State officials say private firms that provide a specific mental health service are overbilling North Carolina by as much as 45 million dollars.
The state is seeking repayment and will hold back 10 percent from checks given to the firms in the future.
An official with the Division of Mental Health says the overbilling was discovered in an audit.
Division deputy director Leza Wainwright told a legislative oversight committee the state has held back $900,000 in payments.
The firms helped about 31,000 people with life skills. Officials say 185 firms were paid for unnecessary medical services.
An industry spokesman says state guidelines are too broad and new guidelines will help.
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