Kentucky Gov. Ernie Fletcher (R) on Wednesday announced that CMS has issued final approval of a waiver that will allow the state to shift most of its 700,000 Medicaid beneficiaries into managed care plans and require copayments and limits on services in some cases, the Louisville Courier-Journal reports. Fletcher said the plan will improve care and help control cost increases to the $4.7 billion-per-year program (Yetter, Louisville Courier-Journal, 5/3). Fletcher in January said the plan would save the state $120 million during the first year and an estimated $1 billion over seven years. Under the plan, called Kentucky Health Choices, the state will group Medicaid beneficiaries into four categories: a general population, children, the elderly and disabled, and beneficiaries with mental retardation. Each group will receive a different health care plan tailored to its specific needs. Beneficiaries will be required to make copays for some services and prescriptions. Copays will be based on income and will be between $1 and $10 in most cases. The maximum out-of-pocket cost per beneficiary each year will be $225 for health care services and $225 for prescriptions. Prescriptions will be limited to four per month, but exemptions will be allowed for some chronic diseases. In addition, the plan calls for limits on radiology services and physical, speech and occupational therapies, although state officials have said the limits could be exceeded if medically necessary. The program also will emphasize preventive care by helping to pay for smoking cessation programs, weight-loss programs or gym memberships. In addition, the program will help beneficiaries pay premiums for employer-sponsored private health insurance (Kaiser Daily Health Policy Report, 1/23). State officials will begin implementing the plan in the next month (Biesk, AP/Lexington Herald-Leader, 5/4). The plan will not affect about 135,000 beneficiaries in Jefferson County, Ky., who already are enrolled in managed care plans. Dennis Smith, director of the Center for Medicaid and State Operations at CMS, said Kentucky is the first state to receive approval for a statewide plan to move beneficiaries to managed care plans under new federal deficit reduction rules (Louisville Courier-Journal, 5/3). Fletcher said, "It's landmark reform, and it's reform that will be modeled, I believe, across the United States" (AP/Lexington Herald-Leader, 5/4).