North Carolina Agrees to Consent Order in ABA Rate-Cut Suit

What the State Signed

RALEIGH, NORTH CAROLINA – North Carolina’s Medicaid agency and the families of 21 children with autism together asked a judge to end the lawsuit that stopped the state’s 10% ABA rate cut. On June 30, they requested a consent order. This happened eight months after the families filed the lawsuit and less than three months before the trial set for September 21.

Under the proposed order, DHHS consents that it “will not reduce N.C. Medicaid reimbursement rates for RB-BHT services, including ABA therapy, for the remainder of the 2025-2026 fiscal year through June 30, 2026.” RB-BHT, or Research-Based Behavioral Health Treatment, is the state Medicaid category that covers ABA.

The department also affirms it “must administer the N.C. Medicaid Program in compliance with the NCPDPA,” the North Carolina Persons with Disabilities Protection Act, including the requirement to run services “in the most integrated setting appropriate to the needs of persons with disabilities.” It further recognizes the court’s earlier finding that without ABA during a “critical development window,” the children face a “substantially increased risk of segregation, isolation, and institutionalization.”

The families dismiss all claims without prejudice, preserving their ability to refile, and the court retains jurisdiction to enforce the terms. The order states nothing “shall be deemed as a concession or an admission of liability,” and each side bears its own fees and costs. Michael Easley Jr., a former U.S. Attorney, led the McGuireWoods team for the families; Attorney General Jeff Jackson’s office signed on behalf of the state.

One step remains. The signature block was blank in the version e-filed with the Wake County clerk on June 30, and no order had been entered and publicly reported by July 6. If signed, the order would end the scheduled September trial and formalize the deal.

From Rate Cut to Reversal

The rate cut took effect on October 1, 2025, after the General Assembly began the fiscal year without a complete budget. With a $319 million Medicaid shortfall, DHHS lowered provider rates by 3% to 10% across the program. RB-BHT received the largest cut. Most services were cut by at least 3%, but pharmacy benefits were not reduced. The families argued that the filings described a bigger reduction that targeted services children with autism depend on.

The families filed their lawsuit on October 31 under the Disability Protection Act. Judge Bryan Collins gave a temporary restraining order within a week. After a hearing on November 10, Judge Clayton Somers issued a preliminary injunction in a written order signed on November 19. The court found the families were “likely to show” that the 10% cut “facially discriminates against Plaintiffs on the basis of disability.”

DHHS argued the cut was based on numbers. RB-BHT reimbursement was $199 million in fiscal year 2022-23. After a 15% rate increase in January 2024, the department said claims per beneficiary rose sharply and expected $639 million in spending for 2025-26, even with the cut. Their filing said spending on the service was “projected to increase 425% by 2026.” In November, their lawyers wrote, “There is no evidence that the provider reimbursement rate cut to the RB-BHT service was discriminatory.”

Three weeks after the injunction, the administration changed its decision. On December 10, Governor Josh Stein directed DHHS to restore all Medicaid rates to their September 30 levels. His office said court orders made the cuts “untenable.” Stein explained, “NCDHHS is restoring rates because the courts have required doing so, but the $319 million funding gap remains.” Justice Department lawyers wrote in March, “This case is moot,” noting that DHHS never sent the paperwork to CMS to lower the rates, and that the 2025 deadline had passed. Judge Vince Rozier denied the motion to dismiss on March 23, so the case continued toward trial.

What the Deal Preserves

The rate pledge expired on June 30, 2026, the last day of the fiscal year it covered. What remains are the compliance affirmations. As the order it asked a judge to enter shows, DHHS stated the disability-protection act binds how it administers Medicaid, requires it to run services in the most integrated setting, and requires its ABA coverage decisions to comply with the statute.

Once a judge enters the order, the retained jurisdiction makes those terms enforceable without the need for a new lawsuit. The dismissal without prejudice leaves the courthouse door open if the state targets the rates again. The families warned in March that the restored rates might be only temporary, reinforcing why the case still matters.

“The current funding status may be only a temporary reprieve before Defendants again seek to discriminatorily target this life-changing service.” – Plaintiffs’ brief, M.Q. v. N.C. DHHS (March 2026)

The case also leaves a template for other provider coalitions to study: a claim under a state disability statute, a restraining order and a preliminary injunction within three weeks of filing, a governor’s reversal, and a consent order whose compliance terms outlast the budget emergency that produced the cut.

Two key dates are coming up. Stein has until July 12 to sign the $34.4 billion budget sent by the General Assembly on July 2, veto it, or let it become law without signing. This is the first full state budget since 2023. In Wake County, the consent order is still awaiting the court’s approval. When a judge signs it, the September 21 trial will be canceled, and the case that halted the rate cut will be dismissed.

AT A GLANCE

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