As of October 1, 2025, North Carolina Medicaid has implemented provider rate reductions that are already affecting reimbursements across multiple care categories, including DME AND HME services.
The North Carolina Department of Health and Human Services (NCDHHS) announced the cuts in late September, citing a budget shortfall in Medicaid funding for the 2025–2026 fiscal year. While officials have said the reductions could be reversed if lawmakers provide additional funding, for now, they are fully in effect and impacting providers statewide.
What’s Changed
Under the new rate structure, many Medicaid reimbursement rates have been reduced by 3%, with larger cuts (up to 10%) applied to select categories such as inpatient care, behavioral health, and home- and community-based support.
For DME providers, that means lower reimbursement for covered supplies, rental equipment, and repair services for any claims with dates of service on or after October 1.
NCDHHS has indicated these changes are reflected in the updated NCTracks Medicaid fee schedules, which all providers are expected to use going forward.
The Impact on DME Billing and Revenue
Rate reductions can feel small on paper, but a 3% cut across thousands of monthly claims will quickly translate into major revenue loss. For providers already operating on tight margins, these changes require immediate operational adjustments. Here’s what to focus on right now.
- Updated fee schedules
Providers must ensure their billing software or clearinghouse reflects the new Medicaid rates. Revenue numbers will be impacted if rates are not updated in the billing software.
- Cash flow and forecasting adjustments
Lower reimbursement means lower cash flow per claim. Providers should review their financial forecasts and adjust expectations to reflect the new payment environment.
- Managed care alignment
If you bill through a managed care plan, confirm that those payers have implemented the state’s new rates. Misalignment between the state’s updates and managed care systems can cause temporary payment discrepancies.
- Denial prevention and documentation
Audit trails matter now more than ever. Ensure your billing logs track when rate changes were applied and which fee schedule version was used. This documentation can be critical during Medicaid audits or payer disputes.
- Profitability by service line
Providers may need to re-evaluate which product categories remain financially sustainable under the new rates, particularly those with low margins or high administrative costs.
To recap, here’s what to do now:
✅Confirm that your billing system is updated with the latest NC Medicaid fee schedule.
✅Audit recent claims to ensure they were billed at the correct rates.
✅Compare remittance data from September and October to identify any unexpected payment differences.
✅Reassess your denial management workflow (with lower margins, every delayed or rejected claim matters more).
✅Stay informed about potential legislative updates that could modify or reverse some of these cuts later in the fiscal year.
When Rates Change, We Keep You Ready
When reimbursement rates shift, proactive management makes all the difference. At Medbill, we help DME providers stay compliant, identify underpayments quickly, and maintain full visibility across every payer, including Medicaid.
If you need help navigating this rate shift, we can help you:
- Keep your billing logic current with the latest NC Medicaid fee schedule
- Spot rate-related denials or short payments before they affect revenue
- Reconcile remittances faster and with greater accuracy
- Understand the financial impact of rate changes through clear, detailed reporting