Gov. Mark Dayton is asking the federal government to let Minnesota push ahead with a local version of Medicaid reform that could save the state $151 million over the next five years.

"The combination of rising health care costs and changing demographics will make our current Medicaid system unsustainable unless major changes are put in place by 2020," Dayton wrote in a letter to the U.S. Department of Health and Human Services last week.

The governor asked for a federal waiver that will allow Minnesota to put into place its own bipartisan plan that Dayton said would make it easier to connect people to services, steering them out of institutions and into home-based care.

Instead of paying the astronomical cost of institutional care, the state wants the freedom to go into a Medicaid recipient's home and install ramps, or bring in home-care workers who could allow the person to stay at home comfortably and at a more affordable price for the state. Rather than waiting until a worker loses a job because of a disability, the reforms would allow the state to reach out to employers and craft a plan to keep them working.

"The initiative is a rare, bipartisan agreement," Dayton wrote of the reforms that sprang out of the 2011 budget negotiations. The Reform 2020 plan, he said, "will help vulnerable Minnesotans receive services sooner than our current system of long waits. We will keep them in their communities longer and out of expensive facilities and programs."

"I'm happy we get to do things the Minnesota way," said House Health and Human Services Finance Chair Jim Abeler, R-Anoka, celebrating the waiver request. "We provide a good service for a really good price. ... Philosophically, I say, let Minnesotans run Minnesota."

The Anoka Metro Regional Treatment Center has become a place where people with serious mental illnesses and debilitating substance abuse issues are left for long -- and expensive -- stretches of time. The proposed reforms would shorten those stays, shift part of the cost to Medicaid, and get patients discharged and into treatment and care programs in the community. The state sees $89 million over five years at the Anoka facility alone.

Minnesota estimates it could save another $9.2 million over the next five years by giving families more options for home-based care, and $15 million by expanding counseling and other support to people faced with a choice between expensive nursing home care and more affordable home care.

At the center of the waiver request is the state's plan to offer incentives to health care providers that make preventive care available to Minnesotans on Medicaid.

The state hasn't yet put a price on how much money it could save by identifying potential health issues early and getting people into coordinated care quickly and more affordably.

Dayton said the state's Reform 2020 proposal "offers a comprehensive approach for meeting the challenges of rising health care costs and an aging population, while still providing Minnesotans the services they need to lead meaningful and fulfilling lives."

The U.S. Department of Health and Human Services will respond to the state's proposal after a 30-day public comment period. If approved, the reforms would go into effect in 2014.

Jennifer Brooks • 651-925-5049