JACKSON, Miss. (WJTV) – Governor Tate Reeves’ (R-Miss.) plan to aid financially struggling hospitals has taken some intense criticism since he announced the plan on Thursday.

By reforming Medicaid reimbursement methods, Reeves said an estimated $698 million will open up for Mississippi’s hospitals.

The governor said the first initiative, known as the Mississippi Hospital Access Program (MHAP), will provide direct payments to hospitals serving patients in the Mississippi Medicaid managed care delivery system.

Reeves said the second initiative will supplement Medicaid base payment rates for hospitals by reimbursing inpatient and outpatient hospital services in the fee-for-service system up to the Medicare upper payment limit.

To minimize the recurring impact of state general fund expenditures, Reeves said the non-federal share of the directed and supplemental payments will be financed through assessments hospitals pay annually to the Medicaid program through a formula set out in state law.

State Democrats and Medicaid expansion advocates have said the plan is simply not enough to help the state’s hospitals. However, officials at one Jackson hospital said the funding will get hospitals back on their feet.

“If you go back in time and look at the establishment of the division of Medicaid, which happened in 1969, this might be the most significant event since that establishment of the agency happened; whether it’s rising labor costs, rising supply costs, challenges in retaining nurses and physicians and recruiting physicians to the area. Honestly, some of us were just kind of wondering how are we going to get through this? This is not just a lifeline. This is going to allow a lot of hospitals an opportunity to take a deep breath,” said Dave Estorge, VP Governmental Relations at St. Dominic Hospital.

Estorge said he is hoping that the Centers for Medicare and Medicaid Services (CMS) approves the plan in 30 to 45 days. If approved by CMS, both would be effective as of July 1, 2023.

“Once approved, these programs will reduce or eliminate the underpayments experienced by Greenwood Leflore Hospital when caring for residents with Medicaid coverage and the uninsured. It is our understanding similar programs have been approved by CMS in several other states. We are appreciative of any efforts to provide additional cash resources in support of our operations. We are hopeful for a rapid approval process,” said Gary Marchand, Interim CEO of Greenwood Leflore Hospital.

“A strong statewide hospital system is essential to the health and well-being of all Mississippians, and I am grateful for efforts to ensure hospitals in our state receive funds that adequately reimburse them for the services they provide,” said Dr. LouAnn Woodward, vice chancellor for health affairs at the University of Mississippi Medical Center (UMMC).

Mississippi has 74 rural hospitals, and some of those hospitals face the risk of closure. Five have closed since 2005, and 24 are at immediate risk of closing because of severe financial problems, according to a national policy group, Center for Healthcare Quality and Payment Reform. Only Texas and Kansas have more hospitals in that risk category.

The Associated Press contributed to this report.