Highlight on Mississippi: OIG finds a big ‘Miss’ in state’s Medicaid reimbursement

The Mississippi state Medicaid agency claimed over $21 million in unallowable school-based administrative costs over a three-year period, according to an OIG review of the state’s school-based and community-based administrative costs. The improper reimbursement request arose from inadequate documentation and sampling.

Administrative Costs

For Fiscal Years 2010 through 2012, Mississippi claimed school-based administrative costs, which are considered public assistance costs, totaling nearly $42.4 million. The OIG conducted a review of the state’s administrative costs because of the significant amount claimed and the fact that the state had not submitted a cost allocation plan (CAP). School-based Medicaid administrative costs are reimbursable when the costs are for activities that directly support identifying and enrolling potentially eligible children in Medicaid.

Not Reimbursable

The OIG determined that the state Medicaid agency claimed costs in violation of federal requirements. Specifically, the state agency used statistically invalid random moment sampling (RMS) to allocate its Medicaid costs and did not maintain adequate support to validate its sample results and related extrapolations. When evaluating the legitimacy of the RMS, the OIG found duplications on participant lists, improperly documented employee schedules, and sampling that included improper days like holidays. Additionally, sample data was not properly stored and could not be duplicated to ensure accuracy.

Additionally, under 45 C.F.R. Sec. 95.507(a), states must submit to the division of cost allocation (DCA) a CAP that follows federal requirements. The state submitted $42,399,301 ($21,199,651 in FFP) in school-based Medicaid administrative costs without promptly submitting all of the necessary information to DCA.


The OIG recommended the state agency:

  • refund $21,199,651 to the Federal Government;
  • revise its implementation plan and amend its CAP to both address the statistical validity issues identified and incorporate CMS’s sampling documentation requirements;
  • implement policies and procedures to ensure that its RMS complies with Federal requirements for statistical validity;
  • maintain adequate support, including all information necessary to reproduce and verify its sample results, for school-based administrative costs allocated to Medicaid;
  • promptly submit to DCA for review and approval its future CAP amendments describing its procedures for identifying, measuring, and allocating costs to Medicaid; and
  • review school-based Medicaid administrative costs claimed after the audit period and refund unallowable amounts.


The State agency disagreed with the OIG’s comments but did not address the recommendations. The state agency disagreed that its RMS was statistically invalid and asserted that it was, instead, properly documented.

DOJ sues Mississippi, says mentally ill are unnecessarily institutionalized

The federal government emphasized its stance on the importance of using home- and community-based services (HCBS) by filing a lawsuit against the state of Mississippi over its mental health program. The Department of Justice (DOJ) alleged that the state ran afoul of the integration mandate of the Americans with Disabilities Act (ADA) (P.L. 101-336) and forced thousands of people to be institutionalized when the services could be provided in a community setting.

Integration mandate and lawsuit

In Olmstead v. L.C., 527 U.S. 581 (1999), the Supreme Court found that the ADA requires public entities to provide services to the disabled in home- and community-based settings as much as possible. The ‘integration mandate’ states, “A public entity shall administer services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities” (28 C.F.R. section 35.130(d)). According to the Olmstead Court, unnecessary institutionalization diminishes patients’ abilities to interact socially,  pursue education and employment, and find cultural enrichment.

The suit against Mississippi alleges that state-run hospitals are segregating mentally ill patients who could be successful in community treatment. The Justice Department believes that patients are regularly cycling through the state’s four mental health facilities because they are not able to thrive in their communities due to a lack of services. The cuts to the DOMH have limited its ability to offer HCBS services and activities, and State Attorney General Jim Hood expressed his displeasure toward the state legislature following the filing of the suit, blaming them for offering corporate tax cuts instead of serving the population. The state attempted to settle with the federal government, but negotiations failed. The DOJ wants a consent decree, but Hood objects due to expense and perpetual oversight. The state is now in the expensive position of defending itself against the DOJ.

Mississippi budget cuts

The state of Mississippi’s budget woes have turned into what some are calling a crisis, resulting in significant budget cuts. The state government admitted in June that at the close of the state fiscal year, there would be unpaid bills and a $50-60 million shortfall. Although some representatives disagreed on the impact of the amount, overcoming the shortfall would have required collections in the $725-750 million range in the month of June.

Significant budget cuts and dipping into funds failed to ward off the shortfall. Governor Phil Bryant (R) already cut $60 million from the budget and spent $50 million out of state accounts, making use of the Rainy Day Fund. The cuts impacted  state departments, such as the Department of Revenue, which was forced to dismiss temporary workers during tax season. In July, this blog covered some of these budget issues, including an editorial written by the director of the Mississippi Public Health Association that highlighted the Department of Corrections’ generous allocations, nearly nine times more than what the Health Department will be able to use (see Highlight on Mississippi: Budget crisis has health pundits grumbling, July 1, 2016).

Health impacts

Health agencies were not immune to the budget cuts, although there are arguments that they only lost a small chunk of money and, in one case, ended up on top. According to watchdog.org, in the latest round of cuts, the Department of Health (DOH) lost $5.8 million and the Department of Mental Health (DOMH) lost $7.3 million, which amounted to 1.53 percent and 1.17 percent of their budgets, respectively.

