The White House cites reviews of home health provider cost reports and claims that led CMS to reduce reimbursements in 2014.
The draft HHS budget is the latest in a set of unprecedented policy and operational actions the administration has proposed or implemented during the short time Trump has been back in office.
If formalized, the plan would slash Health and Human Services Department discretionary spending by about $40 billion, or 31%, result in a sweeping reorganization of its agencies and their functions, and eliminate programs for rural health, geriatrics, substance use disorder, maternal health, HIV/AIDS and other areas, while rearranging the chain of command for many other HHS programs.
For example, the Health Resources and Services Administration would be eliminated and CMS would assume management of the 340B Drug Pricing Program.
The 62-page White House directive offers HHS Secretary Robert F. Kennedy Jr. a blueprint for the department's future and invites input on how to carry out President Donald Trump's agenda. The document the OMB sent to HHS represents an early stage in a process that will result in the president's budget request to Congress and outline the administration's ongoing plans to radically restructure the government.
As such, the final version of the White House budget request could look different from the draft proposals. These budget plans typically function mainly as wish lists to Congress, but Trump can execute many of its provisions as chief of the executive branch.
The White House and HHS did not respond to requests for comment.
Late payments, red tape predicted
The hospital cost reports section is troubling, said Robert Nelb, director of policy for America’s Essential Hospitals, which represents safety-net providers.
Ramping up cost report audits could delay Medicare payments and would increase the administrative burden on hospitals, requiring them to hire staff and take on other expenses they can't afford, Nelb said.
These worries are intensified by other components of the draft budget plan and by HHS laying off thousands of workers, shuttering regional offices, and scrapping a plethora of activities, Nelb said.
“In the context of these overall changes to the department where they are under a significant reduction in staff and change in responsibility, there's concern that it could be challenging to implement some of these changes,” Nelb said. “There’s concern that some of the burden of doing this might end up being shifted on to providers — and that's always a concern for our hospitals, who already struggle with a lot of administrative burden.”
The budget draft itself creates questions about the administration’s goals.
The White House appears to be considering higher funding for hospital cost report audits but, separately, HHS aims to reduce its reliance on entities such as Medicare Administrative Contractors, which are health insurance companies paid to process fee-for-service Medicare claims.
Under the provisional budget plan, the White House seeks $190 million for Medicare Administrative Contractors to conduct hospital cost report audits in fiscal 2026. CMS received $162 million for these activities in fiscal 2024, the OMB notes.
But the White House also wants to know whether that money is being effectively spent, particularly after the HHS Office of Inspector General issued a critical report about their performance last month.
These seemingly incompatible priorities would challenge hospitals either way, said Jeff Wurzburg, a partner at the law firm Norton Rose Fulbright, which represents hospitals.
On one hand, hospitals would have to spend more money and time on audits if CMS ramps up oversight, Wurzburg said, but on the other, closing the regional offices will grind audits and appeals to a crawl, tying up reimbursements.
