The Trump administration recently rescinded a memo about a temporary pause of federal financial assistance programs. Questions linger among palliative and pediatric care providers around the future outlook of Medicaid reimbursement as the administration pushes forward on certain policies.
The White House, through the Office of Management and Budget (OMB), recently issued a memo that, if enacted, would have put a freeze on all activities related to federally funded programs receiving grants, loans and other forms of financial assistance. The memo was written pursuant to an executive order signed by President Donald Trump.
The news reportedly caused confusion and concern among health care providers, particularly those that predominantly rely on Medicaid. This included some palliative and pediatric providers.
“Let me provide the certainty and the clarity that all of you need,” Karoline Leavitt, White House press secretary, said in a recent media briefing. “This is not a blanket pause on federal assistance in grant programs from the Trump administration. However, it is the responsibility of this president and this administration to be good stewards of taxpayer dollars. The president signed an executive order directing OMB to do just this. And the reason for this is to ensure that every penny that is going out the door is not conflicting with the executive orders and actions that this president has taken.”
Freeze halted, funding review continues
U.S. District Judge Loren L. AliKhan halted the temporary pause shortly before the executive order took effect. The OMB also rescinded the federal funding freeze memo.
Additionally, a second judge, U.S. District John J. McConnell, Jr. recently signed a restraining order blocking any future federal spending pauses in a separate lawsuit. The lawsuit was filed by a coalition of roughly 23 states and the District of Columbia, including Wisconsin, Rhode Island, Arizona, Illinois, California and New York, among others. The funding freeze would have violated federal law and the U.S. Constitution by creating new conditions on funds that have already been awarded, according to the claimants.
“The Trump Administration’s attempts to withhold federal funding from Wisconsin hurts kids, families, seniors, and communities across our state,” Wisconsin Governor Tony Evers said in a recent statement. “This was a bad idea from the beginning, and I will continue to fight these efforts every step of the way. The Trump administration must reverse course and follow the law.”
Judge AliKhan has, as of Feb. 2, 2025, extended the temporary block of the freeze, according to a recent Associated Press report. The extension came after several nonprofit organizations expressed financial struggles in obtaining awarded funds from federal grants and loans, the report indicated.
The temporary pause would have provided time for the Trump administration to review current federal agency programs and determine the best uses of funding consistent with the law and the administration’s priorities, the OMB stated in the rescinded memo.
Despite the rescission, the executive order is still in effect, with the Trump administration pursuing a review of federal funding expenditures to ensure alignment with the president’s policies, Leavitt indicated. The OMB is currently working alongside the Department of Government Efficiency (DOGE) to oversee federal funding for certain programs, she stated. These include all activities related to diversity, equity and inclusion, financial assistance for foreign aid and nongovernmental organizations, gender ideology and climate change, among others.
The memo defines “federal financial” assistance to mean “[a]ssistance that recipients or subrecipients receive or administer. “Nothing in this memo should be construed to impact Medicare or Social Security benefits,” the memo indicated. The document did not mention Medicaid by name.
The palliative care impacts
A key clarifying point for palliative care providers to understand is that Medicaid programs were exempt from the OMB’s pause, according to the National Alliance for Care at Home.
A growing number of states have introduced palliative care Medicaid reimbursement pathways in recent years. The U.S. Centers for Medicare & Medicaid Services (CMS) has also expanded coverage for certain Medicaid programs such as state-based tribal health care and pediatric programs, including Children’s Health Insurance Programs (CHIP).
Medicaid health care coverage, even with a federal funding freeze, would have remained unchanged, with continued access for palliative and pediatric patients who rely on these benefits, the Alliance indicated.
“Pausing Medicaid funding is not permissible under the Social Security Act,” the Alliance said in a statement shared with Hospice News. “However, it is important to note that Medicaid, just like Medicare and Social Security, is an entitlement and not discretionary grant funding. The mandatory nature of the funding should prevent it from being paused.”
Nevertheless, some community-based providers welcomed the pause’s rescission with a sigh of relief, according to Sunshine Community Health Center (SCHC).
A federal freeze could have potentially led to an unstable funding environment for health care providers nationwide, SCHC indicated in a statement. The Alaska-based health system offers palliative and dental care, behavioral health and women’s health services, among others.
The OMB pause sent “shockwaves” across the health continuum and could possibly have hindered the ability to support community needs, SCHC stated.
“Federally qualified health centers, such as SCHC, rely heavily on federal grants to provide essential medical services to underserved populations,” the health system said in a statement. “The OMB Pause created uncertainty and concern about potential disruptions in funding. While the grant freeze has been lifted, there may still be lingering effects on certain projects due to prior executive orders.”
Organizations that are dependent on federal grants to help fuel health care programs include those with palliative care service lines, as well as pediatric programs. Palliative care programs have increasingly cropped up across the country, with some organizations receiving federal or state grants to fuel initiatives aimed at improving quality and access among underserved seriously ill populations.
“Thoughtlessly disrupting or dramatically cutting funding for public safety, educational programs, public health, and many other essential services threatens to cause serious damage to our communities,” Evers stated.