Washington state's Medicaid program that gives free health insurance to poor and disabled people is working with the federal government on an experiment that is expected to save taxpayer dollars and improve services.

The new program would combine Medicaid with Medicare, which is the federal health insurance for older Americans.

Some elderly and disabled people qualify for both federal programs, and services for these so-called "dual eligibles" have long been among the most costly provided by the state.

The demonstration project announced Monday would enable the programs to work together to serve this subset of people.

State officials say the experiment would allow Medicare and Medicaid to avoid duplicating services, and then share the money they save by working together. In the past, there was no financial incentive to cooperate or reduce duplication.

The demonstration project is being tried in Snohomish and King counties in Western Washington, and is one of the first in the country.

MaryAnne Lindeblad, state Medicaid director, called the arrangement "a milestone in our efforts to track and better serve the so-called dual eligibles."

Services previously provided by the two separate programs, including medical, behavioral, long-term care and other supports, will be able to be integrated, she said.

Jane Beyer, assistant secretary for Behavioral Health and Service Integration in the state Department of Social and Health Services, said she expects the program to "reduce health disparities and better fit care with client needs, especially for people with complex-care needs."

Regence BlueShield and United Healthcare will participate in the demonstration project.

The goals of the program include leveling the uneven field of services now delivered by different provider organizations, as well as cost containment, the state agencies said. The state will enroll eligible clients but allow them to opt out.

(c)2013 The Seattle Times