OMB Funding Pause Leads to Medicaid Confusion and Lawsuits

On January 27, 2025, the Office of Management and Budget (OMB) issued a memorandum entitled “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs” which sought at least a two week pause on every federal agency from fulfilling their committed financial obligations.  A footnote in the memorandum explained that this action will not affect Medicare and Social Security but left the status of Medicaid uncertain. 

After the release of the memorandum, healthcare providers reported issues accessing the Medicaid payment portal.  White House spokesperson Karoline Leavitt stated that the portal outage would be soon rectified and that no payments were affected.  The OMB released a separate guidance document on January 28 clarifying that Medicaid will be unaffected by the pause.

On January 28, 2025, a coalition of states filed suit seeking an emergency temporary restraining order against the OMB Directive. As discussed in another HLbyte this week, a separate suit filed by the National Council of Nonprofits, the American Public Health Association, and SAGE, resulted in District Judge Loren L. AliKhan granting “a brief administrative stay,” halting enforcement of the pause until February 3, 2025 at 5:00 pm.