Departments heads note that these cuts are only the latest in a line of issues. The Dr. Mary Currier, head of the DOH, said the agency closed six clinics, failed to fill 89 positions, and has cut 64 employees. Diana Mikula, who directs the DOMH, said their reserves are tapped after absorbing a total of $8.39 million in cuts. The agency cut some of its workforce or transferred employees to other positions, but was still forced to eliminate a significant amount of facility space that psychiatrists used to determine if criminals were able to stand trial. Other closures include the Acute Medical Psychiatric Service unit at a state hospital,  Male Chemical Dependency Units, early intervention services, and psychiatric beds.

Highlight on Mississippi: Budget crisis has health pundits grumbling

Mississippi’s fiscal year (FY) 2017 state budget takes effect on July 1, 2016, and health care stakeholders are decrying budget decreases and the potential misuse of funds. Advocates and lawmakers are concerned about overall financial cuts, mental health experts want more program funding, and a health care trust fund is about to hit a zero balance in the state that ranks 48th in state public health funding compared to the rest of the United States and the District of Columbia.

Department of Health

The Mississippi State Department of Health is subject to budget cuts in FY 2017. Although a range of cuts have been mentioned, various news outlets report cuts amounting to $4 million.  They also indicate that the Department is suffering as a result, having been forced to lay off employees, leave other positions unfilled, and close clinics. Health Department funds are allocated to Health Services, including maternal and child health, oral health, and preventive health; Health Protection, including environmental health an licensure; Communicable Disease; Tobacco Control; Public Health Emergency Preparedness and Response; and Administration and Support Services. Charles “Buddy” Daughdrill, Executive Director of the Mississippi Public Health Association, published a scathing editorial criticizing the legislative cuts, noting that the budget allocates to the state Department of Corrections roughly nine times the amount of funds that the Health Department receives. He suggested that Mississippians “should be personally appalled” by the budget and contact state representatives, the Lieutenant Governor, and the Governor to express their views.

Department of Mental Health

The Mississippi Department of Mental Health is particularly concerned about more than $8 million in cuts.  The Mental Health department has eliminated 172 positions, although some employees were transferred to other positions within the agency, and cut forensic psychiatric beds, which allow psychiatrists to determine whether alleged criminals are mentally competent to stand trial.  Mental Health oversees various programs offering services to address mental illness (MI), intellectual and developmental disabilities (IDD), alcohol and drug addictions, and Alzheimer’s Disease and other dementia, including institutional and community programs and support services.

Health Care Trust Fund

The fate of the Mississippi Health Care Trust Fund is, perhaps, symbolic of the state’s budget woes. One of the first states to sue tobacco companies to collect funds required to treat ailing smokers, the state settled its lawsuit in 1997. In 1999, the legislature created the Fund.  Tobacco companies would pay money into the fund on an annual basis, where they would accrue interest; some of those funds would be directed for use by the Health Care Expendable Fund. Due to budget constraints, legislators sent funds for many years directly into the state budget.  Some funds were used on health care, while others were diverted to other programs. The state will receive roughly $116 million as part of its annual settlement payment in 2016, but the funds will be used in the budget.  The Fund will have a zero balance as of July 1, 2016.

Advocates view the overall cuts, which may appear relatively small, as unduly burdensome on a system that is already struggling to allocate funds to programs. As July first approaches, the possibility of changes to the budget diminish, but that hasn’t stopped advocates from raising their voices and demanding change.

Update on Controversies in Medicaid Managed Care

Since October 2012, Kentucky’s Medicaid officials have been on notice that Kentucky Spirit, the Medicaid managed care organization  (MCO) owned by Centene, was terminating its contract at the beginning of July. As we reported in June, the Circuit Court in Franklin County ruled that neither party had breached the contract yet. That meant that when Kentucky Spirit terminated, it would breach the contract, and, therefore,  would be liable to the state for liquidated, or predetermined, damages. Kentucky Spirit appealed.

As the termination date approached, state officials returned to court seeking an order to keep the MCO from leaving. On June 26, 2013, Judge Thomas Wingate denied the state’s request. For one thing, the appeal ended his jurisdiction over the matter. But, he added, the court had repeatedly cautioned the state to prepare for the termination, and its lack of preparation did not justify  the extraordinary remedy of an injunction.

State officials asked the Kentucky Court of Appeals for an emergency order to compel Kentucky Spirit to stay on the job through August. On Monday, July 1, 2013, Chief Appeals Court Judge Glenn Acree denied the request for the same reasons. The state had ample time to prepare, and it should not need another two months to transition the MCO’s 124,000 members to one of the two remaining plans. Kentucky Spirit  ceased offering services to beneficiaries at 12:01 a.m. Saturday, July 6, 2013, although about 100 employees remain to help patients and providers with the transition.

Developments in Other States

Mississippi also moved to Medicaid managed care in 2012. In June 2013, Dr. Tim Alford, president of the Mississippi Academy of Family Physicians, met with Governor Phil Bryant  and testified before a state House committee. Dr. Alford called the managed care program “wildly unpopular” and stated that it was disruptive to the physician-patient relationship.

KanCare has been operational about six months now. So far, there have been few complaints. However, owners of small pharmacies say that the MCOs’ maximum allowable cost formula for some prescription drugs doesn’t cover their costs.

Now Alabama is beginning the latest adventure in Medicaid managed care contracting.