How much is North Carolina adding for Innovations waiver direct care pay?

$21.3 million a year in recurring state funds, starting in fiscal 2026-27, under Section 9E.14 of Session Law 2026-41. The North Carolina Council on Developmental Disabilities says that comes to about $59.4 million a year with the federal Medicaid match.

When does the Innovations rate increase take effect?

On the effective date approved by the Centers for Medicare & Medicaid Services. The state's Division of Health Benefits sets the size of the increase and adjusts payments to the LME/MCOs, which must all pass it on.

What do providers have to show to get the increase?

They must attest and verify to their LME/MCO that the money benefits their Innovations direct care workers through wages, benefits or payroll costs, using verifiable records such as payroll-based journals. LME/MCOs must recoup funds that were not used that way.

North Carolina adds $21.3M for Innovations waiver DSP pay

North Carolina's budget, signed July 7, 2026, puts $21.3 million a year in state funds, about $59.4 million with the federal match, into Innovations waiver rates to raise pay for direct care workers.

Direct Support News desk · July 7, 2026 · Updated September 26, 2026 · 3 min read

North Carolina will spend $21.3 million a year in state funds to raise Medicaid rates for Innovations waiver services, with the money meant for the direct care workers who support people with intellectual and developmental disabilities. With the federal match, the North Carolina Council on Developmental Disabilities puts the total at about $59.4 million a year.

The funding is in Section 9E.14 of Session Law 2026-41 (Senate Bill 257), the state budget Gov. Josh Stein signed on July 7, 2026. The council announced it the same day.

What the law requires

The law says the General Assembly intends to help raise the hourly wages of "Innovations direct care workers." It directs the Division of Health Benefits to use $21,300,000 in recurring funds, starting in the 2026-27 fiscal year, for a rate increase to Innovations providers. That includes enrolled Medicaid providers and the financial management agencies that bill for workers hired by families under the waiver's self-directed option.

The division sets the size of the increase and adjusts the monthly capitation payments to the LME/MCOs, the managed care organizations that run the waiver. Every LME/MCO must pass the increase on. The raise takes effect on the date the Centers for Medicare & Medicaid Services approves.

The law defines Innovations direct care workers broadly, as all workers needed to deliver a unit of Innovations services under the waiver's service definitions.

Proving the money reached workers

Before getting the increase, providers must attest and show their LME/MCO that the money benefits their Innovations direct care workers, through higher hourly wages, benefits or related payroll costs. The division will set the documentation standards, and the law calls for verifiable accounting such as payroll-based journals. Providers must keep records and produce them on request.

If an LME/MCO finds that a provider did not use the money for its workers, it must take back part or all of the increase.

Reporting dates

Each LME/MCO must report to the division by Dec. 1, 2026, on how providers used the money: what kinds of benefits workers received, how much went to each where possible, and how the LME/MCO checked. The division must send a combined report, with its documentation standards, to the legislature's Joint Legislative Oversight Committee on Medicaid by Feb. 15, 2027.

Personal care rates

A separate section, 9E.15, puts $70.8 million a year in recurring state funds into higher rates for Medicaid personal care services. It covers Medicaid Direct, the state's fee-for-service program, and three Community Alternatives Programs: for children (CAP/C), for disabled adults (CAP/DA) and CAP Choice (CAP/CO). The council puts that total at about $197.5 million with federal funds.

The waiting list

Council executive director Talley Wells called the funding meaningful progress. The council also noted that almost 21,000 North Carolinians are on the waiting list for the Innovations waiver.

Why this matters for providers and DSPs

Innovations providers should expect a rate increase once CMS approves it, but with strings attached: an attestation up front, payroll-level proof that the money reached workers, and the risk of recoupment. Agencies should set up tracking now so they can document raises or benefits by the time LME/MCOs report in December. For DSPs, the law ties the money to their pay and benefits, but the size of each worker's raise will depend on the rate the state sets and on each employer.