Surrounded by medical providers and a bipartisan group of lawmakers, N.C. Governor Josh Stein signed into law Thursday a bill providing long-awaited funding for the state's Medicaid program.
House Bill 696 provides North Carolina's Medicaid with $319 million from the state's Medicaid Contingency Reserve fund. That's money Stein and state health officials have been saying for months the program requires to get through the rest of this fiscal year.
"We are reinforcing the state's healthcare system by fully funding Medicaid. When it really matters, state leaders of both parties can come together and do the work of the people," Stein, a Democrat, said during Thursday's press conference.
Stein expressed concern about several provisions in the 33-page legislation. That includes one that requires health officials to look back at three months of a Medicaid applicant's employment history instead of the federally mandated one month to determine if they are eligible for the program and another that N.C. Department of Health and Human Services officials say could remove 27,000 children and pregnant women from Medicaid.
But the focus Thursday was on securing the funding for the remainder of this year, while Republican lawmakers are already eyeing next year's Medicaid adjustment that Stein is saying could be north of $1 billion.
The state's traditional Medicaid program covers about 2.25 million North Carolinians, with Medicaid expansion covering another 725,000. Medicaid covers more than 530,000 infants and children, 275,000 disabled people and 43,000 pregnant women.
The so-called rebase, which adjusts the state's Medicaid funding for enrollment, inflation and unanticipated shifts in how people use the program, only applies to North Carolinians who are covered under the state's traditional Medicaid program. The federal government pays for most of the coverage for those on Medicaid expansion, while an assessment on state taxes pays for the rest.
Last year, during the legislative long session, the General Assembly appropriated $500 million to the rebase. But DHHS officials have been saying for months that the program needed more money.
With the funding approved Thursday, North Carolina's share of Medicaid costs for the 2025-26 fiscal year is about $6.7 billion. Republican lawmakers say it is crucial that they find a way to keep Medicaid from taking on an ever-growing chunk of the state's budget.
To that end, House Bill 696 requires DHHS to check for changes in eligibility on a monthly basis, funds a performance audit of North Carolina's Medicaid program and mandates that DHHS develop a plan to improve health outcomes for people on Medicaid and make the program more cost-effective.
"House Bill 696 takes important first steps in giving our Medicaid partners important tools in order to manage that cost. It gives them the ability to look at data, it gives them the ability to help people make choices with respect to where healthcare is delivered and it gives them the ability to look at better health outcomes for both the taxpayers and for the patients," Sen. Benton Sawrey, R-Johnston, said Thursday.
Critiques of House Bill 696
Perhaps the most prominent criticism of House Bill 696 comes from a clause that says North Carolina's Medicaid eligibility for people who are not citizens will default to federally required coverage.
State health officials say that threatens coverage for 26,5000 children and 500 pregnant women who have been lawfully residing in the coverage for less than the five years typically required to be eligible for federal benefits but can receive Medicaid through a 2009 waiver.
N.C. Department of Secretary and Human Services Secretary Dev Sangvai said Thursday that state health officials have not clarified whether the clause actually removes coverage for those people.
But, Stein told reporters, "The key takeaway is that there seems to be a willingness with the legislature to partner with the Department of Health and Human Services to ensure that these very vulnerable lives — women who are giving birth and immediately have given birth and their infants — have the healthcare coverage they need to have a healthy start."
After the Senate voted on the bill this week, Sawrey told reporters that he does not believe the clause removes coverage for that group and that nobody intended for it do so.
If those 27,000 people would lose coverage, Sawrey said, "We'll come back and address it."
House Bill 696 also implements federal work requirements mandated under last year's federal H.R. 1, requiring adults between 19 and 64 years old who are covered by Medicaid expansion to work or volunteer for 80 hours a month or be enrolled in an education program for 40 hours a month.
The federal legislation required agencies to look back one month to determine eligibility, but the new North Carolina bill requires applicants to be eligible in the three months before they sought Medicaid coverage.
"Requiring three months poses undue paperwork barriers on patients and increases the risk for delayed care. For many conditions, delayed care could result in disease progression and unnecessary medical costs due to loss of health care and coverage," a coalition of 14 patient advocacy organizations wrote in a statement about the bill.
That coalition includes the American Cancer Society Cancer Action Network, the American Diabetes Association and Susan G. Komen, among others.
Most states are using a one-month "lookback," Stein said Thursday.
"That would be something I would welcome the legislature to revisit and get back in line with most of the rest of the country," Stein said.
Other 'critical needs'
House Bill 696 isn't limited to Medicaid.
It also funds a number of state agencies that have seen significant shortfalls due to the ongoing state budget negotiations.
That includes $80 million for the Department of Adult Correction, which Secretary Leslie Cooley Dismukes said faces a shortfall of nearly $100 million. Much of the new funding will be used to provide medical care for prisoners, Dismukes told reporters Thursday.
"We are obligated, constitutionally, to provide for their care. As medical costs rise, we do not fail to provide that care. We have to continue to provide that care," Dismukes said.
Dismukes recently told WUNC that $80 million in additional money would help the department catch up on its bills.
The funds will not be used to address chronic employment shortfalls or salaries.
The legislation also provides the N.C. Department of Motor Vehicles with $13.1 million in recurring funds and $8.5 million in nonrecurring funds and the N.C. State Bureau of Investigation with $2.5 million in recurring funds and $1.2 million in nonrecurring funds.
