Is the Federal Shutdown Affecting Healthcare Claim Reimbursements?

What providers need to know about federal funding impacts on cash flow.

As the U.S. government shutdown continues into its fourth week, the healthcare sector is experiencing increasingly severe disruptions. Hospitals, clinical laboratories, and billing companies are facing delayed payments, regulatory uncertainty, and operational strain. The shutdown, now the second-longest in U.S. history, shows no signs of resolution, with Senate votes repeatedly failing to pass a funding bill.

Key Impacts on Clinical Laboratories

Clinical labs, particularly independent and pathology groups, are under mounting pressure due to delayed Medicare payments. Smaller labs with thin operating margins are especially vulnerable.

Medicare Payment Delays: CMS initially placed a 10-day hold on payments, but has since lifted the hold. Clean claims are typically paid within 14 days, but the shutdown has disrupted this cycle.
Cash Flow Concerns: Labs dependent on Medicare face liquidity challenges, affecting payroll, reagent purchases, and lease obligations.
Regulatory Delays: CMS’s rate-setting process for new CPT codes is stalled, risking chaos in 2026 pricing.

CMS Clarification: What’s Still on Hold

While most Medicare claims payment holds have been lifted, certain services remain paused. Telehealth and Hospital Care at Home claims are still on hold, with only behavioral and mental health telehealth services currently reimbursed. Claims under the Medicare Physician Fee Schedule (MPFS) tied to expired legislative provisions are affected, while those under the Clinical Laboratory Fee Schedule (CLFS) remain unaffected.

Tara Cepull, MA, Industry Strategy & Outreach Advisor for Quadax, briefly covered aspects of the shutdown affecting clinical laboratories during a recent webinar with Lighthouse Lab Services, where she advised labs with claims billed under the MPFS to flag delayed reimbursements and devote resources to monitor them on an on-going basis until the shutdown ends and reimbursement cycles return to normal. She emphasized that claims billed under the CLFS have not been impacted by these holds or delays. Therefore, if your laboratory is experiencing gaps in CLFS claims being paid, the best action is to further investigate the reasons causing said impediments so that they may be remedied and your reimbursements put back on track.

Hospital Payment Impacts

Hospitals are also navigating uncertainty as key programs expired on October 1, 2025. Medicare Dependent Hospital (MDH) and Low Volume Adjustment (LVA) programs are no longer in effect, leaving rural hospitals vulnerable. Medicaid Disproportionate Share Hospital (DSH) allotments were cut by $8 billion, impacting facilities serving high volumes of Medicaid patients. Telehealth reimbursement flexibilities have also expired, forcing many hospitals to pause virtual care services.

Proactive Steps for Providers, Billing Companies, and RCM Teams

To mitigate the impact of the shutdown, stakeholders should take the following actions:

Providers:

Continue submitting claims to avoid backlogs and ensure prompt payment once holds end.
Review financial reserves and consider short-term financing options to cover payroll and supply costs.
Communicate with patients about potential delays or service changes, especially telehealth.
Explore alternative reimbursement models or partnerships to diversify revenue streams.

Billing Companies:

Monitor CMS and MAC updates daily to stay ahead of policy changes.
Adjust AR forecasts and revise revenue cycle projections to reflect delayed payments.
Accelerate collections from commercial payors and self-pay patients to maintain cash flow.
Implement contingency plans for staffing and technology to handle claim reprocessing efficiently.

Revenue Cycle Management Teams:

Issue Advance Beneficiary Notices (ABNs) for telehealth services at risk of denial.
Prepare for large-scale claim reconciliation and reprocessing once funding resumes.
Coordinate with vendors to renegotiate payment terms and avoid service disruptions.
Strengthen denial management workflows to quickly address any post-shutdown claim issues.

Final Thoughts

The shutdown’s ripple effects are being felt across the healthcare landscape. From delayed payments to regulatory bottlenecks, providers must remain vigilant and proactive. Whether you're facing claim lag, adjudication bottlenecks, or uncertainty around payment timelines, partnering with a reliable revenue cycle expert can be a game-changer. As a trusted partner, we can help you navigate this period of uncertainty with expert guidance, proactive monitoring, and tailored support.