As GOP focuses on redistricting, NC Medicaid deal to reverse cuts remains elusive

As hundreds of people gathered at the legislature on Tuesday to protest a new redistricting bill, several hundred others met across the street at the state’s natural science museum to call for more Medicaid funding — warning that cuts to provider payment rates will ripple down to patients.

After convening at the museum, the group, which included several people with disabilities, who could be impacted, went to the legislature to speak with lawmakers about the effects of the cuts.

But it’s looking like North Carolina lawmakers won’t reach an agreement again to provide additional Medicaid funding during their end-of-month short session.

In July, lawmakers approved $600 million for Medicaid, but state health officials said the amount fell far short of what’s needed through June 2026. Without more funding, the Department of Health and Human Services said it would have to make cuts — and on Oct. 1, it reduced provider payment rates by 3% to 10%. DHHS also began cutting costs by ending coverage of drugs like Wegovy, used for weight loss, and by reducing temporary staff, halting projects and scaling back compliance work.

Both chambers are led by Republicans, and while both agree more Medicaid funding is needed, they remain divided over how to pay for it. Senate leaders have said they want to tie new Medicaid funding to a separate proposal to build a children’s hospital by Duke Health and UNC Health. The House prefers a bill without the hospital funding, which has also been tied up in budget negotiations.

NC leadership on Medicaid negotiations

After lawmakers were not able to reach an agreement to pass a comprehensive budget earlier this year, they limited this fall’s meetings to one week, late-month sessions.

On Monday evening, following an initial vote to pass the redistricting bill which would redraw a congressional district to favor Republicans, Senate leader Phil Berger said there had been no progress on Medicaid negotiations since last month, when lawmakers were last in town.

Asked if he had begun to hear from doctors and other providers concerned about the cuts now taking effect, Berger said, “there’s some concern about that.”

Berger said lawmakers already appropriated $600 million to cover the Medicaid rebase — the funding needed to maintain provider rates and services — and said the administration of Democratic Gov. Josh Stein chose to use about $100 million of those funds for administrative costs within the Medicaid program. “So it’s fairly clear that their priority is not making sure providers get paid. Their priority is not making sure that individuals get medical care that gets paid for. Their priority is protecting the bureaucracy,” Berger said.

He added, “There is adequate money in Medicaid for them to move forward without making the cuts that they’re making.”

Stein said in late September, just before the cuts took effect, the state’s health department “cannot spend money that it does not have. It cannot put health care costs on a credit card. It cannot spend at a rate that we know is unsustainable due to increased utilization and due to rising health care costs.”

Stein also sent a letter last week to legislative leaders calling for lawmakers to provide the additional funding, suggesting they authorize money from a $500 million Medicaid contingency reserve to close the gap and reverse the cuts.

During the Senate’s Tuesday morning session, Sen. Lisa Grafstein, a Wake County Democrat, brought forward a discharge petition to pull the House’s version of the Medicaid funding bill to the floor for a vote. But Republican leaders “shut down the effort just hours later — ruling the petition out of order on a technicality, and once again refusing to act on one of the most urgent responsibilities facing North Carolina families,” the Senate Democratic Caucus said in a statement.

Berger’s office cited a rule requiring a bill to remain in committee for at least 10 days before a discharge petition can be filed — which Grafstein, who is also a lawyer with Disability Rights North Carolina, said was correct. “Okay, you’re right, the rules say that,” she said in the release. “So why don’t you just bring the bill to the floor? Their answer was no. They’re not even pretending to govern.”

Effects coming down

Providers paid through Medicaid Direct — where the state pays providers directly — such as many nursing homes and home-based disability support providers — are already seeing the cuts.

Others under the managed care plan structure, which shifted the state from directly reimbursing providers for each visit or procedure to paying health plans that manage patients’ care, are expected to feel them soon.

Managed care plans — including those tailored for people with disabilities — temporarily shielded providers from lower payments in October. But if the cuts persist into November, the plans will recoup the difference retroactively for services provided in October.

By late November, when lawmakers are next expected to return to Raleigh, most providers — and their patients — will likely be feeling the effects of the payment reductions.