RALEIGH — Legislative leaders announced a deal on Medicaid Rebase funding last week, with the bill passing almost unanimously in votes taken in both chambers.
“North Carolina’s Medicaid costs are growing at an unsustainable rate, and Gov. (Josh) Stein and his administration have shown little interest in tackling the waste, fraud, and abuse driving that growth,” said House Speaker Destin Hall (R-Granite Falls) in a press release. “North Carolinians deserve a program that protects taxpayer dollars and delivers care to those who truly depend on it. This legislation will do just that, restoring responsibility and integrity to Medicaid.”
The conference committee version of House Bill 696 includes $319 million drawn from the Medicaid Contingency Reserve to cover the current year’s rebase shortfall. The funding is retroactive to July 1, 2025. The funding will address higher enrollment, cost increases and the launch of the new Children and Families Specialty Plan.
The legislation also requires transfers from the four regional mental-health managed-care organizations, totaling roughly $18 million per year, and restructures hospital assessments to help fund the state’s Medicaid share.
The bill passed the House on a second reading by a vote of 112-1, with only Rep. Pricey Harrison (D-Guilford) voting no. The Senate approved the measure later the same day by a 48-1 vote, with Sen. Michael Garrett (D-Guilford) in opposition.
No changes were made in the Senate, and the bill was passed by both chamber calendars on Tuesday. The measure was signed by Gov. Josh Stein on Thursday.
Other key provisions include monthly eligibility reviews, instead of quarterly, using data on income, employment, lottery winnings, incarceration and death records. The reviews start in October.
Stronger documentation standards prohibiting self-attestation as the sole proof of eligibility are also in the bill, as is citizenship and immigration verification for applicants and beneficiaries. Income of ineligible household members must be counted, and unverifiable immigration status would trigger a referral to federal authorities.
Language includes federally mandated work requirements for Medicaid enrollees, effective Jan. 1, 2027, with applicants needing to show compliance for the prior three months.
Additionally, the state auditor is to conduct a comprehensive performance audit of the Medicaid program and NCWorks Career Centers. The N.C. Department of Health and Human Services (NCDHHS) is required to submit transparency reports on improper payments, recovered funds and ineligible recipients.
NCDHHS is also directed to develop a Medicaid integrity and efficiency plan to reduce administrative burdens and identify cost savings.
The legislation also has new guardrails for Applied Behavior Analysis therapy for children with autism, including limits on telehealth, certification requirements and supervision caps.
Aside from Medicaid, other critical spending needs are addressed in the bill:
- $80 million (nonrecurring) for the Department of Adult Correction
- $13.1 million (recurring) and $8.5 million (nonrecurring) for the Division of Motor Vehicles
- $2.5 million (recurring) and $1.2 million (nonrecurring) for the State Bureau of Investigation
- $10 million recurring in fiscal year 2026-27 for the Children of Wartime Veterans Scholarship program
- $1 million (nonrecurring) for the remainder of the 2025-26 school year for Children of Wartime Veterans Scholarship awards
- $165,000 nonrecurring to maintain and operate the Business Court’s current case management software
