Arkansas Gov. Mike Beebe, a Democrat, floated the concept as a way to win support from his Republican-controlled legislature.
Corbett said he too is looking for alternatives because he wants to cover more of the uninsured but believes the expansion, which the U.S. Supreme Court made optional for states when it upheld the Affordable Care Act last year, is unaffordable.
"Until we know whether or not significant reform is possible, I continue to have concerns that Pennsylvania's Medicaid program will be able to serve, in a sustainable manner, the approximately one in four Pennsylvanians that would be covered under a full expansion,"he said.
Among the reforms Corbett is seeking is to better align benefits to meet individual needs and offer plans that more closely resemble coverage provided by employers, a a spokeswoman for the governor said Wednesday.
Corbett said he sought a meeting with Sebelius to verify that the 100 percent federal match is available for the commonwealth, something a federal official said the secretary "reiterated" was the case for the first three years of the program. It gradually declines to 90 percent.
"[Secretary Sebelius] stressed that the Administration wants to be as flexible as possible within the confines of the law and said she hopes constructive dialogue can continue on innovative ideas that work for Pennsylvania," the official said.
While Corbett said "no further decisions have been made" regarding Medicaid, a similar meeting with Sebelius may have played a role in turning around another foe of the healthcare overhaul.
Florida Gov. Rick Scott, who joined with other GOP governors and attorneys general, including Corbett in his former office, in suing over the law now says he will move foward with the Medicaid expansion, as does New Jersey's Chris Christie.
Meanwhile, pressure is mounting on Corbett from labor unions, hospitals and advocates for the uninsured to follow suit.
A study released last week by the Rand Corporation on behalf of the state hospital association found that expanding Medicaid would boost federal revenue to Pennsylvania by more than $2 billion annually and provide 340,000 residents with health insurance.
The increased federal spending would provide a $3 billion boost in economic activity and sustain more than 35,000 jobs, according to the analysis.
Corbett has argued that implementing the program would mean an additional $4 billion in state costs as federal dollars are reduced in later years.
Under a proposal in the Arkansas legislature, those who would qualify for Medicaid expansion - those with incomes up to 138 percent of the poverty level, or $15,415 for an individual - would be able to buy private insurance through marketplace exchanges that would be subsidized by the federal Medicaid dollars. The federal law mandates exchanges in every state but intended them for those with higher incomes.
Antoinette Kraus, director of the Pennsylvania Health Access Network, which advocated for the law, said she has concerns about the state taking the private insurance route because on average private coverage costs more, especially for previously uninsured working poor who may be at higher risk.
A report from the nonpartisan Congressional Budget Office last year supported that contention, finding that private insurance would cost more than traditional Medicaid.
But Matt Sano, executive director of the non-partisan National Assocation of Medicaid Directors, said the roughly $3,000 per person average cost differential may narrow over time.
Contact Amy Worden at 717-783-2584 or email@example.com or follow @inkyamy on Twitter.