Major Restructuring of the US Department of Health and Human Services

HHS stated that the restructuring is designed to streamline operations, reduce the workforce, and consolidate divisions to enhance efficiency and responsiveness to public health needs. The changes are part of the broader “Make America Healthy Again” initiative, which seeks to address the chronic disease epidemic and improve service delivery.

Key Components of the Restructuring Plan

1. Workforce Reduction

The restructuring plan includes substantial personnel cuts across various HHS divisions. The current workforce of 82,000 full-time employees will be reduced to 62,000 by a combination of the layoff of 10,000 employees, early retirement, and “other efforts.” Specific reductions include:

• US Food and Drug Administration: Approximately 3,500 full-time employees will be laid off, focusing on streamlining operations and centralizing administrative functions. HHS stated that the reduction will not affect drug, medical device, or food reviewers, or inspectors.
• Centers for Disease Control and Prevention (CDC): Approximately 2,400 employees will be laid off. The Administration for Strategic Preparedness and Response (ASPR) will be moved under the CDC as part of an initiative to enhance coordination of response efforts to epidemics and outbreaks. The net decrease in CDC workforce would be 1,400 if the individuals transferring from ASPR (approximately 1,000 individuals) are included.
• National Institutes of Health: Approximately 1,200 employees will be laid off by centralizing procurement, human resources, and communications across its 27 institutes and centers.
• Centers for Medicare & Medicaid Services (CMS): Approximately 300 employees will be laid off, focusing on reducing minor duplication across the agency. HHS stated that the reorganization will not impact Medicare, Medicaid, or “other essential health services.” HHS did not specifically address other federally funded health care programs such as the Veterans’ Health Administration, the Indian Health Service, the Children’s Health Insurance Program, or TRICARE.

2. Consolidation of Divisions

The restructuring plan will consolidate the existing 28 divisions of HHS into 15 new divisions. Key changes include:

• Creation of the Administration for a Healthy America (AHA): This new entity will combine multiple agencies, including the Office of the Assistant Secretary for Health, Health Resources and Services Administration, Substance Abuse and Mental Health Services Administration, Agency for Toxic Substances and Disease Registry, and National Institute for Occupational Safety and Health. The AHA will focus on coordinating chronic care and disease prevention programs and harmonizing health resources for low-income Americans. Divisions within AHA will include Primary Care, Maternal and Child Health, Mental Health, Environmental Health, HIV/AIDS, and workforce development.
• Strengthening the CDC: The ASPR, responsible for national disaster and public health emergency response, will transfer to the CDC, reinforcing its core mission to protect Americans from health threats.
• New Assistant Secretary for Enforcement: HHS will create a new Assistant Secretary for Enforcement to oversee the Departmental Appeals Board, Office of Medicare Hearings and Appeals, and Office for Civil Rights as part of the Administration’s initiative to combat fraud, waste, and abuse.
• Office of Strategy: The Assistant Secretary for Planning and Evaluation (ASPE) will be merged with the Agency for Healthcare Research and Quality to create the Office of Strategy. This agency will provide research services that are intended to evaluate federal health programs effectiveness.
• Reorganization of the Administration for Community Living: Critical programs that support older adults and people with disabilities will be integrated into other HHS agencies, including the Administration for Children and Families, ASPE, and CMS.

3. Centralization and Reduction of Functions

The restructuring plan will centralize core functions within HHS, including Human Resources, Information Technology, Procurement, External Affairs, and Policy. HHS has stated that the centralization initiative aims to improve efficiency and responsiveness to public health needs. HHS will also reduce its regional offices from 10 to five, with the goal of streamlining operations and improving efficiency.

Financial Impact

HHS’s Press Release and Fact Sheet state that the restructuring initiative is expected to save $1.8 billion annually.

Conclusion

HHS has itself termed its initiative a “dramatic restructuring,” which certainly appears to be the case based on today’s statements by the Department. The effect of these structural changes remains to be seen given the scope and magnitude of the initiative. While HHS states that the initiative aims to improve efficiency, responsiveness, and service delivery, the long-term impact on public health, the operations of HHS and its operating divisions and agencies, and the existential effect on operations of the health care provider community will require careful analysis.

We continue to monitor HHS’s proposal and will provide updates as additional information becomes available.

Contact Information

For more detailed information or specific inquiries regarding the restructuring of HHS, please reach out to the authors of this client alert, Karen Carr and Douglas Grimm, or your regular ArentFox Schiff attorney.