North Carolina, December 10, 2025
North Carolina Governor Josh Stein has reinstated Medicaid reimbursement rates that were cut earlier this year. This decision follows legal challenges from healthcare providers and advocates who argued the cuts violated laws protecting individuals with disabilities. The restoration of rates is seen as an urgent response to ongoing budget disputes and potential funding shortfalls, with implications for healthcare services across the state.
Charlotte, North Carolina – December 10, 2025
North Carolina Governor Josh Stein has reversed Medicaid reimbursement rate cuts implemented in October 2025, following legal challenges and ongoing legislative disputes. The cuts, which ranged from 3% to 10%, were initially enacted to address a $319 million funding shortfall in the state’s Medicaid program. However, legal actions from providers and consumers led to court decisions mandating the restoration of pre-October rates.
Governor Stein, along with Department of Health and Human Services (DHHS) Secretary Dr. Dev Sangvai, announced that full reimbursement rates would be reinstated, and retroactive payments would be issued to affected providers. The legal challenges highlighted violations of law and discrimination against individuals with disabilities, prompting the reversal of the cuts.
This decision intensifies pressure on lawmakers, particularly as Republican leaders have failed to pass a two-year state budget. Disagreements over tax cuts and education funding have stalled consensus. Despite Senate Republicans proposing additional Medicaid funding, disputes over spending, including for a new children’s hospital, have delayed progress.
With North Carolina still lacking a ratified budget, Governor Stein warned of potential service cutbacks if the legislature does not act soon. He emphasized the urgency to fully fund Medicaid to avoid future crises, stating that without additional funding, the program could run out of money as early as April 2026. Secretary Sangvai acknowledged that while the program would not run out of money until the spring, restoring the rates means the agency is left with scaling back or eliminating programs and services to find significant savings. He noted that the consequences could be catastrophic if such measures are considered.
The Medicaid shortfall continues, an offshoot of GOP leaders being unable to pass a conventional two-year budget—largely over differences about additional income tax reductions and teacher pay. North Carolina remains the only state without an enacted budget, according to the National Conference of State Legislatures.
As the situation develops, stakeholders continue to monitor the impact of these decisions on healthcare providers and Medicaid recipients across the state, emphasizing the importance of a collaborative approach in overcoming fiscal challenges and supporting economic growth.
Frequently Asked Questions (FAQ)
What prompted the reversal of Medicaid rate cuts in North Carolina?
The reversal was prompted by legal challenges from providers and consumers, including individuals with disabilities, who argued that the cuts violated laws and discriminated against them. Court decisions mandated the restoration of pre-October rates.
What were the original Medicaid rate cuts in North Carolina?
The original cuts, implemented on October 1, 2025, ranged from 3% to 10% across various Medicaid services. These reductions were intended to address a $319 million funding shortfall in the state’s Medicaid program.
How does the lack of a state budget affect Medicaid funding in North Carolina?
The absence of a ratified state budget has led to a funding shortfall in the Medicaid program. Without additional funding, the program could run out of money as early as April 2026, potentially resulting in service cutbacks and reduced access to care for Medicaid recipients.
What is the current status of the North Carolina state budget?
As of December 10, 2025, North Carolina remains the only state without an enacted two-year budget. Disagreements over tax cuts and education funding have stalled consensus among lawmakers, delaying the passage of a budget that fully funds Medicaid.
Key Features of the Medicaid Rate Reversal in North Carolina
| Feature | Description |
|---|---|
| Reversal of Rate Cuts | Governor Josh Stein announced the restoration of Medicaid reimbursement rates to pre-October levels, reversing the 3% to 10% cuts implemented on October 1, 2025. |
| Legal Challenges | Providers and consumers, including individuals with disabilities, filed lawsuits arguing that the cuts violated laws and discriminated against them, leading to court decisions mandating the restoration of rates. |
| Funding Shortfall | The Medicaid program faced a $319 million funding shortfall, prompting the initial rate cuts. Without additional funding, the program could run out of money as early as April 2026. |
| Legislative Impasse | Disagreements over tax cuts and education funding have prevented the passage of a two-year state budget, leaving North Carolina without an enacted budget and impacting Medicaid funding. |
| Potential Service Cutbacks | If the legislature does not act to fully fund Medicaid, there is a risk of service cutbacks and reduced access to care for Medicaid recipients in the future. |
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