The government shutdown has gone on for weeks. Even if it’s resolved soon — or if its resolution comes before this piece gets published — the effects of this shutdown will linger in the healthcare landscape for some time.

A government shutdown doesn’t just pause legislative drama in Washington. It disrupts operations across the healthcare system that depend on federal programs like Medicare, Medicaid, and the agencies that oversee them.

Today, we’ll explore how the shutdown has impacted the industry, as well as what effect it may have on the industry even after it ends.

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Medicare Payments on Hold

As part of its initial contingency plan, the Centers for Medicare & Medicaid Services (CMS) instructed all Medicare Administrative Contractors (MACs) to implement a temporary claims hold beginning in early October.

This hold was a precautionary measure. If Congress later made retroactive changes to Medicare funding, then existing claims could be processed without creating a massive administrative backlog.

That said, this is a move that came with significant consequences. As Medicare payments are slightly adjusted by region, those areas that typically receive lower reimbursement rates were expected to feel the impact of these holds first — and most significantly.

However, CMS has since reversed course. As of October 21st, the agency has instructed MACs to lift the holds and process for payment the majority of claims for services rendered on or after October 1. Specifically, claims under the Medicare Physician Fee Schedule, ground ambulance transport, Federally Qualified Health Centers (FQHCs), and telehealth services definitively for behavioral and mental health are now moving forward for payment.

For many providers, this is a welcome relief. However, the resumption of payments is not universal. Other categories of claims may still experience delays until Congress finalizes new funding or CMS issues additional guidance.  For example, MACs may still hold claims for services in areas where the Geographic Practice Cost Index (GPCI) is below 1.0, which includes states such as North Carolina and Wisconsin.  

At the time of writing, we suggest that providers continue submitting claims as normal while monitoring CMS updates closely. 

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The Expiration of Pandemic-Era Telehealth Rules

Since the pandemic, it seems that care provided via telehealth has been a constant source of debate and argument.

In the initial stages of the COVID-19 pandemic, Congress and CMS granted then-unprecedented flexibility for Medicare beneficiaries regarding telehealth. This allowed recipients to receive telehealth care almost anywhere — a move that fundamentally changed how many interfaced with the healthcare system.

While many have argued that this added flexibility was a success, these additional privileges were never made permanent. Consequently, as of October 1st, those flexibilities expired, as there was no government funding bill to extend them.

In practice, this means that telehealth services are again limited largely to rural areas and to patients located at healthcare facilities such as hospitals or clinics. For most non-behavioral services, home-based telehealth is no longer covered.

The implications are particularly significant for emergency medicine and transitional care. Emergency Department clinicians who had used telehealth for post-discharge follow-ups and triage must now return to in-person models or risk nonpayment. Hospice recertifications again require face-to-face visits, and certain clinician types who were temporarily eligible to bill for telehealth under pandemic rules may now find those claims denied.

That said, there is one critical exception to this rule: behavioral and mental health services. These services continue to be covered, aligning with CMS’ decision to prioritize payment for these claims despite the shutdown. 

Those with Medicare Advantage plans may still be able to access telehealth services independent of Medicare, though coverage details vary by plan. Additionally, clinicians participating in Medicare Shared Savings Program Accountable Care Organizations (ACOs) can continue offering covered telehealth services without rural or site restrictions, including to patients in their homes.

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What’s the Path Forward?

When our government resumes, several lawmakers have already introduced bipartisan legislation to extend telehealth flexibility, which would continue pandemic-era telehealth authorities through the 2027 fiscal year.

However, other parts of our government are proposing significant cuts. For example, the House’s fiscal 2026 Labor-HHS-Education appropriations bill would cut HHS funding by roughly 6% compared to the prior year — a move that would complicate efforts to expand or modernize federal programs.

Even as CMS begins releasing certain payments, there will be significant administrative fallout. Practices must factor in the claims that are eligible for immediate payments and the ones that are still in limbo, while also re-educating patients who have grown accustomed to telehealth services about the new rules.

Concerning the latter, CMS advises that clinicians should consider issuing Advance Beneficiary Notices of Noncoverage (ABNs) to protect both the practice and the patient from unexpected costs.

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Conclusion

The government shutdown and the uncertainty it caused has done more than stall federal operations. It has highlighted just how much our healthcare system depends on predictable, stable policy. The decision taken by CMS to release key payments is an encouraging sign, but broader issues about telehealth access and Medicare’s administrative resilience remain unresolved and must be addressed when the government begins working again.

No matter when the government begins working again, or if it already has by the time you’re reading this, the shutdown has caused problems that will reverberate through the industry for some time. We will keep you updated as policy shifts to address these consequences.