Advocates say a decision by Indiana's human services agency to cut a home health care program for aged and disabled people will cost the state about $4 for each $1 the belt-tightening saves.

The Indiana Family and Social Services told Area Agencies on Aging that a 15 percent cut in funding for the program known as CHOICE will take effect with the start of the new state fiscal year on July 1, saving about $7.3 million from the program's $48.8 million annual budget.

But representatives of the Indiana Home Care Task Force, United Senior Action of Indiana, the Indiana Alliance for Retired Americans and the Generations Project said the loss of CHOICE services such as physical therapy, medication setup and transportation will force people into nursing homes at a cost about 11 times higher than in-home services.

"Home health care is the least expensive option, by far," said Jim Wallihan, president of USA-Indiana.

CHOICE stands for the Community and Home Options to Institutional Care for the Elderly and Disabled. The state-funded program served 9,225 people last year. It serves a wide range of people, but a typical recipient is a woman age 85 or older living alone who has circulation, muscle or nerve problems, or a combination of them, according to an FSSA report.

FSSA spokesman Marcus Barlow said most state programs have been cut during the current economic turndown, allowing Indiana to avoid running up deficits or raising taxes. He also said not every person on CHOICE qualifies for nursing home care.

If Indiana cut its current nursing home population of about 28,000 people in half it would save $800 million in costs to Medicaid, the state-federal health care program for the needy and disabled for which FSSA bears about 37 percent of costs. Those people could instead be served by the less expensive in-home care, advocates claim.

Wallihan termed the potential savings "an opportunity right under our nose."

June Holt successfully sued the state to get it to pay for in-home care for her son, Joe, now 30, after he suffered a brain tumor. He had spent two years in nursing homes where he received limited services and gained little independence.

"They never came into his room to teach him how to get in and out of bed. They never tried to teach him how to use the toilet," said Holt, an outreach and education coordinator for the Generations Project.

With in-home services, Joe Holt now lives in an Indianapolis apartment, she said.

Scott Tittle, president of the Indiana Health Care Association, issued a statement saying the nursing home industry group supports home- and community-based care where appropriate.

Since CHOICE is not an entitlement program, it has a waiting list that has grown by about half to about 3,200 names in recent years, the advocates said.

The 2009 CHOICE annual report showed the average monthly cost for services was $424, compared to $4,576 per month for nursing homes. Since the state paid 37 percent of Medicaid, its share of that nursing home bill came to $1,693, or about four times what it would cost CHOICE.

For the full year, the average CHOICE recipient cost the state $5,086, compared to $54,911 for Medicaid-funded nursing home care. CHOICE saved the state $18,470 per person last year and the federal government $31,355, according to the report by FSSA's Division of Aging.

FSSA spokesman Barlow said the agency didn't cut CHOICE during this current state fiscal year but held back about $2 million in funding that will be released on July 1.

"We're seeing reductions in funding all over state government, so this really shouldn't come as a surprise to anyone," he said. "We're not in the red like almost every state."

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