Singing River Health System in Pascagoula, Miss., and Memorial Hospital at Gulfport (Miss.) have filed a lawsuit against the state's Medicaid division, claiming the reimbursement method underpays hospitals.
The two public not-for-profit systems announced plans Wednesday to sue the Mississippi Division of Medicaid to recover up to $20 million in Medicaid reimbursement payments. The systems allege that the funding formulas unevenly distribute reimbursement among providers.
A spokeswoman for the Division of Medicaid said the agency has received the lawsuit and litigation is pending. She added that the agency follows state and federal regulations set forth by the CMS.
In a news release, Memorial Hospital President CEO Gary Marchand said he has discussed the funding methods with state and federal officials but was unable to reach a resolution. “We have no choice now but to file a suit to protect access to healthcare services,” he said.
Both safety net systems provide care to a large population of uninsured or underinsured patients covered by Medicaid. Memorial Hospital serves 35,000 uninsured patients in Harrison County, the second highest level in Mississippi. Singing River Health System serves nearly 25,000 uninsured patients in Jackson County.
Singing River paid $150 million earlier this month to settle class-action lawsuits alleging the system stopped contributing to its pension plan. The system told the court it stopped contributing because of problems caused by the recession, reductions in Medicaid and insurer reimbursements and large capital expenditures.
The Mississippi Division of Medicaid reimburses hospitals in three ways: discharge costs for Medicaid beneficiaries, disproportionate-share hospital payments and supplemental Medicaid funds.