Additional Medicaid Funds and Requirements.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 2
SENATE BILL 403
House Committee Substitute Favorable 9/23/25

Short Title: Additional Medicaid Funds and Requirements. (Public)
Sponsors:
Referred to:
March 25, 2025
*S403-v-2*
A BILL TO BE ENTITLED 1
AN ACT TO ADJUST MEDICAID FUNDING TO ACCOUNT FOR PROJECTED HEALTH 2
CARE CHANGES, TO MAK E REDUCTIONS TO VACA NT POSITIONS ACROSS 3
STATE AGENCIES, AND TO REDUCE FUNDING AP PROPRIATED TO FUTURE 4
BUILDING RESERVES AND THE STATE CAPITAL AND INFRASTRUCTURE FUND. 5
The General Assembly of North Carolina enacts: 6
7
PART I. GENERAL 8
9
ADDITIONAL AGENCY VACANT POSITION CUTS 10
SECTION 1.1.(a) Reduction. – By October 1, 2025, the Governor and the Office of 11
State Budget and Management shall identify and eliminate vacant positions in State agencies 12
necessary to achieve a total reduction of not less than nineteen million seven hundred forty -two 13
thousand two hundred forty -three dollars ($19,742,243) in recurring funds, beginning with the 14
2025-2026 fiscal year. For purposes of this section, "State agency" means the principal 15
departments listed in G.S. 143B-6, with the exception of the State Bureau o f Investigation and 16
the State Highway Patrol. 17
SECTION 1.1.(b) Report. – The Office of State Budget and Management shall 18
submit a report to the Fiscal Research Division with a list of each position eliminated, identified 19
by position number, title, and the amount of salary and fringe benefits associated with the 20
position, no later than December 1, 2025. 21
22
PART II. HEALTH AND HUMAN SERVICES 23
24
DHHS MANDATORY VACANT POSITION ELIMINATIONS 25
SECTION 2.1. The Department of Health and Human Services shall eliminate 26
vacant positions to achieve net General Fund savings in the amount of thirty -two million six 27
hundred thirteen thousand four hundred ninety -three dollars ($32,613,493) in recurring funds 28
beginning with the 2025-2026 fiscal year. 29
30
MEDICAID REBASE AND MANAGED CARE ADMINISTRATION 31
SECTION 2.2. Section 2B.10 of S.L. 2025-89 reads as rewritten: 32
"SECTION 2B.10. 2B.10.(a) There is appropriated from the General Fund to the 33
Department of Health and Human Services, Division of Health Benefits, the sum of six hundred 34
million dollars ($600,000,000) six hundred ninety million dollars ($690,000,000) in recurring 35
funds and associated receipts for each year of the 2025-2027 fiscal biennium. receipts, beginning 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 403-Second Edition
with the 2025-2026 fiscal year. These funds shall be used to adjust Medicaid funding to account 1
for projected changes in enrollment, enrollment mix, service and capitation costs, and federal 2
match rates, as well as the implementation of the Children and Families Specialty Plan in 3
December 2025 or for contracts needed to operate the State's Medicaid managed care 4
program.2025. 5
"SECTION 2B.10.(b) There is appropriated from the General Fund to the Department of 6
Health and Human Services, Division of Health Benefits, the sum of thirty-eight million five 7
hundred sixty-two thousand six hundred forty-five dollars ($38,562,645) in recurring funds and 8
associated receipts, beginning with the 2025-2026 fiscal year, and the sum of forty-five million 9
four hundred thirty -seven thousand three hundred f ifty-five dollars ($ 45,437,355) in 10
nonrecurring funds and associated receipts for the 2025-2026 fiscal year and eleven million four 11
hundred thirty -seven thousand three hundred fifty -five dollars ($11,437,355) in nonrecurring 12
funds and associated receipts for the 2026 -2027 fiscal year . These funds shall be used for 13
contracts needed to operate the State's Medicaid managed care program." 14
15
DISCONTINUE MEDICAID COVERAGE OF OBESITY MANAGEMENT 16
MEDICATIONS 17
SECTION 2.3.(a) Effective October 1, 2025, the Department of Health and Human 18
Services, Division of Health Benefits, shall discontinue the Medicaid coverage of obesity 19
management medications that became effective August 1, 2024. Consistent with the policy in 20
effect prior to August 1, 2024, this section shall ha ve no effect on the coverage of GLP -1 21
medications for beneficiaries managing diabetes. 22
SECTION 2.3.(b) Funds that are appropriated pursuant to S.L. 2025 -89 to the 23
Department of Health and Human Services, Division of Health Benefits, for the Medicaid 24
program shall be reduced by thirty -four million dollars ($34,000,000) in recurring funds and 25
associated receipts beginning with the 2025-2026 fiscal year. 26
27
LME/MCO INTERGOVERNMENTAL TRANSFERS 28
SECTION 2.4.(a) The local management entities/managed care organizations 29
(LME/MCOs) shall make intergovernmental transfers to the Department of Health and Human 30
Services, Division of Health Benefits (DHB), in an aggregate amount of eighteen million 31
twenty-eight thousand two hundred seventeen dollars ($18,028,217) in the 2025-2026 fiscal year 32
and in an aggregate amount of eighteen million twenty -eight thousand two hundred seventeen 33
dollars ($18,028,217) for the 2026 -2027 fiscal year. The due date and frequency of the 34
intergovernmental transfer required by this section shall be determined by DHB. The amount of 35
