Cuts to North Carolina’s Medicaid reimbursement rates could cost Cape Fear Valley Health millions of dollars in revenue this year and decrease access to care for thousands of patients, according to the health system’s leaders.
The cuts, which range between 3% and 10%, went into effect on Oct. 1 and are the result of a budget impasse between the N.C. House and Senate.
Medicaid payments account for nearly one-fourth of monthly revenue for Cape Fear Valley Health, said Chaka Jordan, vice president of marketing and communication for the health system. Reduced reimbursement rates for Medicaid will have a “significant impact,” she said.
Cape Fear Valley Health served 87,354 patients on Medicaid in 2024, Jordan said. The health system received about $30 million in reimbursements for the care provided to those patients, she said, which represents approximately 23% of annual revenues.
“We anticipate sustained cuts would also create access challenges, particularly if independent providers are forced to limit Medicaid patients,” Jordan said. “This could, in turn, increase emergency department usage and strain safety-net resources.”
The health system faces the full range of Medicaid provider rate cuts. Its ambulance service, called Cape Fear Valley Mobile Integrated Healthcare, is seeing a 3% cut in reimbursements, according to a rate reduction chart from the state Department of Health and Human Services. Each of its eight hospitals will be reimbursed 10% less per service provided to Medicaid patients.
The roughly 1,000 providers in the system will face a minimum 3% reduction in reimbursement payments. Services provided by nurse practitioners and physician assistants will receive 8% less in reimbursements.
Cumberland County has the fourth-highest number of residents enrolled in Medicaid in North Carolina, with 137,528 people on some type of plan as of September, according to NCDHHS data. Almost 21% of those residents are enrolled in Medicaid expansion, which the General Assembly passed in 2023 and gave people with higher incomes access to the health insurance program.
People with low incomes and those without health insurance are more likely to depend on emergency departments for their health care, according to a peer-reviewed analysis of adults’ visits from 1999 to 2021.
The Cape Fear Valley Medical Center in Fayetteville has the second busiest emergency department in the state, and the 21st busiest in the country, according to Becker’s Hospital Review. In fiscal year 2024, it had 125,537 patient visits, according to hospital data provided to the health care industry publication.
Medicaid provider rate cuts were prompted by an impasse in the General Assembly to pass legislation funding the program, which is jointly paid for by the state and the federal government. Of the $29.79 billion spent on the program in fiscal year 2024, $5.47 billion came from the state, according to the most recent NC Medicaid annual report.
NCDHHS has stated that funding for the Medicaid rebase, the projected cost of services to program recipients, was $819 million for fiscal year 2025. This accounts for the increased program costs to the state included in the One Big Beautiful Bill Act, which President Donald Trump signed into law on July 4.
In July, the General Assembly appropriated what amounted to $500 million for the Medicaid rebase as part of its continuing budget operations bill. It’s a shortfall of $319 million from what NCDHHS had requested, according to a warning letter from state health Secretary Dev Sangvai. The letter stated that the department had two options to remain within budget without that funding: Reduce coverage for optional services like dental work, or reduce provider rates by Oct. 1.
“Underfunding NC Medicaid now after years of building a nationally recognized program that delivers real outcomes for the people we serve is a serious setback,” Sangvai wrote. “The forced cuts from the budget shortfall threaten care for those who need it most and include some of North Carolina’s most vulnerable populations.”
Both the North Carolina House and Senate were willing to provide $690 million to the program, as stated in each chamber’s Medicaid funding bills.
However, the Senate’s bill includes $103.5 million in funding for a new children’s hospital in Apex. The House insisted on passing a bill solely dedicated to Medicaid. Neither chamber budged and left Raleigh last month without passing any funding. Legislators will return on Oct. 20.
Republican lawmakers in both the House and Senate pointed out that Gov. Josh Stein, a Democrat, could have delayed the cuts. However, Stein told reporters last month that the state had already pushed the deadline back three months.
“By identifying cuts that are reversible, they can solve this problem,” Stein said.
While not permanent, the rate cuts will remain in effect until the General Assembly passes a Medicaid funding bill. As a member of the North Carolina Healthcare Association, which Jordan said frequently lobbies for health care issues on behalf of health systems in the state, Cape Fear Valley Health hopes it can sway legislators to pass funding before providers are severely impacted.
In the meantime, the health system remains committed to caring for vulnerable residents, Jordan said.
“Our plan is to partner with state leaders and community providers to ensure that patients who rely on Medicaid continue to receive timely, high-quality care close to home,” she said.
CityView Reporter Morgan Casey is a corps member with Report for America, a national service program that places journalists into local newsrooms. Morgan’s reporting focuses on health care issues in and around Cumberland County and can be supported through the News Foundation of Greater Fayetteville.