Welcome to another round of PYA Washington Updates. This week, it’s all about the federal government shutdown.
Government Shutdown
Because Congress failed to reach a deal on appropriations for federal agencies for federal fiscal year 2026, the federal government shut down at 12:01 a.m. ET on Wednesday. Of course, the government does not come to a grinding halt: those government services deemed essential will continue despite the shutdown under previously developed contingency plans. Here’s how healthcare providers are impacted by the shutdown:
Traditional Medicare Payments
These payments to providers are mandatory and not impacted by the shutdown. According to CMS, Medicare Administrative Contractors “will continue to perform all functions related to Medicare Fee-for-Service claims processing and payment.” CMS directed MACs to implement a temporary claims hold (typically 10 business days) to avoid having to reprocess claims if Congress acts in short order to retroactively renew certain expired provisions (discussed below) as part of legislation to end the shutdown. Providers should continue to submit claims, but payment will not be made until the hold is lifted. This hold, however, should have minimal impact on providers due to the 14-day payment floor.
Medicare Advantage
The shutdown should not impact plans’ payments to providers, with the exception of telehealth services (discussed below).
Medicaid
CMS reports sufficient funds are available to make payments to the states through the end of this calendar year. Thus, Medicaid payments to providers should not be impacted by the shutdown unless it continues for three months. (The 2018 shutdown lasted 35 days, the current record holder for the longest shutdown.)
Medicaid Disproportionate Share Payments
The Affordable Care Act called for significant cuts to Medicaid DSH payments, to the tune of $8 billion a year for four years. Congress has repeatedly delayed these cuts, but the latest delay expired on September 30. CMS makes Medicaid DSH payments to states quarterly, so each state will have to decide how to impose cuts based on its assessment of the likely duration of the shutdown and whether Congress will make the delay in DSH cuts retroactive, as it did after the 2018 shutdown.
Federally Qualified Health Centers
Federal funds to FQHCs come from grants paid in part through the Community Health Center Fund and Medicare and Medicaid reimbursement for services. The money in the fund ran out on September 30. If Congress doesn’t add money to the fund in short order, FQHCs may have to reduce staff and scale back services.
Medicare Dependent Hospital and Low-Volume Hospital Programs
Funding for these enhanced Medicare payment programs expired on September 30. Following the 2018 shutdown, Congress retroactively reinstated funding for these programs. Assuming that happens again, and assuming the shutdown ends before the aforementioned temporary hold is lifted, these hospitals will receive enhanced payment uninterrupted. But if the shutdown ends after the hold is lifted, these hospitals will not receive enhanced payments when MACs pay claims submitted before the end of the shutdown with dates of service on or after October 1, but they will later be made whole if the programs are reinstated retroactively.
GPCI Floor
Medicare Physician Fee Schedule payments are adjusted using geographic practice cost indices, or GPCIs. The GPCI floor raises the work GPCI value to the national average for any locality below that average, resulting in higher fee schedule payments for providers in lower-cost (often rural) areas. The GPCI floor expired on September 30. After the 2018 shutdown, Congress retroactively reinstated the floor. If that happens again, providers who benefit from the floor will be impacted in the same manner as hospitals in the Medicare Dependent or Low-Volume Hospital Programs.
Medicare Ambulance Add-on Payments
The funding for these payments also expired on September 30. Assuming Congress does the same thing it did following the 2018 shutdown, the impact on ambulance providers will be the same as discussed above.
Acute Hospital Care at Home Waivers
This COVID-19 era waiver, which reimbursed approved hospitals at inpatient rates for acute care services furnished in patients’ homes, expired on September 30. CMS instructed participating hospitals to either discharge patients receiving these services or move them to an inpatient facility.
