A Wake County Superior Court Judge has ruled that the N.C. Department of Health and Human Services must roll back one of the Medicaid provider reimbursement rate cuts it enacted in an effort to save money amid a funding standoff.
DHHS says the state's Medicaid program is facing a $319 million shortfall this year. When the state House and Senate failed to partially fund that in September, the agency cut provider reimbursements for almost all of the services Medicaid recipients can receive.
A suite of therapy options for children with autism known as research-based behavior health therapy, or RB-BHT, received the highest possible decrease, 10%. Parents of 22 children who have been diagnosed with autism spectrum disorder and either receive therapy through the state's Medicaid program or are on waitlists sued, saying the rollback discriminates against their children and threatens any progress they have made via therapy.
Wake County Special Superior Court Judge Clayton Somers issued a preliminary injunction against the rate cuts on Monday, ruling that the families are likely to prevail at trial and rolling the cuts back as the case proceeds.
In a statement, Michael Easley Jr., the lead counsel for the families, said, "Our case argues that state budget challenges are no grounds to deny children with autism the legal right to services. Every disabled child has the right to live, learn and grow to their full potential in their community, not in an institution."
DHHS officials argued in court filings that rolling back the reductions in RB-BHT reimbursements would result in a $17 million shortfall, even with all of the other cuts. They said that would either necessitate other providers to face steeper cuts or risk the solvency of the state's Medicaid program next spring.
"An order to return RB-BHT providers reimbursement rates to September 2025 levels would put the solvency of the NC Medicaid program in danger, which means NC Medicaid may not be able to cover any services for beneficiaries in the Spring of 2026," N.C. Department of Justice attorneys representing DHHS wrote in court filings.
In an email Tuesday morning, a DHHS spokeswoman said the department will comply with the court's order but is awaiting a formal order signed by the court. It was not immediately clear if DHHS intends to enact steeper cuts for other services or instead wait to see if a funding deal between the House and Senate comes to pass.
"This order makes the need for the General Assembly to fund Medicaid even more urgent. Any reinstatement or reversal of the provider cuts without additional funding from the General Assembly means the program will run out of funding sooner, putting the entire state Medicaid system at risk," wrote Summer Tonizzo, a DHHS spokeswoman.
The General Assembly is set to return this Monday for a special session called by Gov. Josh Stein to address the Medicaid shortfall, although there is not much optimism about a deal.
In September, the House and Senate each passed bills that would have allocated an additional $190 million to the state's Medicaid program. But the Senate version also included funding for a new children's hospital and rural health clinics that the House considers a non-starter.
During a press conference last week, DHHS Secretary Dev Sangvai warned that the department is beginning to receive notices from providers warning that they will cease offering services to Medicaid recipients if the rate cuts remain in place. And, DHHS maintains, the rate cuts must remain in place as long as the funding shortfall exists.
"State lawmakers, not DHHS, hold the authority to make up for the funding shortfall needed for providers reimbursement and beneficiary services that help keep people healthy," the lawyers representing the agency wrote in court filings.
Easley, the plaintiff's lawyer, said he is hopeful the ruling in the autism therapy case will push lawmakers and DHHS toward a conclusion in the funding standoff.
"Everyone in state government has a job to do, and we pray today's ruling will motivate policymakers to work together for a permanent solution for families in need," Easley said in a statement.
