HHS Overhauls Eligibility, Combats Fraud, and Restructures Amid Policy Changes

This week’s biggest headline from the Department of Health and Human Services is the sweeping policy change on eligibility for federal health programs, announced just days ago. HHS has rescinded its previous guidance on how the term “federal public benefit” is defined under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. As a result, programs like Head Start, community health centers, and a host of behavioral health and homelessness services will now be subject to stricter eligibility checks, including immigration status. HHS projects this move will bring in an additional $374 million annually for Head Start alone. The agency says the revised rules take effect immediately, though funding levels will not change for now. However, the National Association of Community Health Centers and Advocates for Community Health are warning this will drive vulnerable people away from receiving care and ultimately raise costs for the system by pushing more individuals into emergency services. Groups are still determining how best to comply, as HHS promises further guidance is on the way.

Adding to a busy week, on July second, HHS joined the Department of Justice to create a new False Claims Act Working Group focused on combating healthcare fraud. The government secured over $2.9 billion in settlements last year, and this new working group will use advanced data analytics to identify suspicious patterns and pursue both whistleblower and agency-initiated enforcement. Brenna Jenny, Deputy Assistant Attorney General and group co-lead, stressed their aim to prioritize the most clear-cut and provable cases. This development means that both healthcare providers and businesses should expect increased scrutiny and potentially faster investigations.

Meanwhile, there are still aftershocks from HHS’s massive restructuring unveiled in April. The agency is consolidating from 28 divisions down to 15, and slashing the workforce from 82,000 to 62,000. Major programs are being folded into the newly created Administration for a Healthy America, while the CDC will narrow its focus and take over the national pandemic response arm. Some regional offices have closed, redistributing states among the remaining locations. HHS claims this will streamline services, but critics, including some advocacy groups, say the cuts threaten access for older adults and people with disabilities.

Financial oversight remains a priority, with Acting Inspector General Juliet Hodgkins recently reporting that HHS’s oversight efforts yielded a $16.61 billion impact in just six months. On the regulatory front, new billing policies and updates for hospital outpatient payments have been released by the Centers for Medicare and Medicaid Services, and HHS has published guidance clarifying when regulatory violations should be referred for criminal prosecution, responding to recent executive orders on federal overcriminalization. Public input is still being sought on planned deregulation efforts.

Looking ahead, HHS has promised more technical guidance for providers navigating the new eligibility rules, and a major report on federal regulatory offenses is due within the year. For more details or to provide feedback, head to the HHS website or the Federal Register. We encourage you to stay informed, check for public comment opportunities, and contact your representatives if these changes impact you or your community.

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