The bill would make several other changes, including requiring more stringent annual evaluations of whether people receiving Medicaid benefits are financially qualified to do so.
Medicaid is a federal-state program for the needy, aged, blind and disabled and for low-income families with children.
Supporters say that bill, which passed the Senate 38 to 7, should save the state over $114 million a year.
"I would like to applaud Lt. Gov. Amy Tuck, Sen. Alan Nunnelee, Sen. Terry Burton, and the other Senate leaders who passed our landmark 'Operation: Streamline' Medicaid Reform legislation out of the Senate by a resounding 38-7 bipartisan vote," said Gov. Haley Barbour in a written statement.
Barbour called it a "sustainable solution for taxpayers who have been burdened with skyrocketing Medicaid costs in recent years."
However, opponents say they worry poor people will be hurt by the changes.