Weekly Health Care Policy Update – April 4, 2025

April 11, 2025

In this update: 

  • Administration Updates
    • Trump Chooses Fox News Personality Sara Carter for Drug Czar
    • 23 States Sue Trump Administration Over Public Health Cuts
    • HHS Begins Massive Layoffs and Reorganization
    • HHS Pushes Out Lead Vaccine Regulator Peter Marks
    • Senate Confirms Dr. Mehmet Oz to Lead CMS
  • Legislative Update
    • Senate Budget Committee Releases Budget Resolution Ignoring Tax Cut Costs
  • Federal Agencies
    • DOJ Launches Anticompetitive Regulations Task Force
  • Other
    • National Academies Members Call for Stop to Trump “Assault on Science”
    • Fitch Reports Non-Profit Hospitals 2024 Margins Improved
    • KFF Report Shows Obamacare Enrollment Has Grown Fastest in Red States
  • New York State Updates
    • NYS Budget Deadline Continues to Be Pushed Back
    • DFS Adopts Final Regulations Requiring the Collection of Voluntarily Disclosed Demographic Data
    • NYS Announces Planned SPA for Continued Operation of CCBHC Program

Administration Updates

Trump Chooses Fox News Personality Sara Carter for Drug Czar
On March 28th, President Trump announced his selection of Sara Carter of Fox News to serve as the next head of the White House Office of National Drug Control Policy (ONDCP), also known as the nation’s “drug czar”. Carter’s background does not involve drug policy, public health, law enforcement, or government work, but her recent journalism has focused on border issues and the trafficking of illicit drugs. This role, which requires Senate confirmation, includes overseeing policy recommendations and coordination efforts between federal agencies to better address the substance use epidemic. ONDCP is responsible for the development and implementation of the National Drug Control Strategy and Budget, which spans 19 federal agencies and $44 billion in funding, and programming such as Drug-Free Communities. Carter is now the 22nd Fox News personality to join the Trump Administration in a high-ranking capacity.

23 States Sue Trump Administration Over Public Health Cuts
On April 1st, attorneys general from 23 states sued the Trump Administration over $11 billion in Covid-19 and public health funding cuts in a Rhode Island district court. The lawsuit alleges that the cuts are illegal, with the Administration failing to provide a rational basis to justify the cuts. States warn that the cuts will result in “serious harm to public health,” seeking a temporary restraining order and injunctive relief.  The Trump Administration has stated that it will no longer allocate funding for a “non-existent pandemic,” though the funds have been authorized and appropriated by Congress. It plans to begin rescinding funding in the next 30 days. The majority of states represented have either Democratic or split leadership, including a number of key swing states such as Arizona, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin.

The filing is available here.

HHS Begins Massive Layoffs and Reorganization
On April 1st, more than 10,000 Department of Health and Human Services (HHS) employees began receiving notices of termination, administrative leave, or proposed transfers. Most separations will be effective 60 days following notice. The notices stated that the decision “does not reflect directly on [employee’s] service, performance, or conduct.” Some employees were informed of their termination when their key cards did not work. While the layoffs were previewed by the Department in a late March press release, the volume of senior leadership affected was unexpected. A number of senior leaders were reassigned to the Indian Health Service (IHS) and/or remote locations like Alaska. Large swaths of communications professionals were terminated as well as those in offices that are considered inconsistent with President Trump’s priorities. The full picture of employee layoffs is still coming into focus, but thus far: 

