MBR Take-Aways
- Funding for Medicare and Medicaid is mandatory, meaning it is not subject to annual appropriations that lapse during a shutdown.
- A government shutdown could result in delays in claims processing, audits, and other administrative functions at CMS.
- During the 1995-1996 government shutdown, Medicare continued to pay physicians and hospitals according to prevailing payment rates, since claims are made out of the Medicare trusts and not current appropriations.
If the federal government is forced to shut down Monday night, Medicare will continue to function as normal, at least in the short term. During the last serious government shutdown threat, in April 2011, Office of Management and Budget and the Department of Health and Human Services issued a statement that providers should expect their claims to be paid on time in the short term. This is because funding for Medicare and Medicaid is not subject to annual appropriations. Unlike typical federal programs, these mandatory entitlements have their own streams of revenue from payroll taxes, which require no congressional vote to authorize. However, HHS employers, who answer Medicare billing questions and process enrollment applications, are paid through annual appropriations. A shutdown that lasts longer than a couple weeks would significantly disrupt the normal business operations at CMS, due to the fact that fewer federal employees would be there to administer them. In addition, payments to CMS’s Medicare vendors for claims processing comes from the CMS operating budget, which is vulnerable to Congressional oversight. During the 1995-1996 shutdown, CMS’s claims vendors processed and paid claims on a credit basis, with the expectation of being made whole later. If a government shutdown lasts longer than a month, claims vendors could run out of cash and be unable to process Medicare payments.
