PROVIDENCE — Governor Carcieri rolled out plans yesterday to transform care for the elderly in Rhode Island, a move he says could save state taxpayers tens of millions of dollars, but may force some nursing homes to close their doors.

The plan would begin diverting hundreds of seniors and disabled Rhode Islanders on Medicaid away from expensive institutional care as soon as July, pushing them to depend on visiting nurses, assisted-living situations, or even their families.

The Republican governor, speaking at a State House news conference just two days before the release of his 2008-09 budget plan, also highlighted proposals that would cut thousands from state welfare rolls, while discouraging “out-of-wedlock pregnancies” and encouraging two-parent families.

“We can disagree, but a family is a father and a mother nurturing their children and building a future for themselves,” Carcieri said, acknowledging that he couldn’t force parents to stay together. “I think we can encourage them…You can set a tone and you try to teach people as to what’s best.”

The governor’s administration plans to work with faith-based institutions in the coming weeks to develop programs aimed at preserving two-parent families, but the budget measure isn’t expected to generate any savings for the coming fiscal year.

Carcieri said his efforts to change the state’s long-term care system, however, will save more than $30 million next year. Overall, the Medicaid changes announced yesterday — which also include shifts in purchasing methods and reducing out-of-state placements for disabled children — could save taxpayers $67 million (and another $70 million in federal funds) next year, according to the governor’s office.

Those savings don’t include his plans to cut time limits for the Family Independence Program, commonly known as welfare, from five years to two years. Families won’t be affected by the change until July 2009.

Carcieri’s ambitious plans face hurdles.

The Democrat-dominated General Assembly must approve the proposals, which will be submitted as part of the governor’s budget tomorrow. And they require the approval of the Centers for Medicare and Medicaid Services. The state has yet to apply for waivers with the federal agency, according to Department of Human Services Director Gary Alexander.

Carcieri’s goal to transform long-term care in Rhode Island is not new.

Study groups for decades have promoted the benefits of a system that diverts the elderly and disabled away from costly institutional care to home-based care, which senior advocates say is the preference anyway. The General Assembly also adopted legislation last year to begin such a transition.

Carcieri said the state’s looming budget deficit — projected at between $384 and $450 million next year — motivated his staff to act now.

“We’ve got to stop talking and do something. That’s where we are today,” he said.

Senior advocacy groups yesterday praised the governor’s plans, but warned that community-based companies aren’t yet prepared to handle a sudden influx of customers.

“It can only work here if the systems are in place prior to launch,” said Donna Policastro, a member of the Senior Agenda Coalition and the executive director of the Rhode Island State Nurses Association.

She also worries that a statewide nursing shortage may complicate the governor’s plans. “Who’s going to take care of them?” she said.

To address a lack of community resources, the governor plans to pump $7 million next year into the system. Among other things, the money will help boost reimbursement rates so that some companies can add staff.

“We will take care of these people, given the resources to do it,” said Robert J. Caffrey, president and chief executive officer of Homefront Health Care, one of about 60 companies in the Ocean State that provide in-home nursing care.

Carcieri maintains that his plan will save millions by simply making seniors and the disabled aware of their options.

The state will establish an assessment unit to work closely with seniors to ensure they are aware Medicaid covers visiting nursing care, adult daycare and assisted living, according to Alexander, of the DHS, which worked closely on the governor’s plan.

The department estimates that at least 100 seniors would leave nursing homes next year when notified of their options. And the department expects to divert 10 percent of Medicaid-eligible seniors entering the system away from institutional care next year.

Ultimately, Carcieri hopes to divert 50 percent of seniors entering the system away from nursing homes within the next five years.

For perspective, there were 11,754 Medicaid-eligible nursing home admissions last year among the state’s 86 nursing homes, according to the DHS. Among them, 6,500 seniors are currently housed in institutions.

It’s unclear how the nursing home industry will respond to a significant loss of patients.

“We would say this is an opportunity for nursing homes to change the way they do business,” Alexander said. “If they happen to close as part of the market forces, I don’t think we’re saying that we’re going to bail them out.”

The head of the Rhode Island Health Care Association acknowledged the governor’s plan may cause “financial strain” on her industry and emphasized the role nursing homes play in Rhode Island.

“People are not being forced into nursing homes because they need reminders to take care of their pills,” said Virginia Burke, president of the health-care association. “The governor seems to have the impression that there’s a large population of people living in nursing homes that could be readily cared for at home, and that’s just not the case.”

In last week’s State of the State speech, however, the governor cited data collected by the Kaiser Family Foundation that show 5.2 percent of Rhode Island seniors were nursing home residents in 2005, a number that is among the highest in the nation.

Meanwhile, the governor yesterday also highlighted plans to cut welfare benefits for all families that have exceeded the state’s five-year limit. An estimated 3,400 children are among the group, according to the DHS.

Most welfare recipients in Rhode Island are single mothers, a fact that the governor noted on talk radio in November.

Carcieri said the government can offer incentives that would encourage two-parent families, a move that would likely reduce dependency on welfare benefits and other social programs.

Linda Katz, policy director for the Poverty Institute at Rhode Island College, said the governor’s perspective is skewed.

“He’s got a very ’50s model of what a family looks like with mom home cooking the meals while dad goes off to the job. Then you don’t have to pay for childcare, mom’s home raising the kids,” she said. “I think his vision doesn’t meet the economic realities of the state.”

speoples@projo.com