This action directly impacts all health-related research by imposing a standardized indirect cost rate of 15%. Indirect costs—used by institutions to cover administrative expenses, facility maintenance, and operational support—have previously averaged around 60% for some organizations. By capping the rate at 15%, institutions that conduct substantial health research may struggle to cover essential operational costs associated with managing grants, potentially slowing progress in understanding health disparities and developing effective interventions.
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Department of Health and Human Services
An internal instruction issued by a government agency outlining policies, procedures, or actions to be followed by agency employees. While not legally binding outside the agency, these directives guide agency operations and decision-making.
Who It Impacts: Employees and divisions within the issuing federal agency. These directives guide how staff enforce regulations, allocate resources, and interpret laws. They may also affect industries regulated by the agency.
Who Is Not Impacted: The general public and businesses are not directly bound by agency directives, though these policies may indirectly influence enforcement practices that affect them.
Date Enacted
February 7, 2025
Last Updated
May 30, 2025
Policy Type
Education
Healthcare Delivery, Services & Quality
Public Health
Health and Disability
Summary
This action mandates that all new grants issued by the National Institutes of Health, as well as existing grants with costs incurred from February 10, 2025, onward, will be subject to a 15 percent cap on indirect cost rates. NIH will no longer negotiate these rates to account for regional or organizational variations.
Impact Analysis
Legal Challenges
Commonwealth of Massachusetts v. NIH (D. Mass.) - filed 2/10/25
Association of American Universities et al v. HHS (D. Mass.) - filed 2/10/25
Association of American Medical Colleges v. NIH (D. Mass) - filed 2/10/25
Take Institutional Action
Healthcare institutions should actively challenge any attempts by the NIH to unilaterally alter previously negotiated indirect cost rates and continue advocating for adequate indirect rates in future grant awards. Congress has expressed particular interest in this decision, and health systems and providers are encouraged to contact their Members of Congress to explain the potential impact of this change on their research programs and institutional operations. For providers new to engaging with policymakers, the American Medical Association offers a helpful resource, the AMA Guide to Communicating with Congress.
