year accords.

The two winners were 'Ohana Health Plan, a unit of WellCare Health Plans of Tampa, Fla., and Evercare Quest Expanded Access, which is a part of UnitedHealth Group Inc., the largest U.S. health insurer. The two plans also are promoting their programs under QExA.

Bazin said there are differences between the plans, such as Evercare not having service for Lana'i and Moloka'i and offering a substance abuse disease management program. 'Ohana also offers a program for depression that Evercare doesn't, she said.

Bazin said people will have to review the offerings of both health plans for physicians, services and other items before choosing. They can change to the other provider once a year.

Bazin said the state has worked to ensure clients keep receiving services they've been getting for at least the first 90 days after the changeover in February.

"This population has a lot of medical needs," Bazin said. "We're trying to give better services, better care to our clients."