CMS Narrows Medicare Payment Delays Amid Federal Shutdown, Impacting Telehealth

Medicare in Limbo: What Insurers and Payers Should Watch During the Shutdown

The federal government shutdown has now stretched into its third week—and Medicare operations are feeling the strain. For those in the insurance industry, understanding where the pressures lie, and what the risks might be, matters more than ever.

The Current Landscape: Payment Holds, Telehealth Rollbacks, and Uncertainty

Come October 1, 2025, CMS told Medicare Administrative Contractors (MACs) to withhold payments on a select set of Medicare claims. The suspension covers services tied to lapsed payment provisions, with dates of service on or after October 1. That includes telehealth visits (in many cases), ground ambulance transports, and claims from Federally Qualified Health Centers.

Other claims—say, physician visits under standard arrangements—are still being processed on the usual schedule. That said, most physician claims already encounter a built-in 14-day “floor” before payment. So the immediate visibility of disruption is muted for now.

At the same time, the COVID-era telehealth waivers expired October 1. That means many telehealth services once covered are no longer reimbursable under traditional Medicare—unless Congress steps in to extend them. Behavioral health and substance use disorder telehealth care remain permissible, but all other services face reinstated restrictions: beneficiaries may once again need to be in rural areas and in qualifying originating sites.

As Dr. Maria Chen, a practicing internist in Ohio, put it:

“Without the telehealth flexibilities, many of my patients—especially the homebound—simply lose coverage. We’re having to scramble to shift visits, retrain staff, and manage patient expectations.”

The California Medical Association has urged practices to switch telehealth appointments to in-person where possible and to issue Advance Beneficiary Notices (ABNs) for services that may no longer be covered under Medicare.

What This Means for Insurers, