A government shutdown, in the event of a lapse in federal funding, would significantly impact the healthcare Revenue Cycle, particularly within the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS).

In such a scenario, HHS would operate with approximately half of its usual staff, with around 42 percent of its employees facing furlough on the second day of the shutdown. This statistic is based on a contingency plan that HHS updated on September 21, just before federal funding was set to expire on October 1, the start of the federal fiscal year.

Out of the approximately 51,293 HHS staff members, only 37,325 would be retained during the funding hiatus, and these individuals would primarily focus on essential tasks to support critical healthcare programs such as Medicare, Medicaid, and other mandatory health initiatives. This reduced workforce would likely result in delays and disruptions in provider credentialing, the administration, and the processing of healthcare claims and reimbursements, impacting the revenue cycle for healthcare providers who rely on these government programs.

The situation is similar within CMS, where almost half its employees would face furlough, with only 49 percent being retained. A small percentage of those retained employees, about 5 percent, would be excluded from furlough because their work is deemed "necessarily implied" to ensure the continued operation of essential activities, such as the Medicare program. These employees would likely be tasked with maintaining the functionality of critical healthcare payment systems, but their limited numbers could lead to bottlenecks and delays in processing claims and payments.

The Office of Management and Budget issued guidance to federal agencies on September 22 to review and update their contingency plans, as it became apparent that there was no short-term funding plan in sight while House Republicans left Washington, D.C., for the weekend. The uncertainty surrounding government funding agreements creates significant challenges for healthcare providers and insurers who rely on timely reimbursements for their services.

If Congress fails to reach an agreement by October 1, it would mark the first government shutdown since December 2018. While the 2018 shutdown was considered a "partial shutdown" due to the passage of some appropriations bills, it still disrupted operations and created uncertainty in the healthcare revenue cycle. Healthcare providers and organizations should closely monitor the situation and prepare for potential delays and challenges in revenue collection in the event of a government shutdown.

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