With cuts to Medicaid reimbursements just hours away, N.C. Governor Josh Stein continued to argue that the General Assembly should make up what his administration says is a $319 million shortfall.
"We get a budget for an entire year, and we have to estimate how much we're going to spend every month of that year. They've not given us enough money for what we know Medicaid will cost us this year," Stein told reporters Tuesday after the Council of State meeting.
The General Assembly provided about $500 million to the state's Medicaid program earlier this year, but the N.C. Department of Health and Human Services said that wouldn't be enough. Now, Republicans who control both the House and Senate have agreed to a $690 million Medicaid funding figure but have been unable to appropriate the money due to other policy differences.
Republican legislative leaders have aimed some criticism at Stein, a Democrat, saying that cutting the reimbursements is unnecessary and politically motivated. For instance, Speaker of the House Destin Hall, R-Caldwell, told reporters last week that Stein doesn't need to cut the rates.
"It's creating a fake crisis," Hall said.
Stein responded to Hall's remarks Tuesday, noting that both the Senate and the House have agreed on an amount to fund the state's Medicaid program and still couldn't pass a funding measure.
"Is his theory, is anyone's theory, that we're supposed to spend all of our money in six months and have no money left in the last six months and somehow expect that they will magically give us the money at that time, when they know we need the money now and they haven't given us the money now? We need a clean Medicaid bill," Stein said.
A timeline of a stalemate
The stalemate is tied to a procedure called the Medicaid "rebase," where the state appropriates funds to the program based on changes in the cost of health care and enrollment.
More than 3.1 million North Carolinians receive their health insurance through Medicaid, according to the N.C. Department of Health and Human Services. The rebase funding doesn't apply to the 680,000 people covered by Medicaid expansion because that program is not funded directly by the state.
In his March budget request, Stein asked for $700 million in each year of the biennium. By July, DHHS officials had started to warn lawmakers that the original figure was low based on new forecasts.
In early August, the General Assembly passed a stopgap spending measure that included $600 million in Medicaid rebase funds and money for the Medicaid Oversight Fund. DHHS Secretary Dev Sangvai said that funding amounted to a $319 million shortfall from the $819 million necessary to maintain Medicaid service levels.
It was likely, Sangvai warned, that DHHS would need to cut provider reimbursements and pare offerings for its Medicaid participants if the General Assembly did not fund the program.
That was the backdrop when the House and Senate returned to Raleigh for several days last week.
The Senate went first.
It passed a new version of House Bill 562, adding $90 million to the original $600 million Medicaid appropriation along with $83.6 million in operational spending. But the bill also included $103.5 million for a proposed standalone children's hospital that Duke Health and UNC Health are planning to build in Apex, the final tranche of $320 million in total funds that was originally promised in the 2023 state budget.
The House has grown increasingly skeptical of that funding, arguing that there are already children's hospitals in North Carolina and wondering why Duke and UNC need taxpayer funding for such a project.
So when the House came back on Sept. 23, it did not take up the Senate's legislation. Instead, it passed a new version of Senate Bill 403, raising the Medicaid funding to $690 million and adding $95.3 million in operational spending.
The House's bill did not provide funding for the children's hospital project.
Both chambers left Raleigh without taking up the other's proposal.
They are set to return for a few days during the week of Oct. 20.
Tuesday, Stein suggested that if the General Assembly doesn't provide the funds, DHHS failing to implement cuts immediately would likely result in deeper cuts later on. Originally, he said, the state planned to reduce reimbursements on July 1, and then Aug. 1.
"If they don't give us the $300 million we need to fund the program, we only have nine months to find those savings. If we keep pushing it off, then we only have eight months or seven months or six months. We cannot keep pushing these cuts off," Stein said.
Where is DHHS planning cuts?
DHHS has released its planned rate reductions in a bulletin to providers. Those reductions range from 3% to 10%.
At the lower end, with 3% reductions, are things like hearing aid programs, home health services and dialysis.
In the middle, at 8%, are things like nurse midwife services, optical programs and physician assistants.
And the largest reductions, at 10%, are for things like ambulatory surgery centers, hospice services and hospitals.
"Please note that the rate reductions are subject to change if the NCGA provides NC Medicaid with additional appropriations for service programs," DHHS said on its website with the rate reductions.
Earlier this month, DHHS said that North Carolina's Medicaid programs will no longer cover the cost of GLP-1 weight loss drugs to treat obesity due to the funding shortfall.
"NC Medicaid remains committed to the potential of GLP-1s for the treatment of obesity; however, at this time the lack of funding for the program prohibits continued coverage for weight management purposes," DHHS wrote in a Sept. 5 bulletin to providers.
