Indiana human services chief Anne Murphy told a legislative panel Tuesday that the face-to-face contact for clients that she has added to the state's error-plagued welfare automation system is showing success, but lawmakers said many problems remain.

Murphy, secretary of the Indiana Family and Social Services Administration, said error rates are down and the percentage of new applications for food stamps, Medicaid and other benefits on backlog has fallen by 83 percent or more in southwestern and west-central Indiana after her agency made the changes in those two regions.

"Hybrid is what's driving down this percentage," Murphy told the Medicaid Oversight Commission.

FSSA rolled out the so-called "hybrid" system to 10 southwestern counties in January and 11 west-central counties in June. The agency added 16 more southern counties this month.

The state was forced to revamp its welfare intake system after Gov. Mitch Daniels last year fired Armonk, N.Y.-based IBM Corp. less than three years into a 10-year, $1.37 billion contract to privatize and automate the processing of welfare applications. IBM and FSSA now are suing each other in state court.

Murphy noted that federal food stamp officials sanctioned the state $1.2 million in June for too many food stamp errors last year, but in April the state's error rates were better than the national averages.

The testimony of a recently retired case worker, however, raised questions over whether FSSA can duplicate elsewhere the successes it has seen in the first two hybrid regions.

Frank Gilbert of Fort Wayne, who retired in July after 34 years as a welfare case worker with FSSA and one of its vendors, said the agency and its contractors poured more manpower into bringing down the backlogs in the hybrid areas as they were rolled out in Vanderburgh and surrounding counties, and later in the Terre Haute area.

"They had priorities. We called them the Vandeys. Vandeys got all the attention," Gilbert said in an interview after the meeting.

Democratic state Sen. Sue Errington, whose Muncie-area district is part of the region that was the first to be automated but hasn't received the extra attention from local case workers yet, said she receives on average a complaint every day about the welfare problems.

Errington read into the record a letter from Rep. Gail Riecken, D-Evansville, that said even with the added face-to-face contact, problems persist and "the system is not designed to help the neediest."

Republican Rep. Suzanne Crouch, also from Evansville, said her survey of hospitals and other Medicaid providers in that area found mixed results with the hybrid system.

Murphy said FSSA hopes it can expand the "hybrid" system to the two remaining automated regions, in north-central and northeast Indiana, by January if it gets approval from the U.S. Food and Nutrition Service, which runs the food stamp program.

She said FNS requires two months of data from a newly added hybrid region before it approves the next, which would suggest FNS won't approve an expansion to both of the next two regions before next March. FSSA spokesman Marcus Barlow said the agency hopes FNS will make an exception based on the success so far.

Murphy most likely will fall short of a goal she stated in May to add the face-to-face attention to all the regions with welfare automation by the end of this year.

The automation still hasn't been introduced to 33 other counties in central, north central and northwest Indiana with some of the largest caseloads. They include the cities of Indianapolis, Gary, South Bend, Elkhart and Lafayette.