COLUMBIA, S.C. - Gov. Mark Sanford's proposal to overhaul South Carolina's insurance program for the poor and disabled has been submitted to the federal government for approval after several changes were made to the original plan.

Co-pays were lowered or dropped altogether for some Medicaid recipients while another major part of plan will be a pilot project rather than implemented statewide.

However, the rest of the proposal is similar to a document submitted to the federal Centers for Medicare and Medicaid Services in June.

States across the country are closely watching South Carolina's proposal as they grapple with Medicaid costs and growth.

South Carolina's proposal has drawn harsh criticisms from advocates for the poor and disabled as well as Democrats and black legislators, who said they were left out of discussions for the new plan.

Rural health clinics and a nonprofit group also sued Sanford claiming the proposed changes to the $4.8 billion program must be considered by lawmakers under the Administrative Procedures Act. The case has not gone to trial.

The state has proposed creating personal health accounts for most of the 850,000 Medicaid recipients. The account would be used to purchase private health insurance, or pay for care directly. The amount of money allocated to each account would depend on the person's age, sex and physical condition.

"Doing this will ultimately ensure better health care outcomes, and at the same time the competition between plans has proven in other settings to help rein in growing costs," Sanford said in a statement.

Sanford and officials with the state Department of Health and Human Services, which manages Medicaid, said the market-driven approach will slow growth and save $300 million dollars.

South Carolina spends nearly 19 percent of its budget on Medicaid, but that's expected to grow to 29 percent in a decade.

"There's definitely improvements to the document," said Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, which does advocacy work for low-income communities. "They did hear some of our concerns."

But Berkowitz said there aren't enough changes, and much of what the proposal called for could have been done without requesting a federal waiver.

She was pleased co-pays are no longer required for children and pregnant women and that other suggested co-pays for services are lowered from the proposal submitted in June.

For example, a suggested inpatient hospital co-pay is currently $25, but an earlier suggested had been $100. The current proposal suggests $40. There is no current non-emergency co-pay, but the new proposal suggests $25. Earlier, $50 had been suggested.

"They are allowing providers to say no to somebody if they don't have the money to pay," Berkowitz said.

The co-pays emphasize "access to primary and preventive care services while maintaining the traditional nominal structure," according to the proposal. Under the new proposal, there will be no co-pay to visit a primary care physician.

Also, the self-directed option, which allows a very small number of Medicaid recipients to use a personal health account to buy major medical coverage, will now be a pilot project. That pilot project will be studied and possibly expanded over time. It also calls for some protection if a person spends all the money in their account.

"When you have Medicaid patients visiting the emergency room 66 percent more often than other South Carolinians, coupled with a program that's on pace to consume almost 20 percent of the state budget, it's clear real reform is needed," the governor said.