Raise DSP Pay to $25 Per Hour.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 239

Short Title: Raise DSP Pay to $25 Per Hour. (Public)
Sponsors: Senators Grafstein and Moffitt (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 6, 2025
*S239-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO PROVIDE A WAGE INCREASE TO DIR ECT SUPPORT PROFESSI ONALS 2
THAT SERVE MEDICAID BENEFICIARIES RECEIV ING SERVICES UNDER T HE 3
NORTH CAROLINA INNOVATIONS WAIVER. 4
Whereas, local management entities/managed care organizations (LME/MCOs) must 5
maintain adequate provider networks pursuant to their managed care contracts and 42 C.F.R. § 6
438.68 and must "assure clients' care is coordinated, received when needed, likely to produce 7
good outcomes, and is neither too little nor too much service to achieve the desired results" 8
pursuant to G.S. 122C-115.4(b)(5); and 9
Whereas, there is a serious shortage of direct support professionals (DSPs) available 10
to provide services under the North Carolina Innovations waiver and other funding sources 11
supporting the needs of people with intellectual and developmental disabilities (I/DD); and 12
Whereas, the DSP workforce shortage has caused significant disruption in services 13
for many Medicaid beneficiaries with I/DD; and 14
Whereas, a leading factor in the DS P workforce shortage is the inadequacy of 15
compensation rates; and 16
Whereas, legislatively provided, short-term DSPs pay enactments are not a substitute 17
for LME/MCO responsibility to maintain adequate rates and network adequacy in their 18
respective catchment areas on an ongoing basis; and 19
Whereas, appropriate and competitive compensation rates vary geographically, and 20
the monitoring of such local market conditions is within the purview and responsibility of each 21
LME/MCO; Now, therefore, 22
The General Assembly of North Carolina enacts: 23
SECTION 1.(a) It is the intent of the General Assembly to assist in increasing the 24
hourly wages of direct support professionals (DSPs) that serve Medicaid beneficiaries receiving 25
services under the North Carolina Innovations waiver by five dollars ($5.00) per hour for the 26
2025-2026 fiscal year and by five dollars ($5.00) per hour for the 2026-2027 fiscal year. To that 27
end, the Department of Health and Human Services, Division of Health Benefits (DHB), shall 28
provide a rate increase for services provided by DSPs to Medic aid beneficiaries receiving 29
services under the North Carolina Innovations waiver. This rate increase shall be effective on the 30
date approved by the Centers for Medicare and Medicaid Services but no sooner than July 1, 31
2025. Any provider receiving a rate in crease under this section shall be required to use at least 32
ninety percent (90%) of the funding that results from that rate increase to increase the rate of pay 33
paid to its DSP workforce. This wage increase shall be provided in addition to the rate of pay 34
each employee was receiving as of June 30, 2025. DHB shall determine the amount of the rate 35
increase under this section and the definition of DSP to be applied. 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 239-First Edition
SECTION 1.(b) Upon implementation of the rate increase under subsection (a) of 1
this section, D HB shall adjust the per member per month (PMPM) capitation amount paid to 2
local management entities/managed care organizations (LME/MCOs). These capitation rate 3
adjustments shall include amounts sufficient to implement the same rate increase for providers 4
paid by the LME/MCO and all LME/MCOs shall be required to implement that rate increase. 5
Providers receiving a rate increase under this section shall be subject to the requirements of this 6
section. 7
SECTION 1.(c) Prior to receiving the rate increase under this section, all providers 8
employing DSPs that serve Medicaid beneficiaries receiving services through the North Carolina 9
Innovations waiver shall attest and provide verification to DHB, or to the relevant LME/MCO, 10
that at least ninety percent (90%) of the funding that results from that rate increase is being used 11
to increase the rate of pay paid to its DSP workforce. DHB shall set the standards for 12
documentation that shall be required as verification that the provider used the rate increase in the 13
manner required by this section, and LME/MCOs shall use these same standards at a minimum. 14
DHB and LME/MCOs may require verifiable methods of accounting, such as payroll -based 15
journals. Providers receiving a rate increase under this section shall keep documentatio n of the 16
use of that rate increase and make the documentation available upon request by DHB or by the 17
relevant LME/MCO. 18
SECTION 1.(d) In addition to other allowable reasons for recoupment of funds, 19
LME/MCOs may recoup part or all of the funds related to the rate increase received by a provider 20
pursuant to this section if the LME/MCO determines that the provider did not use at least ninety 21
percent (90%) of the funding that results from that rate increase to increase the rate of pay paid 22
to its DSP workforce. 23
SECTION 1.(e) For the 2025-2027 fiscal biennium, LME/MCOs shall report on a 24
quarterly basis to DHB and to the Joint Legislative Oversight Committee on Medicaid regarding 25
provider development efforts and planned or enacted provider rate increases as they pertain to 26
the DSP workforce. 27
SECTION 2. Effective July 1, 2025, there is appropriated from the General Fund to 28
the Department of Health and Human Services, Division of Health Benefits, the sum of one 29
hundred fifteen million three hundred seventy thousand dollars ($115,370,000) in recurring funds 30
for the 2025 -2026 fiscal year and the sum of two hundred thirty million seven hundred eighty 31
thousand dollars ($230,780,000) in recurring funds for the 2026 -2027 fiscal year to be used to 32
implement the changes in this act. These funds shall provide a State match for two hundred ten 33
million seven hundred thirty thousand dollars ($210,730,000) in recurring federal funds for the 34
2025-2026 fiscal year and the sum of four hundred twenty -one million five hundred twenty 35
thousand dollars ($421,520,000) in recurring federal funds for the 2026 -2027 fiscal year, and 36
those federal funds are appropriated to the Division of Health Benefits for the same purpose. 37
SECTION 3. Except as otherwise provided, this act is effective when it becomes 38
law. 39