The federal grants that fund academic medical centers, universities, and research institutes run on decades-old management rules. A proposed overhaul would rewrite them.
The June 22, 2026 issue, Report on Medicare Compliance, published by the Health Care Compliance Association, examined that proposal in “Proposed Shakeup of Federal Grants Paves Way for More Terminations.” Kate Gallin Heffernan, a Member of the Firm in Epstein Becker Green’s Health Care & Life Sciences practice, explained what the changes would mean for institutions that rely on federal research dollars.
The Office of Management and Budget issued the rule in late May. It would phase out fixed-amount awards for “merit-based” discretionary grants, make awards easier to end midstream, let political appointees reject applications before peer review, and bar funding tied to diversity, equity, and inclusion or gender-affirming care. Heffernan’s main caution is that institutions used to flexible awards will face a far stricter accounting regime:
“They want clear, item-by-item justification for how you are spending the grant funds. All grant funding will be subject to very rigid cost accounting principles.”
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To discuss this perspective, contact Kate Gallin Heffernan at kheffernan@ebglaw.com.
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