As of 12:01 a.m. on October 1, Congress' inability to agree upon federal government funding has resulted in a lapse in federal appropriations for discretionary government functions and a directive for federal agencies to shut down activities funded by annual appropriations that are not otherwise excepted by federal law. The shutdown comes after weeks of back-and-forth political jockeying in Congress.
The recently updated contingency plans from the Department of Health and Human Services (HHS) indicate that core program operations for Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) facilitated through the Centers for Medicare & Medicaid Services (CMS), will continue via their mandatory funding streams. Likewise, the Food and Drug Administration's (FDA's) oversight of drugs and devices will continue. Additional rulemaking and policymaking activities, however, may be delayed in the event of a shutdown.
Further complicating this shutdown is the Administration's desire to shrink the size of the federal workforce, as evidenced by several executive orders by President Trump and the reduction in force (RIF) activities of the Office of Management and Budget (OMB), led by Director Russell Vought. On September 24, Vought reportedly issued a memo to agency heads directing them to "consider [RIF] notices for all employees in programs, projects, or activities [(PPAs)] that satisfy all three of the following conditions":
- Discretionary funding lapses on October 1;
- Another source of funding (such as H.R. 1 (P.L. 119-21)) or the Inflation Reduction Act (IRA (P.L. 117-169)) is not available; and
- The PPA is "not consistent with the President's priorities."
As such, some of the contingency staffing plans indicate which employees are in "RIF status," which presumably means those whose positions may be permanently eliminated.
In addition to funding for agency operations, there are several health policies that also expire as of September 30, including several Medicare telehealth flexibilities, Medicare's Hospital at Home program, and a delay of the Medicaid disproportionate share hospital allotment reductions. As is standard practice when extenders are scheduled to expire, CMS has directed all Medicare Administrative Contractors to implement a temporary claims hold for up to 10 business days to prevent the need for reprocessing large volumes of claims. Further, CMS has issued guidance on the provision of telehealth services with additional information for providers of these services on submitting claims that are not currently payable by Medicare. History indicates these extenders usually will be reauthorized retroactively at the end of a government shutdown, but the uncertainty in the interim will likely cause deep concern for providers.
While congressional negotiations have been unsuccessful thus far, the government shutdown will put increased political pressure on members of Congress to find accord. Democrats continue to push Republicans to address the enhanced premium tax credits that are set to expire at the end of the year as part of any deal to provide government funding and reopen government operations. The duration of the shutdown—compounded by future clarity on OMB's efforts to carry out RIFs in tandem with the lapse in appropriations—may be a key factor in each party's willingness to make concessions as talks on Capitol Hill drag on.
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.
