Is HHS Changing Shape under New Administration?

Last Friday night, at nearly the last moment, Congress was able to keep the federal government open by passing a continuing resolution (CR) – that’s government-speak for kicking the can down the road. The president signed the CR the next day. The CR keeps the government open until September.

The CR included a number of healthcare extensions, including for Medicare’s telehealth waivers and the Centers for Medicare & Medicaid Services (CMS) Hospital at Home demo and Special Diabetes Program.

A fix for the 2.8-percent Medicare payment cut to physicians was notably – and strikingly – not included in the CR. Doctors have been under the pay cut since January.

This is striking because, every year since 2021, Congress has stepped in and corrected the physician payment schedule to at least soften the now-annual cuts. While some Republican lawmakers have said that the fix will be included in a future bill, the CR that Congress passed on Friday means that the fix may have to wait another six months, when Congress is faced with another government shutdown.

Friday’s CR also did not include any cuts to Medicaid. Those proposed cuts are in a separate budget blueprint that the House passed in February. The House hopes that the Senate will agree on that budget, which would also allow for President Trump to continue and perhaps expand his tax cuts.

Although the House budget proposal doesn’t mention Medicaid specifically, the Congressional Budget Office (CBO) sent a letter to Congress stating that, mathematically, the proposed budget doesn’t work without cutting Medicaid. The House budget would require the House Energy and Commerce Committee to find $880 billion in cuts.

However, according to the CBO, if you take Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) out of the picture, the committee only has about $135 billion that it has discretion to cut, leaving over $700 billion that would have to be cut from those three government programs.

Also last week, Dr. Oz, President Trump’s nominee to head up CMS, faced his congressional confirmation hearing. Dr. Oz outlined a “generational opportunity to fix our healthcare system and help people stay healthy for longer.”

Dr. Oz suggested three ways to reform the U.S. health system: one, give patients more information to navigate the system. This is a nod to the president’s recent Executive Order on price transparency and the broader policy of consumer-driven healthcare. Two, Dr. Oz said that artificial intelligence (AI) can be used to ease doctors’ administrative burdens, and three, combatting waste, fraud, and abuse in the system.

According to the New York Times, Dr. Oz is expected to “sail through the Senate and be confirmed” as the CMS Administrator.

Lastly, Politico reports that the U.S. Department of Health and Human Services (HHS) plans to significantly cut its workforce, targeting, among others, the Office of the National Coordinator for Health Information Technology, or ONC for short. Politico reported that the plan is to cut the ONC’s current 180 employees down to 30, all but closing the office.  

Readers might recognize ONC as the HHS office that set standards for Electronic Health Records (EHRs) and makes sure that health IT products meet certain standards. Lately, ONC’s focus has been on interoperability – and, most recently, on a federal AI strategy for healthcare.

Reorganization is also expected to come to HHS’s Agency for Healthcare Research and Quality, AHRQ, that studies ways of improving health services.

Also this week, we saw HHS pull back on or cancel some of the innovative payment and delivery models coming out of the CMS’s Innovation Center (CMMI), including the Primary Care First (PCR) and Making Care Primary (MCP) models, the mandatory ESRD Treatment Choices (ETC) Model, and the Maryland Total Cost of Care (TCOC) Model. They say that the only constant is change itself. If last week is any indication, we’ll be seeing many changes come to HHS and CMS. Unfortunately, not included in those changes anytime soon is a fix to physicians’ nearly 3-percent Medicare payments cut.