the intergovernmental transfer that each individual LME/MCO is required to make in each fiscal 36
year shall be as follows: 37
2025-2026 2026-2027 38
Alliance Behavioral Healthcare $4,508,857 $4,508,857 39
Partners Health Management $3,544,348 $3,544,348 40
Trillium Health Resources $6,448,693 $6,448,693 41
Vaya Health $3,526,319 $3,526,319 42
SECTION 2.4.(b) In the event that a county disengages from an LME/MCO and 43
realigns with another LME/MCO during the 2025 -2027 fiscal biennium, DHB shall have the 44
authority to reallocate the amount of the intergovernmental transfer that each affected 45
LME/MCO is required to make under subsection (a) of this section, taking into consideration the 46
change in catchment area and covered population, provided that the aggregate amount of the 47
transfers received from all LME/MCOs in each year of the fiscal biennium is achieved. 48
49
MEDICAID REDETERMINA TION TIMELINESS AND ACCURACY STANDARDS 50
AND REPORTING REQUIREMENTS 51
General Assembly Of North Carolina Session 2025
Senate Bill 403-Second Edition Page 3
SECTION 2.5.(a) Part 10 of Article 2 of Chapter 108A of the General Statutes reads 1
as rewritten: 2
"Part 10. Medicaid Eligibility Decision Processing Timeliness. 3
"§ 108A-70.36. Applicability. 4
(a) If a federally recognized Native American tribe within the State has assumed 5
responsibility for the Medicaid program pursuant to G.S. 108A-25(e), then this Part applies to 6
the tribe in the same manner as it applies to county departments of social services. 7
(b) This Part shall not apply to any eligibility determina tions made by the federally 8
facilitated marketplace, also known as the federal health benefit exchange, so long as use of the 9
federally facilitated marketplace for Medicaid eligibility determinations has been authorized by 10
the General Assembly, in accordance with G.S. 143B-24(b). 11
"§ 108A-70.37. Timely decision standards. 12
(a) The county department of social services shall render a decision on an individual's 13
application for Medicaid within 45 calendar days from the date of application, except for 14
applications in which a disability determination has already been made or is needed. For those 15
applications, the county department of social services shall render a decision on an individual's 16
eligibility within 90 calendar days from the date of application. 17
(b) When a redetermination of a beneficiary's Medicaid eligibility is required by federal 18
or State law, regulation, or rule, t he county department of social services shall complete the 19
redetermination by the deadline required by the law, regulation, or rule. 20
"§ 108A-70.38. Timely processing standards. 21
(a) The Department shall require counties to comply with timely processing standards. 22
The timely processing standards are the average processing time standards and the percentage 23
processed timely standards set forth in G.S. 108A-70.39 and G.S. 108A-70.40. The Department 24
shall monitor county department of social services' compliance with these standards in 25
accordance with this Part. 26
(b) For purposes of this Part, processing time is the number of days between the date of 27
application and the date of disposition of the application, except in cases where an eligibility 28
determination is dependent upon receipt of information related to one or more of the following: 29
(1) Medical expenses sufficient to meet a deductible. 30
(2) The applicant's need for institutionalization. 31
(3) The applicant's plan of care for the home- and community-based waivers. 32
(4) The disability decision made by the Disability Determination Services Section 33
of the Division of Vocational Rehabilitation of the Department. 34
(5) Medical records needed to determine emergency dates for nonqualified aliens. 35
(6) The applicant's application or other information from the federally facilitated 36
marketplace. 37
(7) The applicant's application or other information in connection with an 38
application for a Low Income Subsidy for Medicare prescription drug 39
coverage. 40
In these cases, processing time shall exclude the number of days between the date when the 41
county determines all eligibility criteria other than the criteria in subdivis ions (1) through (7) of 42
this subsection and the date when the county receives the information related to the criteria in 43
subdivisions (1) through (7) of this subsection. 44
(c) Processing times for the following types of cases shall be excluded from the 45
calculation of the average processing time and percent processed timely: 46
(1) Newborns who are automatically enrolled based on their mother's eligibility. 47
(2) Applications for individuals who are presumptively eligible for Medicaid. 48
(3) Active cases in which an individual who is eligible for one program is 49
transferred to another program, regardless of whether the transfer occurs 50
between allowable or nonallowable program categories. 51
General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 403-Second Edition
(4) Cases in which an individual transfers from an open case to another case, 1
including establishing a new administrative case for the individual. 2
(5) Actions to post eligibility to a terminated or denied case within one year of 3
the termination or denial. 4
(6) Cases that are reopened because they were terminated in error or because 5
