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There will be a partial federal government shutdown Friday at midnight if Congress does not pass and the President does not sign a stop-gap discretionary spending bill. The shutdown would be partial because it would only impact discretionary spending programs, i.e., those subject to the annual Congressional appropriations process. Mandatory spending programs (e.g., Social Security, Medicare, Medicaid), would not be impacted because they are funded outside the annual appropriations process, i.e., spending on these programs continues unless and until Congress changes the statutory funding mechanism.
On Saturday, March 8, House Speaker Mike Johnson unveiled a 99-page continuing resolution (CR), the Full-Year Continuing Appropriations and Extensions Act, 2025, to fund discretionary spending programs through the end of federal fiscal year (FFY) 2025, i.e., September 30, 2025. The CR would increase defense spending by about $6 billion and reduce domestic spending by about $13 billion as compared to FFY 2024 levels. The spending reductions would cut across several programs, including $890 million in grants for healthcare facilities and equipment.
The CR does not include any new earmarks (special funding requests made by members of Congress) and does not incorporate any of the spending cuts identified by the Department of Government Efficiency (DOGE). (Speaker Johnson indicated DOGE cut will be addressed in the FFY 2026 budget.) Nor does the CR address a looming debt ceiling deadline.
The House approved the CR by a vote of 217-213 on Tuesday. The Senate plans to vote Friday on the CR. Senate Democrats have announced their opposition to the CR, meaning Republicans would fall short of the 60-vote requirement to cut off debate. But things can change quickly, as Democrats do not want to be blamed for a partial government shutdown.
If this seems like déjà vu all over again, it is. Congress faced another partial government shutdown in late December 2024. After some last-minute political wranglings, Congress passed the American Relief Act (ARA), 2025, which extended FFY 2024 funding levels through March 14, 2025. In fact, the federal government is still operating under FFY 2022 funding levels, with some small adjustments. Now we’ve reached the place in the road to which Congress most recently kicked the can.
What does this mean for the healthcare industry?
As noted above, federal healthcare programs are funded automatically under statutory formulas; they will, for the most part, continue to operate after March 14. However, there are certain Medicare statutory funding provisions now set to expire on March 31, 2025, having been extended to that date by ARA, 2025. The CR would extend these provisions to September 30, 2025. This includes the following:
- Temporary changes to low volume hospital payment adjustments
- Medicare Dependent Hospital program
- Add-on payments for ambulance services
- Work geographic practice cost index (GPCI) floor used in calculating Medicare physician payments
- Acute hospital care at home waivers
The CR also would continue to delay the reduction in Medicaid disproportionate share payments to hospitals included in the Affordable Care Act of 2010. These reductions have been delayed repeatedly since 2014.
Like the ARA, 2025, the CR does not include an increase in payments under the 2025 Medicare Physician Fee Schedule, which have been reduced by 2.83% over 2024 rates.
Certain COVID-19 pandemic waivers expanding Medicare coverage for telehealth services now set to expire March 31, 2025, would continue for an additional six months through September 30, 2025. This includes the following:
- Waiver of geographic and originating site restrictions for medical telehealth services, thus permitting Medicare coverage for medical telehealth services furnished to a beneficiary in their home
- Waiver of the initial and continuing in-person visit requirements for tele-behavioral health services imposed when the geographic and originating site restrictions were permanently eliminated for these services under the Consolidated Appropriations Act, 2021
- Coverage for telehealth services furnished by all providers eligible to bill Medicare (vs. physicians and non-physician practitioners only)
- Coverage for telehealth services furnished by rural health clinics and federally qualified health centers
- Coverage for certain audio-only telehealth services
In addition to continued funding for FFY 2025, Congress is continuing work under the budget reconciliation process for FFY 2026. We’ll keep an eye on the latest developments this upcoming week, and keep you informed.