  • Food and Drug Administration (FDA): On the heels of Dr. Marks’ departure, additional senior leaders were terminated or put on leave, including Dr. Peter Stein, Director of the Office of New Drugs (OND) and Julie Tierney, who was elevated to replace Dr. Marks. The policy office inside of OND was also eliminated. Much of the Vaccines and Related Biological Products Advisory Committee was also terminated, and the Office for Tobacco Products was effectively shuttered; 
  • Centers for Disease Control and Prevention (CDC): The CDC sent a total of 2,400 notices to staff. A broad range of offices were targeted, including the National Center for Chronic Disease Prevention and Health Promotion. Up to two-thirds of the National Institute for Occupational Safety and Health (NIOSH) may also have been terminated, based on some reports, including full labs;
  • Centers for Medicare and Medicaid Services (CMS): Approximately 300 staff were terminated from CMS, including elimination of the Office of Equal Opportunity and Civil Rights, the Office of Minority Health, the Medicare Medicaid Coordination Office, and the Office of Program of All-Inclusive Care for the Elderly (PACE) Management;
  • Health Resources and Services Administration (HRSA) and Substance Abuse and Mental Health Services Administration (SAMHSA): As many as 500 to 600 HRSA employees, and nearly half of SAMHSA’s 900 employees were terminated. All of SAMHSA’s regional offices were closed, along with the Office of Minority Health and the Office of Behavioral Health Equity. HRSA’s Offices of Communications, Human Resources, Civil Rights, Diversity and Inclusion, Special Health Initiatives, Health Equity, and Intergovernmental and External Affairs were closed.
  • National Institutes of Health (NIH): The directors of five NIH institutes – the National Institute of Nursing Research, the National Institute of Minority Health and Health Disparities, the Eunice Kennedy Shriver National Institute of Child Health and Human Development, the National Institute of Allergy and Infectious Diseases, and the National Human Genome Research Institute – as well as two other members of senior leadership, were put on leave or offered new assignments. Overall, hundreds of employees across policy, operational, and administrative staff were terminated.
  • Office of the Assistant Secretary for Planning (ASPE)/Agency for Healthcare Research and Quality (AHRQ): In a news release last week, Secretary Kennedy announced plans to combine ASPE and AHRQ into an “Office of Strategy”. ASPE started the year with roughly 150 employees, and is now down to fewer than 50. AHRQ started the year with over 300 employees, but 111 were eliminated on Tuesday. AHRQ’s Center for Evidence and Practice Improvement lost the most staff, the office responsible for reviewing evidence and consolidating information for the U.S. Preventive Services Task Force.
  • Administration for Community Living (ACL): ACL lost roughly half of its workforce, including most of its leadership, management and budget teams, public affairs and policy teams, as well as its regional offices. Remaining staff were unsure how ACL’s grants – to organizations such as Meals on Wheels and others – would be disbursed. Last week’s press release said that ACL would be folded into other agencies, but staff have received no further guidance.

On April 3rd, Secretary Kennedy stated that certain programs and personnel were inappropriately cut, and he expected about 20% of the firings to be reinstated, saying that it “has always been the plan” to fix mistakes made by the DOGE cuts. He has been invited to speak before the Senate Health, Education, Labor and Pensions (HELP) Committee to discuss the reorganization next week.

HHS Pushes Out Lead Vaccine Regulator Peter Marks 
On March 28th, Dr. Peter Marks, head of the Food and Drug Administration’s (FDA) Center for Biologics Evaluation and Research (CBER), resigned under pressure from HHS leadership after 13 years of service. CBER is responsible for authorizing and monitoring the safety of vaccines and other biological treatments. According to news, Dr. Marks had expressed a willingness to work with HHS Secretary Kennedy over vaccine safety and transparency but was told to quit or he would be fired. The announcement sent the biotech community scrambling, with many raising serious concerns over the void of experienced leadership at CBER and impact on pipeline therapies. Dr. Marks wrote that the FDA “was spiraling deeper and deeper into danger” under a leader who “doesn’t care about the truth.”

This letter is available here.

