House Bill 491 appropriates $190 million in nonrecurring funds from North Carolina’s Medicaid Contingency Reserve to the Department of Health and Human Services, Division of Health Benefits, for the 2025-2026 fiscal year. The money is intended to “rebase” Medicaid funding by adjusting for projected changes in enrollment, the mix of enrollees, service and capitation costs, federal matching rates, and the planned implementation of the Children and Families Specialty Plan in December 2025.
The bill also requires local management entities/managed care organizations (LME/MCOs) to make intergovernmental transfers to DHB totaling $18,028,217 in each of fiscal years 2025-2026 and 2026-2027. It specifies the amount each LME/MCO must contribute and gives DHB authority to reallocate those amounts if county catchment areas change during the biennium, so long as the statewide total is still met. The act is made effective retroactively to July 1, 2025, except as otherwise provided.
Impact
The bill directly affects state Medicaid financing by moving money from the Medicaid Contingency Reserve into DHB’s budget and by setting mandatory intergovernmental transfer obligations for specific LME/MCOs. It does not create a new program, but it changes how Medicaid and behavioral health funding is supported and distributed for the biennium, with particular implications for Medicaid managed care, behavioral health regional entities, and the Children and Families Specialty Plan.
Sentiment
The available voting history suggests strong bipartisan support or at least no recorded opposition, with the House passing second reading 111-0. No committee transcript is available, but the unanimous vote indicates the bill was viewed as a routine or necessary funding measure rather than a controversial policy change. The bill’s framing as Medicaid “rebase” funding also suggests it was treated as an administrative budget adjustment to keep the program aligned with current costs and enrollment trends.
Contention
The main substantive issue is not whether Medicaid should be funded, but how the funding burden is allocated and whether the contingency reserve should be used for this purpose. The bill’s required transfers from LME/MCOs may be of concern to behavioral health entities because they impose fixed contribution amounts and allow DHB to adjust them if county realignments occur. Another possible point of attention is the retroactive effective date and the use of nonrecurring reserve funds to cover ongoing Medicaid cost changes, though no recorded opposition appears in the available materials.