Senate committee substitute replaces the content of the 1st edition in its entirety with the following. Changes the act's titles.

Part I.

Amends Section 2B.10 of SL 2025-89 (implementing various budgetary adjustments and making other changes in the budget operations of the state), as follows. Increases the recurring appropriation from the General Fund to the Department of Health and Human Services (DHHS), Division of Health Benefits (DHB), from $600 million to $690 million, now beginning with the 2025-26 year (was, for each year of the 2025-27 biennium). Removes the authorization to use those funds for contracts needed to operate the State’s Medicaid managed care program. Instead, (1) appropriates $49.2 million from the General Fund to DHB in recurring funds and associated receipts beginning with the 2025-26 year and (2) appropriates $34.4 million from the ARPA Temporary Savings Fund to DHB in nonrecurring funds and associated receipts for the 2025-26 year, to be used for contracts needed to operate the State’s Medicaid managed care program.

Instructs the local management entities/managed care organizations (LME/MCOs) to make intergovernmental transfers to DHB in an aggregate amount of $18,028,217 for both the 2025-26 and 2026-27 years. Specifies that the due date and frequency of the intergovernmental transfer required by the act will be determined by DHB. Specifies the amounts that each of the three individual LME/MCOs is required to make in each fiscal year. Specifies that in the event that a county disengages from an LME/MCO and realigns with another LME/MCO during the 2025-27 biennium, DHB has the authority to reallocate the amount of the intergovernmental transfer that each affected LME/MCO is required to make under the act, taking into consideration the change in catchment area and covered population, provided that the aggregate amount of the transfers received from all LME/MCOs in each year of the fiscal biennium is achieved.

Amends Section 2B.5 of SL 2025-89 so that the reduction in funds appropriated to DHHS’s Division of Mental Health, Developmental Disabilities and Substance Use Services (Division) are changed from $18,562,645 to $30 million now beginning in the 2025-26 year (was, for each year of the 2025-27 biennium). During each year of the 2025-2027 fiscal biennium, directs each LME/MCO to offer at least the same level of service utilization as during the 2024-2025 fiscal year across the LME/MCO's catchment area. Specifies that the requirement should not be construed to require LME/MCOs to authorize or maintain the same level of services for any specific individual whose services were paid for with single-stream funding or be construed to create a private right of action for any person or entity against the State of North Carolina or DHHS or any of its divisions, agents, or contractors and cannot be used as authority in any contested case brought pursuant to GS Chapters 108C or 108D.

Reduces the funds appropriated from the General Fund to the Division for each year of the 2025-27 biennium for Single Stream Funding by $14 million in recurring funds. Repeals the Prescription Digital Therapeutics Pilot Program authorized by Section 9F.2 of SL 2022-74. Instructs the State Controller to transfer $1.85 million for 2025-26 from funds available in the Opioid Abatement Fund (as a result of the repeal of the Prescription Digital Therapeutics Pilot Program) to the Opioid Abatement Reserve. Directs the State Controller to transfer $14 million in recurring funds for each year of the 2025-27 biennium from funds available in the Opioid Abatement Reserve to the Division. Instructs the Division to use those funds to offset the reduction in Single Stream Funding authorized by the act. Specifies that the funds transferred are appropriated for the fiscal year when they are transferred.

Reduces the funds appropriated from the General Fund for each year of the 2025-27 biennium to DHHS by $33,986,530 in recurring funds. Requires DHHS to eliminate vacant positions to achieve net General Fund savings in the amount of $33,986,530 in recurring funds for each year of the 2025-27 biennium by January 1, 2026. Provides a schedule setting forth the budgeting reductions to be achieved by each DHHS division. Requires DHHS to report to the specified NCGA division by April 1st of each of the 2025-27 biennium on the actions taken to achieve the budgeted reductions described.

Reduces the funds appropriated from the General Fund for each year of the 2025-27 fiscal biennium to DHHS’s Division of Services for the Blind, for the Medical Eye Care Program by $100,000 in recurring funds.

Directs DHHS, in consultation with relevant stakeholders, to develop a plan for improved health outcomes, program integrity, cost-savings, and efficiency measures in the Medicaid program, as described. Requires DHHS to submit the plan to the specified NCGA committee and division by no later than November 11, 2025, with monthly updates.  

Instructs the Office of the State Auditor to examine the Medicaid eligibility redetermination efforts of all county departments of social services in the State, as described and conduct a performance audit of a sample of county departments of social services modeled after the specified audit. Requires the State Auditor to report its findings to the specified NCGA committee and division by April 1, 2026. Retroactive to July 1, 2025, appropriates $1 million from the General Fund to DHB in nonrecurring funds and associated receipts to be transferred to the State Auditor to be used for the examination and audit.

Part II.

Reduces the funds appropriated for the 2025-27 biennium to Future Building Reserves for the building and operating expenses of State agencies by $42,206,909 in recurring funds.

Appropriates $208.5 million from the State Capital and Infrastructure Fund to the Office of State Budget and Management for 2025-26 to be allocated to the two named project codes in the amounts described. Transfers $208.5 million to the State Capital and Infrastructure Fund from the ARPA Temporary Savings Fund for 2025-26.

Part III.

Specifies that the headings of the parts of the act are a convenience to the act and are for reference only. Instructs that the headings do not limit or define the text of the act. Directs that, except where expressly repealed or amended by the act, any legislation enacted during the 2025 Regular Session expressly appropriating funds to an agency, a department, or an institution covered under this act, remains in effect. Specifies that if any of the act’s provisions are in conflict with GS 143C-5-4 are in conflict, the act’s provisions prevail. Instructs that the appropriations and the authorizations to allocate and spend funds which are set out in the act remain in effect until the Current Operations Appropriations Act for the applicable fiscal year becomes law, at which time that act will become effective and govern appropriations and expenditures. When the Current Operations Appropriations Act for that fiscal year becomes law, directs the Director of the Budget to adjust allotments to give effect to that act from July 1st of the fiscal year.

Contains a severability clause.

Specifies that the act is effective retroactive to July 1, 2025, except as otherwise provided.