Hawaii has obtained federal approval to make eligibility and benefit changes for adults enrolled in QUEST, the state’s health plan for the poor, which could leave an estimated 3,500 people without coverage.

The revisions, which take effect in July, could trim $150 million in costs in the QUEST program that has grown to $1.8 billion. The Abercrombie administration sought the adjustments after enrollment grew by 34 percent during the recession, covering about 286,000 people, or nearly one in five residents.

The state will tighten income eligibility and reduce benefits for adults in QUEST, but not for children, pregnant women and the aged, blind and disabled. The state will soon begin notifying adults enrolled in two limited QUEST benefit plans that they could lose coverage in July. Adults who become ineligible would have to buy private health insurance or pay for care on a sliding scale at federally qualified health centers.

The state will also limit the number of inpatient hospital days for medical and surgical services and for behavioral health — which are now unlimited — in the main QUEST plan. Outpatient rehabilitation, optometry services and durable medical equipment, including prosthetics, will no longer be covered.

"Our starting point is that nobody should be without health care and that health care is a vital necessity for all of Hawaii’s residents," said Patricia McManaman, director of the state Department of Human Services. "We will continue to look at ways that we can restore the reduction in services and that philosophy will be on our radar as we move forward."

WHILE THE STATE is making the changes to contain costs in QUEST, the state’s version of the federal Medicaid program, the revisions will place adults in the same benefit package, which will increase benefits for more than 10,000 people who now receive limited coverage.

The package includes unlimited outpatient doctor visits and prescription drugs, an investment the state hopes will encourage adults to seek primary and preventive care and eventually reduce more costly emergency room visits and hospital stays.

"We want to invest more in primary care and prevention, believing that that will improve health and reduce utilization," said Kenneth Fink, who administers the QUEST program.

Lowering the income eligibility limit to 133 percent of the federal poverty level from 200 percent also aligns the state with the Medicaid requirements of the new federal health care law in 2014. The new income threshold would be about $16,668 for an individual or $22,512 for a couple.

The state had to obtain approval for the changes from the federal Centers for Medicare & Medicaid Services, which oversees federal health programs for the elderly and the poor.

Health and social service advocates, while preferring no reductions in the health care safety net, praised the Abercrombie administration for listening to community feedback. The state, for example, had initially proposed limiting coverage for hospital stays for medical and surgical services to 10 days a year, which drew concerns from advocates and federal regulators because the cap would have been the most restrictive in the nation. The state adjusted it to 30 days a year.

Emmanuel Kintu, the executive director of the Kalihi-Palama Health Center, said the state’s original proposal was unacceptable. He agrees with the state’s focus on primary and preventive care through benefits such as unlimited doctor visits and prescription drugs.

"For our types of patients — these are the patients who are really in need — providing primary care effectively becomes the most effective way of improving outcomes and reducing overall cost," he said. "So if you take an example of a person who has a chronic condition: if that person has effective primary health care, yes, there will be a high utilization of that primary care, they might even have a high utilization of prescriptions, but their hospitalization — which is the highest cost factor — their length of stay in the hospital would be shorter."

State Sen. Suzanne Chun Oakland (D, Kalihi-Pauoa), the chairwoman of the Senate Human Services Committee, said lawmakers and advocates recognize that the state is not financially able to cover everyone. She believes the number of people who need QUEST will decline when the economy improves and more people are working and eligible for private health insurance through their employers.

"The number of people that we are able to cover with the money that we have and the array of benefits seems to be a lot more palatable than what DHS originally proposed," she said. "So I was really happy with the input that was provided by the community."

Chun Oakland, however, said she hopes to set aside some money in the state budget or through a separate bill that could help the adults who will lose coverage in QUEST. House Bill 304, which is moving to conference committee, would provide money to several education, health and welfare programs that function as a safety net for the poor.

Another bill, HB 2275, would establish a hospital sustainability fee that would help the state draw additional federal Medicaid money. Hospitals have agreed to the fee, which would attract more federal funds to help cover the cost of care for people in QUEST, but are at odds with the Department of Human Services about how the money would be allocated.

The jump in enrollment in QUEST during the recession has driven state and federal costs higher — a burden on taxpayers — but it has provided coverage for people who might otherwise be uninsured and only seek treatment when they get sick. The federal health care law, if it survives a legal challenge now before the U.S. Supreme Court, would eventually require people to have health insurance. The uninsured would be guided into Medicaid or urged to buy low-cost health plans offered through new health insurance exchanges.

State Rep. Ryan Yamane (D, Waipahu-Mililani), the chairman of the House Health Committee, said legislators are concerned that some adults who lose QUEST coverage this summer will not buy private insurance and postpone care until they wind up in hospital emergency rooms.

"When they don’t pay, then our hospitals and our health care facilities eat the cost. And so that eventually drives up health care costs for everybody," he said. "It’s better if we get more people covered so that way there is some type of reimbursement for everybody down the stream."