Shutdown would have had little effect on Medicare, Medicaid claims payments

Washington -- A late-night compromise among lawmakers on federal fiscal 2011 spending stopped a partial government shutdown from going into effect after midnight on April 8. However, the steps that federal agencies took as the deadline approached gave an indication of what might happen if the divided Congress runs into a similar stalemate over government funding levels for fiscal 2012, which will start Oct. 1.

The eleventh-hour agreement reduces federal discretionary spending by about $38.5 billion compared with fiscal 2010 levels but abandons some proposed Republican policy provisions, such as language to defund Planned Parenthood. Provisions aimed at preventing certain health reform funding will not be in the final measure but will receive a Senate vote, which is expected to fail.

The government is being kept in operation by another short-term extension until the House and Senate officially can approve the compromise later in the week of April 11. The deal is expected to pass.

Despite the impending shutdown, physicians caring for Medicare and Medicaid patients were told that they should expect their claims to be paid on time in the short term. Any closure that lasted weeks or longer, however, could have disrupted the programs, because fewer federal employees would have been available to administer them.

Funding for Medicare and Medicaid is mandatory, meaning it's not subject to annual appropriations that lapse during a shutdown. However, HHS employees who answer Medicare billing questions and process enrollment applications, among others, are paid through annual appropriations and would have been affected by the shutdown. This also is the case for private contractors who process Medicare claims.

HHS estimated that 62% of its 76,000 employees would have stopped working by the second day of a shutdown, with the rest allowed to continue, according to a Dept. of Health and Human Services contingency staffing plan posted on its website before the congressional deal on April 8. HHS agencies that handle many grants or have many workers would have been affected more quickly. For example, HHS calculated that 76% of the 5,470 employees at the Centers for Medicare & Medicaid Services would have been furloughed immediately.

However, CMS has the most mandatory funding of any HHS agency, according to the department document. Such funding would have allowed CMS to continue to support implementation of the national health reform law, programs from the 2009 economic stimulus package, state grants and demonstration projects, and the Center for Medicare and Medicaid Innovation, for example.

Any future possible shutdown might have different effects based on the status of advance federal appropriations, but in any event, a general rule of thumb would apply. Federal employees that protect life and property, including those who provide emergency medical care to patients, would continue working, according to HHS.

If Congress approves the compromise funding plan for the remainder of fiscal 2011, the next opportunity for a partial government shutdown would occur at the start of the next fiscal year on Oct. 1 if lawmakers cannot agree on a long-term funding plan or a short-term extension before that date.

House Republicans are pushing for even larger spending cuts for next year, and lawmakers are predicting more difficult negotiations in the months ahead. Another big fight could erupt over increasing the federal government's $14.3 trillion debt ceiling, which Obama administration officials expect will be necessary by May 16.