reopening of the terminated case is allowed by policy. 6
(7) Cases in which the eligibility decision was appealed and the decision was 7
reversed or remanded. 8
(d) The Department may, in its discretion, exclude days, other than those required by 9
subsection (b) of th is section, from the calculation of processing time under this section if the 10
Department determines that the delay was caused by circumstances outside the control of county 11
departments of social services. The Department also may, in its discretion, exclude types of cases, 12
other than those described in subsection (c) of this section, from the calculation of processing 13
time. When the Department exercises its discretion pursuant to this subsection, the Department's 14
determination regarding circumstances outside the control of county departments of social 15
services and the Department's decision to exclude types of cases shall be applied uniformly to all 16
county departments of social services. 17
"§ 108A-70.39. Average processing time standards. 18
(a) Average processing time is calculated by finding the processing time for each case 19
that received a disposition during a given month and finding the average of those processing 20
times. 21
(b) The standard for average processing time is 90 days for cases in which the individual 22
has applied for the Medicaid Aid to the Disabled category (M -AD) and 45 days for all other 23
cases. 24
"§ 108A-70.40. Percentage processed timely standards. 25
(a) Percentage of applications processed timely is the percentage of cases that received a 26
timely disposition in a given month. The percentage of applications processed timely is calculated 27
by expressing the number of cases during a given month with a processing time equal to or less 28
than the standard set in G.S. 108A-70.37 as a percentage of the total cases receiving a disposition 29
during that month. When the deadline for meeting the timely decision standard in 30
G.S. 108A-70.37 falls on a weekend or holiday, an application that receives a disposition on the 31
first workday following the deadline shall be considered timely for purposes of calculating the 32
percentage of applications processed timely. 33
(b) The Department is authorized to adopt rules to establish a percentage standard for 34
each county department of social services that will be the percentage of applications processed 35
timely standard for that county department of social services. Until the Department adopts rules 36
establishing percentage standards for each county, the percentage of ap plications processed 37
timely standards are those established in 10A NCAC 23C .0203 as of April 2016. 38
(c) Percentage of redeterminations processed timely is the percentage of cases, out of the 39
total number of cases in a given month for which a redetermination of Medicaid eligibility was 40
required to be completed for a given month as required by federal or State law, regulation, or 41
rule, that were completed by the required deadline. 42
(d) The Department may adopt rules to establish a percentage standard for each county 43
department of social services that will be the percentage of redeterminations processed timely 44
for that county department of social services. If no rule establishing a percentage standard is in 45
effect, then the percentage of redeterminations processed timely standard is ninety-five percent 46
(95%). 47
"§ 108A-70.41. Corrective action. 48
(a) If for any three consecutive months or for any five months out of a period of 12 49
consecutive months a county department of social services fails to meet either the average 50
processing time standard or the percentage processed timely standard or both standards, the The 51
General Assembly Of North Carolina Session 2025
Senate Bill 403-Second Edition Page 5
Department and the county department of social services shall enter into a joint corrective action 1
plan to improve the timely processing of applications.applications if, for any three consecutive 2
months or for any five months out of a period of 12 consecutive months, a county department of 3
social services fails to meet any one of the following standards: 4
(1) The average processing time standard. 5
(2) The percentage of applications processed timely standard. 6
(3) The percentage of redeterminations processed timely standard. 7
(b) A joint corrective action plan entered into pursuant to this section shall specifically 8
identify the following components: 9
(1) The duration of the joint corrective action plan, not to exceed 12 months. If a 10
county department of social services shows measurable progress in meeting 11
the performance requirements in the joint corrective action plan, then t he 12
duration of the joint corrective action plan may be extended by six months, 13
but in no case shall a joint corrective action plan exceed 18 months. 14
(2) A plan for improving timely processing of applications or redeterminations 15
that specifically describes the actions to be taken by the county department of 16
social services and the Department. 17
(3) The performance requirements for the county department of social services 18
that constitute successful completion of the joint corrective action plan. 19
(4) Acknowledgement that failure to successfully complete the joint corrective 20
