Based on the statutory language in the legislatively approved program, MSDH says they need additional direction from lawmakers on disbursing the funds to state hospitals.
At a recent Joint Legislative Budget meeting, it was made public that the $103 million in funds appropriated toward the Mississippi Hospital Sustainability Grant Program in 2023 had not been disbursed yet.
The grant program, which was enacted through HB 271, intended for the $103 million to be divided between all of the state’s 110 hospitals based on several specific criteria such as number of beds and type of care. The program is being administered by the Mississippi State Department of Health (MSDH) and the funds are managed by the Department of Finance and Administration (DFA).
On Friday, September 29, Dr. Daniel Edney, State Health Officer for MSDH, alerted lawmakers during the JLBO meeting, that there was a hang up in distribution of those funds. He said MSDH was recently made aware of a compliance issue by the State Auditor’s office. The issue, Dr. Edney said, surrounds how federal American Rescue Plan Act (ARPA) money can be distributed.
The grant program is entirely comprised of ARPA funds.
At the JLBO meeting, State Representative Trey Lamar (R) began asking questions about the program during MSDH’s presentation. He wanted to know if hospitals were aware of the hold up. Dr. Edney indicated that they were being made aware of the challenges.
“What I’m hearing you say, without giving into specifics of legalities, is that hospitals, who were more effected than any industry by COVID, are not eligible or are having difficulties receiving financial help that was provided to the states,” asked Rep. Lamar.
Dr. Edney said MSDH has been told by the State Auditor’s office that there are statutory issues with the ARPA dollars and how they can be sent out. He said this has caused the program to not be compliant with the legislative intent.
When the program proposal was first presented, the money that would be appropriated was to come from completely from state general funds. However, towards the end of the legislative process it was determined that ARPA funds would be used.
“We have used every inch of discretion we have had. If I had full authority to fix this it would have already been done but this is a federal issue,” said Dr. Edney. “ARPA funding is federal funding that has very specific rules and regulations and compliance issues attached to it.”
The original funding model, based off of state general funds, indicated that all of the state’s hospitals would receive a portion of the grant funding. Edney said all models and spreadsheets presented to lawmakers by MSDH were based on the use of state funds.
“Late in the appropriations process the decision was made to pivot to ARPA funding and take advantage of money we didn’t want to send back to Washington,” said Edney. “Absolutely good thinking. Unfortunately, it was late in the process after all the models had been done.”
As of now, one-third of the state’s hospitals applied and were approved based on the criteria. Another third applied and were not approved, and the last third, had not applied at the time. Dr. Edney noted that many of those hospitals did not apply because they expected not to be approved.
Dr. Edney said it is now up to legislative leadership to determine the path forward.
One option is to allow the $103 million of ARPA funds to be distributed to the one-third of applied and eligible hospitals now. The Legislature could also decide to pivot to state general funds come January’s session and begin the process anew.
“We see a way to eventually fund all the hospitals, as is the Legislature’s desire. We are being told we can’t do it with that $103 [million],” said Dr. Edney at the LBO meeting.
ARPA funds must be obligated by the end of December 2024 and spent by December 2026.
“The intent of the Legislature was to provide $103 million to hospitals and Lt. Governor Hosemann has committed to ensuring they receive it, even if the program or appropriation source has to be changed,” said a representative from Lt. Governor Delbert Hosemann’s office.
Dr. Edney told lawmakers that the compliance issues were anticipated but no one was sure to what extent until the State Auditor’s office reviewed the program.
Among the approved group, those hospitals saw a major negative impact in losses in just one year at upwards of $500 million. While ARPA doesn’t require negative impact, there were other statutes that had to be followed.
While some hospitals are still struggling from the pandemic impact, Edney said he does not expect any to be on the verge of closure in the next few months.
“The worst thing that could happen is for us to push the money out and then it all have to come back,” said Dr. Edney on MSDH and DFA’s caution in administering the program as is. “We can’t afford to be non-compliant.”
Dr. Edney expressed that conversations moving forward have all been positive and believes a direction will be determined quickly.
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