Layoffs at HHS spark concern from providers

Modern Healthcare – Wednesday, February 19, 2025
By Bridget Early

The health care industry is scrambling to figure out how recent federal layoffs could impact the Health and Human Services Department’s programs.

Thousands of federal officials across HHS recently received layoff notices, prompting worries about lower participation in the Center for Medicare and Medicaid Innovation’s payment models, timely approval of medical devices and the agencies’ abilities to respond to pressing concerns.

Related: House budget talks heat up over Medicaid cuts

HHS could be headed for a crisis if layoffs are paired with budget reductions, Alison Barkoff, director of the Milken Institute’s Hirsh Health Law & Policy Program and former administrator of the Administration for Community Living, said. Funding for the federal government expires next month.

Here’s what to know about the layoffs at HHS.

What happened?
In a series of emails sent to employees over the weekend, the Trump administration began laying off thousands of federal employees, including at HHS.

It’s unclear how many people were removed from their posts, but those affected have predominantly been federal career staff in their probationary period, which can last between one and two years.

Staffers at the Centers for Medicare and Medicaid Services, the Center for Medicare and Medicaid Innovation, the Health Resources and Services Administration, the Food and Drug Administration, the Centers for Disease Control and Prevention and other agencies have said on LinkedIn, X and other social media platforms they received such notices.

HHS did not respond to a request for comment or provide additional details, but former officials are raising serious concerns about the layoffs.

“The work of the members of the HHS team is not just important to the health of this country. It is also vital to the economic security of our nation,” eight former HHS officials, including former CMS Administrator Chiquita Brooks-LaSure, wrote in a statement issued Monday.

What prompted the layoffs?
Trump administration officials have repeatedly pointed to plans to reduce unnecessary federal spending via the Department of Government Efficiency.

Bloomberg reported the letter sent to affected employees said they were “not fit for continued employment because your ability, knowledge and skills do not fit the agency’s current needs, and your performance has not been adequate to justify further employment at the agency.”

How are providers reacting to the layoffs at CMS?
There are concerns staff reductions could hamstring models operated by the innovation center, including the agency’s kidney care model, a dementia care model and a maternal health model, among others.

“It is unclear if any prior thought was given to the effects these mass terminations will have on the ability of these agencies to function or the effects these cuts will have on everyday Americans,” Dr. Jesse Roach, senior vice president of government relations at the National Kidney Foundation, said in a news release. “There will also be an incalculable loss of talent, expertise and experience that will be difficult, if not impossible, to ever replace.”

Providers are also worried staff reductions could cut back agency guidance and communication with the industry.

The Federation of American Hospitals is worried the agency’s prior authorization changes may be undermined by a lack of staff.

“Recently, we’ve made progress ensuring CMS was cracking down on Medicare Advantage companies’ delays, denials, and abuses towards beneficiaries, and we can’t risk widespread reductions in CMS staff letting those strides backslide or undermine the agency’s ability to carry out the rest of its mission,” Chip Kahn, the federation’s president and CEO, said in a statement.

Will claims processing be affected?
Emily Cook, a partner at law firm McDermott Will & Emery, said claims processing likely won’t be affected since those duties are already delegated to contractors. However, staffing cuts could reduce communication between Medicare contractors and the federal government on issues like Medicare’s Conditions of Participation.

Cook said she’s watching closely to see whether the administration ramps up its use of contractors to do more regulatory work in the wake of layoffs.

How might layoffs affect device manufacturers?
Staffing reductions could slow the approvals process for new medical devices or drug approvals at the Food and Drug Administration, Mendelson said.

Some are optimistic that won’t be the case. Kwame Ulmer, managing partner at MedTech Impact Partners, said in a blog on FDA approvals he doesn’t anticipate a substantial approvals process slowdown.

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