AUGUSTA, Maine (AP) – Two legislative committees, kicking off a key phase of extended budget hearings, sat down Tuesday to review proposals by Gov. John Baldacci to save $75 million within the Department of Health and Human Services by relying more on managed care and standardizing payments to more health care providers.

In the face of rising health care costs, “Maine now needs a broader, more comprehensive approach to provide quality care and manage costs,” Commissioner Brenda Harvey of the Department of Health and Human Services told members of the Legislature’s Appropriations and Health and Human Services committees.

Harvey told the panelists that MaineCare spending had risen from $1 billion in 1997 to $2.4 billion in 2006. Contributing factors include service utilization rates, rates of illness, new drugs and technology.

Expenditures by the state/federal Medicaid program ease pressures elsewhere in the health care system, according to officials who say hospitals were faced with more than $200 million in bad debt and charity care costs in 2005.

“We have continued to use MaineCare to prevent an increase in the uninsured,” Harvey told lawmakers.

The state’s Medicaid program, or MaineCare, serves one in five Mainers, including elderly, people with disabilities and low-income families and individuals.

Officials say care management and behavioral health management initiatives could generate about $54 million in savings over two years, while standardizing Medicaid payment rates and lowering the highest provider-specific rates could net another $20 million.

The savings have been proposed within Baldacci’s $6.4 billion budget package for the two years beginning July 1.

Other major elements of the package include a tobacco tax increase that would produce about $66 million a year and bring the tax per-pack of cigarettes in Maine to $3 – the nation’s highest among the states.

The governor also hopes to shrink 152 school district administrations around the state to 26 units known as regional centers. Administration officials have booked $36.5 million in savings from such a consolidation for fiscal 2009.

The two committees that met jointly Tuesday are scheduled to extend their hearings through the week, hearing outlines from Baldacci administration officials and taking testimony from others.

Other Appropriations Committee hearings are slated to run into March.

Taking a break this week are other legislative panels, including the Education and Taxation committees. Some committees have taken on light duties.