NC Medicaid House Senate bills

By Luciana Perez Uribe Guinassi
The News & Observer

(The News & Observer) The House and Senate are still at odds over North Carolina’s Medicaid program, with provider rate cuts set to take effect Oct. 1 unless lawmakers act.

Both Republican-controlled chambers on Sunday night released separate bills addressing the Medicaid rebase — the funding required to maintain current services and provider payment rates. Both bills included various other provisions, including cuts to vacant positions.

But there is a key difference between the two. The Senate bill released includes funding for a pediatric hospital and rural health program. The House version does not have those items.

The News & Observer previously reported that the Senate and House were struggling to find a compromise on Medicaid funding. The Senate prefers a bill that includes funding for a pediatric hospital and a rural health care program, while the House prefers a bill without these additional items.

Lawmakers are set to convene this week.

The Department of Health and Human Services (DHHS) previously said the state budget office notified lawmakers in May that Medicaid costs were projected to rise. By mid-July, DHHS shared updated projections showing $819 million would be needed for this year’s Medicaid. That was up from the $700 million requested in Gov. Josh Stein’s budget earlier in the year, which relied on January data, according to the agency. In a mini-budget they passed in late July, lawmakers included $600 million for Medicaid. After administrative costs, $500 million went toward the rebase, leaving a $319 million shortfall, according to DHHS.

Stein in a letter last week, urged House and Senate lawmakers to pass a budget — which was supposed to be enacted at the end of June — but said that in the absence of a comprehensive plan, funding for items such as Medicaid “cannot wait and demand your attention in your September session.”

Stein wrote that the state budget office and DHHS “strongly indicate” that an additional $319 million is needed to fully fund Medicaid.

Stein wrote that it was his understanding that General Assembly staff believe the amount needed is closer to $190 million and that he was “willing to compromise” at that number with a commitment to reevaluate in January.

Details on the bills

The Senate’s bill — an overhaul of a prior version of House Bill 562 — provides $690 million a year for the next two years to cover Medicaid needs. It uses the nonpartisan Fiscal Research Division’s forecast, according to a Senate news release. It also provides $49 million in state funds, along with $34 million in federal relief money, for administrative Medicaid costs.

At the same time, the measure requires DHHS to draw up a plan by April 2026 to make Medicaid more efficient. It also sets aside $1 million for the State Auditor to review how counties are handling Medicaid eligibility checks.

To cover costs, the plan includes cuts, particularly to the state’s regional mental health agencies, known as Local Management Entity/Managed Care Organizations (LME/MCOs).

The bill requires these organizations to send back a combined $18 million a year for two years to the state. It also cuts $30 million a year for the next two years in funding for mental health, developmental disability and substance use services. To offset the reduction, lawmakers would redirect $14 million a year from the state’s opioid settlement funds.

The bill also orders DHHS to eliminate vacant positions by January to achieve nearly $34 million in savings. It also requires shaving $100,000 each from the Whole Child Health program and the Medical Eye Care program.

As for the pediatric hospital and rural health program, the Senate bill provides $103.5 million for the North Carolina Children’s Hospital and $105 million for the N.C. Care initiative.

In 2023, both the House and Senate approved nearly $320 million over three fiscal years for the hospital and $420 million for the N.C. Care initiative. The more than $200 million in this bill is what remains to be released, Sen. Michael Lee, a budget writer, previously told The N&O, calling on the House to live “up to the commitment.”

Meanwhile, the House bill — an overhaul of a prior version of Senate Bill 403 — is largely the same as the Senate bill in terms of funding, vacancy cuts and trims. The key difference is the funding for the children’s and rural programs.

A notable difference is that it halts Medicaid coverage of obesity management drugs such as Wegovy beginning Oct. 1. Glucagon-like peptide-1 drugs for diabetes would remain covered. The change is projected to save the state $34 million a year. The House bill also requires $19 million in savings to be achieved via cuts to other state agencies, in addition to DHHS savings.

The oversight also goes further: The State Auditor would conduct performance audits of county administration of Medicaid and the federal Supplemental Nutrition Assistance Program, also known as food stamps, with results due in May 2026. DHHS would also need to work with the auditor’s office to set deadlines and accuracy rules for Medicaid eligibility checks and rederminations, and give the state a way to enforce them if counties don’t comply.