After being faced with several lawsuits by patients and providers, the North Carolina Department of Health and Human Services (NCDHHS) is restoring Medicaid provider rates to their full levels before the Oct.1 cuts to provider reimbursement rates went into effect.
“DHS can read the writing on the wall, so the department is restoring all provider rates to where they were on September 30th before the cuts took place,” Gov. Josh Stein said at a press conference on Wednesday.
He said courts have ruled in the patients’ favor in two cases so far, with three more pending and several more “waiting in the wings.”
Medicaid currently serves 3 million North Carolinians, or one in four people across the state.
NCDHHS Secretary Dr. Devdutta “Dev” Sangvai said rural communities would be hit the hardest if Medicaid funding is not restored.
“In several rural counties, more than half of the population is covered by Medicaid, and the consequences go beyond healthcare,” he said during the press conference. “Medicaid contributes more than $30 billion to the North Carolina economy, it helps keeps rural hospitals open, and strengthens the financial stability of providers across the state.”
However, Stein, a Democrat, still blames the General Assembly for not fully funding the Medicaid rebase, either for failing to pass a budget or for not returning to Raleigh to vote on the funding and that their inaction forced the lawsuits and for NCDHHS to take action to restore the cuts that they made on Oct. 1.
“For six months, the General Assembly was warned by DHS time and time again about the impending Medicaid funding shortfall, and then without more funding, the legislature would force substantial rate cuts onto health care providers,” the governor stated. “What was incredibly frustrating was that both chambers in the legislature agreed that more funding was necessary. They even agreed on the amount of money that was necessary, but they failed to act in August, they failed to act in September, and they failed to act in October.”
Stein said that in November, instead of taking action, lawmakers allowed unrelated budget disputes to get in the way of doing their jobs.
“Their failure forced these cuts, which are causing real and damaging impacts on people’s health and well-being,” he said. “Their failure is irresponsible and callous, and it’s infuriating because all of this was absolutely unnecessary. All they had to do was their most basic and important job: pass a budget.” He added that North Carolina is the only state in the country that has not passed a budget this year.
Stein also stated that Medicaid doesn’t have enough money to get through the rest of the budget year and will run out of funds in the spring.
The governor’s calls for additional funding for the rebase and for lawmakers returning to Raleigh to vote on it were met with opposition from both the House and the Senate.
Senate Leader Phil Berger, R-Rockingham, and House Speaker Destin Hall, R-Caldwell, issued a joint statement saying that Stein’s demand was unconstitutional and unnecessary.
Legislators noted that when they allocated an additional $600 million to address the Medicaid rebase, NCDHHS “decided to use $100 million of that to cover administrative costs, not services.” They also cited public comments from the DHHS secretary acknowledging that Medicaid funding was sufficient “for Medicaid to operate uninterrupted until April 2026.”
NCDHHS indicated there would be a $319 million shortfall after covering the program’s administrative requirements and has instituted cost-cutting measures, including a 3% reduction in provider reimbursement rates across all providers, and an 8-10% reduction to select Medicaid services.
NC House: Stein tried to pin his cuts on the general assembly
The House reiterated in a response to Stein on Wednesday that “Despite repeatedly trying to pin his cuts on the General Assembly, Gov. Stein’s own health agency confirmed Medicaid is fully funded through at least April 2026, supported by $600 million appropriated by lawmakers for the program’s rebase.”
They also stated in the press release that reimbursement rate cuts were illegal and “quickly drew lawsuits, with courts partially blocking them,” and added that House lawmakers passed three clean, separate bills in previous months to additionally fund the Medicaid rebase.
“Gov. Stein manufactured a crisis out of thin air, and regular North Carolinians paid the price for it, “ Health Appropriations Co-Chair Larry Potts, R-Davidson, said. “I’m glad he’s finally cleaning up his mess, but it should’ve never gotten this far. People deserve steady leadership, not political games.”
Rep. Grant Campbell, MD, R-Cabarrus, who has been outspoken about the Medicaid rebase increasing at a fiscally unsustainable rate for several years, also added a statement in the release.
“I’ve seen firsthand how uncertainty can shake patients and providers alike. There was no sound reason for these cuts, and erasing them doesn’t undo the damage,” said Campbell.
The release said that the House will continue to monitor Medicaid spending and will act quickly if a shortfall emerges.