How a Federal Government Shutdown Impacts Healthcare Billing & Reimbursement

Sources: American Academy of PAs (AAPA), NBC News Health | www.adsc.com

As the federal government shutdown stretches on, healthcare organizations of all sizes — from independent labs and radiology groups to behavioral health and specialty clinics — are watching closely for billing and reimbursement disruptions. While care delivery hasn't stopped, payment timelines, policy expirations, and federal oversight are already shifting beneath the surface.

Medicare Claims: Delays in Payment, Not Denials

(Source: AAPA, CMS guidance reported by NBC News Health)

CMS has instructed Medicare Administrative Contractors (MACs) to hold claims for up to 10 business days while legislative funding remains unresolved. Claims are still being accepted and processed, but payments aren’t released until the hold is cleared.

For practices, that means cash flow interruptions — especially for those heavily dependent on Medicare — but not outright claim rejections. It's a familiar move during funding lapses, but one that still catches unprepared providers by surprise.

This is the moment to tighten cash planning and alert leadership about possible payment delays.

Telehealth Coverage Set to Revert After October 1, 2025

(Source: AAPA Shutdown Impact Brief)

If Congress doesn't intervene, the expanded telehealth flexibilities granted during the COVID-19 Public Health Emergency — such as offering care from a patient’s home or in urban areas — will expire.

Key points providers should prepare for:

• Medicare will return to pre-pandemic originating site requirements (largely rural/facility-based).
• ABNs (Advance Beneficiary Notices) may be needed when delivering services that risk non-coverage.
• ACOs retain telehealth flexibility under the Bipartisan Budget Act of 2018 — but this does not apply to all providers.
  
  

This rollback has billing consequences. Place-of-service coding, modifier use, and documentation must be airtight to avoid preventable denials.

Medicaid and Commercial Insurance: A Temporary Safety Net

(Source: NBC News Health, federal appropriations updates)

Unlike Medicare, Medicaid funding is authorized through early FY 2026, offering some stability. However, individual states administering Medicaid may still experience processing backlogs if staff or systems are affected.

Commercial insurance, largely unaffected by federal appropriations, will continue operating normally — making it an important financial anchor during shutdowns.

Operational Slowdowns & Federal Oversight Delays

(Source: AAPA, NBC News Health)

Even if claims are flowing, staffing limitations at CMS and federal agencies have secondary effects:

• Slower appeals and policy responses
• Delays in No Surprises Act Independent Dispute Resolution (IDR) reviews
• Possible rise in self-pay balances if enhanced ACA subsidies lapse
  
  

These hidden slowdowns often surface weeks later in the billing cycle through delayed answers and unresolved disputes.

Labs & Research: Funding Disruptions with Real Consequences

(Source: NBC News Health, AAPA clinical research reporting)

Shutdowns strain areas beyond routine billing — particularly for institutions tied to federal funding:

• New NIH and NSF grants are on hold
• Clinical trial enrollment is limited or frozen
• University and hospital-affiliated labs may face furloughs or contract suspensions
  
  

For hospital-based and academic providers, these scenarios directly affect operational budgets and future project pipelines.

Don’t Overlook the Growing Denials Problem

Even outside of shutdown conditions, providers are facing rising claim denials — often on small-dollar claims that slip through the cracks. Over time, these quiet write-offs add up to substantial revenue loss.

Now is the critical window to:

• Revisit denial tracking and appeals protocols
• Strengthen ABN usage and documentation standards
• Monitor telehealth and place-of-service denials heading into 2026
  
  

What Revenue Leaders Should Prepare For

How ADS Supports Practices Through Federal Disruptions

At Advanced Data Systems (ADS), our RCM team tracks federal developments in real time to help providers:

• Time claim submissions to minimize cash interruptions
• Prepare for telehealth coverage shifts and ABN requirements
• Protect revenue through smarter denial management and contingency planning
  
  

If your organization relies on Medicare or is navigating tight margins, we’re here to help you plan ahead — not just react.

 Visit https://www.adsc.com/contact-us to connect with our revenue cycle experts or access federal billing updates and resources.

Information provided is based on our best understanding of it. Please visit www.cms.gov or other sources if clarifications or addition details are needed.