Cuts of Tens of Thousands of Employees and Large-Scale Department and Regional Office Restructuring at HHS Will Likely Stall Administrative Adjudication, Impact Audits, and Impede Rulemaking

The U.S. Department of Health and Human Services (HHS) is undergoing dramatic employee cuts and restructuring at the direction of Secretary Robert F. Kennedy, Jr., and the Trump administration's Department of Government Efficiency (DOGE). On March 27, 2025, Secretary Kennedy announced that he would cut approximately 10,000 employees in addition to previous cuts facilitated through buyouts, bringing HHS's workforce from 82,000 workers to 62,000 workers. Kennedy stated that these layoffs would aim to eliminate "excess administrators while increasing the amount of scientists and front-line health providers" and that "[w]e are realigning the organization with its core mission and our new priorities in reversing the chronic disease epidemic." 

Kennedy also announced that he would consolidate HHS's 28 divisions into 15 and cut regional offices from 10 to five. These restructuring efforts include the appointment of a new Assistant Secretary of Enforcement overseeing HHS's Departmental Appeals Board, the Office of Medicare Hearings and Appeals, and the Office of Civil Rights, likely affecting HHS's enforcement efforts, administrative adjudication of claims disputes, and the investigation of civil rights violations. It remains to be seen exactly how claims disputes and administrative appeals will be impacted, but a consolidation is likely to increase the time it will take to exhaust administrative remedies concerning coverage and payment disputes. 

On April 1, 2025, in line with his previous announcement, Kennedy fired many of those 10,000 employees and eliminated or greatly reduced entire divisions of HHS, including those handling Freedom of Information Act (FOIA) requests, the HIV prevention division, communication teams, and tobacco control efforts at the Food and Drug Administration (FDA) and Center for Disease Control (CDC). Kennedy later suggested that 20 percent of these cuts might need to be retracted because they were made in error. 

There have also been recent changes to the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services (CMS). Despite the Trump administration's executive order on transparency, in an earlier reduction in force at HHS this year, about 15 percent of CCIIO's workforce (82 of more than 600 employees) was fired. The CCIIO has jurisdiction to implement and enforce provisions of the Affordable Care Act (ACA) related to private health insurance, including through audits and reviews pertaining to the Medical Loss Ratio (MLR) rule, the Public Health Service Act (PHS Act), and Network Adequacy (NA) reviews of health insurance issuers offering Qualified Health Plans (QHPs) and stand-alone dental plans (SADPs) in federally facilitated health insurance exchanges (FFEs). 

The CCIIO also has jurisdiction implementing the No Surprises Act (NSA), which has been in effect since January 1, 2022. The NSA removed certain restrictions on access to covered services, limited patient cost-sharing amounts for certain out-of-network health services by tying those amounts to in-network cost sharing amounts, eliminated balance-billing for those services, and created an Independent Dispute Resolution (IDR) system for payment disputes between providers and payors. NSA regulations have been subject to recent challenges within the Fifth Circuit, as we have previously covered. A reduction in force at the CCIIO will likely result in less oversight, rulemaking, and administrative guidance implementing the NSA. 

Miller & Chevalier's ERISA Litigation and Employee Benefits Practice Welcomes DeMario Carswell

Miller & Chevalier is pleased to announce DeMario Carswell joined our ERISA Litigation and Employee Benefits practice as Counsel. DeMario joins Miller & Chevalier from a multinational law firm where his practice focused on ERISA litigation, government investigations (including involving the Department of Labor (DOL)), complex commercial litigation, and dispute resolution. He also previously served as ERISA counsel at M&T Bank and its subsidiary, Wilmington Trust, where he managed ERISA litigation matters nationwide and provided counsel for the companies' ERISA-related business lines. DeMario's practice includes representing fiduciaries, plan sponsors, benefit plan service providers, recordkeepers, and trustees in all phases of ERISA litigation in federal courts across the country. He was recognized in the 2022 edition of Legal 500 for ERISA litigation and in Best Lawyers as One to Watch (2024-2025).

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