Medicaid providers and beneficiaries across North Carolina can breathe a sigh of relief. Lawmakers put their differences aside on Wednesday to near-unanimously advance $319 million in Medicaid funding.
The state Senate and House conducted second readings Wednesday, but have scheduled final votes for Tuesday, April 28.
The Department of Health and Human Services and Gov. Josh Stein have sounded the alarm for nearly 10 months. Due to changes in federal health care funding in the One Big Beautiful Bill Act, inflation, rising demand for certain autism treatments and broad use of new, expensive drugs like GLP-1s, the cost to keep North Carolina’s Medicaid program running has skyrocketed.
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While lawmakers agreed to give DHHS $500 million, plus $100 million in administrative funding, toward the program as part of a 2025 mini-budget, they held out on the final $319 million requested. Like most legislation proposed in the 2026 session, the Medicaid funding became a bargaining chip in tense budget negotiations.
North Carolina still does not have a comprehensive budget agreement, but time was ticking to come to a Medicaid funding deal. According to DHHS officials, the program would have run out of money before the end of the fiscal year in June if lawmakers didn’t act.
State Rep. Donny Lambeth, R-Forsyth, credited his colleagues’ hard work and creativity in crafting the final bill.
“It's not perfect,” he said. “We still have more to do, and we have, certainly, long term work to do to curb the cost increases that we're seeing in Medicaid. But this is a really, really good start.”
Not just $319 million: What else is in Medicaid bill
House Bill 696 takes a paragraph to describe the additional $319 million state lawmakers will send to the Medicaid program to cover one year. Lawmakers want program officials to reduce costs before funding the second year of the biennium.
The remainder of the 33-page bill details various reporting requirements, a performance audit of the Medicaid program and some restrictions on program use.
House Democratic leader Robert Reives would have preferred a “clean” bill without all the extra provisions, but a win is a win, he told reporters.
“I'm just thankful something got done, because at this stage, I saw where we were headed,” he said.
Alleged fraud, waste and abuse
Rising Medicaid costs have made some lawmakers suspect there could be fraud, waste and abuse running rampant in North Carolina’s system.
In a recent committee hearing, Democratic Attorney General Jeff Jackson denied that, and argued that the state punched above its weight on a regional level.
He said an additional staff member dedicated to using data analysis tools to better identify potential fraud, waste and abuse in the program would help bring them to the next level, though.
That additional staff member is not included in the Medicaid package. Reives questioned why Jackson didn’t get what he wanted, but Republican State Auditor Dave Boliek got $500,000 to conduct a performance audit into the Medicaid program.
“What we're doing as a General Assembly is saying we want the job done technically, but we want somebody that we know and we like to do it,” Reives said.
Berger said he wasn’t sure exactly why Jackson’s requested staff member wasn’t included, but he suspects that “one reason is if he's got enough staff to file lawsuits all over the country, that maybe he doesn't need us to fund another one.”
Under the bill, DHHS is charged with reporting all cases of fraud, waste and abuse to the legislature by Oct. 1. The department also must come up with a plan to save money, improve health outcomes and increase efficiency by then.
Other provisions
The bill requires the state to maintain work requirements as part of Medicaid eligibility as long as the federal government allows it. Under the legislation, there will be more frequent checks — monthly instead of quarterly — that recipients are meeting these requirements.
“At the end of the day, we have a job to look after taxpayer dollars here,” House Speaker Destin Hall, R-Caldwell, told reporters. “The program should be there for folks who need it because they don't have other recourse. And it's not a program that's there just to provide health insurance for people for forever, absent them being disabled.”
Coverage not only expressly excludes undocumented immigrants, who already were ineligible to receive benefits, but removes the ability for refugees and immigrants who have five years of legal status — like a green card or work visa — but not citizenship, to receive benefits. DHHS will refer people whose immigration status cannot be verified to federal immigration officials under certain circumstances.
Senate Democratic leader Sydney Batch was particularly troubled over the exclusion of certain legal immigrants from coverage, which includes thousands of pregnant women and children.
“They are saying, you guys can just figure it out,” she told reporters. “I hope that you don't die in childbirth.”
Berger didn’t seem to acknowledge the impact on legal immigrants.
“We have such an explosion of cost in the Medicaid program, … we need to look at every possibility of trying to save money,” he said. “... At least, what I'm hearing, … our members are hearing, is the taxpayers don't feel like their taxes ought to be going for benefits for folks who are in this country illegally.”
The bill also takes a broader scope on eligibility. If a Medicaid applicant lives in a household with another person who is not eligible, their income and financial resources will be included in calculations and determinations of eligibility.
Finally, the bill takes on one of the greatest rising expenses of the Medicaid program, applied behavior analysis therapy, a behavioral health treatment for patients on the autism spectrum.
In the next five years, the state is projected to spend 10 times more than it currently does on ABA therapy, said Rep. Grant Campbell, R-Cabarrus.
“What we're hoping is that this is going to push some of the bad actors out of the space,” Campbell said. “This can potentially give a savings somewhere between $210 (million) and $450 million.”
Among the changes are bans to many telehealth services and restrictions on others. For example, all initial assessments are required to be in person to receive a Medicaid reimbursement.
Additionally, service plans lasting more than 16 hours of service per week must be approved monthly.
While all but one House Democrat voted in favor of the bill, some expressed concerns.
For example, Rep. Maria Cervania, D-Wake, said the increased reporting and monthly checks put more pressure on localities without the support to match.
“It's not just money,” she said. “There's technical knowledge, institutional knowledge, support that we also need to be provided to our localities.”
On the other hand, Rep. Blair Eddins, R-Wilkes, complained about accusations made against legislators last year that they were “cutting people off” of Medicaid with their inaction.
“I want it to be known loud and clear across the state that this body stood up, fully funded Medicaid, as we said we would, as we committed to the people of North Carolina that we would,” he said.
This article first appeared on Carolina Public Press and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.