action plan will result in temporary assumption of Medicaid eligibility 21
administration by the Department, in accordance with G.S. 108A-70.42. 22
"§ 108A-70.42. Temporary assumption of Medicaid eligibility administration. 23
(a) If a county department of social services fails to successfully complete its joint 24
corrective action plan, plan under G.S. 108A-70.41, the Department shall give the county 25
department of social services, the county manager, and the board of social services or the 26
consolidated human services board created pursuant to G.S. 153A-77(b) at least 90 days' notice 27
that the Department intends to temporarily assume Medicaid eligibility administration, in 28
accordance with subsection (b) of this section. The notice shall include the following information: 29
(1) The date on which the Department intends to temporarily assume 30
administration of Medicaid eligibility decisions. 31
(2) The performance requirements in the joint corrective action plan t hat the 32
county department of social services failed to meet. 33
(3) Notice of the county department of social services' right to appeal the decision 34
to the Office of Administrative Hearings, pursuant to Article 3 of Chapter 35
150B of the General Statutes. 36
(b) Notwithstanding any provision of law to the contrary, if a county department of social 37
services fails to successfully complete its joint corrective action plan, the Department shall 38
temporarily assume Medicaid eligibility administration for the county upon giving notice as 39
required by subsection (a) of this section. During a period of temporary assumption of Medicaid 40
eligibility administration, the following shall occur: 41
(1) The Department shall administer the Medicaid eligibility function in the 42
county. Administration by the Department may include direct operation by the 43
Department, including supervision of county Medicaid eligibility workers, or 44
contracts for operation to the extent permitted by federal law and regulations. 45
(2) The county department of soci al services is divested of Medicaid 46
administration authority. 47
(3) The Department shall direct and oversee the expenditure of all funding for the 48
administration of Medicaid eligibility in the county. 49
General Assembly Of North Carolina Session 2025
Page 6 Senate Bill 403-Second Edition
(4) The county shall continue to pay the nonfederal share of the cost of Medicaid 1
eligibility administration and shall not withdraw funds previously obligated 2
or appropriated for Medicaid eligibility administration. 3
(5) The county shall pay the nonfederal share of additional costs incurred to 4
ensure compliance with the timely processing standards required by this Part. 5
(6) The Department shall work with the county department of social services to 6
develop a plan for the county department of social services to resume 7
Medicaid eligibility administration and perform Medicaid eligibility 8
determinations in a timely manner. 9
(7) The Department shall inform the county board of commissioners, the county 10
manager, the county director of social services, and the board of social 11
services or the consolidated human services board created pursuant to 12
G.S. 153A-77(b) of key activities and any ongoing concerns during the 13
temporary assumption of Medicaid eligibility administration. 14
(c) Upon the Department's determination that Medicaid eligibility determinations can be 15
performed in a t imely manner based on the standards set forth in G.S. 108A-70.39 and 16
G.S. 108A-70.40 by the county department of social services, the Department shall notify the 17
county department of social services, the county manager, and the board of social services or the 18
consolidated human services board created pursuant to G.S. 153A-77(b) that temporary 19
assumption of Medicaid eligibility administration will be terminated and the effective date of 20
termination. Upon termination, the county department of social services resumes its full authority 21
to administer Medicaid eligibility determinations. 22
"§ 108A-70.43. Reporting. 23
No later than November 1 of each year, the Department shall submit a report for the prior 24
fiscal year to the Joint Legislative Oversight Committee on M edicaid, the Joint Legislative 25
Oversight Committee on Health and Human Services, and the Fiscal Research Division 26
containing the following information: 27
(1) The annual statewide percentage of Medicaid applications and Medicaid 28
eligibility redeterminations processed in a timely manner for the fiscal year. 29
(2) The statewide average number of days to process Medicaid applications for 30
each month in the fiscal year. 31
(3) The annual percentage of Medicaid applications and redeterminations 32
processed in a timely manner by each county department of social services for 33
the fiscal year. 34
(4) The average number of days to process Medicaid applications for each month 35
for each county department of social services. 36
(5) The number of months during the fiscal year that each cou nty department of 37
social services met the timely processing standards for Medicaid applications 38
and the number of months during the fiscal year that each county department 39
