What The October 1, 2025 Federal Government Shutdown Means For HHS Operations

Summary:

• At 12:01 a.m. on October 1, 2025, the federal government entered a shutdown. The Food and Drug Administration (FDA) and Centers for Medicare & Medicaid Services (CMS), among other parts of The Department of Health and Human Services (HHS), are not fully closed, but are operating in a limited capacity under HHS's FY 2026 contingency plan and the Anti-Deficiency Act.
• FDA estimates roughly 86% of staff will be retained through (1) carryover user fees and other non-lapsed funds and (2) "excepted" public health/safety work. Activities lacking user fee or other available funding generally will pause.
  • During the lapse, FDA cannot accept applications or other actions that require NEW user-fee payment at submission. Reviews tied to already paid user fees and critical life safety work will continue, but expect slower communications and selective deferrals.
• CMS estimates that 53% of its staff will be retained through (1) funding unaffected by the appropriations bills that have lapsed or being otherwise exempt (50%) and (2) being necessary to continue funded activities and therefore excepted (3%).
  • Several CMS functions will continue during the lapse (e.g., payments to providers), but others will be suspended or delayed (e.g., healthcare facility survey and certification for less serious complaints and oversight of major contractors like the Medicare Administrative Contractors and Call Centers).
• The Office of the Inspector General (OIG) Health Care Fraud and Abuse related activities will continue and all OIG staff will be excepted.

FDA: What Continues?

Core Public Health and Safety Functions

Despite the government shutdown, the FDA remains committed to its essential public health protection responsibilities. Emergency and outbreak responses—including those related to foodborne illness and infectious diseases—continue without interruption. The agency is actively managing product recalls and working to mitigate drug shortages, while also maintaining all actions necessary to protect life and property. Import screening for food and medical products remains in place, and the FDA will still conduct targeted "for cause" inspections when there is an imminent risk to public health.

User Fee–Funded Activities

Work funded by user fees is also ongoing, provided that the relevant user fees were paid prior to the shutdown. This includes the review of marketing applications and supplements under programs such as PDUFA, BsUFA, GDUFA and MDUFA . While these reviews are expected to continue, stakeholders should be aware that goal-date work may slip due to staffing constraints. The FDA will also continue to review requests to conduct "important clinical research," while certain guidance or regulatory work deemed necessary to support patient access to therapies, diagnostics, vaccines, generics, and biosimilars will also proceed.

Staffing and Agency Operations

The agency estimates that approximately 86% of its staff will be retained, either through exempt funds or because their roles are considered excepted. However, many routine functions and communications will be slower than usual, and non-urgent policy work as well as updates to web resources may be delayed.

FDA: What Pauses or Will Be Constrained?

During the shutdown, the FDA is unable to accept new submissions that require user-fee payments at the time of filing. This means that new NDAs, BLAs, certain supplements, 510(k)s, PMAs, De Novo requests, and meeting requests that would trigger fee collection are not being processed. Sponsors who are prepared to file but have not yet paid the necessary fees must wait until appropriations are restored before their applications can be accepted.

A number of discretionary and non–user-fee activities are also paused. Programs that do not have user fee or other available funds, such as many voluntary food programs and some cosmetics activities not directly linked to life-safety, are on hold. Routine domestic inspections that are not tied to an imminent risk are generally deferred, and administrative functions, including recruitment, some FOIA processing, and hiring, as well as longer-horizon policy initiatives, are also delayed.

Even for activities that are funded by user fees, there may be modest delays due to reduced support staff, limited meeting availability and slower electronic correspondence. The issuance of new guidance, updates to enforcement policies and stakeholder engagement may also be delayed unless these actions are directly tied to immediate safety concerns or statutory deadlines.

FDA: Sector-Specific Implications

Drugs and Biologics

The impact of the shutdown varies across different sectors regulated by the FDA. For drugs and biologics, including both innovators and biosimilars, review work is expected to continue if the user fee has already been paid and the application is on file. However, applicants should anticipate some delays in review timelines. No new submissions that require a user fee will be accepted during the shutdown. Critical activities such as safety monitoring, shortage mitigation, and recall work will proceed, but meeting management and general correspondence with the agency may be slower than usual.

For generic drugs, ANDA and supplement reviews will continue if they were previously accepted and funded. However, new fee-triggering submissions cannot be accepted until the government reopens. Work related to drug shortages remains a priority and will continue.

Medical Devices

In the medical device and in vitro diagnostic (IVD) space, ongoing reviews funded by MDUFA will proceed, but the FDA will not accept new fee-paying submissions during the lapse. For-cause inspections and safety actions will continue, while routine inspections are generally paused.

Food

With respect to food, the FDA will maintain import screening, recalls, outbreak investigations and other activities necessary to address imminent risks. However, routine inspections and longer-term initiatives are curtailed until normal operations resume.

Tobacco Products and Cosmetics

For tobacco products, user fee-funded regulatory and review work may continue, but nonessential activities will slow. In the cosmetics sector, particularly under the Modernization of Cosmetics Regulation Act (MoCRA), life-safety activities may continue, but discretionary policy work and the buildout of routine programs could be delayed during the shutdown.

FDA: Other Important Considerations

Sponsors and manufacturers should take several proactive steps during the shutdown. If you have not already submitted and paid for new fee-triggering applications or meeting requests, you likely may need to defer these until the lapse ends. For filings that have already been accepted, closely track milestones and be prepared for some variability in timelines.

