The North Carolina House and Senate have passed legislation to fund the state’s Medicaid program while also taking meaningful steps to address fraud, waste, and abuse in the program.
The measure represents a balanced approach—ensuring the program is fully funded while putting in place reforms to improve efficiency, strengthen oversight, and better protect taxpayer dollars. Lawmakers in the North Carolina General Assembly should be commended for advancing a solution that prioritizes both fiscal responsibility and access to care.
What’s in the Bill
Medicaid Rebase Fully Funded
The legislation fully funds the state’s Medicaid rebase, ensuring the program remains financially stable and capable of meeting the needs of North Carolinians who rely on it.
The “rebase” simply means aligning funding with the actual cost of providing care. This helps avoid budget shortfalls that could disrupt services or require additional taxpayer dollars down the road.
Since transitioning to managed care, North Carolina’s Medicaid program has already delivered significant value—saving taxpayers more than $500 million since 2022. This legislation builds on that success by ensuring the program is appropriately funded moving forward.
Increased Flexibility for Health Plans to Manage Costs
The legislation also gives prepaid health plans additional tools and flexibility to better manage costs while improving how care is delivered.
Key provisions allow plans to:
- Align claims processing operations with national standards, reducing administrative inefficiencies and lowering overhead costs.
- More effectively manage high-cost GLP-1 medications. At more than $510 million a year, North Carolina currently ranks in the top five nationally in Medicaid spending on these drugs, according to the North Carolina Association of Health Plans. Providing plans with the ability to ensure appropriate use will help curb unnecessary spending.
- Implement site-neutral payment policies for certain hospital services, including inpatient and hospital-based labs. When the same service can be delivered safely in a lower-cost outpatient setting, reimbursement will reflect the lower rate—helping eliminate price disparities that drive up costs.
- Expand value-based care arrangements, which reward providers for improving patient outcomes rather than increasing the volume of services. These models are proven to lower costs over time while improving quality.
Together, these reforms reduce inefficiencies in the system and give plans the tools they need to manage rising costs, without compromising access to care.
Addressing Potential Fraud, Waste, and Abuse
In addition to funding and flexibility measures, the legislation takes important steps to strengthen oversight and accountability within Medicaid.
The bill includes new annual reporting requirements designed to increase transparency and identify areas where taxpayer dollars may be misused. These provisions build on concerns raised in recent legislative hearings about improper billing practices and gaps in oversight.
A key area of focus has been Applied Behavior Analysis (ABA) services, where rapid spending growth has raised questions about utilization and billing integrity.
During a recent hearing, Sen. Benton Sawrey raised concerns about a sharp rise in potential fraud cases. “I was deeply concerned when they told me there's a 127% increase in referrals to the special investigative unit at DHHS just over the past year,” said Sawrey.
Rep. Larry Potts also questioned whether certain services are being delivered appropriately. “We are talking about children with autism. How do you do telehealth for 1 hour and 30 minutes, and keep 1-to-5 year olds’ attention, and have any kind of hope that anybody understands what's being said,” Potts said.
The legislation responds directly to these concerns by increasing transparency, strengthening reporting requirements, and giving the state better tools to identify and address improper billing. These steps will help ensure services are medically necessary, appropriately delivered, and provide real value for patients and taxpayers.
A Responsible Path Forward
With this legislation, North Carolina lawmakers continue to demonstrate leadership in managing the state’s Medicaid program responsibly.
By fully funding the rebase, empowering health plans with proven cost-management tools, and strengthening oversight, the General Assembly has taken a comprehensive approach to improving the program.
These reforms reinforce a clear goal: protecting access to care while ensuring taxpayer dollars are spent wisely.
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