The head of the Division of Medicaid will step down from his post, according to the governor.

On Thursday night, shortly after he spoke at a meeting of the House Medicaid Committee, Gov. Phil Bryant called Dr. David Dzielak into his office and asked for his resignation, according to several persons familiar with the conversation who spoke to Mississippi Today on condition that they not be identified.

In a statement Friday, the governor thanked Dzielak for his service to the agency.

“I appreciate Dr. Dzielak’s 30 years of service to Mississippi, including six years leading the Division of Medicaid. I can assure beneficiaries and employees that the operations at the agency will continue as normal during the transition to new leadership,” said Bryant.

The resignation of Dzielak is the culmination of a long but increasingly tumultuous reign, marked in recent months by questions of mismanagement and special interests, atop the biggest agency in the state.

The budget of Medicaid, when federal funds are factored in, is more than $6 billion, almost equal to Mississippi’s entire state budget. But increased funds mean increased scrutiny, and as the budget of Medicaid has swelled in recent years, even as the number of beneficiaries leveled off, some lawmakers have questioned Dzielak’s ability to steer the agency.

In Thursday’s meeting, Dzielak announced his agency would seek an additional $47.3 million to close a hole in this year’s budget. Chris Brown, who chairs the House Medicaid Committee, said he was struck by what he said seemed like Dzielak’s unwillingness to find ways to reduce this number.

“We asked the question, you knew there was going to be a deficit appropriation. Well, was there (anything you could have done) to offset that deficit? And he said there’s nothing we can do. Well, that’s not true. There’s always something we can do,” Brown said.

On Friday, Dzielak released a statement thanking the governor for his commitment to the agency.

“It has been an honor and a privilege to serve the people of Mississippi in my capacity as executive director of the Mississippi Division of Medicaid for the past six years, but the time has come for me to step down and explore other opportunities. I have spent my entire career in health care, and I have a passion for improving the health of Mississippians that will endure,” Dzielak said.

“I appreciate the care and commitment Gov. Bryant has for bettering the health of our state as well as the support I’ve had from other state leaders. I have no doubt the Division of Medicaid will continue to fulfill its mission of responsibly providing access to quality health coverage for vulnerable Mississippians.”

Dzielak’s tenure at the Division of Medicaid began auspiciously in January 2012, shortly after the swearing in of the newly elected governor. Prior to this Dzielak had served as an associate vice chancellor at University of Mississippi Medical Center.

Although Medicaid had already implemented its managed care program one year earlier, in 2011, over the next few years Dzielak oversaw rapid expansion of the program as it grew tenfold, from 50,000 beneficiaries its first year to over 500,000 by 2017. In managed care, Medicaid contracts with private insurers, who then try to reduce health care costs by keeping their patients healthier.

But if managed care was one of the hallmarks of Dzielak’s tenure, it was also a liability. The program, which supposedly offers budget predictability by charging states a flat rate per patient, has been dogged with complaints since its inception. Doctors and hospitals have accused the two insurers, Magnolia and United Healthcare, of bill delays and nonpayments. And lawmakers, who’ve approved five years of deficit appropriations in a row, have questioned whether the program has truly saved the state any money.

These questions came to a head in August, when Mississippi Today made public an independent evaluation of the state’s managed care program, MississippiCAN. The report, commissioned by the Legislature in 2016 and conducted by independent consulting firm Navigant, determined that several quality metrics had not been met and providers were unhappy with the insurers.

“It’s blatantly obvious that it’s dysfunctional, extraordinarily dysfunctional. It seems to me the managed care companies are doing exactly what they want to do,” Rep. Steve Holland, D-Plantersville told Mississippi Today in August. “It’s time to have a wake up call, and this study is the wake up call we need. But we’ve got to massage it and see where it fits into the public policy perspective.”

As a result of the report, in April the Legislature appropriated $250,000 to commission a second independent audit of MississippiCAN, this one to determine whether Magnolia and United had saved the state as much money as it claimed.

But documents obtained by Mississippi Today show that the procurement time frame provided by the Division of Medicaid was too short, according to companies that officially inquired about a bid. In the end, the Division of Medicaid did not receive any competitive bids and closed the procurement, a move that rankled legislators. Some said they questioned whether the Division of Medicaid wanted an honest evaluation of its program.

“So were they just trying to get the results that they wanted?” asked Medicaid Committee Chairman Brown in a call Thursday evening.

The managed care program also led Medicaid into murky political waters earlier this summer, when the Division of Medicaid awarded a third MississippiCAN contract to Molina Healthcare, a California-based company, over Mississippi True, a provider-sponsored plan owned by 60 hospitals in Mississippi.

Mississippi True and another insurer quickly sued the Division of Medicaid, arguing that the Division was biased in its scoring of the programs. Emails later revealed during the trial showed that executives with Molina had approached Dzielak with job offers, although no evidence suggested that he had accepted either offer.

“That didn’t help the case,” said Brown on Friday. “That was kind of a debacle.”

Over the past two years, Medicaid has also had to contend with increased scrutiny from the federal government over its Hospital Access Plan, which the agency uses to reimburse hospitals for shortfalls in Medicaid payments. Several hospitals across the state have complained that the formula is inherently unequal, overpaying some hospitals while shortchanging others to the tune of millions a year. The federal government agreed, ordering the agency in 2016 to rework its formula. The agency submitted its corrective action plan last month.

In a meeting with the Senate Medicaid Committee, Dr. Steve Demetropolis, who heads the state’s Medical Care Advisory Committee, criticized the agency, saying fixing the formula should be a top priority for the agency.

“Why wouldn’t you figure out a formula where (the payments) could come down at par so all hospitals are equal?” Demetropolis asked. “Our main principal is that (the payment) doesn’t go below the cost of taking care of a patient.”

Dzielak’s tenure at Medicaid was also unusually long. According to a report from the National Association of Medical Directors, most people in Dzielak’s position stay aboard for two years, a function of the increasing size of the program and the increasing demands to control costs while improving quality of care. Dzielak, who faced all of these, according to Brown, lasted at Medicaid for just shy of three times that.

And this upcoming Legislative session, in which the lawmakers will attempt to pass a new Medicaid Technical Bill and rewrite the rules of the agency, would have likely been more of the same.

“I wish Dr. Dzielak all the best,” Brown said. “But I look forward to tackling the tech bill this session and making Medicaid a better, more efficient agency.”

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Larrison Campbell is a Greenville native who reports on politics with an emphasis on public health. She received a bachelor’s from Wesleyan University and a master’s from Columbia University's Graduate School of Journalism.Larrison is a 2018 National Press Foundation fellow in public health, a 2019 Blue Cross Blue Shield Foundation of Massachusetts fellow in health care reporting and a 2019 Center for Health Journalism National Fellow.