of social services met the timely processing standards for Medicaid eligibility 40
redeterminations under G.S. 108A-70.38. 41
(6) The number of months during the fiscal year that each county department of 42
social services failed to meet the timely processing standards for Medicaid 43
applications and the number of months during the fiscal year that each county 44
department of social services met the timely processing standards for 45
Medicaid eligibility redeterminations under G.S. 108A-70.38. 46
(7) A description of all corrective action activities conducted by the Department 47
and county departments of soci al services in accordance with 48
G.S. 108A-70.36. 49
(8) A description of how the Department plans to assist county departments of 50
social services in meeting timely processing standards for Medicaid 51
General Assembly Of North Carolina Session 2025
Senate Bill 403-Second Edition Page 7
applications, for every county in which the performance metrics for 1
processing Medicaid applications in a timely manner do not show significant 2
improvement compared to the previous fiscal year." 3
SECTION 2.5.(b) The Department of Health and Human Services shall adopt 4
temporary rules necessary to implement G.S. 108A-70.40(d) as amended by this section not later 5
than January 1, 2027, or as soon as practicable, and shall concurrently begin adopting permanent 6
rules to replace temporary rules. 7
SECTION 2.5.(c) Rules adopted pursuant to this section are not subject to: (i) 8
G.S. 150B-21.3(b1) and (b2); and (ii) G.S. 150B-21.3(b3) and G.S. 150B-19.4, as enacted by 9
S.L. 2025-82. 10
SECTION 2.5.(d) Part 11 of Article 2 of Chapter 108A of the General Statutes reads 11
as rewritten: 12
"Part 11. Medicaid Eligibility Determinations Accuracy and Quality Assurance. 13
"§ 108A-70.45. Applicability. 14
If a federally recognized Native American tribe within the State has assumed responsibility 15
for the Medicaid program pursuant to G.S. 108A-25(e), then this Part applies to the tribe in the 16
same manner as it applies to county departments of social services. 17
"§ 108A-70.46. Audit of county Medicaid determinations. 18
(a) Beginning January 1, 2019, the Department of Health and Human Services, Division 19
of Central Management and Support, shall audit county departments of social services for 20
compliance with the accuracy standards adopted under G.S. 108A-70.47 for Medicaid eligibility 21
determinations made wi thin a 12 -month period. This audit shall also include an evaluation of 22
compliance with the quality assurance standards under G.S. 108A-70.48 by the county 23
department of social services. Audits Medicaid eligibility determination audits shall be 24
conducted for initial Medicaid applicant eligibility determination applications determinations as 25
well as Medicaid reenrollment determinations . beneficiary eligibility redeterminations . The 26
Department shall ensure that every county is audited no less than once every three years. 27
(b) Beginning 18 months after the Department has implemented the training and 28
certification program under G.S. 108A-26.5, the Department shall include in its audits required 29
under this section a verification that all county departments of socia l services are in compliance 30
with the certification program requirements for individuals involved in the Medicaid eligibility 31
determination process. 32
"§ 108A-70.47. Medicaid eligibility determination processing accuracy standards. 33
(a) The Department shall require county departments of social services to comply with 34
accuracy standards set forth in rule for the processing of Medicaid eligibility determinations. The 35
Department shall set the following standards: 36
(1) Accuracy standards with regards to errors tha t caused an ineligible Medicaid 37
recipient to be approved for Medicaid benefits. 38
(2) Accuracy standards with regards to errors that caused the denial of benefits to 39
an applicant that should have been approved for Medicaid benefits. 40
(3) Accuracy standards wi th regards to errors made during the eligibility 41
determination process that did not change the outcome of the eligibility 42
determination. 43
(b) Standards under this section shall be developed by the Department in consultation 44
with the State Auditor. 45
"§ 108A-70.48. Quality assurance. 46
The Department shall require county departments of social services to comply with quality 47
assurance minimum standards set forth in rule. The quality assurance standards shall be based 48
upon best practices and shall be developed by the Department in consultation with the State 49
Auditor. 50
"§ 108A-70.49. Corrective action. 51
General Assembly Of North Carolina Session 2025
Page 8 Senate Bill 403-Second Edition
(a) If the Department's audit under G.S. 108A-70.46 results in a determination that a 1
county department of social services fails to meet any of the standards adopted under 2
G.S. 108A-70.47 or G.S. 108A-70.48, the Department and the county department of social 3
services shall enter into a joint corrective action plan to improve the accurate processing of 4
applications. 5
(b) A joint corrective action plan entered into pursua nt to this section shall specifically 6
identify the following components: 7
(1) The duration of the joint corrective action plan, not to exceed 24 months. If a 8
