This plea comes as a political stand-off has resulted in drastic Medicaid provider rate cuts—which took effect on October 1, 2025—threatening to dismantle healthcare access for vulnerable patients across North Carolina, especially in rural communities.
Despite the Governor's formal proclamation calling for an "Extra Session" on November 17, 2025, to resolve the shortfall, legislative leaders have rejected the call, leaving the harmful cuts in place. The disagreement over fully funding the state’s share of Medicaid—a process known as the "rebase"—hinges on a $319 million gap that the General Assembly has failed to appropriate. This political gridlock has forced the Department of Health and Human Services (NCDHHS) to implement rate reductions of 3% to 10% for providers.
The situation remains at a critical impasse. While both the House and Senate agree that hundreds of millions of dollars are needed, they have failed to reach a compromise, largely due to the Senate attempting to pair the Medicaid funding with other measures, such as funding for a new children's hospital, which the House has resisted. The legislature has indicated it is unlikely to take further action this year, meaning the cuts will remain in effect through the remainder of 2025
Meanwhile, patients and providers are already feeling the impact, with court-ordered injunctions recently blocking the cuts for certain essential services, including those for children with autism and assisted living services.
The Heart of the Crisis: A $319 Million Funding Shortfall
The cuts stem from a dispute between the General Assembly and Governor Josh Stein over fully funding the state’s share of Medicaid, a required annual adjustment known as the Medicaid "rebase."
The Gap: The North Carolina Department of Health and Human Services (NCDHHS) determined that $819 million was needed to cover the rising costs of the state’s 3.1 million Medicaid recipients for the current fiscal year (2025-2026).
The Shortfall: While the General Assembly appropriated an additional $500 million in a "mini-budget," this left a $319 million gap in the necessary funding.
The Result: State law required NCDHHS to operate within the allocated budget. To avoid cutting optional services, the department implemented reimbursement rate cuts ranging from 3% to 10% across nearly all services provided to Medicaid patients. Hospitals and nursing homes were among the hardest hit, facing the full 10% reduction.
Impact on Providers and Patients
The consequences of these cuts are already being felt across the state, with rural hospitals and smaller practices facing a severe financial strain.
Financial Strain: Many rural healthcare systems already operate on razor-thin margins. Systems across the state, like ECU Health and Cape Fear Valley Health, project losses in the tens of millions of dollars if the cuts remain in place. For hospitals, where Medicaid payments often account for a significant portion of revenue, a 10% reduction can be devastating.
Access to Care: Providers warn that reduced reimbursement rates make it impossible to cover the costs of services. This could force independent providers, specialists, and even hospitals to limit or stop accepting new Medicaid patients, or even close essential services. This has an immediate, direct impact on the 1 in 4 North Carolinians who rely on Medicaid for their health coverage.
Legal Interventions: In a positive development for vulnerable groups, court-ordered injunctions have begun to block some of the most severe cuts. A Superior Court judge recently blocked the 10% cuts for Research-Based Behavioral Health Treatments (including ABA therapies) for children with autism, and an administrative judge blocked the cut for assisted living services, underscoring the immediate, irreparable harm caused by the rate reductions.
Political Standoff: Sticking Points Block Resolution
The core reason the funding has not been passed is the inability of the House and Senate leadership—both Republican-led—to agree on a clean bill.
Legislative Rejection: Republican legislative leaders rejected Governor Stein's call for a special session on November 17, asserting that the crisis is a "self-inflicted" problem by the administration and that the state has enough funding to delay cuts until April 2026.
The Impasse: The Senate proposed a compromise that would fund Medicaid but tied it to a smaller allocation for rural healthcare and a controversial new children's hospital in Apex. House Speaker Destin Hall has maintained that funding for the children's hospital must be part of a full budget, and the disagreement has blocked movement on the Medicaid funding bill that both chambers agree is necessary.
Future Action: With legislative leaders signaling that they are likely done voting for 2025, advocates fear the cuts will continue to erode the state’s healthcare infrastructure as they wait for the next regular session.
A Looming Federal Threat
The situation is further complicated by potential massive federal Medicaid cuts from the recently passed federal H.R. 1.
H.R. 1 Impact: This federal budget measure is projected to drastically reduce federal Medicaid spending over the next decade.
The NC Expansion "Trigger": North Carolina’s 2023 Medicaid Expansion law included a "trigger" provision which could force the state to discontinue the expansion if state funding sources are deemed insufficient. Since the federal H.R. 1 impacts these funding sources, experts fear it could jeopardize coverage for the more than 675,000 residents covered by the expansion.
The political infighting means that the battle for Medicaid funding continues, with the health of 3.1 million North Carolinians hanging in the balance.
WNCTimes