When communicating with the FDA, it is important to consolidate and prioritize your questions, as response times are likely to be longer than usual. Be sure to document any impacts the shutdown has on your development timelines and costs, as this information may be useful for future planning or in discussions with the agency.

In terms of inspections and compliance, prepare for the possibility that routine inspections may be deferred. However, you should maintain readiness for for-cause or risk-based visits and ensure that Corrective and Preventive Actions (CAPAs) and recall documentation are up to date.

For ongoing clinical development, continue to fulfill all safety reporting obligations and maintain essential trial oversight. If you have pending requests to conduct "important clinical research," engage with the FDA promptly to determine the status of your request.

Supply chain and import activities will continue to be monitored by the FDA, so ensure that all import documentation is complete and that you are prepared to respond to any holds or inquiries. For those with government contracts, coordinate with your contracting officers as soon as possible to obtain written direction on performance during the shutdown and keep detailed records of any delay costs and mitigation steps you undertake.

CMS: What Continues?

The following CMS activities will continue despite a lapse in appropriations:

Medicare: Medicare is a mandatory program that is not funded through the annual appropriations process. Medicare Program operations will continue. This means, for example, that providers can expect to continue to receive payment for claims with dates of service before and after the date of the shutdown.

Medicaid and CHIP: Medicaid has sufficient funding for the first quarter of FY 2026 due to advance appropriations. Similarly, payments to states for the Children's Health Insurance Program (CHIP) will continue.

Federal Marketplace: Federal Marketplace activities, such as eligibility verification, will be maintained using user fee carryover. The shutdown will not affect the Advance Payment of Premium Tax Credits for Marketplace enrollees and plans will continue to be paid premiums.

Non-discretionary activities: Additional non-discretionary activities, including Health Care Fraud and Abuse Control and Center for Medicare & Medicaid Innovation, will proceed.

CMS: What is Being Paused or Will Be Delayed?

Healthcare facility survey and certification activities will be limited to the most serious complaints. Other survey activities, including recertification surveys, initial surveys, less serious complaint investigations, and all surveys done by federal staff will be suspended.

Policy and rule-making activities will be delayed, with limited staff at CMS, the Office of General Counsel at HHS, and the Office of Management and Budget available for review and support. CMS's summary of its contingency planning states "we would expect delays in rule-making and other policy development." This statement raises questions about whether CMS will be timely in issuing its many Medicare payment rules with statutory deadlines for final rule publication on October 31, 2025, such as the Outpatient Prospective Payment System rule and the Medicare Physician Fee Schedule Rule.

Oversight of major contractors (e.g., Medicare Administrative Contractors, Call Center, IT contractors) will largely cease. Similarly, national and community outreach, education activities, and beneficiary casework services will be suspended or slowed.

Relatedly, CMS meetings with the public and stakeholder groups are likely to be cancelled, which will limit opportunities for the public to engage with CMS as it is making key decisions for 2026 and beyond.

CMS: Sector-Specific Implications

Hospitals and Health Systems

Medicare payments to hospitals and providers will continue, ensuring ongoing cash flow for covered services. However, survey and certification activities will be limited to the most serious complaints, meaning routine recertification and initial surveys will be suspended. This may delay new facility openings, expansions, or changes in provider status. Hospitals should anticipate delays in CMS policy updates, rulemaking, and responses to inquiries, potentially impacting compliance planning and reimbursement forecasting.

Physician Practices and Ambulatory Providers

Medicare and Medicaid payments will continue, but practices may experience delays in policy clarifications and responses to coverage or billing questions. Additionally, Reduced contractor oversight could affect the timeliness and accuracy of claims processing and appeals. Suspension of less urgent survey and certification activities may delay practice expansions, new enrollments, or changes of ownership.

Long-Term Care and Post-Acute Providers

Only the most serious health and safety complaints will be investigated, with routine surveys and recertifications suspended. This could delay licensure renewals and impact quality reporting timelines. Providers should maintain heightened vigilance for compliance and be prepared for possible post-shutdown survey backlogs.

Looking Ahead

The duration of the government shutdown will be a key factor in determining its overall impact. A brief shutdown is likely to result in only limited operational delays, but a prolonged lapse could significantly amplify delays and create communications bottlenecks, even in programs funded by user fees. It is important to remember, for example, that FDA carryover user fees are finite and an extended shutdown could strain these reserves and further slow the agency's work.

Additionally, litigation involving HHS may be delayed, as HHS and DOJ typically ask for extensions for deadlines in litigation when there is a shutdown. The extent of the delays will depend on how long the lapse in appropriations persists.

Finally, while not directly related to HHS's shutdown operations, on September 30, 2025, funding for telehealth flexibilities authorized in connection with the COVID-19 pandemic and hospital-at-home model, among other health extenders, expired. Regarding telehealth, CMS has directed Medicare Administrative Contractors to implement a temporary 10-day claims hold to prevent the need for reprocessing large volumes of claims should Congress act to reauthorize the telehealth flexibilities after the expiration. Providers of telehealth services provided pursuant to the expired flexibilities may continue to submit claims during this period, by payment will not be released until the hold is lifted. If Congress does not extend the telehealth flexibilities, Medicare beneficiaries could be on the hook for payment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.