Why NC is cutting Medicaid, what’s affected, and who could lose coverage
AI-generated summary reviewed by our newsroom.
- DHHS implemented across-the-board Medicaid provider rate cuts after $319M shortfall.
- Cuts range 3–10%, hitting hospitals, nursing homes, PRTFs and ICFs with 10%.
- DHHS ended GLP‑1 weight-loss coverage and scaled back operations pending funding.
On Wednesday, cuts to provider payment rates in North Carolina’s Medicaid program went into effect.
You may be wondering how we got here and what these cuts mean.
Here’s what we know.
Why are the cuts happening?
The reductions, separate from federal cuts in the “One Big Beautiful Bill,” stem from a Medicaid funding dispute.
In late July, lawmakers approved $600 million for Medicaid, with $500 million for use by the state Department of Health and Human Services for what is known as the Medicaid rebase.
DHHS said the rebase amount fell short of covering needs through June 2026. The agency set cuts to start Oct. 1 if lawmakers didn’t provide more funding.
What is the rebase?
It’s the funding required to maintain current services and provider payment rates.
What exactly is being cut?
Payments to medical providers. According to a list shared by DHHS, the cuts range from 3% to 10%.
Acute care hospitals, nursing homes, psychiatric residential treatment facilities and intermediate care facilities will have rate reductions of 10%, according to a letter DHHS Secretary Devdutta Sangvai sent to lawmakers in August.
DHHS has also posted a list of cuts effective Wednesday on its website, which will be updated if anything changes.
Beyond provider cuts, the state ended Medicaid coverage of popular glucagon-like peptide-1 drugs such as Wegovy, used for obesity and weight loss, according to Sangvai’s letter.
Coverage of these GLP-1 drugs for diabetes, heart disease and other Food and Drug Administration–approved uses remains in place.
DHHS spokesperson Summer Tonizzo has said starting Wednesday, the department would also pull back financial support for the Integrated Care for Kids Pilot — which coordinates physical, behavioral and social services for some children on Medicaid. Tonizzo said DHHS has attempted to make these cuts reversible if additional funding is approved.
Sangvai’s letter also said DHHS is cutting Medicaid operations, including ending or reducing contracts, reducing temporary staff, halting projects, and scaling back activities meant to ensure compliance and quality.
What are the effects?
Experts and some state leaders have warned the cuts could lead to Medicaid patients having less access to care, provider layoffs, lower wages and potentially even closures.
Providers paid directly by the state under what’s called Medicaid Direct — such as many who provide personal care services, like adult care homes — will see the effects first. For others, it will take longer.
Agencies operating tailored plans that cover people with complex needs — such as intellectual or developmental disabilities, serious mental illness, or certain substance use disorders — are shielding providers from lower payments in October, but will recoup the difference retroactively if cuts persist into November.
How many people are losing coverage?
The clearest data is available on weight-loss drugs. A total of 91,000 Medicaid recipients used GLP-1s from Aug. 1, 2024, to July 31, 2025. That includes those using GLP-1s for diabetes and for weight management. Of this total, 47.8% (43,500 members) used a weight management GLP-1 such as Wegovy, Saxenda or Zepbound, Tonizzo previously told The N&O.
Why hasn’t more funding been provided?
The Republicans who control the state legislature are arguing, both among themselves and with the Democratic governor’s administration.
DHHS has said that the North Carolina Office of State Budget and Management sent members of the General Assembly information as far back as May about the increased funding need. The N&O has requested that.
On July 16, DHHS notified lawmakers about the Medicaid rebase need — sharing an email thread with The News & Observer that included Senate leader Phil Berger and House Speaker Destin Hall.
Lawmakers have disagreed with the state budget office’ analysis and have said that the General Assembly’s Fiscal Research Division calls for less (The N&O has previously requested this analysis).
Despite the differing projections between the state’s budget office and the legislature’s Fiscal Research Division, lawmakers in both the House and Senate — led by Republicans — have agreed to provide more funding for the Medicaid rebase. And Gov. Josh Stein has agreed to accept lower funding than requested with a commitment to revisit the issue later.
Lawmakers differ, however, on what else they want to include in a health care spending bill. Last week, both chambers returned and filed their own bills to fund Medicaid, with each providing about $190 million based on Fiscal Research Division estimates.
But the Senate, in its bill, also included about $200 million combined for two other projects: a children’s hospital being built in Apex by Duke and UNC, and a project called the NC CARE initiative, which aims to improve rural health in the state. The House did not want to include those items in the Medicaid funding bill.
The Senate says the money for those projects needs to be released in the Medicaid bill because it was agreed to in the 2023 budget. Hall has said he wasn’t the speaker at that time and expressed doubt about the hospital funding and whether the state should move forward with it. He’s also said that funding should be tied to budget negotiations and not the Medicaid bill. Lawmakers have been unable to pass a full budget this year yet.
Both chambers passed their own Medicaid bills and then left Raleigh without a compromise.
Lawmakers in both chambers have also placed blame on Stein. Hall has said Stein and DHHS did not need to implement the cuts and that existing funds would last through June. Stein has pushed back, saying the state had already delayed rate increases and delaying further would only force steeper cuts later. He’s also placed blame on the legislature.
Health care groups have meanwhile called on the state to pause the cuts so lawmakers can reach an agreement.
Lawmakers will be back in Raleigh at the end of October.
This story was originally published October 2, 2025 at 11:44 AM with the headline "Why NC is cutting Medicaid, what’s affected, and who could lose coverage."
