Public Policy Update - May 15, 2026

Read a summary of recent public policy updates that may be of interest to North Carolinians with intellectual and other developmental disabilities (I/DD).

FEDERAL

Current Fiscal Year Budget

On April 30, 2026, the House voted to pass a Senate-passed bill that funds non-immigration enforcement agencies in the Department of Homeland Security (DHS), ending the longest recorded shutdown of a single federal agency in U.S. history. This bill includes funding for agencies such as the Transportation Security Administration (TSA) and the Federal Emergency Management Agency (FEMA).

Reconciliation 2.0

The DHS bill described above did not include funding for immigration enforcement agencies. Congressional Republicans are moving forward on a budget reconciliation bill to fund these agencies in DHS.

A reminder that the reconciliation process is what was used to pass HR1 (One Big Beautiful Bill), which included significant Medicaid cuts. Reconciliation is a special legislative tool that can be used by the Senate for mandatory spending and requires only 51 votes instead of 60.

Lawmakers are drafting a narrow reconciliation bill focused on roughly $70 billion in additional funding for Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP), targeting a May 15, 2026 committee reporting deadline. Four committees—House Judiciary, House Homeland Security, Senate Judiciary, and Senate Homeland Security & Governmental Affairs—were directed to draft legislation. The Senate Judiciary Committee and the Senate Homeland Security Committee released legislative text for the $72 billion budget reconciliation to fund ICE and CBP through 2029.

The committees plan on holding a review and vote on their portions of the bill—a process known as “markup”—the week of May 19th, before combining the sections into one legislative package for a full vote on the Senate floor. The bill would then move to the House for consideration. Congressional republicans are aiming to enact a final reconciliation bill by June 1, 2026.

So far, the main focus has been on funding ICE and CBP, but there are some lawmakers who have been pushing to include other provisions.

Budget

The regular budgeting/appropriations process for fiscal year 2027 (October 2026 – September 2027) is underway. The process began with the President’s budget, which was released in April, before moving to committees. In the April edition of Highlights & Hot Topics, we provided an overview of the President’s budget, which included an increase in defense spending, along with significant decreases in other spending. The decreases included proposed cuts to disability programs. University Centers for Excellence in Developmental Disabilities (UCEDDs) would be eliminated. The Leadership Education in Neurodevelopmental Disabilities (LEND) Programs would be decreased by almost $20 million. State DD Councils and Protection and Advocacy agencies are proposed to receive only a small decrease. Like last year, there was also a proposed restructuring plan for U.S. Department of Health and Human Services (DHHS), which would eliminate the Administration for Community Living.

The President’s budget is not legislation, but it is required to be submitted each year. It provides insight into the Administration’s priorities. Last year, Congress rejected these cuts and also rejected the restructuring plan for DHHS.

The next steps in the budget process are committee meetings that include administration agency leaders who will talk about the President's budget. These are underway and will continue through May. This will lead to bills being drafted that will include appropriations for different federal departments and programs.

Congress will also hold markups, which is when they meet to work on bills and make updates and changes. Markups for DHHS are scheduled for early June. DHHS includes funding for several disability programs. The goal is to complete all appropriations bills by June 30th and pass the bills before the August recess.

Center for Medicare & Medicaid Services

The Center for Medicare & Medicaid Services (CMS) continues to focus on alleged fraud within Medicaid.

Dr. Mehmet Oz, CMS Administrator, has announced his plan to crack down on alleged Medicaid fraud across the country. Letters have been sent to each state’s governor requiring states to provide plans for how they will double-check that Medicaid providers are not defrauding the program.

On April 30th, it was announced that CMS would withhold $91 million in federal Medicaid funding to Minnesota. CMS expressed concern that “$76 million was tied to 14 service categories highly vulnerable to fraud” and asked Minnesota for more information before doling out the funding.

The concern is that the focus includes Home and Community Based Services, with a target on family as caregivers.

Supplemental Security Income

The Trump administration has advanced a proposed rule change to Supplemental Security Income (SSI) that would penalize adults with disabilities who live with relatives, slashing benefits by up to a third or ending them entirely for an estimated 400,000 low-income recipients. The rule would reclassify "in-kind" support by treating rent, housing, and in-home assistance provided by family members as income. It specifically targets SSI recipients whose families also receive Supplemental Nutrition Assistance Program (SNAP) food stamps.

Advocates warn that penalizing families for housing relatives with disabilities could force individuals out of stable homes and into much more expensive institutional care.

STATE

Legislative

The NC General Assembly convened on April 21st for a short legislative session. The short session is typically focused on making minor budget adjustments and passing a small number of bills.

Session Law 2026-1 was already passed to address some urgent issues. The bill makes several changes to Medicaid and includes other budget items. Two sections are of particular interest to people with intellectual and developmental disabilities (I/DD).

The bill includes $319 million to address the Medicaid shortfall for the current year. These are non-recurring dollars, so this will need to be addressed as the legislature continues to work on a budget.

The bill also included a section addressing the increase in Medicaid costs related to Research Based – Behavioral Health Treatment (RB-BHT). It requires changes to the Clinical Coverage Policy 8F as it pertains to Applied Behavioral Analysis (ABA). Changes include:

1. Limits to the use of telehealth.
2. Requires assessments to be in-person.
3. Requires more oversight by a licensed professional.
4. Requires paraprofessionals to be certified.
5. Plans over 16 hours a week require special approval.
6. Requires professionals to be in-state Medicaid providers.

The Department of Health Benefits (DHB) had already begun to make changes to RB-BHT policy and has tweaked it based on the legislation. The policy should be posted at this time.

Addressing the Budget

North Carolina has not had a budget in place this year since the legislature failed to pass a budget during the previous long session. On May 12th, Senate President Pro Tempore Phil Berger and House Speaker Destin Hall announced they had come to an agreement on some key issues that will allow the budget process to move forward. The agreements included issues related to taxes and raises for teachers, state employees, and law enforcement officers. A significant amount of work remains, but Sen. Berger expressed hope that a budget could be passed in late June.

Legislative Bills

There are a few bills that have been introduced that address the waiting list.

• SB 873 – Innovations Waiver Tiers: Instructs DHHS to work with LME/MCOs; and creates a tiered Innovations waiver ($25,000, $75,000; and full waiver).
• HB 1076 – Innovations Waitlist Reduction Act: This bill proposed to increase waiver slots by 6,635 by revising the eligibility for the Opportunity Scholarships.
• HB 1147 – IDD Omnibus: This is the comprehensive bill that Rep. Hawkins has filed over the last couple of years. It addresses several areas, including DSP wage increases, housing, transportation, and schools. It also includes a section that calls for the development of a 10-year state plan to address the waiting list.

These bills will continue to be discussed in committees. Advocates have expressed some concerns about the specific amounts suggested in the tiered approach. NCCDD has advocated for a comprehensive plan that begins with examining the waitlist before developing a specific solution. Nonetheless, it is good to see the attention to the waitlist by various members of the general assembly.

Department of Health Benefits

The Department of Benefits (DHB) is working on changes to policy for the Innovations Waiver. Changes are being proposed to align with previous legislation related to workforce efforts. The job requirements for some staff positions (Qualified Professional/QP) are being changed from bachelor's level to associate's degrees.

DHB is also working on several areas related to 1915(i). The dashboard for 1915(i) is being finalized and will include more precise data on time frames from referral to assessment to the beginning of services. The assessment tool is being updated, and a guide on completing the assessment is being developed for care managers.