North Carolina Gov. Stein cancels Medicaid rate cuts amid legal and legislative battles

RALEIGH, North Carolina — North Carolina Democratic Gov. Josh Stein is reversing Medicaid reimbursement rate cuts he initiated two months ago, a move that protects short-term access to care for vulnerable patients while a political fight with Republican lawmakers to enact additional funding is resolved.

Stein and state Health and Human Services Secretary Dr. Dev Sangvai announced Wednesday that the state agency would restore reimbursement rates for doctors, hospitals and other medical providers for Medicaid services that otherwise had generally been reduced by 3 percent to 10 percent starting Oct. 1.

The governor had said the cuts were necessary to address the funding gap for Medicaid, which serves more than 3 million people in the ninth-largest state. But legal challenges to the cuts that recently resulted in court rulings requiring some rates to return to pre-October levels make continuing the cuts untenable.

“What hasn’t changed is that the program doesn’t have enough money. What has changed is that the courts have made it clear that the rates need to go down,” Stein told The Associated Press in an interview.

The freshman governor had said the cuts, while painful for Medicaid patients and providers, were inevitable because a stopgap spending measure approved by lawmakers this summer fell $319 million short of what was needed to address changing demographics and rising health care costs.

“The Legislature imposed these cuts to the program,” Stein said. “It was absolutely nothing that 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. Yet Republican leaders in the House and Senate tried but failed this fall to craft legislation to provide additional funds that would support the program longer.

Stein has tried in recent weeks to pressure lawmakers into action — even formally calling a special legislative session last month. But House Speaker Destin Hall and Senate Leader Phil Berger refused to meet, saying Stein had not met the requirements for such a special session.

The governor has been pressured to relent because Medicaid consumers, such as children with autism, and providers such as adult nursing homes have so far successfully sued the Health Department and blocked some rate reductions.

The plaintiffs accused the state of violating laws by unilaterally cutting rates and discriminating against people with disabilities. A host of groups representing thousands of doctors and other providers filed their own appeals last week to block the rates more broadly.

Under this reversal, Sangvai said, providers will retroactively receive reimbursements for the difference between reduced and full rates for claims filed after the reductions took effect.

The Medicaid deficit persists, however, due to GOP leaders’ failure to pass a conventional two-year budget — largely because of differences over additional income tax cuts and teacher pay. North Carolina remains the only state without an adopted budget, according to the National Conference of State Legislatures. A budget was supposed to be in place on July 1.

House and Senate Republicans separately agreed in September that they would provide an additional $190 million to the Medicaid program. But senators also wanted the legislation to allocate federal money previously received for the construction of a stand-alone children’s hospital in Wake County by two university medical schools and for investments in rural health. Despite previous spending on these projects, House Republicans are now hesitant to finalize these investments.

Parliament had already planned to meet next week, but any action or recorded vote is unlikely. Stein said reinstating rates only adds urgency for lawmakers to act and find more funds.

“If the legislature had just done its job and passed a budget that fully funded Medicaid, we never would have had to start this whole business,” Stein said.

Sangvai acknowledged the program won’t run out of money until spring. But he said reinstating rates meant his agency found itself forced to reduce or eliminate programs and services to achieve significant savings.

“It’s really a situation that we hate to contemplate because the consequences could actually be catastrophic,” Sangvai said.