Raleigh, NC – North Carolina Governor Josh Stein announced on December 10 his administration is canceling October 2025 Medicaid reimbursement rate cuts because of the successful court challenges of a broad range of medical providers. As a result of the administration’s reinstatement of full reimbursement rates, medical providers who render essential services to Medicaid beneficiaries will be reimbursed at full rates retroactive to October 1, 2025.
The first Medicaid provider challenge to these rates was brought by over 107 adult care home providers as well as the NC Assisted Living Association and challenged the rate cuts as being in violation of state and federal law and harmful to Medicaid providers, recipients, and their families. On November 14, after a lengthy hearing, an administrative law judge issued a temporary restraining order (TRO) enjoining the rate cuts for adult care home providers. The judge ruled the providers "have sustained, and absent immediate relief will continue to sustain irreparable harm” because of the rate cuts and ordered the North Carolina Department of Health and Human Services (DHHS) to pay full reimbursement rates for Medicaid personal care services provided by adult care homes. The court held a preliminary injunction hearing on December 2 and determined that a preliminary injunction would be issued. This would effectively stop the rate cuts for all adult care home providers until a full hearing and decision was made in the case.
In addition to the adult care home providers case, Parker Poe filed a second case on behalf of the NC Medical Society, the NC Academy of Family Physicians, the NC College of Emergency Physicians, Benchmarks, NCARF, MARC, the Addiction Professionals of North Carolina, The Arc of North Carolina, and the NC Speech, Hearing and Language Association, as well as individual home care and behavioral health providers. These groups also alleged that the rate cuts violated state and federal law. The second challenge was supported by over 30 affidavits from healthcare providers from across the state, which explained how the cuts harmed their practices and the Medicaid patients they serve. A TRO was scheduled to be heard on their claims the week of December 10.
Following Governor Stein’s announcement reversing the cuts, DHHS issued a bulletin on December 10 that said, "Recent court rulings now require the North Carolina Department of Health and Human Services to reverse those reductions and restore rates to their Sept. 30, 2025, levels."
The Parker Poe team representing the provider groups and the providers was led by Raleigh partner Robb Leandro and Raleigh associate Deb Stern, and it included Raleigh associates Andrew Tabeling, Jack Belk, and Aislinn Klos.
"Medicaid funding is a complicated political issue, but the state must always act in a lawful manner when it decides to take actions that broadly impact healthcare providers and their patients," Robb said. "Medicaid providers and their patients unfortunately were harmed by the state’s decision to cut rates and litigation was for them a last resort. We welcome the governor’s announcement that the cuts are being reversed and we hope that healthcare providers can now focus on doing what they do best — helping people. We hope that in the coming months that all of our elected officials will work together to address any Medicaid shortfalls in the new year."
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