DCW Wage Increase Initiative FAQs - SFY 2027

The North Carolina General Assembly approved funding to support Innovations Waiver services provider rate increases to raise the wages for direct care workers (DCW) who provide services to Medicaid beneficiaries. Legislated requirements for use of the funds can be found in Session Law 2026-41, Section 9E.14.

Additional information can be found on the Direct Care Worker Wage Increase Initiatives - SFY 2027 webpage.

To receive the rate increase, an authorized user for each eligible Innovations Waiver service provider must complete and submit an Innovations DCW Wage Increase Attestation and Acknowledgment Form to their Local Management Entity/Managed Care Organization (LME/MCO).

Contact information for the LME/MCOs can be found on the NC Medicaid website.

Employers doing business in North Carolina are required to pay at least $7.25 per hour to all employees. This rule applies to those DCWs eligible for the wage increase.

Providers must use the rate increase to the benefit of their Innovations Waiver DCWs. Uses of the rate increase must include at least one of the following: increases in hourly wage, benefits or associated payroll costs.

The legislation defines Innovations DCWs as "all workers required for compliance with, or delivery of, the relevant Innovations waiver service definitions and the delivery of a unit of Innovations services. Individuals in the definition of direct care worker to be applied shall include only caregivers who are contracted for the provision of services in a legally appropriate manner”. 

The funds appropriated for SFY2026-2027 are intended for the benefit of the DCW. Providers may choose how they want to use the rate increase to benefit their Innovations Waiver DCWs. At a minimum, the funds must be used to do at least one of the following: increase DCW hourly wages, expand benefits, or cover increased associated payroll costs.

The entity that employs the person(s) delivering alternative family living (AFL) services is eligible for the rate increase and must complete the required attestation form. This entity – labeled for purposes of this initiative as an Innovations Waiver services "provider" - must use the rate increase to benefit the individuals employed by them who directly serve the Innovations Waiver beneficiary.

Note: The legislated requirements for these AFL providers are the same as they are for all other Innovations Waiver service providers that are eligible for the rate increase.

The registered Medicaid Innovations Waiver services "provider," as documented in the State's Claims payment system, must sign the Attestation form to receive the reimbursement rate increase.

For Innovations Waiver beneficiaries who use the Innovations Self-directed Model, the “provider” is the Financial Services Specialist (FSS), not the Employer of Record (EOR). The FSS should sign on the EOR's behalf once the EOR confirms they will meet the requirements to receive the rate increase and maintain/submit documentation regarding the use of the rate increase.
 

Providers must sign the DCW Wage Increase Attestation and Acknowledgment Form and submit it to their respective LME/MCO prior to receiving the State Fiscal Year (SFY) 2026-2027 rate increases. 

Providers receiving a rate increase are required to keep documentation regarding the use of the rate increase funds. Each provider which received the increase must also submit, to the LME/MCO, the Year-End Aggregate Report documenting the use of the rate increase funds during SFY 2026-2027. 

Summary documentation shall include DCW benefit and wage expenses for the SFY (2025-2026) prior to the rate increase, and for the SFY (2026-2027) in which the rate increase mandated by S.L. 2026-41 became effective. Providers must make their backup documentation available upon request by NC Medicaid or the relevant LME/MCO.

Please note that the reporting deadlines originally designated by S.L. 2026-41 have been revised by NC Medicaid. These revised dates for the overall reporting requirements, data periods, and submission cadences are based on the previous DCW wage increase reporting structure under S.L. 2023-134 and S.L. 2024-1. NC Medicaid’s intention is to reduce administrative burden while ensuring data integrity. Providers are strongly encouraged to engage their respective LME/MCO to understand their internal reporting procedures to meet the specified timelines; which are as follows:

• Due Dec. 1, 2027: LME/MCOs submit Innovations Direct Care Worker Wage Year-End Aggregate Report to NC Medicaid
  • LME/MCOs and Providers are encouraged to proactively engage to align with respective LME/MCO reporting processes to achieve the Dec. 1, 2027, due date.
• Due Feb. 14, 2028: NC Medicaid submits legislative report to General Assembly

The General Assembly allocated $21.3 million in recurring funds, beginning in the 2026-2027 fiscal year. Each provider which submitted the Attestation and Acknowledgement form for SFY 2026-2027 will receive the rate increase for SFY 2026-2027. Providers receiving the increases will also need to submit a SFY 2026-2027 Year-End Aggregate Report to their respective LME/MCO documenting that their use of the funds met the legislated requirements. There has not been funding appropriated or identified requirements for DCW rate increases beyond SFY 2026-2027.

The LME/MCO will notify Medicaid if a provider does not submit a Year-End Aggregate Report documenting valid usage of the funds for a given year. As directed in the legislation, if determined necessary, LME/MCOs shall recoup funds that had been given to the provider but were not used in a manner consistent with the legislated requirements.