(RALEIGH) -- Facing a projected $139 million shortfall in North Carolina's Medicaid program, Health and Human Services Secretary Lanier Cansler told lawmakers Tuesday that in order to balance the budget, drastic cuts for Medicaid patients might have to be made. He told a legislative oversight committee he needs an answer on how to proceed.

"I really need just guidance from you about, do we want to go down that road?  If we do, I need to give notice next week and get started on that," said Cansler.  Reimbursement to medical providers who take Medicaid patients could drop and services the federal government does not require the state to offer could be limited or dropped.

Republican budget writer Rep. Nelson Dollar told Cansler he did not believe it would be productive to reduce rates further and scale back optional services beyond those already identified in this year's budget. Dollar advised Cansler to work with lawmakers to find other ways to cut spending.  Rep. Dollar even suggested that, as a last resort, cash reserves could be used.