A Hinds County Chancery judge on Monday ordered the Mississippi Division of Medicaid to make a scheduled payment of roughly $2.4 million to Greenwood Leflore Hospital after the agency said it planned to withhold the funds. The Delta hospital had argued that missing a payment would force it to close this week and jeopardize a proposed agreement for the University of Mississippi Medical Center to take over its operations.
Judge Dewayne Thomas ordered the Division of Medicaid to make the June payment by Tuesday. This is the second time he has intervened in the dispute over debts Greenwood Leflore Hospital owes to the agency. In March, Thomas ordered Medicaid to temporarily stop recouping overpayments made through the Mississippi Hospital Access Program, which supplements low Medicaid reimbursements to hospitals.
In a written statement to Mississippi Today, Gary Marchand, a consultant advising the hospital’s board and former interim CEO, said the Division of Medicaid plans to make the payment by Tuesday.
“This payment will enable the hospital to remain open until July 31,” he said.
The Division of Medicaid did not respond to a request for comment from Mississippi Today.
Hospital officials have said keeping Greenwood Leflore open until the end of July is critical for allowing enough time to finish transferring its operations to UMMC, the state’s only academic medical center. Officials have argued the transfer is the only viable option to continue providing quality healthcare to Leflore County and surrounding Delta communities.
The 25-bed hospital, which is owned by the city of Greenwood and Leflore County, has struggled financially since the COVID-19 pandemic. Hospital officials have repeatedly warned that repaying the debts owed to Medicaid could force it to close.
On June 7, Greenwood Leflore Hospital filed a bankruptcy court document outlining a plan to donate its operations and facilities to UMMC. UMMC would not be considered a successor to the Greenwood hospital and cannot be held liable for debts not covered by the agreement.
The board for the Institutions of Higher Learning, which governs Mississippi’s public universities, approved the proposed transfer of Greenwood Leflore Hospital to UMMC on June 18. The bankruptcy judge would have to confirm the plan before it could take effect.
UMMC did not respond to a request for comment from Mississippi Today.
Monday’s ruling is the latest development in a yearlong dispute over Medicaid’s effort to recover millions of dollars in supplemental hospital payments.
The payments, which began in 2024, initially provided a financial boost to the hospital. But they were later recalculated using updated patient volume data as part of a routine process that found the initial amount of funding was too high. That discrepancy occurred because state officials did not account for declining patient volumes after the hospital closed its labor and delivery and intensive care units in 2022.
In June 2025, Medicaid notified the hospital it would recoup $5.5 million from those 2024 payments.
On June 17, the agency asked a bankruptcy court for permission to withhold the scheduled June payment to Greenwood Leflore Hospital, writing that the hospital owes “somewhere in the neighborhood of $10 million.” Medicaid contended that it has the right to withhold the money because the chancery court’s order applied only to 2024 supplemental payments and does not prevent the agency from withholding this year’s scheduled payments.
The same day, Greenwood Leflore Hospital asked a federal district judge to order the Division of Medicaid to make the June payment or send the case back to chancery court, arguing the agency sought to bypass the March order. The judge sent the case back to chancery court on June 23.
In its June 17 filing in bankruptcy court, Medicaid said if the court orders payments to continue, strict safeguards should be put in place to govern how the funds are spent. Attorneys said the hospital should only be allowed to use the money for expenses necessary to “literally ‘keep the doors open.’”
In his Monday ruling, Thomas did not address how Greenwood Leflore Hospital could use the funds. He denied the hospital’s request for attorney fees and expenses related to the motion.
