A proposed overhaul of Massachusetts’Medicaid program, MassHealth, from Mass. Gov. Charlie Baker’s administration would transition the program from fee-for-service to an accountable care organization (ACO) model in an effort to keep costs down.

The plan also includes negotiating with the federal government to get $1.5 billion for providers to move toward ACOs. The state would contribute $250 million through an increase in a fee paid by hospitals, offset by an equal annual increase in Medicaid reimbursements to hospitals, according to MassLive.com.

Baker’s administration cited the growing costs of MassHealth as the reason for the change, saying the $15 billion program now takes up nearly 40 percent of the state’s annual budget while only covering a fourth of the state’s residents.

“The current structure is not sustainable," said Massachusetts Secretary of Health and Human Services Marylou Sudders to MassLive. "It's the same structure we had since the mid-1990s. Rumor has it healthcare has changed since the mid-'90s."

The alternative, according to Sudders, would be reducing benefit programs.

The plan doesn’t include any hard estimate as to how much the state will save by transitioning to ACOs, but it does cover additional care not typically included in ACO models in other states, such as substance abuse treatment.

“We're optimistic the plan recognizes the centrality of behavioral health in a way state government hasn't in the past," Vic DeGravio, president of the Association for Behavioral Healthcare, said to MassLive.

The state’s Executive Office of Health and Human Services (EOHHS) expects to select ACOs by December, in time for the full program to launch in late 2017.