Government Shutdown Begins: What It Means for Healthcare in Los Angeles
- LA Medicine Staff
- Oct 1
- 5 min read
As of midnight, the U.S. government has officially shut down—marking the first federal closure in nearly seven years. The budget impasse, driven by deep partisan divisions in Congress, is already sending ripple effects across the nation. In Los Angeles, where healthcare systems are stretched thin, the impact is expected to be immediate and far-reaching.
Key Healthcare Programs in Limbo
While core programs like Medicare and Medi-Cal will continue to operate, many healthcare services and support systems are now in jeopardy. This includes the expiration of key Medicare telehealth flexibilities first introduced during the COVID-19 pandemic. These flexibilities had been especially valuable to Los Angeles physicians managing large caseloads, caring for underserved populations, and supporting patients in hard-to-reach areas.
Federally Qualified Health Centers (FQHCs) now face growing uncertainty. These facilities rely heavily on federal funds to deliver primary care to low-income and uninsured Angelenos. Any disruption in funding could lead to service cutbacks, staff reductions, or even closures—at a time when demand for care remains high throughout the county.
Impact on California’s Safety Net
California is home to more FQHCs and community health centers than any other state. With nearly half of all births in California and one in three LA County residents covered by Medi-Cal, the stakes are significant. While Medi-Cal funding itself is protected in the short term, administrative operations—such as new enrollments and appeals—may be delayed due to furloughed federal workers.
State agencies are also bracing for interruptions in data-sharing and communication with federal partners, which could hinder public health reporting and slow emergency response coordination.
Medicaid in the Crosshairs
Although Medicaid (Medi-Cal in California) remains funded, the federal administrative workforce behind it does not. According to The Guardian, workers responsible for processing enrollments, renewals, and appeals are now furloughed. In LA County—where more than one-third of residents depend on Medi-Cal—this could result in significant delays in coverage determinations and patient access to care.
This bureaucratic freeze comes just as millions of Californians risk losing coverage during the post-pandemic redetermination process. “This is not just about budget politics—this is about whether our patients can refill their prescriptions or get cancer screenings next month,” said one East LA clinic director.
Physician Workforce and Public Health Programs at Risk
The shutdown also halts funding for several federal physician workforce initiatives, including the National Health Service Corps and Teaching Health Center Graduate Medical Education programs. Los Angeles has long benefited from these programs to support training and retention of physicians in underserved communities. Without continued funding, clinics may face shortages in residents and trainees—many of whom provide direct care to high-need populations.
A Looming Insurance Crisis
Perhaps most alarming is the unresolved status of the ACA premium tax credits, which help nearly 2 million Californians afford insurance through Covered California. If the shutdown drags on and Congress fails to extend these subsidies, Los Angeles could see a sharp rise in the uninsured population by mid-2026—a blow to both individual health outcomes and the sustainability of the region’s safety-net providers.
Stay Informed
LACMA+CMA continue to advocate for stable healthcare funding, uninterrupted support for physician workforce programs, and proactive communication to help physicians navigate this period of uncertainty with minimal disruption to patient care.
We will continue to monitor developments in Washington and Sacramento and share timely updates affecting your practice and your patients.
READ MORE:
SIDEBAR: What Physicians Need to Know About Telehealth During the Shutdown
Medicare Telehealth Still Billable – But With Caveats
Physicians may continue to provide and bill for Medicare Fee-for-Service and Medicare Advantage telehealth services that were authorized prior to the shutdown.
CMS Claims Hold in Effect:
CMS has placed these claims on a 10-business-day payment hold (payment floor). Claims will be processed once Congress extends the expired pandemic-era waivers.
Important: There is no guarantee Medicare will pay for these services if waivers are not extended—but it is likely, based on past shutdown precedents and bipartisan support for telehealth.
Should I Bill Now or Wait?
Physicians may either:
Submit claims now (they’ll be held and potentially paid retroactively), or
Hold telehealth claims until Congress acts.
Advance Beneficiary Notice (ABN):
CMS recommends you ask patients to sign an ABN if billing now, in case services ultimately aren’t covered.
Consider Alternatives:
CMA advises:
Rescheduling or converting some telehealth visits to in-person appointments
Reviewing CMA’s prior telehealth guidance: View CMA Guidance
Rural Area Rules – Do They Still Apply?
CMS has clarified that physicians may bill for telehealth services beyond rural areas during the shutdown period.
ACO Exception Remains Intact
Physicians in Shared Savings Program ACOs can continue telehealth without geographic restrictions through CY2025. No special application is required.
Medicare Administrative Contractors (MACs):
MACs will continue full operations for Fee-for-Service claims, but claims for expired telehealth flexibilities will be held pending Congressional action.
CMS UPDATE: Telehealth, Claims Processing, and Medicare Administrative Contractors Status During the Shutdown
When certain legislative payment provisions (“extenders”) are scheduled to expire, CMS directs all Medicare Administrative Contractors (MACs) to implement a temporary claims hold. This standard practice is typically up to 10 business days and ensures that Medicare payments are accurate and consistent with statutory requirements. The hold prevents the need for reprocessing large volumes of claims should Congress act after the statutory expiration date and should have a minimal impact on providers due to the 14-day payment floor. Providers may continue to submit claims during this period, but payment will not be released until the hold is lifted.
Absent Congressional action, beginning October 1, 2025, many of the statutory limitations that were in place for Medicare telehealth services prior to the COVID-19 Public Health Emergency will take effect again for services that are not behavioral and mental health services. These include prohibition of many services provided to beneficiaries in their homes and outside of rural areas and hospice recertifications that require a face-to-face encounter. In some cases, these restrictions can impact requirements for meeting continued eligibility for other Medicare benefits.
In the absence of Congressional action, practitioners who choose to perform telehealth services that are not payable by Medicare on or after October 1, 2025, may want to evaluate providing beneficiaries with an Advance Beneficiary Notice of Noncoverage. Practitioners should monitor Congressional action and may choose to hold claims associated with telehealth services that are not payable by Medicare in the absence of Congressional action. Additionally, Medicare would not be able to pay some kinds of practitioners for telehealth services. For further information: https://www.cms.gov/medicare/coverage/telehealth.
CMS notes that the Bipartisan Budget Act of 2018 allows clinicians in applicable Medicare Shared Savings Program Accountable Care Organizations (ACOs) to provide and receive payment for covered telehealth services to certain Medicare beneficiaries without geographic restriction and in the beneficiary’s home. There is no special application or approval process for applicable ACOs or their ACO participants or ACO providers/suppliers. Clinicians in applicable ACOs can provide these covered telehealth services and bill Medicare for the telehealth services that are permissible under Medicare rules during CY 2025, irrespective of further Congressional action. For more information:
MACs will continue to perform all functions related to Medicare Fee-for-Service claims processing and payment.
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