Government Shutdown 10/1/25

The federal government entered a shutdown as of October 1, 2025, following the expiration of funding amid a bitter legislative standoff. Healthcare providers, payers, and anyone working with Medicare or federal programs will see some direct impacts—but much remains steady. Here’s what you need to know about how the shutdown affects federal agencies, Medicare operations, and telehealth policy.

Why Did the Shutdown Happen?

Late last week, the House of Representatives passed a seven-week Continuing Resolution (CR) to keep government funding on life support through Thanksgiving, but the Senate did not pass this measure. The mathematics of the Senate’s 60-vote rule, coupled with party-line friction, stalled the process. Democrats have drawn a line: they want any deal to include an extension of enhanced ACA premium subsidies set to expire soon, warning that insurers need rate certainty before open enrollment begins. Both parties sense political leverage and are posturing to win public opinion.

Federal Agency Operations During Shutdown

Each federal agency must follow shutdown contingency plans, specifying which functions are “essential” and which will be paused. The Department of Health and Human Services (HHS) recently issued such guidance, and other agencies are following suit. In general:

• Essential services—like defense, law enforcement, air traffic control, TSA, and the Postal Service—continue with staff working but unpaid.

• Non-essential staff are furloughed, causing delays in services from tax processing to medical device reviews.

• Agencies may use leftover funds to keep some activities running temporarily, but disruptions will increase over time.

Agencies overseeing Medicare, Social Security, and national security are largely exempt from layoffs.

Medicare, CMS, and Provider Impacts

Medicare remains an entitlement program and is not subject to these appropriations, so critical functions—including provider claim submissions and payments—will mostly continue. However, the Centers for Medicare & Medicaid Services (CMS) is implementing a temporary claims hold for up to 10 business days on some payments to ensure consistency with new laws that may pass during or after the shutdown. This is standard practice and, because of Medicare’s 14-day payment floor, the impact on providers should be minimal: claims can be submitted, but some payments are delayed.

What else changes?

• Approximately half of CMS staff are furloughed, so functions like provider enrollment and audit programs (e.g., Targeted Probe and Educate) may be delayed.

• Legislative activity in Congress is mostly paused, as much staff is furloughed and attention is focused on resolving the shutdown rather than new laws or hearings.

Telehealth Policies Revert as COVID-19 Flexibilities Expire

October 1 is also the date that many COVID-19 telehealth waivers and flexibilities expired. Unless Congress acts, Medicare reverts to pre-pandemic telehealth rules for most (non-behavioral/mental health) services. This means:

• Many telehealth services can no longer be performed for beneficiaries in their homes or outside of rural areas.

• Hospice recertifications once again require in-person encounters.

• Providers may need to use Advance Beneficiary Notices of Noncoverage for telehealth services that are no longer reimbursable.

• Practitioners in certain Medicare Shared Savings ACOs can still offer some telehealth services to eligible beneficiaries in their homes, with no special approval required.

Providers should monitor Congressional action, as further policy changes are possible if/when a funding bill does pass.

What to Expect in the Coming Weeks

• Most government services facing a pause should resume when funding is restored, but the longer the shutdown drags on, the bigger the delays, especially for administrative and regulatory activities.

• Air travel may continue but could see slowdowns if unpaid essential workers, such as TSA agents or air traffic controllers, call out sick in protest.

• CMS and other agencies will provide updates as the situation develops. The HBMA Government Affairs office will also circulate new guidance as agencies issue revised instructions.

Quick Answers for Healthcare Providers

Final Thoughts

While another messy shutdown creates uncertainty, core Medicare payments and entitlement services persist for now. The expiration of pandemic-era telehealth flexibilities returns compliance challenges to the forefront. Providers should prepare for processing delays, track regulatory updates, and stay tuned for Congressional developments that could swiftly change the rules once again.

https://www.cms.gov/medicare/coverage/telehealth https://www.cms.gov/files/document/shared-savings-program-telehealth-fact-sheet.pdf.