county department of social services shows measurable progress in meeting 9
the performance requireme nts in the joint corrective action plan, then the 10
duration of the joint corrective action plan may be extended by six months, 11
but in no case shall a joint corrective action plan exceed 36 months. 12
(2) A plan for improving the accurate processing of applications that specifically 13
describes the actions to be taken by the county department of social services 14
and the Department. 15
(3) The performance requirements for the county department of social services 16
that constitute successful completion of the joint corrective action plan. 17
(4) Acknowledgment that failure to successfully complete the joint corrective 18
action plan will result in temporary assumption of Medicaid eligibility 19
administration by the Department, in accordance with G.S. 108A-70.50. 20
(c) Any county department of social services under a joint corrective action plan shall be 21
audited under G.S. 108A-70.46 on an annual basis until the joint corrective action plan is 22
successfully completed or until the failure to successfully complete the joint corrective ac tion 23
plan results in the temporary assumption of Medicaid eligibility administration by the 24
Department, in accordance with G.S. 108A-70.50. 25
"§ 108A-70.50. Temporary assumption of Medicaid eligibility administration. 26
(a) If a county department of social services fails to successfully complete its joint 27
corrective action plan, the Department shall give the county department of social services, the 28
county manager, and the board of social services or the consolidated human services board, 29
created pursuant to G.S. 153A-77(b), at least 90 days' notice that the Department intends to 30
temporarily assume Medicaid eligibility administration, in accordance with subsection (b) of this 31
section. The notice shall include the following information: 32
(1) The date on which t he Department intends to temporarily assume 33
administration of Medicaid eligibility determinations. 34
(2) The performance requirements in the joint corrective action plan that the 35
county department of social services failed to meet. 36
(3) Notice of the county department of social services' right to appeal the decision 37
to the Office of Administrative Hearings, pursuant to Article 3 of Chapter 38
150B of the General Statutes. 39
(b) Notwithstanding any provision of law to the contrary, if a county department of social 40
services fails to successfully complete its joint corrective action plan, the Department shall 41
temporarily assume Medicaid eligibility administration for the county upon giving notice as 42
required by subsection (a) of this section. During a period of temporary assumption of Medicaid 43
eligibility administration, the following shall occur: 44
(1) The Department shall administer the Medicaid eligibility function in the 45
county. Administration by the Department may include direct operation by the 46
Department, including supervision of county Medicaid eligibility workers or 47
contracts for operation to the extent permitted by federal law and regulations. 48
(2) The county department of social services is divested of the authority to 49
administer Medicaid eligibility determinations. 50
General Assembly Of North Carolina Session 2025
Senate Bill 403-Second Edition Page 9
(3) The Department shall direct and oversee the expenditure of all funding for the 1
administration of Medicaid eligibility in the county. 2
(4) The county shall continue to pay the nonfederal share of the cost of Medicaid 3
eligibility administration and sh all not withdraw funds previously obligated 4
or appropriated for Medicaid eligibility administration. 5
(5) The county shall pay the nonfederal share of additional costs incurred to 6
ensure compliance with the accuracy and quality assurance standards required 7
by this Part. 8
(6) The Department shall work with the county department of social services to 9
develop a plan for the county department of social services to resume 10
Medicaid eligibility administration and perform Medicaid eligibility 11
determinations more accurately. 12
(7) The Department shall inform the county board of commissioners, the county 13
manager, the county director of social services, and the board of social 14
services or the consolidated human services board, created pursuant to 15
G.S. 153A-77(b), of key ac tivities and any ongoing concerns during the 16
temporary assumption of Medicaid eligibility administration. 17
(c) Upon the Department's determination that Medicaid eligibility determinations can be 18
performed accurately and with proper quality assurance by the county department of social 19
services based on the standards adopted under G.S. 108A-70.47 and G.S. 108A-70.48, the 20
Department shall notify the county department of social services, the county manager, and the 21
board of social services or the consolidated hu man services board, created pursuant to 22
G.S. 153A-77(b), that temporary assumption of Medicaid eligibility administration will be 23
terminated and the effective date of termination. Upon termination, the county department of 24
social services resumes its full authority to administer Medicaid eligibility determinations. 25
"§ 108A-70.51. Reporting. 26
