Indiana's Department of Child Services announced Wednesday that it will "reinvest" nearly $10 million in rate increases this week to groups that provide in-home services to families.

Over the last few years, DCS has drastically cut the rates it pays to providers across the board, negotiating contracts with companies directly and re-emphasizing its philosophy of keeping children at home or with relatives rather than with foster families or in residential treatment.

But on Wednesday, DCS issued a news release stating that new contract adjustments will result in rate increases -- ranging from 8 percent to
15 percent -- to about 300 providers of in-home services that include therapy, parenting skills, child development and other educational services.

Stephanie McFarland, interim spokeswoman for DCS, said the agency is "making good" on a commitment.

She said DCS in 2009 asked all providers to cut their rates by 10 percent amid statewide budget reductions and a souring economy. The agency had done so with the hope that eventually it would be able to raise the rates.

"And that's what they're doing, making good on their commitment to these community-based providers," McFarland said.

The $10 million reinvestment is coming out of the 2012 and 2013 budgets, McFarland said. She said the state's Office of Management and Budget recently authorized the agency to release the money.

The rate increases will support in-home programs and services, not intensive residential treatment, McFarland said. She said the agency continues to see short-term and long-term success in keeping children safely in their own homes or relatives' homes, rather than placing them in residential facilities.

Cathy Graham, executive director of IARCCA in Indianapolis, which  represents about 100 agencies that offer services to the state's children, said Wednesday that about half of those member agencies will benefit from the newly negotiated rates.

"Everyone is very pleased. It's a good step," she said. "It's good progress."

Graham said that as DCS has focused more on home-based treatment to help families, those providers -- especially in rural areas with fewer providers to begin with -- struggled with the rate cuts at a time when gas prices and increased staffing cuts took a toll. Some of those agencies reported that they would no longer be financially able to provide those services, she said, reaching a crisis point in some areas.

DCS officials had been negotiating with a group called Indiana Coalition of Family-Based Services, also an IARCCA member agency, Graham said.

"We appreciate that DCS listened and did something about that," Graham said.

IARCCA's reopened federal litigation against DCS is still pending, she said, regarding the cuts in residential treatment and foster care services. About half the agencies affected by the lawsuit have reached new agreements with DCS on 2012 rates, while the other half are in the appeals process or are meeting individually with DCS rate review staff.

Those cuts are still a concern, Graham said, and IARCCA and others hope to be able to testify this summer on rate and policy changes to a study committee charged with examining DCS changes, which the General Assembly mandated in March.

The controversy over DCS' emphasis on outpatient services and keeping children at home was part of a recent Tribune series on DCS changes.
DCS claims the move is better for children while it also saves money, but critics say the state's emphasis on the bottom line is resulting in more children not being treated quickly and well enough.

Bruce Greenberg, CEO of the Mishawaka-based Family and Children's Center, said it is too soon to know how FCC's programs might be affected by this week's announcement. FCC has this year ended some programs and laid off staff, taking the largest hits in intensive residential programs, which would be unaffected by Wednesday's announcement.

He points out that the $10 million is still only a portion of the more than $100 million DCS returned at the end of last summer to state coffers, unspent.

"We will look at the impact on our agency but I assume it will be positive," Greenberg wrote in an e-mail, "which for a change is a VERY good thing."



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