NC Medicaid cuts under scrutiny amid funding stalemate :: WRAL.com

North Carolina health officials said Tuesday that they continue to explore ways to save money for the state’s Medicaid program amid state budget constraints and looming cuts from the federal government. 

The state Department of Health and Human Services said earlier this year that North Carolina’s Medicaid program needed additional state funding by Oct. 1 to avoid cutting their reimbursement rates to hospitals, nursing homes and other medical providers who treat Medicaid patients. State lawmakers didn’t provide additional funding by that date, and DHHS is now cutting reimbursements to health care providers and slashing operating costs across the department.

The Joint Legislative Oversight Committee on Medicaid, led by Republicans who hold a majority in the General Assembly, summoned top health officials to a hearing in Raleigh Tuesday to question their decision to cut reimbursement rates and to ask about the future of the program.

State Rep. Donna White, R-Johnston, said she thought that Republican legislative leaders, state health officials, and Gov. Josh Stein — who oversees DHHS — had previously agreed to work together on any plans to change Medicaid, a health insurance program for children, people who have disabilities and the poor that’s funded by the state and federal government.

“We thought we had an understanding with the governor’s office. We thought we had an understanding with you all. So I’m very disappointed” by the cuts, White told DHHS leaders. 

Republican legislative leaders claim that DHHS didn’t need to cut Medicaid reimbursement rates yet but did so for political reasons — a claim health officials dispute. The department falls under Democratic Gov. Josh Stein. Health officials say the law requires the department to budget for the full fiscal year.

State Rep. Donny Lambeth, R-Forsyth, said the department should have continued reimbursing providers at the full rate and waited to implement cuts at a later date, if needed. In the meantime, health leaders should be looking for ways to cut costs in ways that don’t affect services or reimbursements, he said.

“I’ve never seen this happen with HHS since I’ve been here,” Lambeth said, adding: “What have you done in the area of administrative costs?” 

Jay Ludlam, the state’s deputy secretary for Medicaid, said the department searched for ways to cut costs in ways that wouldn’t affect the most vulnerable populations. But administrative expenses are only a fraction of the state’s Medicaid costs, he said. 

“We have done administrative reductions,” Ludlam said. “We have let go a large number of contracts, and contractors who would normally support us. Our vacant positions are being held.”

Health officials said legislators needed to approve $819 million in Medicaid funds for the fiscal year that started in July. State lawmakers supplied only $600 million, saying they wanted more time to examine why additional funding is needed.

Historically, North Carolina has been able to use federal funding to shore up its Medicaid program. That’s coming to an end.

President Donald Trump’s signature tax and spending legislation, known as the “One Big Beautiful Bill,” reduces federal spending on Medicaid and food stamps starting at the end of next year. It also introduces new work requirements and calls on state programs to review enrollees’ eligibility status more frequently. DHHS is already preparing for those new guidelines, Ludlam said.

Republican legislative leaders say they want to avoid disruptions to Medicaid but have proposed competing plans for supplying the funding. The state Senate’s package includes funding not only for Medicaid but also other health-related projects, such as a new children’s hospital in Wake County. House leaders have said those projects should be addressed separately and didn’t include them in their Medicaid proposal. 

On Tuesday, Stein sent a letter to legislative leaders urging them to unite around a Medicaid funding plan. 

“The chambers allowed ancillary matters to get in the way of a deal,” Stein said in the letter. “The time is now to set those matters aside and produce a clean bill.”

If legislators can’t agree on a long-term Medicaid spending plan, Stein said he would support the use of up to $500 million from the state’s Medicaid Contingency Reserve. He added: “Of course, appropriating these funds spends one-time money, making next year’s Medicaid requirements even larger.”

Senate leader Phil Berger, R-Rockingham, and House Speaker Destin Hall, R-Caldwell, didn’t immediately respond to requests for comment. 

U.S. Sen. Thom Tillis, R-NC, told WRAL on Tuesday that he’s worried about the effects of cutting Medicaid reimbursement rates. If medical providers continue to receive less money for treating Medicaid patients, they may withdraw from the system altogether. 

“You’ve always got to be mindful: If that Medicaid reimbursement is on the backs of providers, you’re always worried about those providers just choosing no longer to serve the Medicaid population,” he said. 

Medicaid services are already poised to change, Tillis noted. He cited Trump’s signature bill, which Tillis opposed because of its effect on Medicaid. Then, after Trump suggested he would support a challenger to Tillis in next year’s GOP primary, the two-term senator ended his reelection bid. 

“We’re going to have a lot of financial stressors on Medicaid going forward with some of the cuts that are in H.R. 1,” Tillis said, referring to Trump’s bill. “So we want to make sure that we don’t destabilize the health care system.”