The state of Indiana has delayed $60 million worth of cuts in Medicaid payments to hospitals until Feb. 1 while dealing with an outcry from the state's hospitals and a Gary hospital's lawsuit.
The 265-bed Methodist Hospital-Northlake campus in Gary and six Gary physicians filed suit last month in U.S. District Court in Hammond, Ind., to try to stop the cuts, which were scheduled to be effective Jan. 1.
"We have said, for several years, that fiddling with the reimbursement system was not going to solve the Medicaid budget woes," said Dave Wiesman, vice president of the Indiana Hospital Association. "We would rather reform the whole system rather than just the payment system. Reforming the payments doesn't control utilization of the system."
Of Gov. Evan Bayh's proposed $490 million in Medicaid cuts during the two-year budget period that ends June 30, 1995, cuts affecting hospitals include: $32 million from inpatient care, $28 million from outpatient care and $23 million through changes in lengths of hospital stays, the state budget agency said.
The state is only delaying Medicaid cuts to hospitals for inpatient and outpatient care. "We agreed to delay for one month the cuts to give them (hospitals) time to suggest the same amount of savings the new system would propose," said Jim Verdier, Indiana's Medicaid director.
Gov. Bayh's office said Medicaid reforms were designed to make the system run more efficiently, and the cuts weren't only to hospitals.
"We are bringing Medicaid reimbursement in line with what we can afford," said Fred Nation, a spokesman for Mr. Bayh. "Historically, Indiana has had some of the highest reimbursements in the country."
Prior to Mr. Bayh's reforms, the state reimbursed 100% of hospitals' Medicaid costs. The governor's new proposal reduces those reimbursements to 85%, Mr. Verdier said.
Before the changes, the state of Indiana was projected to spend $2.4 billion in Medicaid in the two-year budget period scheduled to end June 30, 1995, the state budget office said.
Meanwhile, the state last week filed a motion to dismiss Methodist Hospital's lawsuit, and a status conference was scheduled for Jan. 26. A hearing on a preliminary injunction to the cuts was scheduled for Feb. 3.-Bruce Japsen