North Carolina restored Medicaid provider rates to their Sept. 30, 2025 levels, reversing cuts made in October, but warned that a $319 million shortfall remained. Gov. Josh Stein directed the Department of Health and Human Services to restore the rates, the department announced on Dec. 10, 2025.

Why rates were cut

The department cut rates on Oct. 1, 2025, saying the General Assembly had left Medicaid underfunded amid a budget stalemate between the House and Senate. According to NC Medicaid's Sept. 25, 2025 notice, the cuts included 8% for ICF-IID facilities, while Innovations, 1915(i) and TBI waiver services were paid at 97% of their Sept. 30 rates.

Why they were restored

The reversal followed what the department called a wave of litigation. According to the Dec. 10 release, recent court orders made it untenable to keep the cuts in place. Health and Human Services Secretary Dev Sangvai and the governor both said the move protected access for the roughly 3 million people covered by Medicaid.

NC Medicaid said on Dec. 19, 2025, that claims for services on or after Oct. 1 affected by the cuts would be reprocessed after updated fee schedules were posted Jan. 5, 2026.

The gap that remained

Officials stressed that restoring rates did not fix the underlying problem. The $319 million shortfall remained, and Medicaid was projected to run out of money before the end of the fiscal year unless the General Assembly acted. At the time, North Carolina was the only state without an enacted budget.

Provider groups including the Autism Society of North Carolina, Benchmarks, the Developmental Disabilities Facilities Association and BAYADA welcomed the reversal and urged lawmakers to fully fund Medicaid.

What came next

The legislature later passed a 2026 budget that added $21.3 million for Innovations waiver DSP pay. This post does not track whether the 2025-26 shortfall itself was closed.

Why this matters for providers and DSPs

For two months, North Carolina providers, including I/DD and home care agencies, operated under lower rates. The episode shows how quickly a state funding gap can reach agency budgets, and why providers plan for the possibility that cuts return when a gap is left open.