Senate Confirms Dr. Mehmet Oz to Lead CMS 
On April 3rd, the Senate voted to confirm Dr. Mehmet Oz as the next Administrator of the Centers for Medicare and Medicaid Services (CMS). Dr. Oz was confirmed on a strictly party-line vote (53-45) and will now oversee $1.5 trillion in federal spending across programs that cover more than 160 million Americans. Dr. Oz, previously a cardiothoracic surgeon at New York-Presbyterian, hosted a daytime television program, “The Dr. Oz Show,” from 2009 through 2022. In 2022, he ran for Senate in Pennsylvania, ultimately losing to Senator John Fetterman (D-PA).

Legislative Update

Senate Budget Committee Releases Budget Resolution Ignoring Tax Cut Costs
On April 2nd, Senate Budget Committee Chair Graham (R-SC) released the Senate’s amendment to the House of Representatives’ budget resolution for fiscal year (FY) 2025. The budget resolution must pass both chambers in order to unlock the budget reconciliation process, which permits the passage of tax and spending bills in the Senate with just 51 votes.

In a unique move, the resolution authorizes the Chairman of the Senate Budget Committee to use current policy baseline to measure the impact of budgetary changes, rather than the traditionally utilized current law baseline, but grants no such authority to the Chairman of the House Budget Committee. Using a current policy baseline effectively masks the cost of extending the Trump tax cuts currently in effect for 10 years (estimated to cost $3.8 trillion).

Otherwise, the resolution does not resolve key differences between the two chambers on many issues, including overall spending cuts/increases, the debt limit increase amount, and the budgetary baseline against which changes made by a reconciliation bill will be measured.

The instruction to the House Energy and Commerce Committee to reduce the deficit by a minimum of $880 billion remains, which continues to raise widespread concern over the fate of Medicaid funding. Senate and House committees would have until May 9th to write their portions of the bill.

The Senate voted 52-48 to proceed on Thursday, setting a vote-a-rama of up to 50 hours in motion with a final vote expected today or tomorrow (April 5th). If it succeeds, it would then head to the House.

The resolution is available here, and the announcement is available here.

Federal Agencies

DOJ Launches Anticompetitive Regulations Task Force
On March 27th, the Department of Justice (DOJ) launched the Anticompetitive Regulations Task Force within its Antitrust Division to identify and advocate for the elimination of state and federal regulations that hinder free market competition. The initiative aims to remove regulatory barriers that unnecessarily burden businesses, increase costs for consumers, and limit market entry for new competitors. This aligns with President Trump’s Executive Orders which direct federal agencies to review and reduce regulations that stifle economic growth. The Task Force will identify and work with state and federal agencies to revise or eliminate anticompetitive laws and regulations.
 
As a first step, the Antitrust Division is requesting public comments on laws and regulations that create barriers to competition in a number of key markets, including health care, defined as “laws and regulations in health care markets that discourage doctors and hospitals from providing low-cost, high-quality health care and instead encourage overbilling and consolidation, making affordable care less accessible.”
 
The announcement is available here. Comments may be submitted by May 26th via Regulations.gov here.

Other Updates

National Academies Members Call for Stop to Trump “Assault on Science” 
On March 31st, nearly 2,000 elected members of the National Academies of Sciences, Engineering and Medicine (NASEM) published an open letter calling for an end to the Trump Administration’s “wholesale assault” on U.S. science. The researchers warned that the Trump Administration’s cuts to funding, mass firings, and cancelled programming is threatening America’s position as a global leader in biomedical research. NASEM, a non-partisan, non-profit advising body with extensive federal contracting, has taken special care to remain out of the Administration’s crosshairs, including scaling back the use of terms like “health equity” in reports.

The letter is available here.

