State health officials Monday named five companies to implement the Jindal administration’s new health-care delivery system for the poor.

The new program will cover two-thirds — mainly children — of the state’s 1.2 million Medicaid recipients and moves the state toward privatization. The move affects about $2.2 billion of the $6.7 billion health-care program for the poor.

The new system would hire private companies to coordinate health care by forming networks of physicians, specialists, clinics and other providers of care of government-run Medicaid program.

Critics argue the program diverts health-care dollars into private insurance company profits.

Proponents contend the program will help reduce costs and improve the health of the 875,000 people who will be covered by it.

Twelve entities vied for the contracts to offer “coordinated care networks,” called CCN, which emphasize preventive and primary care. Insurers, or third-party entities, will develop health-care networks of physicians, hospitals and others to provide patient care.

“We picked the five best,” state Department of Health and Hospitals Secretary Bruce Greenstein said.

“They are five plans with significant experience in the Medicaid market in changing the behavior of the recipients and enrollees that lead to better (health) outcomes,” he said.

Nine companies were interested in implementing a pre-paid program involving the payment of a flat sum, or insurance premium, to cover health-care costs. Chosen for the “pre-paid” program were Louisiana Healthcare Connections Inc., whose parent company is Centene; Amerihealth Mercy of Louisiana and AmeriGROUP Louisiana Inc.

Three others filed for a “shared-risk” model, under which fees are paid for services rendered.

Two were chosen: United Healthcare of Louisiana, Inc., and Community Health Solutions of America.

Only one of the companies offers health insurance in Louisiana — United Healthcare, said Gil Dupré, executive of Louisiana Association of Health Plans, a Baton Rouge trade group.

United is the second largest health insurer in the state behind Blue Cross Blue Shield of Louisiana, Dupré said.

In its first full year of implementation the CCN program is expected to save about $135 million annually, Dupré said.

Up to three entities could be chosen for each three health-care region.

The CCNs are scheduled to be operational statewide by May 1. A phase-in begins in the Orleans area region Jan. 1.

Unsuccessful proposers have 14 days to file a protest of the selections. The governor’s Division of Administration must sign off on the contracts.

Greenstein said each company must go through “an extensive readiness review,” including evidence they have “an adequate network of providers.”

Dr. Rodney Wise, state Medicaid director, said the companies chosen “had the most capacity and experience in other states.”

Unsuccessful proposers for the pre-paid plan include Aetna Better Health Inc., Children’s Hospital Health Plan Inc., Coventry Cares of Louisiana Inc., Louisiana Cares Health Plan, United Healthcare of Louisiana and Wellcare Health Plans Inc.

The unsuccessful proposer for the at-risk model was LA Physicians Connections.

Before DHH developed its request for proposals, the agency studied the coordinated care network experience of some two dozen states, said Medicaid deputy director Ruth Kennedy.

Among them were Tennessee, Georgia, South Carolina, Arizona, Texas, Florida, Kentucky, Illinois, Indiana, Michigan and New York, she said.

According to DHH, the network’s operating cost was not a factor in decision-making because the agency pre-determined CCN rates based on current Medicaid spending.

A network must reimburse providers at least equal to the Medicaid fee-for-service rate. CCNs will be required to spend at least 85 percent on direct patient care.

“The recommendations were based on a potential CCN’s qualifications, experience coordinating care for Medicaid recipients, additional benefits or value and how the network would work with patients and providers to improve health outcomes,” according to a DHH news release.