PROVIDENCE — A waiver that would give Republican Governor Carcieri authority to steer the elderly away from nursing homes and slice away some of the Medicaid-financed benefits available to families on RIte Care has elicited more concern from the Democrats in the state’s congressional delegation than it has from their counterparts in the state legislature who have a say in what happens now.

Advocates for the poor are worried. The nursing home lobby fears that decisions about who truly needs Medicaid-financed nursing home placement will be made by “intermediaries” under orders to cut spending. And the words coming out of Washington have been strong.

U.S. Sen. Sheldon Whitehouse, said: “There is no indication that the state has the work force, physical infrastructure, or administrative capability in place to implement the sweeping changes envisioned by this waiver without risking the health care benefits thousands of Rhode Islanders rely on.”

U.S. Rep. James R. Langevin lamented that the terms of the federal waiver had been hammered out in “a closed and expedited negotiation process.”

But with the state facing a $357-million deficit this year, “what are the alternatives?” House Finance Chairman Steven Costantino asked rhetorically in an interview this week.

The Carcieri administration’s bid for permission to “vary the amount, duration and scope of services” it provides the one in five Rhode Islanders poor enough to qualify for Medicaid won federal approval late last week, in the final days of the Bush administration.

Governor Carcieri has not yet fully disclosed what his administration intends to do with this newly won flexibility to redesign medical benefits to reduce state and federal Medicaid costs by a projected $358 million over the next five years. And state lawmakers still have to approve the deal.

But top officials in the state’s human-services arena acknowledge they are considering dropping dental coverage for some or all of the state’s 134,964 RIte Care enrollees, offering “catastrophic coverage” only to some enrollees, and limiting Medicaid-paid nursing home placements in the future to those with the “highest need.”

The state also sought and won permission to “restrict freedom of choice of provider(s)” and impose “premiums in excess of statutory limits” and “waiting periods after application before individuals … are eligible for demonstration benefits.”

State lawmakers have 30 days to say yea or nay to this five-year Medicaid “demonstration project” aimed at saving hundreds of millions of dollars in a state and federally financed health-insurance program that currently pays the medical bills of 180,318 Rhode Islanders at an estimated annual cost of $1.7 billion.

“In theory, I have always been supportive of it,” said Costantino, acknowledging his biggest concern six months after lawmakers approved a state budget predicated on $67 million in increasingly elusive Medicaid savings this year is “slow startup.”

On the access-to-care issues frightening some Medicaid recipients and advocates, he said, he is convinced no one in a group home or nursing home as of Nov. 1, 2008, will be booted out; reassured that the state has an escape clause if the $12.1-billion, five-year cap on Medicaid spending that is part of the deal proves untenable; and encouraged by the prospect the state will be able to get federal matching dollars for the first time for an array of services that might enable people to stay in their homes that are currently ineligible for reimbursement or paid for entirely with state dollars.

He had no comment when asked how he would explain the deep disparity in how Rhode Island’s state and federal lawmakers view the waiver.

Langevin said: “My first priority is ensuring that Rhode Island’s low-income, elderly and disabled citizens continue to receive access to the health care services they need, particularly during an economic crisis that has left families strapped.”

In its briefing papers, the Carcieri administration asserted the new Medicaid spending cap would not compromise Rhode Island’s ability to get a potential $70 million in additional Medicaid dollars from a stimulus package aimed at helping the states, in their varying degrees of budget crisis, pay their bills.

On this point, Costantino had concern. While details of the stimulus package are evolving, Costantino said, “a lot of the talk is if you touch eligibility you are not eligible for the stimulus package … so I am not quite sure what they are saying.”

In an e-mail newsletter that went out yesterday, Carcieri said again the state simply cannot afford the $1.7-billion cost of the current state and federally subsidized Medicaid program, which makes up 25 percent of the state budget and that is rising at a rate of 7 percent a year, “far greater than the 1.8 percent in state revenue growth.”

“In order to sustain the Medicaid services so many depend upon,” Carcieri said, “we have sought this accord with the federal government … to design and deliver programming that will be more consumer oriented and directed, promote community and home care, emphasize prevention, and, at the same time, lower costs.”

The state currently has no Medicaid director; the waiver package was crafted and negotiated, in part, by the Lucas Group, a private consulting firm with offices in Boston and Toronto that has no paid role yet in the administration of the new Medicaid structure. Carcieri spokeswoman Amy Kempe said the firm is “welcome to submit a bid” if the state decides to seek outside help.

Asked what exactly these unpaid consultants did, she said; “The Lucas Group was very helpful in the negotiation process with the federal government, offering [on a voluntary basis] assistance, however negotiations were led by” Gary Alexander, director of the state Department of Human Services, Carcieri chief of staff Brian Stern “and a team of senior level staffers at DHS.”

Alexander has been unable over a two-day period to detail who within the existing “home-based and community service” network received a 10-percent rate increase in November, and how their rates changed. But in an e-mailed response to a second day of questions, he said the $4.6-million hike “is conditional on a demonstrated increase in … capacity for these services.”

cneedham@projo.com