PROVIDENCE — The first Rhode Islanders to see firsthand how the Carcieri administration intends to use its unprecedented new power to cut Medicaid spending may be those seeking tonsillectomies.

To save $200,000 in the 5½ months remaining in this budget year, the Department of Human Services intends to seek bids to determine where a patient can go for the cheapest non-emergency surgery, a tonsillectomy being just one example cited by DHS Director Gary Alexander yesterday. A hospital? A surgical center? A doctor’s office?

The “selective contracting” of surgical services was just one of several money-saving plans that came to light yesterday after a second day of hearings on legislation to require General Assembly approval before the administration can use its new powers to limit, redesign or raise the patient share of the cost for any medical service covered by Medicaid.

Governor Carcieri is banking on at least $2 million in Medicaid savings this year to help avert a massive state deficit, and Alexander acknowledged this is also hinged on “selective contracting” with companies willing to provide the least expensive prescription drugs and medical equipment; a previously disclosed $10,000 liquid-assets maximum for adults to qualify for the state-subsidized RIte Care health-insurance program, and the “diversion” of 196 nursing home patients to alternative settings.

Carcieri has repeatedly pledged that the agreement — known as a “global Medicaid waiver” –– that was approved in the waning days of the Bush administration is designed to give poor, elderly and disabled Rhode Islanders better health-care choices.

The waiver caps all Medicaid spending at $12 billion over the next five years and gives Carcieri broad authority to reshape programs. A document released at one point by the governor’s office anticipated $20 million in Medicaid-related savings in the first year alone.

On Tuesday, however, a day after the agreement with the federal government officially took effect, state officials appeared unable to explain millions of dollars in expected cuts to health-insurance programs.

“We’re not prepared to answer those questions,” Ann Martino, a senior administrator with the Department of Human Services, told the House Finance Committee, when asked to explain a proposed “limited benefit package” for RIte Care, which serves at least 112,672 children and parents.

Martino testified that the administration has backed off a plan to cut dental coverage for some recipients. But she said there would be cuts.

“Alternate savings were being looked for,” she said. “And I’m, to be honest with you, not sure what was exactly elected as a substitute.”

Those comments sparked a new round of concerns when the Senate Finance Committee held its own hearing yesterday on the legislative-oversight bill. The Senate version states, “No changes in the state Medicaid program shall be made without the express approval by a legislative body ...”

It allows the governor to unilaterally impose only the most basic administrative changes that don’t affect “beneficiary eligibility, benefits, overall health-care delivery systems, payment methodologies or cost sharing.”

Without the oversight, advocates representing vulnerable Rhode Islanders fear the governor could eliminate or change popular services. The lobbyist for the nursing home industry urged senators to specifically prohibit state Medicaid administrators from retroactively refusing to pay for patients released by hospitals to nursing homes. The executive director of Kids Count recommended latitude to reinstate coverage for the non-citizen children of immigrants in this country legally. Others urged the inclusion of patients on an implementation task force.

Without legislative or congressional oversight, “the governor would have free rein to erode the provisions of RIte Care,” fretted Amanda Dumas, a pediatric resident at Hasbro Children’s Hospital. But Alexander said there was no plan to cut early screening programs for poor children. He said there was no immediate plan to change how RIte Care is managed, and “whatever changes we propose have to come before the legislature.”

The General Assembly expects to approve the oversight legislation in the next two weeks. The administration has promised not to begin implementing the new system in that time, according to a letter Alexander sent to lawmakers.

speoples@projo.com