With the federal government technically without spending authority now that FY 2026 has begun without an approved FY 2026 budget, the federal role in health care will change in some respects and be greatly reduced in others.
The Department of Health and Human Services anticipates reducing its workforce by 40 percent during the federal government shutdown while the Centers for Medicare & Medicaid Services anticipates furloughing nearly half its staff. The Office of Management and Budget has issued a memo encouraging agencies to consider making at least some and possibly many of these furloughs permanent.
Medicare and Medicaid will continue to function; previous legislation ensures Medicaid funding through the first quarter of FY 2026.
States will continue to receive federal funding to support their Children’s Health Insurance Programs (CHIP).
CMS will continue to operate the federal health insurance Marketplace, including verifying applicants’ eligibility.
On the other hand, Medicaid disproportionate share (Medicaid DSH) allotments to the states will be cut – a reduction that will amount to $8 billion in Medicaid DSH cuts in FY 2026. Congress has expressed a desire to delay these cuts but for now they will begin to take effect.
CMS will suspend health care facility survey and certification activities; its capacity to make policy decisions and develop payment proposals and regulations will be severely limited; and community outreach, education activities, and beneficiary casework will be very limited.
The agency also will have a very limited ability to oversee its contractors, including the Medicare Administrative Contractors (MACs).
In addition, flexibilities for telehealth services have expired, including the prohibition against Medicare patients receiving telehealth services in their homes except for the diagnosis and/or treatment of mental health issues and the limit on non-rural facility settings serving as originating sites.
The Acute Hospital Care at Home program has ended. Current participants must be discharged or return to a hospital.
Learn more about how HHS and CMS plan to operate during the federal government shutdown from this HHS contingency staffing plan and CMS’s explanation of how it plans to proceed in the absence of an approved federal budget.