State Medicaid Provider Payment Cuts Intensify Amid Budget Shortfalls

States like North Carolina and Idaho are implementing cuts to Medicaid provider payments amid broader efforts to manage state budget shortfalls. North Carolina announced a minimum 3% cut for all Medicaid providers starting October 1, with primary care doctors facing an 8% reduction and specialty doctors a 10% cut.

These reductions are expected to diminish provider participation in Medicaid programs, limiting access to care for beneficiaries such as children with complex medical needs relying on in-home therapies, nursing, and dental care. The cuts come even before the impact of a recent federal law expected to reduce Medicaid spending by approximately $1 trillion over the next decade. North Carolina projects a $23 billion loss in federal Medicaid funds over ten years and has repeatedly received less state legislative funding than requested, necessitating these payment cuts.

Idaho has also enacted a 4% across-the-board cut in Medicaid payments in response to an $80 million budget shortfall, with concerns raised by nursing home operators and rural hospitals about the financial viability and potential reductions in services, including labor and delivery and behavioral health units. Medicaid accounts for about 19% of state general fund spending nationwide, second to K–12 education. States have experienced slowed revenue growth following federal pandemic aid and tax cuts, increasing pressure on Medicaid budgets alongside increased spending needs in housing, education, and disaster response.

These policy shifts pose significant challenges for providers who serve vulnerable populations and for caregivers dependent on Medicaid-supported services. Advocates warn that lower provider payments will reduce care access and may increase long-term costs due to worsened health outcomes. Continual funding constraints compel states to either cut provider payments or eliminate optional Medicaid benefits, with provider networks and services at risk of contraction in the near term.