Stein reverses Medicaid cuts, but warns of ‘devastating’ consequences if Republicans fail to fund the program

The governor cited court rulings that blocked some of the cuts, but said the state’s Medicaid fund would still run out of money in the spring if Republicans failed to resolve their 6-month dispute over funding it.

Gov. Josh Stein is reversing the cuts his administration made to the Medicaid reimbursement rates it pays medical providers, he said at a press conference Wednesday, but warned Republican lawmakers to stop dragging their feet on the budget impasse that made those cuts necessary.

NC Republicans control both chambers of the General Assembly, but are six months late in passing a state budget, and have been unable to resolve differences over separate stand-alone bills to fill a large shortfall in the state’s Medicaid fund. 

The Medicaid cuts were necessary, Stein has said, because without new funding, the entire system was in danger of running out of money in the spring. And, he often added, the legislature had not shown any indication they would resolve their differences in enough time to avoid catastrophe. Health officials said in October that cuts of between 3% and 10% would prevent deeper cuts the closer the state got to toppling over the fiscal cliff.

But the cuts meant less money for providers, leaving many of them facing potential staff cuts or service reductions. More than 3 million North Carolinians rely on Medicaid, and staffing cuts to an already strained system, has meant delays and disruptions to vital patient care.

Some adult care homes and autism treatment facilities filed separate lawsuits against the state over the cuts, and the judges in those cases sided with the providers. More cases were pending. 

Citing those cases, Stein on Wednesday said state health officials would restore the rates to previous levels and pay providers the difference for any services rendered while the rates were cut. 

Stein made the announcement at the governor’s mansion alongside Dr. Devdutta Sangvai, the Secretary of the NC Department of Health and Human Services, and several state healthcare providers, who detailed the harm the cuts had caused and warned of the devastation awaiting the entire healthcare system if Republicans fail to fully fund Medicaid.

The lawsuits made it easy to “ read the writing on the wall,” Stein said. 

“ That’s what’s changed.”

But the court rulings do not change the fiscal realities that caused the cuts in the first place, he said. 

RELATED: NC Republicans face criticism from the right as they slap each other over a stalled budget 

“Medicaid still does not have enough money to get through the rest of the budget year, and that is even clearer now that we’re nearly six months into this fiscal year, and we can see how Medicaid spending is actually tracking without additional funds.”

That, Stein said, “would be absolutely devastating not only to Medicaid patients, but to the entirety of our healthcare system.”

A “mini-budget” passed by the NC General Assembly at the end of July fell $319 million short of what the state needs to pay providers who accept patients on Medicaid. State health officials told lawmakers that unless they filled that gap with new legislation, they would have to make steep cuts on Oct. 1 in order to avoid catastrophic cuts later on. 

Republicans criticized the cuts as unnecessary, and ignored calls for any immediate funding, defending their slow stroll and their vague promises to fund Medicaid at some point.

The fund will run out of money in March or April, Sangvai said on Wednesday.

How did we get here?

When legislators returned to Raleigh the last week of September, the House and Senate passed separate bills intended to fill the gap. The votes were unanimous in both chambers. Not a single lawmaker voted against either bill.

But Republican leaders Berger and Hall could not resolve the differences between their respective chamber’s versions, and no final bill was passed. Then lawmakers left town.

The General Assembly returned in October to pass a new Congressional map tilted toward Republicans, and the House again passed a new bill fully funding Medicaid, but Berger refused to even accept receipt of the bill. In November, Berger and Hall ignored Stein’s call for a special session, arguing the circumstances were not “extraordinary” enough to give him legal authority to order a new session. 

“They failed to act in August, they failed to act in September, they failed to act in October, and they failed to act in November,” Stein said of Republican leaders on Wednesday.  

“Instead of providing the funding that both chambers knew was necessary, they allowed unrelated budget disputes to get in the way of doing their jobs,” he said.

“Their failure forced these cuts, which are causing real and damaging impacts on people’s health and wellbeing. Their failure is irresponsible and callous, and it’s infuriating because all of this was absolutely unnecessary.”

What is at stake?

More than two dozen representatives from area Medicaid providers stood behind Stein at the press conference. Several spoke as well, thanking Stein for reversing the cuts while detailing the damage they’d done.

 ”Many agencies have already lost staff, forcing them to reduce services while other agencies have had to eliminate services,” said Margaret Weller Stargell, president and CEO of Coastal Horizons Center, a NC based non-profit that provides mental health and other services. 

“Or even worse, some providers have made the difficult decision to stop taking Medicaid clients.”

Lisa Proteat, the CEO of The Arc of NC, a statewide organization that provides services to people with intellectual disabilities, said that many smaller providers were also reducing services or “leaving their jobs because they can not afford to take a pay cut.”

But if the rate cuts were bad, both said, it would be catastrophic for providers and patients if the legislature delays funding much longer. 

“ As Governor Stein said, we can’t just talk about funding Medicaid, we need to fund Medicaid,” Weller Stargell said.

Proteat thanked Stein for this “temporary solution,” but urged lawmakers to do something more permanent.

“ We pledge and look forward to working with members of the General Assembly to fully fund Medicaid in the new year so that individuals with intellectual and developmental disabilities can get the services and supports they need to live a life like yours, to live a life like mine, to live a life like ours.” 

Confusion remains for parents of kids who depend on Medicaid

Stacy Staggs has been following the Medicaid story from the beginning. Her daughter’s life depends on the ending. 

Her twin daughters, Emma and Sara, age 11, were born more than two months premature in Charlotte. They spent months in the neonatal intensive care unit. 

Emma still needs a feeding tube and around-the-clock care. They rely on a Medicaid waiver program that pays for home care and the supplies that help keep her alive. 

Emma is one of 3,751 North Carolina children the program provides care for.

In a text exchange on Wednesday, Staggs said the news did little to allay her fear.

“It’s a short term win, but it amplifies long term risk,” she wrote. Then seconds later, corrected herself. 

“It’s not long-term. It’s only 4 months away.”

And if it was true that the rates needed to be cut to avoid larger cuts closer to the cliff, then does restoring the old rates “accelerate the funding cliff?” she asked.

Dr. Sangvai said at the press conference that projections had not changed over the last two months about when the fund would run out of money. And he said that by reversing the cuts now, it would give providers time to reverse any planned staffing cuts or service reductions.

But unless the legislature acts, the hourglass will run out of sand.

Cardinal & Pine profiled Emma, and Kinsley Stadler, another child in the waiver program, in July.  The prescription formula that feeds them costs $3,500 a month.

“If Medicaid reaches zero balance on 3/31, each of our girls will run out of the only source of nutrition their bodies can process, their life sustaining formula, the first week of April and we can’t replace that cost,” Staggs said. 

“We’re in the same place we were when they passed the mini budget, except the clock has been ticking this whole time,” she said.

“All these months without a resolution, so now all [3 million] Medicaid beneficiaries, including our families, are ‘closer to the buzz saw,’” she said. 

 She half-apologized for the analogy, but felt it was apt.

“I can’t think of another way to say that,” she said.