- Indiana's human services agency announced Tuesday that it will slash the state's Medicaid reimbursement rate to hospitals by 5 percent, a decision that hospitals say is a harsh hit that could force them to provide fewer services.

The reduction of the reimbursement rate, which is expected to save $10.6 million, comes as the Indiana Family and Social Services Administration attempts to heed Gov. Mitch Daniels' order of a 5 percent emergency spending cut to cope with freefalling state tax collections.

"These cuts represent a significant blow to the ability of Indiana's hospitals to serve their communities. Hospitals will be forced to make difficult decisions about what types of services they can provide," said Douglas Leonard, president of the Indiana Hospital Association.

He said hospitals already at times receive 50 cents in Medicaid reimbursement for every dollar of care provided.

"The gap between the cost of providing care and government payments received continues to widen and is simply unsustainable," he said.

The FSSA said it expects to save another $13.6 million by combining some county offices and not filling vacant jobs. It will save $9.8 million by refusing to accept new clients in the state's Residential Community Assistance Program and ending a contract that helps elderly communities in Indianapolis, Gary, South Bend, Linton and Huntington.

The cuts are expected to save $34 million total.

FSSA Secretary Anne Murphy said the changes will "cut spending without cutting vital services" to the 1.2 million Hoosiers who receive benefits such as Medicaid, food stamps and Temporary Assistance for Needy Families from the agency.

"Like the state, hospitals are also hurting - we are treating more Medicaid and uninsured patients and seeing fewer patients with better-paying commercial health insurance," Leonard said.

Broad cuts

Indiana has collected $300 million less in tax revenue since the July 1 beginning of the current fiscal year than forecasters had predicted. As a result, Daniels has ordered budget reductions and pay freezes. Meanwhile, his administration is allowing Indiana's 30,000 state workers to take as much unpaid vacation time as they wish.

On Tuesday the Indiana Department of Correction posted a video in which Commissioner Edwin Buss announced changes that will result in lower pay for correctional officers.

Currently, correctional officers work four 12-hour shifts one week and three shifts the next. However, they are paid on seven-day pay periods.

Therefore, when officers work four shifts in a week, they receive regular pay for the first 43 hours and automatically receive overtime pay for the final five hours.

Buss said the department will switch to a two-week pay period, which will allow the state to calculate overtime over a long period and result in a savings of $5 million each year.

Buss said the department considered abandoning 12-hour shifts in favor of 8-hour shifts, saying such a move would "save millions annually." However, he said, he decided against doing so.

"The 12-hour shift is very popular, allows for quality time away from the facility, and most importantly, gives you quality time with your family and loved ones," Buss said.

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