Raleigh, N.C. — North Carolina Department of Health and Human Services officials said Monday that state lawmakers have changed their tune about finding funds to fill a projected $139 million Medicaid budget shortfall, forcing them to consider making catastrophic cuts to the program.

Unless lawmakers find more money for Medicaid, many adult services, like hospice care and mental health care, could be on the chopping block. The state could also reduce reimbursements to physicians who treat Medicaid patients by up to 20 percent, DHHS officials have said.

They say lawmakers publicly pledged to help fill the shortfall in October after it became clear that the agency couldn't make the $356 million in cuts required in the state budget.

"We are not going to cut services, and we are not going to cut rates to make up for one-time liabilities," said state Rep. Nelson Dollar, R-Wake, in October.

Speaker Thom Tillis also said at the time that lawmakers were looking at a $150 million surplus to plug the funding hole.

"That (money) could be appropriated for those areas where we're coming up short without necessarily having to go back and cut any reimbursement rates or programs," he said.

Legislative leaders have since privately indicated to DHHS officials that the money isn't coming, according to correspondence between legislative leaders and Health and Human Services Secretary Lanier Cansler obtained by WRAL News.

That leaves officials with two options – "large-scale rate cuts or the elimination of some optional services," DHHS Deputy Secretary Michael Watson said.

"That kind of wrong-headed extreme view that has prevailed is going to hurt North Carolina citizens and North Carolina care providers," said Al Delia, senior advisor to Gov. Bev Perdue. "That only body that can fix that is the legislature."

A spokesman for House Speaker Thom Tillis said comments made in October about the state using budget surplus or rainy day funds to bridge the Medicaid gap were "best case scenario" options. The General Assembly never committed to find funds for Medicaid, he said.

More than 1.5 million North Carolina residents – mostly poor children, older adults and the disabled – receive Medicaid coverage. Stevie Goodwin, 55, is one of them. When he was 19, he was paralyzed from the chest down in a car accident. 

"I'm mentally sound. I'm just physically unable to do the things I need to go for myself," Goodwin said.

With the state's help, he is able to live independently in his own home, but some state leaders say in-home care is one of several state services on the chopping block.

"I would be institutionalized. There's no way I could live without the help I'm receiving," Goodwin said. "It kills me to think of that, physically and spiritually."

Delia said the state should not turn its back on patients like Goodwin.

"Let's be clear," he said. "These are the most vulnerable people in our state."