HHS adopts OMB grant regulations in two-phase approach
The Department of Health and Human Services (HHS) published an interim final rule Oct. 2 to fully adopt the Uniform Guidance at Title 2 of the Code of Federal Regulations (CFR), Part 200, relating to federal assistance awards. The updates include codification of 12 previously adopted HHS-specific differences and a two-phase implementation. Applicants and recipients who have been navigating separate regulations for HHS and non-HHS assistance awards will likely welcome this development, which increases the uniformity of regulations applicable to awards across federal departments and agencies.
For Phase 1, effective Oct. 1, 2024, HHS has adopted several changes in 2 CFR 200, including revisions to various thresholds, with codification at 2 CFR 300.1. These revisions provide recipients of new HHS awards issued on or after Oct. 1, 2024 with additional flexibility and burden reduction.
HHS adoption of the Office of Management and Budget (OMB) grant provisions (Phase 1)
| Description of change | Effective date | 2 CFR reference |
|
Current micropurchase and simplified acquisition thresholds at 2 CFR 320 (Procurement Methods) replace HHS-specific definitions that included older threshold amounts. Note: HHS previously adopted the revised thresholds in 2018 but will codify them with the interim final rule. |
Oct. 1, 2024 | 2 CFR 200.320 |
|
Updated OMB closeout provisions include a new “prompt closeout” option and clarifications on indirect rate finalization during the closeout period. Note: HHS previously adopted the OMB closeout provisions in lieu of HHS-specific closeout provisions in September 2023. |
Oct. 1, 2024 | 2 CFR 200.344 |
| The subaward threshold for modified total direct cost (MTDC) calculation increased from $25,000 to $50,000. | Oct. 1, 2024 | 2 CFR 200.1 |
| The equipment threshold increased from $5,000 to $10,000, and clarifications on disposition of equipment were added. | Oct. 1, 2024 | 2 CFR 200.1; 2 CFR 200.313(e) |
| The supplies threshold increased from $5,000 to $10,000, and clarifications on disposition of supplies were added. | Oct. 1, 2024 | 2 CFR 200.1; 2 CFR 200.314(a) |
| The fixed amount subawards threshold increased from $250,000 to $500,000. | Oct. 1, 2024 | 2 CFR 200.333 |
| The de minimis cost rate increased from 10% to up to 15% for U.S. organizations, and clarifications were added. | Oct. 1, 2024 | 2 CFR 200.414 |
| The audit threshold increased from $750,000 to $1 million. | Recipient’s fiscal year beginning on or after Oct. 1, 2024. | 2 CFR 200.501 |
In Phase 2, effective Oct. 1, 2025, HHS will forgo the separate codification of HHS grant regulations in Title 45 of the CFR and fully adopt 2 CFR 200, with HHS-specific changes codified in 2 CFR 300. Only the following 12 HHS-specific modifications will be included in 2 CFR 300. HHS emphasized in its Federal Register notice that these provisions are not new for the HHS applicant and recipient community, and all were previously submitted for public comment.
HHS adoption of the OMB grant provisions (Phase 2)
| HHS-specific modification | Prior CFR reference | New 2 CFR 300 reference (effective Oct. 1, 2025) |
| Provision revised for HHS adoption of 2 CFR 200 | 2 CFR 300.1 | 2 CFR 300.106 |
| Conflict of interest policy requirements that apply in addition to 2 CFR 200.112 requirements | 45 CFR 75.112 | 2 CFR 300.112 |
|
Special provisions for awards to for-profit organizations as recipients, including emphasis on prohibition against profit, program income restrictions, and audits Note: “For-profit organizations” replaces prior 45 CFR 75 references to “commercial organizations.” |
45 CFR 75.216 and 45 CFR 75.322(f) | 2 CFR 300.218 |
| Special provisions for awards to federal agencies, including restrictions on program income, salary/fringe costs for federal employees and indirect costs | 45 CFR 75.217 | 2 CFR 300.219 |
| Nondiscrimination requirements regarding sexual orientation and gender identity in addition to 2 CFR 200.300 statutory and national policy requirements | 45 CFR 75.300 | 2 CFR 300.300 |
| Requirements around expenditure of program income, rebates, etc., prior to a state requesting additional federal cash payments | 45 CFR 75.305(a) | 2 CFR 300.305 |
| Prior approval of research patient care costs required in addition to compliance with approval requirements under 2 CFR 200.308(f) | 45 CFR 75.308(c)(1)(ix) | 2 CFR 300.308 |
| Prohibits HHS from asserting rights to inventions made by the recipient under awards made primarily for educational purposes | 45 CFR 75.307(c)(2) | 2 CFR 300.315 |
| Indirect costs under HHS awards for training, and awards to foreign organizations and foreign public entities performed fully outside the U.S., are limited to 8% of MTDC exclusive of tuition and related fees, direct expenditures for equipment, and subawards in excess of $25,000. Incorporates HHS allowance for negotiated indirect costs to be paid to American University of Beirut and the World Health Organization. | 45 CFR 75.414(c)(1) | 2 CFR 300.414 |
| Requirements for independent research and development costs | 45 CFR 75.476 | 2 CFR 300.477 |
| Clarifies that payments for noncompliance with certain minimum health coverage requirements are not allowable costs | 45 CFR 75.477 | 2 CFR 300.478 |
| Appendix IX, Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals, is transferred to 2 CFR 300 | 45 CFR Appendix IX | 2 CFR 300 Appendix IX |
New HHS assistance awards issued on or after Oct. 1, 2024, should align with Phase 1 of HHS’ adoption of OMB provisions for federal assistance and incorporate new flexibilities and thresholds. For existing and ongoing awards, recipients should look for further guidance from HHS, review their specific award terms, and consult with their agreement officers and grant officers to determine whether a modification would be appropriate to incorporate the new flexibilities and revised thresholds that HHS has adopted with this interim final rule.
Following the recodification of HHS-specific modifications into 2 CFR 300 on Oct. 1, 2025, and pending additional HHS guidance, recipients may again wish to consult with their agreement officers and grant officers to determine if any modification to existing and ongoing awards is necessary.
For more information or to learn more about how RSM can provide support for your HHS awards and other federal awards, contact our government contract advisory team at govconadvisory@rsmus.com.
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