(Story updated with additional content at 6 p.m. ET.)

Illinois Gov. Patrick Quinn is calling for reductions in 58 separate line items to help achieve $2.7 billion in Medicaid savings, including provider rate reductions of $675 million.

The Illinois Hospital Association says the plan requires a $350 million rate cut for hospitals, and called Quinn's plan “the wrong approach that will hurt patients.” The IHA suggested alternatives including better maximization of federal revenues and improving the Primary Care Case Management program.

“While we commend the Governor for taking some positive steps—including incorporating several of IHA's savings alternatives—the proposal is still too drastic and too rash to impose on the state's already fragile healthcare system,” an IHA statement read.

“Elimination or reduced coverage of certain optional populations and services” is one of those 58 items, which would represent $1.35 billion, or half of the $2.7 billion in cuts Quinn said needed in February. Other line items include controls on use of Medicaid services to prevent overuse or waste, a redesigned healthcare-delivery system through coordinated care and expanding cost-sharing by clients.

Quinn told reporters assembled in Springfield, Ill., that he appreciated the work of clinicians, but said they needed to make sacrifices.

“They do very important work, but at the same time, the reimbursements that they receive have to be reduced,” Quinn said. “Our plan does that. It isn't a radical reduction; in fact, there are some that might want to reduce it even more than I proposed, and I don't want to do that.”

The Illinois Cares Pharmaceutical Assistance program, which offers discounts on drugs to the 180,000 residents who are low-income seniors or disabled, would be eliminated under Quinn's plan.

The governor is asking to cut rates for providers, which would generate $675 million, or 25% of the cuts he said are needed. He is also proposing an increase in the state's cigarette tax to generate $337.5 million, or 12.5% of the $2.7 billion. That's a $1 tax per pack of cigarettes. A federal match would bring in another $337.5 million. Quinn's camp is billing the costs surrounding cigarette use as “reducing tobacco-related Medicaid and healthcare costs over the long term.”

The IHA and Quinn agree that better verification of the eligibility of Medicaid beneficiaries would help, and Quinn suggested making bigger investments in information technology to aid that endeavor.

The blueprint for the governor's plan comes from the Civic Federation, a Chicago-based watchdog which Quinn mentioned several times in his remarks. Laurence Msall, the group's president, said they're pleased with Quinn's leadership and called the cuts difficult.

“The Civic Federation has real concerns and reservations about the state's ability to implement the magnitude of all these reforms and the potential dramatic consequences that the rate cuts may have on our most vulnerable healthcare providers,” Msall said.