The state health agency will end a special program under which it has been paying for private insurance for some Medicaid recipients.

The Louisiana Health Insurance Premium Payment, or LaHIPP, program serves 1,500 households and will go away Dec. 1 as a cost-saving measure.

LaHIPP provides help for a Medicaid-eligible member of a household to be covered by the family’s employer-sponsored private insurance policy. Most of the Medicaid-eligible individuals are developmentally disabled.

Now, the families must decide what health care coverage arrangement they want for their Medicaid-eligible loved ones in the future.

State Department of Health and Hospitals Secretary Kathy Kliebert said it used to be more cost-effective to pay for the private insurance of those who qualified and use Medicaid as a secondary payer.

But that has changed because of the state’s private-insurance-based Bayou Health program, Kliebert said. Medicaid recipients select from among five companies. The companies are paid premiums to manage the Medicaid recipients’ care.

“With the success of managed care, we don’t have that same cost-effectiveness,” Kliebert said.

Elimination of the program is projected to produce a $3 million savings — eliminating the need for that amount in DHH cuts, she said.

The program elimination came in the context of budget savings, Kliebert said. But she said the federal Centers for Medicare and Medicaid Services soon would have told the state to discontinue the program because it is no longer cost-effective — a condition of its existence.

“It’s going to have to go away anyhow,” Kliebert said.

The program was supposed to go away Wednesday. But DHH moved the date to Dec. 1 to give families time to make other arrangements.

“They can keep their private insurance if they choose to do so. For some families, it may not make a difference,” Kliebert said. “For some, it may not be worth it to keep coverage that’s going to cost that much.”

Families affected can enroll the Medicaid-covered member in one of the Bayou Health plans or find a new provider if their current providers do not accept Medicaid as primary payer.

Some LaHIPP recipients receiving home- or community-based services may choose to opt into the Bayou Health plan for certain services or may elect to remain on legacy fee-for-service Medicaid, according to DHH.

DHH is sending letters to each household affected by the change. Recipients who have questions can call DHH offices from 8 a.m. to 4:30 p.m. Monday through Friday at (888) 342-6207.

Follow Marsha Shuler on Twitter, @MarshaShulerCNB. For more coverage of the State Capitol, follow Louisiana Politics at politicsblog/.