Beginning with the calendar year 2020, no No later than March 1 of each year, the 27
Department shall submit a report to the Joint Legislative Oversight Committee on Medicaid, the 28
Fiscal Research Division, and the State Auditor that contains the following information about the 29
prior calendar year:contains, with respect to the prior calendar year, the followi ng information 30
reported separately for Medicaid applicant eligibility determinations and for Medicaid 31
beneficiary eligibility redeterminations: 32
(1) The percentage of audited county departments of social services that met the 33
accuracy standards adopted under G.S. 108A-70.47 in the prior fiscal year. 34
(2) The percentage of audited county departments of social services that met the 35
quality assurance standards adopted under G.S. 108A-70.48 in the prior fiscal 36
year. 37
(3) The audit result for each standard adopted under G.S. 108A-70.47 for each 38
county of department services in the prior fiscal year. 39
(4) The number of years in the preceding 10 -year period that any county 40
department of social services failed to meet the standards in G.S. 108A-70.47 41
or G.S. 108A-70.48. 42
(5) A description of all corrective action activities conducted by the Department 43
and county departments of social services in accordance with 44
G.S. 108A-70.49. 45
(6) For every county in which the performance metrics for processing Medicaid 46
applications in an accurate manner do not show significant improvement 47
compared to t he previous audit of that county, a description of how the 48
Department plans to assist county departments of social services in accuracy 49
and quality assurance standards for Medicaid applications." 50
General Assembly Of North Carolina Session 2025
Page 10 Senate Bill 403-Second Edition
SECTION 2.5.(e) Subsection (d) of this section applies to r eporting for calendar 1
years beginning with 2025. 2
SECTION 2.5.(f) Subsection (a) of this section is effective January 1, 2027. The 3
remainder of this section is effective when this act becomes law. 4
5
AUDIT OF SUPPLEMENTA L NUTRITION ASSISTAN CE PROGRAM AND 6
MEDICAID PROGRAM ELIGIBILITY DETERMINATIONS 7
SECTION 2.6.(a) The Office of the State Auditor shall conduct a performance audit 8
of a sample of county departments of social services' administration of the federal Supplemental 9
Nutrition Assistance Program (SNAP), also known statewide as the food and nutrition service s 10
(FNS) program, including accuracy in determining eligibility and benefit amounts for SNAP. 11
The scope of the audit shall be as the State Auditor deems necessary to evaluate accuracy, 12
timeliness, and related processes and controls. 13
SECTION 2.6.(b) The Office of the State Auditor shall conduct a performance audit 14
of a sample of county departments of social services' administration of the North Carolina 15
Medicaid program, including accuracy and timeliness in determining and redetermining 16
eligibility for Medicaid. The audit shall consider any information deemed necessary by the State 17
Auditor to evaluate accuracy, timeliness, and related processes and controls. 18
SECTION 2.6.(c) The Department of Health and Human Services (DHHS) and 19
county departments of social services shall provide the State Auditor with all data, records, and 20
information the State Auditor deems necessary to conduct the audits required by subsections (a) 21
and (b) of this section in accordance with G.S. 147-64.7(a). DHHS and county departments of 22
social services shall provide requested information to the Office of the State Auditor within 30 23
days of the request. 24
SECTION 2.6.(d) No later than May 1, 2026, the State Auditor shall submit a report 25
on the results of the audits required by subsections ( a) and (b) of this section to the Joint 26
Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight 27
Committee on Medicaid, the Joint Legislative Commission on Governmental Operations, and the 28
Fiscal Research Division. 29
SECTION 2.6.(e) There is appropriated from the General Fund to the Department 30
of Health and Human Services, Division of Child and Family Well -Being (DCFW), the sum of 31
one million five hundred thousand dollars ($1,500,000) in nonrecurring funds and associated 32
receipts to be transferred to the Office of the State Auditor to be used for the audit required by 33
subsection (a) of this section. 34
SECTION 2.6.(f) There is appropriated from the General Fund to the Department of 35
Health and Human Services, Division of Heal th Benefits (DHB), the sum of one million five 36
hundred thousand dollars ($1,500,000) in nonrecurring funds and associated receipts to be 37
transferred to the Office of the State Auditor to be used for the audit required by subsection (b) 38
of this section. 39
SECTION 2.6.(g) Subsections (e) and (f) of this section are retroactively effective 40
July 1, 2025. The remainder of this section is effective when it becomes law. 41
42
PART III. STATEWIDE 43
44
BUILDING RESERVES REDUCTION 45
SECTION 3.1. Notwithstanding any provision of law to the contrary, the amount of 46
recurring funding for the Future Building Reserves is reduced by forty-two million two hundred 47
six thousand nine hundred nine dollars ($42,206,909) in recurring funds beginning with the 48
2025-2026 fiscal year. 49
