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September 8, 2008




“On Friday the Division of Medicaid (DOM) received verification of a major financial issue it has been discussing with the Center for Medicare and Medicaid Services (CMS) since June of this year. CMS’ decision is an extremely good result for Mississippi as it improves Medicaid’s financial condition enormously.


In October 2003, the Musgrove Administration adjusted the State’s formula for paying the state share of Medicare Part B premiums for what are referred to as “dual eligibles,” that is Mississippians who are eligible for both Medicaid and Medicare. At that time the Musgrove Administration made a mistake in the calculation of dual eligible beneficiaries, and Mississippi DOM began paying in more state Medicaid funds than was required.


In May 2008, DOM discovered an apparent discrepancy and brought it to CMS’ attention. After several weeks of validation and confirmation, CMS last week sent Medicaid an invoice that confirmed the corrected beneficiary counts.

As a result CMS has now agreed Mississippi overpaid the state share of Part B premiums and is giving us a refund. Today, CMS refunded approximately $58.9 million to the State, which reduces the Medicaid deficit for FY09 by a like amount. A partial refund of $33.2 million was made by CMS on August 20th and used to repay a FY08 line of credit, making a total reimbursement of more than $92 million.


Additionally, correcting the Part B premium formula reduces the state share payment for the remainder of FY09 by $30-32 million.


As a result of these corrections, Medicaid’s budget will be in balance for FY09.


Dr. Bob Robinson, Executive Director of the Division of Medicaid, Friday wrote me a letter to that effect. Accordingly, I have instructed him to withdraw Medicaid’s State Plan Amendments to cut medical service reimbursement payments since there is no longer a deficit, and he advises me that will be done today. Of course, CMS is aware of these financial changes.


While it is irritating to me that we continue to find major problems in Medicaid’s finances, all dating back to the Musgrove Administration, I do appreciate the efforts of staff at DOM in ferreting them out. This is the third problem from the Musgrove Administration with a combined impact on state finances of hundreds of millions of dollars.


Now, for the fourth consecutive year, because of federal funds - first from Katrina emergency health care monies and now from this refund and premium reduction - the deficit at Medicaid has been solved for one year, with one-time, non-recurring revenue.


It would be irresponsible to think another rabbit will jump out of the hat for our next budget. It is, therefore, essential the Legislature finally enact a fair, permanent, sustainable solution to funding the state share of Medicaid as it relates to hospital distributions and reimbursements.


The Senate passed such a solution back in May, but the House failed to pass any fair, permanent or sustainable solution during the Special Session.


This issue will now come back to the Legislature in the 2009 Regular Session, and I will support passage of a fair bill, which preserves the provider fee system, and provides a permanent, sustainable solution to this four year old problem.”