INDIANAPOLIS (AP) — Indiana Medicaid officials are working on a new rule defining entities that provide abortions and are ineligible for state funds under a new law.

The law signed by Gov. Mitch Daniels last month bars the state from signing contracts with or granting money to “any entity that performs abortions or maintains or operates a facility where abortions are performed.”

Planned Parenthood of Indiana operates three abortion clinics and is suing in federal court to block the law. It cuts off about $1.4 million in Medicaid funds that Planned Parenthood receives for general health services like breast exams or Pap tests.

Some supporters of the law say Planned Parenthood can receive Medicaid funds by creating a separate corporation for its abortion clinics. The rulemaking is expected to take several months.

Posted 6/7/2011