JACKSON (AP) — The Mississippi Supreme Court is ordering the state’s Medicaid program to pay back $2 million to 12 hospitals, including Merit Health Natchez, saying the agency improperly skimped on reimbursement for services.

The unanimous Thursday decision upholds a suit the hospitals filed saying the state-federal health insurance program had illegally changed its payment formula for radiology and laboratory services.

After every year, Medicaid looks at the charges and reimbursement rates to see if hospitals were overpaid or underpaid for the services they delivered. This usually takes a few years, but Medicaid had trouble adjusting the rates for 2001 and didn’t do so until 2010.

“The recalculation caused the hospitals’ costs to be understated and the charges to be overstated, reducing their overall reimbursement rate. This was a clear violation of the language of the state plan,” Presiding Justice Mike Randolph wrote for the nine justices.

The decision overturns an earlier ruling in favor of the Division of Medicaid by Hinds County Chancery Judge Patricia Wise.

“The significance of this is that, agencies are allowed to make rules, but when they make rules, they are required to follow them,” said George Ritter, attorney for the hospitals. “Too often they have attempted to extend those rules beyond how they’re actually written.”

The agency says it must still calculate refunds, but will follow the court’s decision.

The hospitals that won the lawsuit include those now known as Delta Regional Medical Center in Greenville, King’s Daughters Medical Center in Brookhaven, Merit Health Biloxi, Merit Health Natchez, Merit Health Rankin in Brandon, Merit Health River Oaks and Merit Health Woman’s Hospital in Flowood, Northwest Mississippi Medical Center in Clarksdale, St. Dominic Hospital in Jackson, University of Mississippi Medical Center Grenada, and the former Riley Hospital, now part of Anderson Regional Medical Center in Meridian.