Kansas Gov. Sam Brownback says federal officials have granted the state permission to overhaul its Medicaid program.

The decision by the U.S. Department of Health and Human Services was announced Friday. It allows Kansas to turn the $2.9 billion-a-year program for the needy over to three private insurance companies in January as planned.

The state already has awarded three-year contracts to the companies. Medicaid covers medical services for about 395,000 poor, disabled and elderly Kansans.

Brownback’s administration argues that moving all Medicaid participants into managed care will improve services while controlling the state’s costs.

Kansas needed HHS to waive some of its rules for the overhaul to proceed because the federal government provides the majority of funds for states’ Medicaid programs.