(Updated 12:22 p.m.) It wasn’t technically part of the deficit mitigation plan lawmakers passed in December, but the Department of Social Services informed federally qualified health centers on Jan.1 that they would not be receiving an incentive payment to transition to the Person-Centered Medical Home model.

The incentive payments had — according to advocates — been a centerpiece of the Malloy administration’s effort to reform the delivery of healthcare in the state because it uses a proactive approach to managing populations with chronic conditions such as diabetes. This idea is that by reaching out and calling to make sure patients are taking care of themselves it cuts down on the cost of delivering healthcare.

“It goes without saying that deficit reduction, inherently, is difficult,” Department of Social Services spokesman David Dearborn said earlier this week. “With Medicaid the main driver of the state’s projected deficit, the program was subject to efforts to close the gap.”

The $900,000 reduction, which one advocate called a “secretive cut,” is part of an overall reduction of tens of millions of dollars to the social services budget during the deficit mitigation process.

“It was an approach by the state – executive and legislative branches together – as one of the measures for deficit mitigation,” Dearborn said Friday.

Ludwig Spinelli, CEO of Optimus Health Care, a federally qualified health center (FQHC) with locations in Bridgeport, Stratford, and Stamford, said he understands these are difficult times for the state, but is “disappointed” by the decision.

He said the move could cost the health center millions of dollars in the future because it hinders its ability to employ information technology and transition to electronic medical records, both of which are necessary to achieve accreditation and continue on the path toward the medical home model.

“Cutting the safety net is not in the best interest of the state,” Spinelli said.

In the end, it will be the patients that suffer because the center will have to reduce services in order to focus on obtaining accreditation without any additional money, he said.

Dearborn said part of the reason they decided to make the cut to the program was because “FQHCs were already getting paid more under Medicaid than most other medical providers.”

But unlike private doctors, the federally qualified health centers are not allowed to bill Medicaid for every test they do on a patient. They are expected to do all of the necessary tests and still receive one flat rate.

Deb Polun, director of government affairs for the Community Health Center Association of Connecticut, said that even though the centers receive more Medicaid money per patient from the state, they are paid a flat rate. That rate is based on the average cost 12 years ago, not what it actually costs them to see and treat a patient.

Polun said it’s costly to transform the way these centers currently do business and in order to receive Person-Centered Medical Home recognition they will need to obtain accreditation. It’s a process that’s not easy and demands additional resources, she said.

Sheldon Toubman, an attorney with New Haven Legal Assistance, said the “secretive cut” sends an awful message to the health care providers the state is trying to get to participate in the medical home model.

“The message: this administration is not really committed to this program, which it has claimed to be a central component of its health care reform agenda,” Toubman said.

He said it’s possible the budget reduction will cause some providers to decide not to participate in the voluntary program aimed at better care coordination.

“As some of these other providers have expressed to me, if the administration is going to end PCMH payments to these major Medicaid providers, it is very likely to end payments to them as well.  This is going to make recruitment into this important program, which has already been a challenge, much more difficult.”

Of the 600,000 Medicaid recipients in the state about 315,000 visit federally qualified health centers on an annual basis. At the moment, Polun, whose organization represents 13 of the 14 health centers in the state, said she doesn’t believe any of the dozen participating are withdrawing from the program. But it could make other providers thinking about participating wary.

The incentive to transition to the medical home model has been in place for about eight months. The fiscal year for all of the centers starts on July 1, so the loss of state revenue mid-year was unanticipated.

But it’s not only the health centers and advocates that are upset, some lawmakers also are unhappy with the administration’s New Years Eve surprise.

The notice of the change in Medicaid payments was published in the newspaper on Dec. 31 and by Jan. 1 the payments to the center had already been reduced.

“Bureaucracy doesn’t move that fast,” Rep. Peter Tercyak, D-New Britain, said Wednesday.

As the former co-chair of the Human Services Committee, Tercyak said the chairs were never consulted about the cut and it wasn’t discussed as a possibility during deficit mitigation negotiations.

Rep. Cathy Abercrombie, D-Meriden, who took over as chairwoman of the Human Services Committee, this week said with a more than billion budget deficit she understands that at this everything has to be on the table. However, the legislature which has invested a lot of money over the years in the health centers and may have other ideas about where to find savings.

“I understand these are tough times, but don’t take away the safety net,” Abercrombie said.

Sen. Toni Harp of New Haven said Friday that it’s not entirely accurate to say the legislature was unaware of the cut. She said leadership knew and should have conveyed that information to its members, who may have been “too stunned by the hospital cuts” to have paid much attention to it.

She said the cut was the result of collaboration between legislative leaders and the administration.

Harp expressed confidence that about 95 percent of the health centers will be able to use a similar standard for accreditation, lessening the need for the additional payments.