North Carolina Medicaid funding impasse threatens patient access as rate cuts loom

North Carolina Medicaid patients face reduced access to care as a funding stalemate persists, with the state program poised to cut reimbursement rates for doctors, hospitals and other providers beginning next week unless lawmakers approve a funding fix. Gov. Roy Stein’s administration said the rate reductions would take effect as soon as Oct. 1, warning that the cuts would threaten access to care for about 3.1 million Medicaid enrollees in the ninth-largest state. Stein urged lawmakers to resolve the impasse, saying it is not too late to reverse course if a deal is reached. "Their disagreements have nothing to do with Medicaid. It’s hard for me to express the gravity of their failure," the governor said at a Raleigh care clinic.

The drive behind the looming reductions is a shortfall the administration projects at roughly $319 million after accounting for population growth and rising health care costs. Stein’s team has said that unlike previous years, there is no expected influx of federal dollars to close the gap this year. The policy package moving through the General Assembly would provide an additional $190 million in Medicaid funding annually, but lawmakers in the House and Senate remain far apart on how to allocate funds and what other health care projects should ride along with any spending boost. The Senate proposes funding increases that include support for two health care initiatives, while the House version omits those lines. As night fell on the legislative session, negotiators still had not produced a final plan and lawmakers prepared to reconvene Oct. 20, leaving the program’s finances exposed in the meantime.

Stein and Jay Ludlum, a deputy health secretary who leads North Carolina Medicaid, said Thursday that unlike recent years no additional federal funds are anticipated to close the shortfall. The administration contends the state must act now to avoid deeper cuts that could reverberate through rural and underserved communities. The proposed reductions span a range: about 3% for home health and ambulance services and up to 10% for hospitals, nursing homes and hospice care. Stein warned that without relief, some providers may scale back services or stop accepting Medicaid patients altogether, worsening access and health outcomes in parts of the state with high concentrations of rural residents.

Republican lawmakers roundly criticized the governor’s choice to move ahead with reductions without a final budget agreement. They argued that the administration acted with little notice and that the cuts are not necessary, especially while the two chambers fail to agree on other health spending. GOP Rep. Grant Campbell of Cabarrus County, a physician, said the governor was threatening North Carolinians with drastic cuts well before the budget was settled. He argued that the state should first settle the broader budget questions before implementing sweeping rate reductions that could affect patient care.

The stalemate also centers on whether to fund long-debated health projects. Senate leaders have emphasized a 2023 accord to support a standalone children’s hospital in Wake County and investments in rural health, noting that the Senate bill would allocate $208.5 million in previously received federal funds to these efforts. The House, however, chose not to include those allocations, prompting questions about future prioritization and governance of health-care infrastructure. Senate Majority Leader Michael Lee said the hospital and rural health projects remain on the table as negotiators seek a comprehensive budget agreement, while House Speaker Destin Hall suggested that there are other hospital needs and that the Wake County project may not be the best use of funds at this time.

Stein and his allies have warned that the administration’s move is tied to the broader national debate over Medicaid funding in the wake of President Donald Trump’s spending-reduction law. They argue that reductions enacted under the law could threaten enrollment for hundreds of thousands of people and strain rural hospitals, though Republicans have downplayed the federal funding risk and urged a focus on state-level budget discipline. The fiscal dynamic has become a focal point of the political contest in Raleigh as lawmakers seek to balance immediate health-care needs with the state’s broader budget constraints. Stein asserted that the consequences of inaction would be borne by patients who already face barriers to care, especially in rural communities.

In the near term, doctors and clinics serving Medicaid patients have warned that revenue pressures could prompt reductions in services or even an exit from the program for some providers. Dr. Jenna Beckham, who spoke at a Raleigh health care clinic, warned that rate cuts could lead to longer wait times, delayed diagnoses and worse health outcomes for Medicaid patients, particularly those in rural and marginalized communities. The administration has said the current gap must be closed to prevent a deterioration of care for a large share of North Carolina residents, even as lawmakers debate the best path forward.

As the funding impasse stretches into a new fiscal year, state officials emphasize that the trajectory hinges on the willingness of the General Assembly to approve a funding package that can sustain Medicaid at current levels while addressing population growth and rising health costs. Stein has urged lawmakers to consider a compromise that prevents access to care from deteriorating, arguing that the lives and well-being of hundreds of thousands of residents depend on a timely resolution. While Republicans maintain that any broad reductions should be avoided and that extra federal support could mitigate the need for such cuts, the two chambers remain unable to reconcile their differences before the next legislative calendar. Until a final budget is enacted, the state faces a period of uncertainty about how Medicaid providers will operate and how enrollees will access essential services.