Plan to avoid NC Medicaid cuts hits snag over dispute within GOP about 2023 deal
AI-generated summary reviewed by our newsroom.
- Senate says House is not upholding 2023 funding promises for NC Children’s, NC Cares.
- Stalemate risks access to care as providers face cuts without added funding.
- Lawmakers face $319M Medicaid shortfall as Oct. 1 provider cuts approach.
As an Oct. 1 deadline looms, funding for Medicaid to avoid cuts is hitting negotiating snags between the state legislature’s two Republican-controlled chambers.
Sen. Michael Lee, a top Senate budget writer, said he doesn’t believe a comprehensive state budget will move forward when lawmakers return to Raleigh next week, but he wants to get a “health care package” passed.
He envisions that package containing Medicaid funding along with the money for a rural health initiative and a children’s hospital “that we promised two years ago that we would fund this year.”
More Medicaid funding would avoid $319 million in cuts that the state’s Department of Health and Human Services said it will implement Oct. 1 — including across-the-board reductions in payments to health care providers and ending coverage for weight-loss drugs such as Wegovy.
But the House is walking back on agreements made in 2023, said Lee, a Republican from Wilmington.
In 2023, lawmakers agreed to spend $320 million on NC Children’s, a planned pediatric hospital network led by Duke Health and UNC Health. Some of the money for NC Children’s and for what’s known as the NC Care Initiative, a rural health care initiative run through East Carolina University’s ECU Health, UNC Health and their medical schools was set aside for that purpose two years ago but has not yet been provided in a budget. Lawmakers haven’t been able to agree on a comprehensive budget for this year, more than two months into the new fiscal year.
When those plans were laid out, the House was led by Speaker Tim Moore, who has since moved to Congress. Now Speaker Destin Hall holds the gavel.
The News & Observer reached out to Hall’s office on Wednesday but did not receive a comment.
Demi Dowdy, a spokesperson for Hall, previously said in an email that “House appropriators and health leaders have proposed a plan to fully fund Medicaid and prevent the NCDHHS’ politically-motivated cuts. We are hopeful that unrelated budget items will not hold up an agreement on this plan.”
The House and Senate are expected to return to Raleigh next week.
So far, leaders have indicated they’ll introduce wide-ranging legislation on public safety . But it’s unclear whether the Medicaid stalemate will be resolved in time.
Funding dispute on Medicaid traces back to the summer
The funding dispute on Medicaid traces back to the summer.
The state’s health and human services department said the state budget office notified lawmakers in May that Medicaid costs were projected to rise. By mid-July, DHHS shared updated projections showing $819 million would be needed for the year’s Medicaid rebase — the funding required to maintain current services and provider payment rates. That was up from the $700 million requested in Gov. Josh Stein’s budget earlier in the year, which relied on January data, according to DHHS.
Lauren Horsch, a spokesperson for Senate leader Phil Berger, said the legislature’s nonpartisan Fiscal Research Division came up with an estimate of $640 million, and Senate leaders wanted to fund that amount, plus $50 million for administration. But the House wouldn’t agree, she said. (The News & Observer previously asked Fiscal Research for its analysis, but the office deferred to lawmakers.)
Instead, in a mini-budget they passed in late July, lawmakers included $600 million for Medicaid. After administrative costs, $500 million went toward the rebase, leaving a $319 million shortfall, according to DHHS. Without additional funding, the department said on Tuesday it will move forward with provider cuts on Oct. 1, despite a coalition of health groups urging it to pause the cuts to allow lawmakers to come to an agreement.
Republican Rep. Grant Campbell, an OBGYN representing Cabarrus and Rowan counties, in a video posted on X over the weekend said House members had a plan to provide the full difference based on the Fiscal Research forecast. But, he said, Senate leaders told House members in a Thursday meeting that they would only support the plan if it also included $300 million for a new children’s hospital in Apex.
But Lee said on Wednesday that’s not correct.
The Senate is not asking for additional money, he said, but rather for the House to return to a 2023 funding agreement that used federal American Rescue Plan Act (ARPA) dollars the state received for Medicaid expansion, to fund NC Children’s and the NC Care Initiative.
For the current fiscal year, they authorized but did not appropriate $103.5 million for NC Children’s and $105 million for NC Care using ARPA funds, said Lee.
“These are very specific funds that go into a reserve that had been committed already. These aren’t new funds,” Lee said in an interview Wednesday.
Lee said the money for the children’s hospital and the NC rural health care initiative was promised to “these various folks” two years ago.
“They’ve already started moving forward and we need to live up to those obligations,” he said.
On the likelihood of reaching a deal before the deadline, Lee said he was “hopeful the House will recognize the fact that we need to live up to the commitment.”
As for the effects of the Medicaid cuts taking effect in October?
Secretary Devdutta Sangvai said in a letter to lawmakers in August that “most immediately, reduced rates and the elimination of services could drive providers out of the Medicaid program, threatening access to care for those who need it most.”
North Carolina Healthcare Association president and CEO Josh Dobson, who represents hospitals, told The N&O “there will be challenges for hospitals, providers and payers. Everyone is going to have to make some tough decisions if we don’t figure this out.”
Details on the numbers
Documents obtained by The N&O, as well as the 2023 budget itself, show that in a 2023 agreement on how to spend federal ARPA funds, lawmakers mapped out appropriations through 2026.
For the current fiscal year that began in July, the document called for $103.5 million for NC Children’s and $105 million for NC Care using ARPA funds.
NC Children’s received just over $216 million in the 2023 budget.
For the NC Care Initiative, lawmakers authorized about $420 million total in the 2023 budget, including money to help create three rural health clinics.
This year, the House called for cutting some of the money for the pediatric hospital, while the Senate called for cutting money elsewhere and shifting it to the hospital. Lee said more money “would be great, but all we’re asking the House to do now — right now — is to live up to what we agreed to do in 2023.”
Duke and UNC have said the hospital which will be built in Apex will cost about $3 billion.
Budget plans for next week
Beyond health care initiatives, Lee said lawmakers are working on the package dealing with safety.
“The idea, really, is to address those things that are most immediate in their needs, and go ahead and get those across the goal line,” he said.
“There are a lot of things that the House and Senate agree on in their budget,” but “I don’t think that’s going to move forward, even though we might agree on them, because we really need to focus on some of these things that are most critical,” he said.
The budget is stalled in part because of debate among Republicans over whether and how lawmakers should change tax cuts they previously agreed upon, especially in light of a dim forecast for state revenue.
Lee said a tax package is “a longer discussion” and lawmakers “are still talking about it.” But on House Republicans’ call to slow future tax cuts, Lee said, “There’s no discussion on that.”
Senate Republicans had actually called in their budget for accelerating tax cuts, but is no longer pushing for that, Horsch said. Their position now is to stay at what was agreed-to in 2023.
Berger previously blamed the stalemate on “an insistence on the part of the House to try to renegotiate agreements that we’ve made in the past.” But Hall previously said that with the currently planned tax cuts, “If we’re going to continue down the road of a policy that we think ultimately may put us in a position, at least not to be able to do the investments we would like to do in education, in the university system, then we have to tighten our belts right now.”