Fitch Reports Non-Profit Hospitals 2024 Margins Improved 
On March 26th, Fitch Ratings announced non-profit hospital and health systems with early fiscal year ends saw an improvement in 2024 median financial performance relative to 2023, though well below pre-pandemic levels, finding: 

  • Operating Margins: Among providers surveyed, median operating margins improved to 1.2% in 2024, up from -0.5% in 2023. Fitch reported that a decline in contract labor use and overall personnel costs contributed to profitability;
  • Revenue Growth: The providers reported a median increase of 9.1% revenue growth, largely spurred by higher patient volumes and more favorable payor contracts;
  • Labor Costs: Base salaries and wage expenses experienced a year-over-year expense increase of 6.9%;
  • Capital Spending: Capital spending as a percentage of depreciation increased to 116.3% in 2024, up from 107.5% in 2023;
  • Liquidity: Days cash on hand remained stable from 2023 at approximately 220 days, but, overall, the liquidity cushion could shrink with potential budgetary changes affecting Medicaid; and
  • Medicaid Reimbursement: Median Medicaid reimbursement as a percentage of gross patient revenue remained stable from 2023 at approximately 16.2%.

The announcement is available here.

KFF Report Shows Obamacare Enrollment Has Grown Fastest in Red States
On April 2nd, the Kaiser Family Foundation published a report, “Enrollment Growth in the ACA Marketplaces,” showing that enrollment has reached 24.3 million Americans, a 113% increase since 2020, and a record high. Notably, enrollment has grown fastest in traditionally red states over the past five years: Texas (255%), Mississippi (242%), West Virginia (234%), Louisiana (234%), Georgia (227%), and Tennessee (221%). In fact, the 15 states with the most ACA marketplace growth since 2020 were all won by President Trump in 2024. Only three states – New York, Oregon, and the District of Columbia – saw shrinking Marketplaces since 2020, largely due to states the availability of other insurance options such as a Basic Health Plan or more generous Medicaid eligibility.

The full report is available here.

New York State Updates

NYS Budget Deadline Continues to Be Pushed Back
Negotiations between the Executive, Assembly, and Senate over the New York State Fiscal Year (FY) 2025-26 Budget are continuing, requiring ongoing extensions of the statutory April 1st deadline. On April 3rd, Governor Hochul signed a second budget extender, ensuring the government remains funded through April 7th. With discussions still unresolved, another short-term extender is anticipated once the current measure expires.  
 
DFS Adopts Final Regulations Requiring the Collection of Voluntarily Disclosed Demographic Data
On April 2nd, the New York State (NYS) Department of Financial Services (DFS) adopted final regulations that require regulated health insurance plans to request race, ethnicity, preferred language, sexual orientation, and gender identity or expression data for all covered individuals and dependents. DFS seeks this information “to better understand insurance benefit use and develop policies that serve the needs of all New Yorkers, especially underserved communities.”
 
Insurance plans are required to collect the demographic data via a separate and supplemental questionnaire either at the time of application for new members or at renewal for current members. Responding to the questionnaire would be optional for the member and their dependents. The final rule includes a new provision that directs insurance plans to collect the demographic information no more than once every two years.
 
The regulation prohibits insurance plans from using the data for unfair or unlawful discriminatory purposes, including for eligibility, rate setting, and underwriting determinations. The rule also includes limitations on the use and distribution of the data collected by insurers, including prohibiting insurers from sharing data with a third-party, unless the third-party agrees not to sell or share the information.
 
The proposed rule is available here. The DFS press release is available here. To support compliance, DFS has developed a standard template that insurance plans can use to collect the required information.
 
NYS Announces Planned SPA for Continued Operation of CCBHC Program
On April 1st, the NYS Office of Mental Health (OMH) issued a notice to Certified Community Behavioral Health Clinic (CCBHC) providers notifying them that the State’s federal CCBHC demonstration is currently set to expire on September 30th absent congressional action. NYS was selected as one of the eight CCBHC demonstration sites in 2016, and the program has since been renewed and extended periodically by Congress. The notice indicates that the State is in the process of submitting a Medicaid State Plan Amendment (SPA) for continued operation of the CCBHC program. Providers will be notified regarding rate rebasing and other changes to CCBHC rates upon federal approval of the SPA.
 
Questions may be directed to CCBHC@omh.ny.gov.