Medicare Telehealth Coverage
All remaining COVID-19 era telehealth waivers expired September 30, severely restricting Medicare coverage for these services. As of today:
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Medicare covers tele-behavioral health services furnished to a beneficiary regardless of location at the time of service. However, these services are covered only if (1) the service is furnished by a physician, a non-physician practitioner, or an RHC or FQHC; and (2) for a beneficiary for whom the billing practitioner has not previously furnished tele-behavioral health services, the practitioner must have a face-to-face visit with the beneficiary within six months of initiating telehealth services (delayed until January 1, 2026 for RHCs and FQHCs) and must have a face-to-face visit once every 12 months following initiation of tele-behavioral health services (with certain exceptions).
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Medical telehealth services are now covered only if the beneficiary is physically present at a facility in a rural area at the time of service. In other words, these services can no longer be provided to a beneficiary in his or her home. Note, however, that physicians and non-physician practitioners presently participating in a Medicare Shared Savings Program ACO that is under two-sided risk and has selected prospective assignment will continue to receive payment for medical telehealth services furnished to a beneficiary in his or her home.
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Physical therapists, occupational therapists, and speech-language pathologists cannot bill Medicare for telehealth services.
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Through December 31, 2025, RHCs/FQHCs may bill Medicare for medical telehealth services under HCPCS G2025 (~$97) (i.e., an RHC/FQHC can be a distant site provider), but the beneficiary must be physically present at a facility in a rural area at the time of service.
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Medical telehealth services CMS previously identified as covered when using an audio-only platform are no longer covered. Instead, a telehealth service furnished audio-only will be covered only if (1) the beneficiary is at home when the service is provided (i.e., it must be a tele-behavioral health service); (2) the practitioner is capable of providing an audio-video connection; and (3) the beneficiary cannot or does not want to connect by video.
There are three options for providers that want to continue providing telehealth services pending Congressional action. First, CMS has advised providers to consider securing an Advance Beneficiary Notice and billing the beneficiary for the service. However, if Congress were to make coverage retroactive, the provider would have to refund any beneficiary payment. Second, a provider can submit claims as it always has, with the understanding that the claim will be denied (once the aforementioned hold is lifted). What would happen is not clear if Congress were to make coverage retroactive (i.e., whether the MAC would automatically reprocess the claim or whether the provider would have to appeal the denial or resubmit the claim). Third, a provider could hold the claims until the shutdown is resolved.
Medicare Advantage and Commercial Payer Telehealth Coverage
Because MA plans are required to provide the same coverage as traditional Medicare, plans have covered telehealth services consistent with the COVID-19 waivers. With the expiration of the waivers, plans are no longer required to provide coverage. However, MA plans have the flexibility to pay for Medicare-covered services furnished via telehealth. Thus, a provider will need to communicate with the MA plans with which the provider contracts to determine coverage. Similarly, a provider will need to communicate with commercial plans that have previously covered telehealth services to determine if such coverage remains, as some payers have tied coverage to Medicare policy.
CMS Survey and Certification Activities
On October 1, CMS issued a memorandum detailing the shutdown’s impact on its survey and certification activities.
Annual Medicare Payment Rules
In a typical year, CMS publishes the final calendar year payment rules (including hospital outpatient and physician fee schedule) around November 1. CMS has warned the publication of regulations may be delayed due to the shutdown.
Rural Health Transformation Program
The RHTP application process is full steam ahead, with no change to the November 5 deadline. CMS has warned there may be some delay in issuing additional guidance to states as they prepare their applications.
Reduction in Force
The Trump Administration has threatened to use the shutdown as a reason for significant, permanent cuts to the federal workforce. Such reduction in force, however, has not started, yet.
PYA Webinars
On October 1—the first day of the new federal fiscal year—PYA presented a webinar on the latest healthcare-related developments in Washington, including the shutdown. You can access a recording of the webinar here. On October 15, we will be presenting a webinar on compliance risk assessments for which you can register here.
Please do not hesitate to contact us if you have any questions regarding these latest developments. You can also continue to check PYA’s website for updates.
