The Indiana Family and Social Services Administration announced a $10.6 million Medicaid provider payment cut Tuesday.
The provider rate adjustment includes a 5 percent Medicaid reimbursement reduction for hospitals.
Indiana FSSA Secretary Anne Murphy blamed the cuts on revenue shortfalls as a result of the recession and increases in Medicaid enrollment.
"The reductions we are announcing today cut spending without cutting vital services," she said. "Our commitment is to the 1.2 million Hoosiers that receive benefits from us, and the cuts announced today will not take away from our clients receiving the benefits to which they are entitled."
FSSA budget cuts include $13.6 million in internal administrative cuts, which includes not filling employment vacancies, as well as contract reductions of $9.8 million. The latter reductions include cuts to the Residential Community Assistance Program (RCAP) moratorium for new clients, elimination of the Naturally Occurring Retirement Communities (NORC) contract and lower negotiated rates with vendors.
The Indiana Hospital Association criticized the FSSA action.
"These cuts represent a significant blow to the ability of Indiana's hospitals to serve their communities," said IHA President Douglas Leonard. "Hospitals will be forced to make difficult decisions about what types of services they can provide. We hope that the cuts will be temporary and that we can work with the state in the future to address the long-term inadequacies of our Medicaid program."