The Proposed HHS Budget for 2027: Key Takeaways

On April 3, 2026, the director of the Office of Management and Budget submitted to Congress President Donald Trump’s budget for 2027—proposing $111.1 billion in discretionary budget authority for the U.S. Department of Health and Human Services (HHS) for Fiscal Year 2027, beginning October 1, 2026, and ending September 30, 2027.

The number represents a $15.8 billion or 12.5 percent decrease from the 2026 enacted level and suggests ongoing emphasis on combatting improper payments and practices in health care. The proposed budget investments also signal potential shifts that will impact service delivery for certain communities and business operations for entities that contract with the federal government or federal government grantees. We’ve noted the following key takeaways from the HHS Budget in Brief on these points, below.

CMS Program Integrity & the HHS OIG

The FY 2027 HHS budget calls for a $35 million increase in discretionary spending to further address fraud, waste, and abuse in the healthcare industry relative to government payer programs. Discretionary spending for the Health Care Fraud and Abuse Control (HCFAC) Program totals $976 million; this would give $740 million for the Centers for Medicare & Medicare Services (CMS), $138 million for the Department of Justice (DOJ) and $98 million for the HHS Office of Inspector General (OIG). The administration represents that this investment will “more than pay for itself” based on recent trends.

Specifically, the administration estimates a gross savings yield of $1.2 billion resulting from this alignment of funding. Achieving this kind of savings will likely require continued, if not increased, investigative and enforcement activities. Such activities are likely to occur in the Medicaid program, which has already seen considerable scrutiny in states like New York and Minnesota (see EBG blog post here) and California. The Budget in Brief states that CMS will “ramp up oversight of key Medicaid programs by expanding audits and investigations and establishing new processes to support law enforcement and recover the overpayment of funds” in FY 2027.

Conversely, however, the budget briefing indicates an overall decrease of $84 million in funding for the HHS OIG. While the briefing document references Medicare and Medicaid oversight and initiatives such as the 2025 National Health Care Fraud Takedown (see EBG blog post here), it is relatively short on detail regarding Medicaid or further oversight and enforcement in the Medicaid program. Such lack of detail could be at least partly explained by the HHS Department of Government Efficiency’s intention to crowdsource identification of Medicaid fraud via its release of “the largest Medicaid dataset in department history” (see EBG blog post here).

Taken together, the statements, proposed investments, and data released by and under this administration strongly suggest that Medicaid payers and providers will continue to face a landscape marked by heightened scrutiny and significant investigative and enforcement activity.

CMS Program Management

The budget calls for $811 million to carry out operational needs and beneficiary rights guaranteed by Medicare Parts A & B. It further says, “CMS supports the growing number of beneficiaries choosing to enroll in Medicare Advantage and Prescription Drug Plans.” This statement stands in contrast to statements made by CMS Administrator Dr. Mehmet Oz in 2025 wherein the Administrator expressed the opinion that fraud, waste, and abuse were widespread throughout the Medicare program, including Medicare Advantage.

The briefing document also reflects a proposed investment of $112 million for Medicare Parts C & D administrative needs to support rulemaking, information technology systems, and timely appeals. The document also proposes “rebalancing” work away from federal contractors, stating that CMS has six contractors for every federal employee. Should these changes come to pass, payers and providers alike should expect rulemaking activity that could impact their operations and compliance programs. The proposed “rebalancing” could also impact how payers and providers interact or engage with CMS and will likely impact those entities that currently contract with or provide services to CMS.

Children, Families, and Communities Discretionary Spending

Overall, the administration’s proposed budget calls for a net reduction in services and programs for seniors and disabled adults. The administration also proposes a new model for overseeing these programs, which would blend multiple different HHS divisions into a consolidated entity. Specifically, the plan includes merging the Administration for Community Living and Administration for Children and Families into a new Administration for Children, Families, and Communities; the plan also creates a new Administration for Healthy Aging.

These changes and proposed budget cuts signal potential challenges ahead for state governments, Area Agencies on Aging, and contract partners or other stakeholders that serve the older adult population. Such changes have the potential to be particularly impactful in states like California, which has invested heavily in its older adult service network since Governor Gavin Newsom’s executive order calling for the creation and implementation of a Master Plan for Aging.

Conclusion

Congress may approve, reject, or modify the proposed FY 2027 HHS budget. Some have noted that a comprehensive comparison between 2026 and 2027 HHS spending is difficult, given that programs are eliminated and funding is consolidated or is moved to different agencies.

HHS Secretary Robert F. Kennedy Jr. appears to be largely defending the cuts, with the exception of proposed cuts to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and Supplemental Nutrition Assistance Program (SNAP), according to NPR. Kennedy testified before Congress on April 16 and is slated to testify today, April 21. We will see what happens, but, in the meantime, payers, providers, and other entities that operate in these spaces should take heed of the administration’s signals and give continued thought and consideration to their compliance programs and day-to-day operations to minimize, if not outright avoid, negative impacts from this proposed budget.

Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.