Medicaid, which provides health coverage for low-income Americans, is jointly funded by the state and federal governments. Federal officials have not yet agreed to grant Oregon a waiver from standard Medicaid regulations, which is needed for the program to be implemented and the money to be spent.

The financial commitment from the U.S. Department of Health and Human Services, while tentative, is a clear public endorsement of the concept and an indication that the administration believes the initiative holds promise to save money. The state anticipates savings of $11 billion to state and federal budgets over the next decade by reducing duplicated treatments and avoidable hospitalizations.

Finding ways to deliver health care for cheaper is a critical challenge as baby boomers age and President Barack Obama's health care overhaul extends coverage to millions more Americans, many of whom will join Medicaid in 2014. Under Obama's Affordable Care Act, the federal government will pay most of the costs for the new patients.

In a statement, Health and Human Services Secretary Kathleen Sebelius said Oregon's plan "mirrors our plan at the national level under the Affordable Care Act."

"This is another example of how we are collaborating successfully with states in their efforts to find innovative health care solutions that work for their communities," Sebelius said.

The Oregon plan would create "coordinated care organizations" to manage all mental, physical and dental care for 600,000 low-income patients on the Oregon Health Plan, the state's Medicaid program. It would focus particularly on the sickest patients with the highest costs, especially people with chronic conditions such as diabetes and asthma or with mental health concerns.

The point, proponents say, is to provide money for services that keep people healthy but don't get much funding — such as paying caseworkers to make sure patients go to medical appointments and take their medications. The state Legislature overwhelmingly endorsed the idea this year and last, though some Republicans complained that it would increase the government's role in health care.

Kitzhaber cleared his schedule at the last minute this week to fly to Washington, D.C., and finalize the deal for the money.

The federal money will lessen the impact of payment cuts to providers and help them pay the upfront costs of the new initiative before the savings can kick in. Oregon, facing a budget shortfall, planned to severely cut payments to doctors, hospitals and other care providers beginning this summer.

Potential coordinated care organizations, which had been working to comply with proposed requirements, were eager to find out how much federal money would be available. Many will have to upgrade their computer systems so patient records can be shared, or hire new staff to manage patient care. They face a May 14 deadline to submit financial proposals to the state.

The changes will initially apply only to Medicaid patients, but Kitzhaber wants to eventually extend it to government workers and the general public.