Speaking at what was originally billed as a press conference about increasing nutrition education requirements at the University of Kentucky, Kennedy instead broke news about the Trump administration's decertification of Network for Hope.
The nonprofit has been at the center of ongoing controversies over its organ donation practices, following allegations that it pushed hospital workers in the direction of organ recovery despite signs of revival in patients.
Wednesday, Kennedy said the network has not shown sufficient improvement and will be losing its contract with the federal government.
"Despite repeated oversight, repeated warnings, corrective action plans, and multiple opportunities to improve, federal reviewers found serious deficiencies in nearly 30 percent of the cases that they examined," he said.
Network for Hope has said it's worked "cooperatively with Congress and oversight agencies" and is committed to transparency and accountability.
Health Resources and Services Administration official Tom Engels said patient care would not be interrupted by the decision to sever ties.
"I want to emphasize even though the action that the secretary is announcing today, care will still be offered to the patients that are served by this organization. That will not stop HRSA and CMS will continually closely monitoring the organization," he added.
Kennedy and Engels did not take any questions from the press on other topics.