50
SCIF TRANSFER REDUCTION 51
General Assembly Of North Carolina Session 2025
Senate Bill 403-Second Edition Page 11
SECTION 3.2. Notwithstanding G.S. 143C-4-3.1(b)(1)e., the amount transferred 1
from the General Fund to the State Capital and Infrastructure Fund is reduced by thirty -four 2
million dollars ($34,000,000) for the 2025 -2026 fiscal year. The amount transferred from the 3
General Fund to the State Capital and Infrastructure Fund in the 2026 -2027 fiscal year pursuant 4
to G.S. 143C-4-3.1(b)(1)f. shall be based upon the amount provided in G.S. 143C-4-3.1(b)(1)e. 5
6
ADDRESS UNEXPENDED BOND PROCEEDS 7
SECTION 3.3.(a) As used in this section, "unexpended bond proceeds" means the 8
following: 9
(1) Any funds obtained from issuing General Obligation bonds authorized 10
pursuant to S.L. 1998-132. 11
(2) Any funds obtained from issuing indebtedness authorized pursuant to S.L. 12
2006-146, Section 19.13 of S.L. 2007-323, or Section 27.8 of S.L. 2008-107. 13
(3) Any funds obtained from issuing General Obligation bonds authorized 14
pursuant to S.L. 2014-100. 15
(4) Any funds obtained from issuing General Obligation bonds authorized 16
pursuant to S.L. 2015-280. 17
(5) Interest earned on any indebtedness authorized by a subdivision of this 18
subsection. 19
SECTION 3.3.(b) The Office of State Budget and Management may use unexpended 20
bond proceeds not reasonably anticipated to be needed for completion of the projects and 21
purposes for which they were issued to do any of the following to the extent the listed action can 22
be taken without (i) resulting in adverse tax consequences to the State or (ii) violating, where 23
applicable, the categories of uses contained in the bond question on which the indebtedness was 24
approved by a vote of the qualified voters of the State: 25
(1) Redeem or otherwise retire bonds of the same issuance to eliminate debt 26
service on such bonds. 27
(2) Reimburse the State Capital and Infrastruct ure Fund (SCIF), established in 28
G.S. 143C-4-3.1, for expenditures incurred for a State agency capital 29
improvement project authorized in legislation to be funded from the SCIF; 30
provided, however, the amount of unexpended bond proceeds used does not 31
exceed expenditures incurred. 32
(3) Pay expenditures authorized but not incurred for a State agency capital 33
improvement project authorized in legislation to be funded from the State 34
Capital and Infrastructure Fund, established in G.S. 143C-4-3.1; provided, 35
however, the amount of unexpended bond proceeds used does not exceed the 36
difference between the maximum amount authorized for the project minus the 37
expenditures incurred. 38
SECTION 3.3.(c) To the extent unexpended bond proceeds are used pursuant to 39
subsection (b) of this section to reimburse funds previously paid or to pay costs that would have 40
been paid from other funds, such other funds are not an "appropriation made by law," as that 41
phrase is used in Section 7(1) of Article V of the North Carolina Constitution. The funds shall be 42
deemed and shall remain unappropriated unless the General Assembly appropriates the funds in 43
a subsequent act. To the extent the funds are in the State Capital and Infrastructure Fund, such 44
funds shall be invested by the Department of the State Treasurer, with earnings and interest 45
therefrom being deposited in the State Capital and Infrastructure Fund. 46
SECTION 3.3.(d) For proceeds of public improvement bonds and notes, including 47
premium thereon, (i) authorized in S.L. 2015 -280, (ii) alloca ted to the Department of 48
Environmental Quality for Statewide Water/Sewer Loans and Grants, (iii) placed in the Water 49
Infrastructure Fund established in G.S. 159G-22, and (iv) used for low-interest loans pursuant to 50
sub-subdivision (f)(2)d. of Section 1 of S.L. 2015-280, the Department may repurpose repaid 51
General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 403-Second Edition
loan funds as grants that comport with the requirements of, notwithstanding the dollar limitation 1
for grants contained in, that sub-subdivision. 2
SECTION 3.3.(e) This section is effective when it becomes law. 3
4
PART IV. MISCELLANEOUS 5
6
STATE BUDGET ACT APPLICABILITY 7
SECTION 4.1. If any provision of this act and G.S. 143C-5-4 are in conflict, the 8
provisions of this act shall prevail. The appropriations and the authorizations to allocate and 9
spend funds which are set out in this act shall remain in effect until the Current Operations 10
Appropriations Act for the applicable fiscal year becomes law, at which time that act shall 11
become effective and shall govern appropriations and expenditures. When the Current 12
Operations Appropriations Act for that fiscal year becomes law, the Director of the Budget shall 13
adjust allotments to give effect to that act from July 1 of the fiscal year. 14
15
SEVERABILITY CLAUSE 16
SECTION 4.2. If any provision of this act or its application is held invalid, the 17
invalidity does not affect other provisions or applications of this act that can be given effect 18
without the invalid provisions or application and, to this end, the provisions of this act are 19
severable. 20
21
PART V. EFFECTIVE DATE 22
SECTION 5.1. Except as otherwise provided, this act is effective retroactively to 23
July 1, 2025. 24