FAQ & Key Takeaways
The details above outline how the shutdown impacts healthcare providers. This FAQ offers a quick reference to the most common questions and key issues providers are asking about now.
What happens to Traditional Medicare payments during the shutdown?
Traditional Medicare payments are mandatory and not impacted by the shutdown. MACs will continue to process and pay claims. However, CMS has directed a temporary claims hold (typically 10 business days) to prevent reprocessing if Congress reverses expired provisions. Providers should still submit claims, but payment may be delayed until after the hold.
Will Medicare Advantage payments to providers be affected?
No. Generally, the shutdown should not impact Medicare Advantage plans’ payments to providers, except potentially for telehealth services (depending on how coverage is handled).
How will Medicaid payments to providers be affected by the shutdown?
CMS reports that there are sufficient funds to make Medicaid payments to states through the end of this calendar year. Therefore, unless the shutdown continues for about three months, Medicaid payments to providers should not be disrupted.
What is the status of Medicaid Disproportionate Share (DSH) payments during the shutdown?
The delay of cuts to Medicaid DSH payments expired on September 30. Because DSH payments are made quarterly, states may have to decide whether to impose cuts based on how long the shutdown lasts, and whether Congress will make those cuts retroactive, similar to what was done after the 2018 shutdown.
What risk do FQHCs face during the shutdown?
Funding through the Community Health Center Fund expired on September 30. Without renewed funding, FQHCs may have to reduce staff or scale back services if Congress does not act quickly.
Are enhanced payments under Medicare Dependent and Low-Volume Hospital Programs still valid?
Funding for these enhanced payment programs also expired on September 30. Historically, Congress has retroactively reinstated funding after a shutdown. If that happens, the enhanced payments may be made whole. But if the shutdown ends after the temporary claims hold is lifted, providers may see gaps in payments for claims submitted during that period.
What is the GPCI floor, and how is it affected by the shutdown?
The GPCI (Geographic Practice Cost Index) floor, which boosts the “work” GPCI value to the national average for lower-cost localities (often rural), expired on September 30. If Congress reinstates it retroactively (as in previous shutdowns), the benefit may be restored—but until then, providers may see reduced payments.
What changes have occurred to telehealth coverage for Medicare?
All COVID-19 era telehealth waivers expired on September 30. Tele-behavioral health services may still be covered under certain conditions (location of beneficiary, practitioner type, required face-to-face visits). Other telehealth services generally require the beneficiary to be physically present at a rural facility. Some waivers remain temporarily for RHCs/FQHCs under certain codes through 12/31/2025, but audio-only services are now tightly restricted.
What options do providers have while the shutdown is still ongoing for telehealth services?
Providers have three primary strategies: 1) Issue an Advance Beneficiary Notice (ABN) and bill the beneficiary (with potential refund if coverage is later made retroactive). 2) Submit the claim normally, knowing it may be denied, with the possibility of automatic reprocessing or appeal. 3) Hold off submission until the shutdown is resolved.
How are Medicare Advantage and commercial payers handling telehealth now?
Medicare Advantage plans are no longer required to maintain telehealth coverage post-waiver expiration, though they may opt to do so. Providers must check contracts with MA and commercial payers to confirm whether telehealth services remain covered.
Will CMS survey and certification, or rulemaking activities be delayed because of the shutdown?
Yes. On October 1, CMS issued a memo outlining the impact on its survey and certification activities. Also, publication of the annual Medicare payment rules (e.g. hospital outpatient, physician fee schedule) around November 1 could be delayed due to the shutdown.
Is the Rural Health Transformation Program (RHTP) affected?
The RHTP application process is proceeding with no change to the November 5 deadline. However, CMS cautions that guidance to states regarding their applications may be delayed.
Could the shutdown lead to a federal workforce reduction in healthcare-related agencies?
There has been talk of using the shutdown as justification for a reduction in force, but as of now, no permanent cuts to the federal workforce have occurred.
