Hospitals would get 5 percent less money from the state for caring for Medicaid patients under cuts announced today by the state.

Gov. Mitch Daniels last week called for emergency budget cuts as the state’s revenue continues to fall short of projections. State tax collections already are a half-billion dollars short of what was collected at this time last year.

To make the cuts, Daniels said state employees would not be getting pay raises, and asked agencies to come up with cuts, including the Family and Social Services Administration which administers Medicaid in Indiana.

STATE WORKERS: Deciding about unpaid leave.

Under cuts announced today, FSSA said it would save $10.6 million in the current fiscal year by cutting Medicaid reimbursement rates to hospitals.

The Indiana Hospital Association said it would comment later today on those cuts.
In addition, FSSA said it would save $13.6 million by not filling vacancies and by combining some county offices. Another $9.8 million will be saved by putting a moratorium on new clients in the state’s Residential Community Assistance Program, which currently has about 1,400 people in the program, and by ending the state’s Naturally Occurring Retirement Communities contract, which helps five elderly communities in Indiana in Indianapolis, Linton, South Bend, Gary and Huntington.

Marcus Barlow, a spokesman for FSSA, said the state also is negotiating lower contract rates with vendors. That does not include Affiliated Computer Services and other vendors with whom the state has contracted to provide welfare services, he said, although the state does expect that the shift to a new hybrid system, following the cancellation of the state’s contract with IBM, will save money.

In addition to the FSSA cuts, other state agencies are looking at ways to trim costs.

In the Department of Correction, correctional officers will be paid over a two-week period, rather than a one-week period. That will allow the state to calculate overtime pay over 14 days instead of seven, and result in savings of $5 million annually, DOC Commissioner Ed Buss said in a video presentation to DOC employees.

Under the new system, DOC officers will get OT after working 84 hours in a two-week period.

DOC spokesman Doug Garrison said that there is “no question that this is a pay cut.”

But, he said, in the past officers were routinely paid five hours of OT every two weeks for working their normal shift, because of the way the 12-hour shifts fall.
Buss said in the video that this change allows the state to keep those popular 12-hour shifts for correctional officers while avoiding layoffs.

“Tough times call for strong leadership and tough decisions,” Buss says in the video.