RALEIGH, North Carolina — North Carolina Democratic Gov. Josh Stein is reversing cuts to Medicaid reimbursement rates. started two months agoa decision that protects short-term access to health care for vulnerable patients while the political battle with Republican lawmakers over additional funding is resolved.
Stein and state Health and Human Services Secretary Dr. Dev Sangwai announced Wednesday that the state agency will restore reimbursement rates for doctors, hospitals and other Medicaid health care providers that have otherwise typically been cut by 3% to 10% starting Oct. 1.
The governor said the cuts are needed to address a funding shortfall for Medicaid, which serves more than 3 million people in the ninth-largest state. But legal challenges to the rate cuts, which recently led to court orders requiring some rates to return to pre-October levels, make maintaining the cuts untenable.
“What hasn't changed is that the program is starved of money. What has changed is that the courts have made it very clear that the rates have to go back,” Stein told The Associated Press.
The first-year governor said the cuts, while painful for Medicaid patients and providers, were inevitable because temporary spending measure The Legislature approved over the summer came in $319 million short of what was needed to address the challenges of changing populations and rising health care costs.
“The Legislature forced these cuts into the program,” Stein said. “This was absolutely not what the department or I wanted to happen.”
Republican lawmakers said Stein's actions were unnecessary, unprecedented at the start of the fiscal year and politically motivated. Still, GOP leaders in the state House and Senate tried and failed to craft legislation this fall to provide additional money that could sustain the program longer.
Stein has tried to force lawmakers into action in recent weeks, even formally calling a special legislative session last month. But House Speaker Destin Hall and Senate Leader Phil Berger refused to reconvene, saying Stein did not qualify for such a special session.
The governor was pressured to relent as Medicaid consumers, such as children with autism, and providers, such as nursing homes for adults have so far successfully sued the health department and blocked certain rate cuts.
The plaintiffs accused the state of violating laws, unilaterally lowering rates and discriminating against people with disabilities. Last week, multiple groups representing thousands of doctors and other providers filed their own demands seeking broader rate blocking.
As part of the repeal, Sanguay said, providers will be retroactively reimbursed for the difference between reduced and full rates on claims that were filed after the cuts took effect.
But the Medicaid deficit persists, a consequence of GOP leaders being unable to pass a regular two-year budget – largely due to disagreements over additional income tax cuts and teacher pay. North Carolina remains the only state without a budget passed, according to the National Conference of State Legislatures. The budget was supposed to be adopted on July 1.
House and Senate Republicans separately agreed in September to provide an additional $190 million for Medicaid. But senators also wanted the legislation to direct previously received federal money toward construction freestanding children's hospital in Wake County two university medical schools and investments in rural health care. Despite previously spending money on these projects, House Republicans have now changed their minds about ending these investments.
The Legislature had already planned to reconvene next week, but any action or a recorded vote is unlikely. Stein said the rate restoration only reinforces the need for lawmakers to act urgently and find additional funds.
“If the Legislature would have just done its job and passed a budget that fully funded Medicaid, we would never have had to start this whole enterprise,” Stein said.
Sanguay acknowledged that the program won't run out of money until the spring. But he said restoring rates means his agency can only cut or eliminate programs and services to find significant savings.
“We actually hate to think about this situation because the consequences could be catastrophic,” Sanguay said.
