William Walters, Associate in the Health Care & Life Sciences practice, in the firm’s Washington, DC, office, was quoted in Fierce Healthcare, in “Trump's Federal Assistance 'Pause' Axed Following Confusion, Litigation, System Outages,” by Dave Muoio and Noah Tong.
Following is an excerpt:
The Trump administration's “temporary pause” on federal financial assistance is no more—though it does not seem that the White House is entirely ready to call it quits.
On Wednesday, the Office of Management and Budget (OMB) distributed a new internal memo rescinding a hold that threw much of the country's federal funding recipients into a panic.
"OMB Memorandum M-25-13 is rescinded," according to the one-page memo obtained by Fierce Healthcare. "If you have questions about implementing the President’s Executive Orders, please contact your agency General Counsel."
The pause, shared Monday afternoon, was set to go into effect at 5:00 p.m. Tuesday before opponents secured a last-minute delay until Feb. 3 from the courts.
In a new filing, attorneys for the Department of Justice told the court that the temporary restraining order is no longer necessary.
"Based on the rescission of the challenged action in this case, Plaintiffs’ claims are moot, and there is no need for prospective relief—let alone emergency relief in the form of a temporary restraining order—against the nowwithdrawn Memorandum," they wrote.
However, comments from White House Press Secretary Karoline Leavitt suggest that the administration does not want to back down from the pause's broader goals.
"This is NOT a rescission of the federal funding freeze," she wrote on X. "It is simply a rescission of the OMB memo. Why? To end any confusion created by the court's injunction. The President's [executive orders] on federal funding remain in full force and effect, and will be rigorously implemented."
Plaintiffs who filed a lawsuit against the freeze and the DOJ are slated to appear in court later this afternoon.
The sweeping hold would have included federal grants, cooperating agreements and loans, among other types of obligations or disbursements that OMB contends made up more than $3 trillion of spending in fiscal year 2024.
Footnotes outlined an exception for “assistance received directly by individuals,” and specified that “nothing in this memo should be construed to impact Medicare or Social Security benefits.”
A frequently asked questions explainer from OMB attempted to offer further clarity on which programs exactly are affected. Distributed Tuesday, it said mandatory programs like Medicaid and SNAP will not be paused—however, that promise contradicted alarms raised by industry figures and lawmakers that state Medicaid portals had stopped working or were unreliable.
"My staff has confirmed reports that Medicaid portals are down in all 50 states following last night's federal funding freeze," Sen. Ron Wyden, D-Oregon, said Tuesday in a post on X. "This is a blatant attempt to rip away health insurance from millions of Americans overnight and will get people killed."
Other lawmakers confirmed on X their states had been locked out of the portals. In a statement addressing the broader freeze, Illinois State Comptroller Susana Mendoza said her office is "doing everything it can to process federal funds prior to the deadline" and was fortunate to prioritize Medicaid payments.
"In fact, on Thursday we processed all $518 million in Medicaid bills on-hand and received our federal match yesterday before the administration shut down our access to the Medicaid system," she said.
Broad language, discrepancies sowed confusion
"Funds for small businesses, farmers, Pell grants, Head Start, rental assistance and other similar programs will not be paused," said the OMB in the Tuesday FAQ. "If agencies are concerned that these programs may implicate the President’s Executive Orders, they should consult OMB to begin to unwind these objectionable policies without a pause in the payments."
Still, reactions from organizations, government policy experts and individuals working in care outlined concerns that the memo’s ambiguous language made it difficult to know what health, research and social support programs were caught in the pause—though they suspect that many will be affected.
“Any grants that have not been paid out in their entirety will be paused pending this review,” Will Walters, a healthcare attorney at Epstein Becker Green, said in an emailed analysis of the memo. “This will impact every imaginable state-federal cooperative program, including most run by state health agencies, which receive the lion's share of their resources from the federal government. I am already hearing from state folks that their federal partners have gone radio silent and revised guidance is coming for certain programs.”
