Hospitals in Sunflower County, along with others in the Mississippi Delta, are already working together to plan for more shared resources and services regionally as they prepare for significant changes to Medicaid funding expected in the coming years.
“We’re working with some of the hospitals here in the Delta, trying to get together and see what services we can offer collaboratively, what kind of resources we can share,” said Courtney Phillips, CEO of South Sunflower County Hospital in Indianola.
That push toward collaboration is being driven by provisions in the One Big Beautiful Bill Act (OBBBA ), a federal tax and spending law signed by President Donald Trump in July that includes changes to Medicaid reimbursement formulas. Beginning in fiscal year 2028, states will be required to step down Medicaid supplemental payments that are currently tied to average commercial insurance rates.
“So what they’ve done with the One Big Beautiful Bill is they’re trying to reduce what’s called the average commercial rate down to 110% of Medicare,” Phillips said. “So basically what that does is, when you’re pulling that number down, it reduces your Medicaid payments.”
Phillips said hospitals are already trying to prepare — even though the full financial impact has not yet been felt.
“We’ve done some impact analysis, and over a 10-year period, we don’t have exact numbers, but we know it’s going to impact us significantly — any cuts in payment — especially when you’re working off such low margins like we are,” he said.
The majority of patients at South Sunflower County Hospital, like many Delta hospitals, rely on government insurance programs.
“So we’re 70% Medicaid, Medicare,” Phillips said.
That payer mix is typical for rural Delta hospitals, he said, but it leaves those health care centers especially vulnerable to changes in Medicaid reimbursement.
At North Sunflower Medical Center in Ruleville, CEO Daniel Ceja said OBBBA’s impact will be felt most through Medicaid reimbursements.
“I believe the biggest impact that is expected as a result from OBBBA is the decrease in Medicaid reimbursements over the next 10 years,” Ceja said.
“There is a potential decrease in Medicaid reimbursement due to work and reporting requirements,” he said. “We anticipate that we will lose revenue. It is difficult to predict how much until we see how many of our patients will not qualify or meet reporting requirements.”
Ceja said about 33% of patients seen in North Sunflower’s clinics are covered by Medicaid.
“Losing a big portion of our reimbursement, particularly in our clinic and our nursing home would be devastating,” he added.
Richard Roberson, president and CEO of the Mississippi Hospital Association, said one of the most significant provisions in OBBBA is the step-down of Mississippi’s state-directed Medicaid supplemental payments.
“One of the biggest provisions that we’ve been concerned about is the stair-stepping down of the state supplemental payment program for hospitals,” Roberson said late last year during a meeting of the Greenwood Rotary Club.
Known as the Mississippi Hospital Access Program, or MHAP, the program increased Medicaid reimbursements by tying them to the average commercial insurance rate.
“What the One Big Beautiful Bill does, however, starting in fiscal year 2028, is it requires states to lower that average commercial rate to 110% of the Medicare rate,” Roberson said.
“In Mississippi, that’s going to mean we’re going to lose about $100–150 million from that program that’s been a lifeline to Greenwood and other rural hospitals across the state, as well as urban hospitals,” he said.
While the cuts will not begin immediately, hospital leaders say preparation is already underway.
“What we’re trying to do is get prepared for it on the front end, try to build those systems so it won’t hurt so bad,” Phillips said.
To help offset the expected Medicaid reductions, OBBBA created the Rural Health Transformation Fund, a $50 billion national program aiming to support rural health care systems through 2030.
“The Rural Health Transformation fund is part of OBBBA, and that’s $50 billion throughout the United States over a period of time to be awarded to each state based on what they’re trying to do,” Phillips said.
According to Phillips, the program is aimed at encouraging hospitals to work together rather than compete.
“The goal is trying to get everything clinically integrated systems so that when a patient comes, no matter what services he needs, you’ve got a relationship or you’ve got a collaboration with somebody, that you can take that patient and get him the care you need, but keep them in the continuum of care,” he said.
Ceja said North Sunflower is also participating in those conversations.
“We are cooperating with all the hospitals in the surrounding areas to see how we can help each other and improve quality of care,” he said.
On Nov. 4, Gov. Tate Reeves announced Mississippi had submitted its Rural Health Transformation Program plan to the Centers for Medicare & Medicaid Services. The plan outlines six initiatives focused on workforce expansion, telehealth, health technology modernization, infrastructure improvements and coordinated regional systems.
“The Rural Health Transformation Program is a once-in-a-generation opportunity to make a lasting impact on the health of our rural communities,” Reeves said in a press release.
Under the plan, the Office of the Governor will oversee the program in coordination with the Mississippi Department of Health and the Division of Medicaid.
Phillips said hospitals were asked to submit proposals outlining how they would use the funds.
“All the hospitals got together, associations, everybody submitted their views of what they wanted to do,” he said. “We all submitted requests of what we wanted to do if we got the funds, and how we would do it.”
The state’s initial allocation was about $206 million.
“They will focus on staffing. They will focus on telehealth and clinically integrated systems,” Phillips said.
Hospital leaders are also focusing on expanding services that can be sustained locally.
“This money will support new service lines,” Phillips said. “So we’re looking at a couple of new service lines.”
He pointed to the hospital’s wound care center as an example.
“We were not doing that here before,” Phillips said. “So what happened were those people going to go somewhere else for those wound treatments, but we were able to open a wound center here and keep those patients here and provide that service.”
He said therapy services have also expanded.
“When I first got here, we didn’t have therapy, but now we got a full therapy service,” he said.
The goal, Phillips said, is to keep patients in their community whenever possible.
“We want to keep them in one continuum of care,” he said.
While hospital leaders say the Rural Health Transformation Program will help, they caution it may not fully replace lost Medicaid revenue.
“This program is designed to build more efficient systems and reducing cost,” Ceja said. “But all this may not be sufficient to cover all revenue lost.”
State Sen. Derrick Simmons, D-Greenville, said hospitals statewide are already under strain.
“Last year alone, hospitals saw $600 million in uncompensated care and climbing,” Simmons said.
“The biggest cuts in the OBBBA are to hospitals, but the Rural Health Transformation Fund — the $50 billion fund meant to shore up rural health care — contained within the bill is time limited and does not make up for the cuts,” he said.
State Rep. Otis Anthony II said the financial pressure created by OBBBA could have ripple effects.
“When rural hospitals lose funding, it doesn’t just affect health care — it affects jobs, emergency response times and whether people can get care close to home,” Anthony said. “In places like the Delta, hospitals are often one of the largest employers and one of the few access points people have to medical care.”
The District 31 representative, a Democrat who has represented Bolivar and Sunflower counties since 2019, said Sunflower County and surrounding Delta communities are particularly vulnerable because of high poverty rates and reliance on government insurance programs.
“We already know our hospitals operate on thin margins,” he said. “Any reduction in Medicaid reimbursement puts rural hospitals at risk.”
Phillips said uncertainty remains.
“You don’t know how it’s going to affect you one way or another,” he said. “But I’ve seen more collaboration this last year than I have in a long time.”
That collaborative effort may be what helps sustain the Delta’s rural hospitals.
This coverage is supported by a grant from Press Forward Mississippi, part of a nationwide philanthropic effort to strengthen
local news so communities stay informed, connected and engaged.
