How Laboratories May Be Impacted During a Government Shutdown

All eyes of the nation are on Washington this week as the looming possibility of a government shutdown is poised to close big parts of the federal government at least temporarily—including many health programs. Congress has until Saturday night, September 30th, to pass legislation averting a lapse in government funding— and there’s yet to be clear resolution to the standoff in the House.

The 12 appropriations bills are supposed to be passed by both chambers of Congress and signed by the president before the start of the federal fiscal year, Oct. 1. This almost never happens. In fact, according to the Pew Research Center, Congress has passed all the appropriations bills in time for the start of the fiscal year only four times since the modern budget process was adopted in the 1970s; the last time was in 1997.

Congress usually keeps the government’s lights on by passing short-term funding bills, known as “continuing resolutions,” or CRs, until lawmakers can resolve their differences on longer-term spending. This year, however, a handful of conservative Republicans in the House have said they won’t vote for any CR, in an attempt to force deeper spending cuts than those agreed to this spring in a bipartisan bill to raise the nation’s borrowing authority.

If a shutdown happens, some government functions would stop completely, some partially, and others wouldn’t be immediately affected—including Medicare and Medicaid. But, a shutdown could complicate many aspects of federal health programs and anyone who relies on them, including laboratories.

Here are four things laboratories need to know about the potential impact on health programs and their facilities:

1. Medicare Claim Funding is Mandatory

A potential government shutdown will have no impact on Medicare and Medicaid at the federal level, CMS has stressed in the past following the 2019 partial government shut down.

“Mandatory” spending programs, like Medicare, have permanent funding and don’t need Congress to act periodically to keep them running. But the Department of Health and Human Services is full of “discretionary” programs—including at the National Institutes of Health a Centers for Disease Control and Prevention that must be specifically funded by Congress through annual appropriations bills.

Payment for laboratory claims filed through Medicare should remain largely unaffected, and those claims filed through Medicaid are eligible for payment while Medicaid has full funding into the first fiscal quarter of 2024 following a shutdown. Providers, hospitals, and laboratories alike could continue to submit claims and get paid.

2. However, Laboratory Payments Might Be Delayed

While CMS is partially shielded from the impending tumult, it would retain fewer than half of its employees — many unpaid — until the potential shutdown ends, according to the updated Health and Human Services contingency plan released Thursday.

This could complicate the laboratory billing process once claims are submitted in terms of timely responses, corrections, adjustments, and payments. For payers, the aftermath of the shutdown could be expensive down the line, despite the fact that the immediate impacts are limited. Laboratories would need to prioritize their capabilities to accurately and thoroughly report all billing metrics during this time to keep track of this impact.

3. Commercial Payers May Experience Small Impacts

Although not administered by the government, commercial plan offerings, to a large degree, are regulated and overseen by each state. Any state health employees that are furloughed or any federally qualified health centers (FGHCs) that are temporarily closed can affect the support that laboratory patients need during this time. Though essential functions will continue, it could be difficult for states to get technical assistance from CMS during the shutdown, and the agency could have limited oversight of the process.

Commercial payers typically have contingency plans in place to mitigate some of the potential disruptions, but prolonged shutdowns can still pose significant challenges. Therefore, commercial payers closely monitor government activities and adapt their strategies as needed to navigate these situations.

4. Data May Be Limited to Labs During Infectious Season

A large part of the funding for community health centers, which offer things like free and reduced-fee checkups, comes from the federal government. Funds are allocated based on several factors, including how many people a center serves. In the event of a shutdown, there may be limited or no staff available to administer tests and vaccinations to those reliant on these federally funded organizations resulting in these procedures not being done.

Laboratories rely on data from tests and vaccinations performed at these federally funded health centers to project and prepare for common seasonal illnesses such as respiratory syncytial virus (RSV), flu, and COVID-19. A hole in this data from public service clinics and organizations can impact projections that labs may need when analyzing trends this season.

Laboratories May Experience a Slowed Cash Flow If There is a Government Shutdown

It is unlikely that most laboratories will be severely affected if there is a government shutdown or partial shutdown, however laboratories should remain informed of potential short and long term affects if one ensues. Their Medicare and Medicaid claims will be slower to process and receive payment if CMS employees are furloughed during this time, and even commercial payer claims could be delayed as well. Labs should also be aware of potential impacts heading into the infectious season if they have a clinical test menu offering such as RSV, flu, and COVID-19.