News

CMS Budget Justification Released, Details Administrative Reductions

• According to the CMS budget justification document released on May 30, the Grants to States for Medicaid account would receive a $57.5B increase in President Trump’s FY2026 proposed budget. However, federal matching funds for state and local administrative expenses would be $1.2B lower compared to FY2025. The Trump administration is requesting an additional $58.5B, totaling $733B, for federal Medical Assistance Payments (MAP), using estimated 2025 expenditures. If the budget is passed as written, states could see a loss of federal funding for Medicaid management information systems, fraud control units, enrollment verification systems, and staff salaries and benefits among other items. The budget justification noted that 1115 waivers should be “refocused and strengthened” and be budget neutral with focuses on chronic disease prevention, home and community-based services, and enrollment integrity along with strong oversight, monitoring, and evaluation. CMS plans to renew the Performance Metrics Databases and Analytics system for 1115 waivers and consolidate the number of state plan amendment processing systems. In line with the administration’s “skinny budget” released on May 2, HHS is expected to be reorganized, with some Health Resources and Services Administration programs merging under CMS along with the Administration for a Healthy America (Inside Health Policy, May 30).

CMS Innovation Center Extends, Revises Kidney Care Choices Model

• The CMS Innovation Center announced it would extend three out of four tracks within the Kidney Care Choices (KCC) Model through 2027. The financial methods in the model will change to improve sustainability starting in 2026, while one track of the model will end December 2026, the Kidney Care First option. The KCC Model, launched in January 2022, started with 93 participants. Early results of the program showed improvements in certain quality metrics like Optimal End State Renal Disease (ESRD) Starts and home dialysis rates. Despite these improvements, the model lost $304M in 2023. Other changes coming to the program include the option for more U.S. territories to host participants in the program, more options in different tracks to achieve discounts for chronic kidney disease benchmarks, rescinding the $15,000 payment per successful transplant over three years, and reducing capitated payments. This comes as the CMS Innovation Center has shifted its priorities to focus on chronic disease prevention and supporting the Make America Healthy Again initiative (Fierce Healthcare, May 27; CMMI, May 27).

CMS Director Submits Resignation

• CMS Director and Deputy Administrator Drew Snyder resigned on Monday, June 2. Former North Dakota Medicaid Director Dr. Caprice Knapp will be stepping in as interim acting director of CMS. She currently serves as the Medicaid counselor to RFK Jr. and was previously a member of the Panel of Health Advisors in the Congressional Budget Office (Politico Pro, June 2).

Hospitals Face New Questions on Gender-Affirming Care

• The Trump administration took additional actions last week to further its policies related to gender-affirming care for children, reaching out to hospitals and healthcare organizations with letters expressing concern and requesting detailed information. Health and Human Services Secretary RFK Jr. sent a letter to providers and state medical boards referencing a recent departmental evidence review. In the letter, he suggested that “some gender-affirming treatments may carry risks” and asked providers to “reconsider their current protocols.” He also indicated that new policies may be introduced to further regulate this area of care. Later that day, CMS Administrator Mehmet Oz contacted specific hospitals that offer gender-affirming care to minors, asking them to share how they obtain informed consent, how they track potential outcomes (including for youth who later choose to detransition), and how federal funding is used for such procedures (X, May 28; CMS, May 28; Fierce Healthcare, May 29).

CMS Looks to Revitalize Health IT Systems Ahead of Medicaid Work Requirement Implementation

• In an interview with Politico, CMS Administrator Mehmet Oz stated that the agency will be looking to revitalize health IT infrastructure and create a centralized repository of the various data CMS collects. Oz expressed that this effort could help ease the administrative burden states may face in implementing Medicaid work requirements. CMS is expected to release “minimal viable products” that will be required for the system update within a year. On May 16, CMS issued a request for information (RFI) for stakeholders in the private sector to help the agency in modernizing the system, though work requirements are not explicitly mentioned. Comments are due June 16 (Politico, June 1; Inside Health Policy, June 2).

Federal Regulation/Guidance

HHS Budget Proposal Shifts Key Drug Program to CMS

• The Department of Health and Human Services (HHS) is proposing a significant reorganization that would phase out the Health Resources and Services Administration (HRSA) and shift its responsibility for oversight of the 340B Drug Pricing Program to the Centers for Medicare and Medicaid Services (CMS). The 340B program, which helps safety-net providers like hospitals and community health centers access discounted outpatient drugs, has been managed by HRSA since 1992. Under the new plan, CMS would take over in 2026 with a proposed $12M budget, matching what HRSA currently receives for the program. Supporters say the change could improve accountability and simplify oversight, as CMS already manages several federal drug programs. However, some worry it could bring stricter compliance requirements for providers. The reorganization is part of a broader effort under the Healthy America agenda, led by HHS Secretary RFK Jr. It remains unclear what changes require executive action versus congressional approval (Modern Healthcare, June 2).

HHS and CMS Rescind 2022 EMTALA Guidance on Pregnancy Care

• The U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) have withdrawn 2022 guidance on emergency care for pregnant patients, stating it no longer reflects the current administration’s policy. While the specific guidance is being rescinded, CMS indicated it will continue enforcing the Emergency Medical Treatment and Labor Act (EMTALA), which ensures emergency care for all patients, including pregnant individuals facing serious health risks. The agencies also claim this move will reduce legal confusion created by the previous administration’s actions (CMS, June 3).