By John Hanna, Associated Press

TOPEKA — Subsidiaries of three large, out-of-state health insurance companies were hired Wednesday to manage Kansas' Medicaid program, and Gov. Sam Brownback's administration said the contracts were expected to produce even greater cost savings over the next five year than previously anticipated.

The contracts are key to the conservative Republican governor's efforts to overhaul the $2.9 billion-a-year Medicaid program, which provides health coverage to the poor, disabled and elderly. He and top administration officials have said the changes — moving all Medicaid participants into managed care — will provide better-coordinated care while controlling the state's costs.

The state awarded the contracts to Amerigroup Kansas Inc., United Healthcare of the Midwest Inc. and Sunflower State Health Plan. The Amerigroup Corp. parent is based in Virginia Beach, Va.; Sunflower is a subsidiary of Centene Corp., which has its headquarters in St. Louis, and United Healthcare is based in Minneapolis. They were among five bidders.

Brownback's administration had projected that the state would save $853 million over the next five years because of the overhaul, based on expectation that the changes would lower the annual growth in its costs. The administration said Wednesday that savings over the next five years should now exceed $1 billion. Critics of the overhaul had been skeptical of previous projections, however.

The new contracts are effect Jan. 1, and the three companies will offer competing plans so that Medicaid participants have choices. The overhauled program will be called KanCare.

"These new KanCare plans will provide our most vulnerable Kansans with superior service at a more sustainable price," said Lt. Gov. Jeff Colyer, a surgeon and former state senator who led the team that developed the overhaul plan.

The state still needs the federal government's permission to go ahead with the overhaul, because it provides a majority of the funds for Medicaid. The U.S. Department of Health and Human Services would have to waive some of its Medicaid rules.

The unsuccessful bidders were Coventry Health Care of Kansas, affiliated with Coventry Health Care, of Bethesda, Md., and WellCare of Kansas, affiliated with WellCare Health Plans Inc., based in Tampa, Fla. The administration's announcement did not say why the other firms were chosen over them.

Most of the nearly 385,000 Kansans receiving state medical assistance are covered by managed care through private contractors, but the Medicaid overhaul represents the first time the state has tried to include relatively expensive, long-term care for the disabled and the elderly, including those in nursing homes.

Advocates for the developmentally disabled have been vocal critics of the overhaul. Their concerns led Brownback to agree to wait until 2014 to deal with long-term services for the developmentally disabled in the contracts, while permitting pilot programs.