Governor Josh Stein is calling the General Assembly back to Raleigh this month for a special session he says will focus on fully funding the state's Medicaid program.
Stein and N.C. Department of Health and Human Services Secretary say the state needs $319 million to fully fund its Medicaid program.
After Republican leaders in the N.C. House and Senate failed to reach a compromise on Medicaid funding — despite agreeing to provide $190 million — DHHS cut the rates it offers providers for the services they render to the state's Medicaid recipients.
That decision has caused significant alarm among the state's medical community and among Republicans, who have called it an unnecessary political gambit. Speaking outside the N.C. State Capitol on Thursday, Stein said he wants to return rates to their full levels but can't do that while the program isn't fully funded.
"We care deeply about the health and well being of the people of North Carolina. We are desperate to restore the funding levels to where they were before. But by law, we cannot spend money that we do not have, nor should we spend money that we do not have. The legislature has not fully funded Medicaid," Stein said.
It is rare for North Carolina governors to call special sessions. The last one was in 2018, when then-Gov. Roy Cooper called one to address Hurricane Florence recovery. State law says a governor can call a special session "on extraordinary occasions."
Lauren Horsch, a spokeswoman for Senate leader Phil Berger, R-Rockingham, said in a statement that the Medicaid funding debate does not meet that standard.
"Gov. Stein's self-inflicted 'crisis' is not an extraordinary occasion by any measure. Now that the courts have stepped in to block some of his politically motivated cuts, he's attempting a new stunt to pass the buck. The General Assembly appropriated $600 million to the Medicaid rebase, and instead of prioritizing funding for services, Gov. Stein decided funding bureaucracy was more important," Horsch wrote.
Horsch's statement referenced $600 million in funding the state included for Medicaid and contracts needed to manage the state's managed care program in a mini budget bill that became law in August. DHHS said they needed $100 million of that funding for administrative costs.
About 3.1 million North Carolinians receive their health care through the state's Medicaid program.
The House and Senate have been embroiled in an ongoing controversy over funding for a proposed children's hospital in Wake County and a series of rural health clinics that are part of a partnership between UNC Health and East Carolina University.
The Senate has tried to tie Medicaid funding to further funding of those projects, funds that it says were agreed upon. The House has instead tried to pass a standalone Medicaid funding bill, which isn't receiving any traction in the Senate.
During a September legislative session, the House and Senate each passed bills that would provide about $190 million in funding to the state's Medicaid program. The House passed a similar bill in October, which the Senate returned because of an agreement between the chambers that only certain bills would be taken up during that session.
"The House has done its job to fund Medicaid with clean bills and is prepared to do more if needed. We need to resolve this matter quickly to protect patients, support providers, and ensure the long-term stability of North Carolina’s Medicaid program," Speaker of the House Destin Hall, R-Caldwell, wrote in a statement.
Stein has said that while the additional $190 million wouldn't fully fund Medicaid, it would be enough to return provider reimbursements to their normal rates while awaiting further action by the General Assembly later in the fiscal year.
Consequences of not funding Medicaid
The rate cuts have been greatly contentious, with a group of families suing this week to halt rate cuts to applied behavior analysis therapy for children who have been diagnosed with autism.
A Wake County Superior Court judge issued a temporary restraining order against the cuts, pausing them while the case moves forward.
When DHHS implemented the cuts on Oct. 1, it slashed all reimbursements between 3% and 10%. The autism therapy cut was on the 10% level, and DHHS officials have previously said an increase in that service is one of the greatest drivers of increases in costs for the Medicaid program.
In court filings, a N.C. Department of Justice attorney said that returning the therapy rates to their normal level could result in a $17 million shortfall for the state's Medicaid program. To make up for that funding, the attorney wrote, DHHS would need to implement steeper rate cuts somewhere else.
DHHS Secretary Dev Sangvai said Thursday that the overall cuts were one of the hardest decisions he's had to make in his career.
"Without additional funding from the General Assembly, it was simply unavoidable. If we did not implement these changes, the financial strain on the Medicaid program would be even greater, potentially jeopardizing stability of the entire system and putting the state at significant financial risk," Sangvai said.
Sangvai also said providers are beginning to warn DHHS that they will stop serving Medicaid recipients.
"We have now started to get emails from large practices and large providers that have given a date, by which time they will exit Medicaid. Many of them are calling the end of this month the time period that they will exit the Medicaid program," Sangvai said.
Sangvai added that while a handful of practices have given notice so far, there could be a "domino effect," particularly if the provider no longer in Medicaid is a specialist.
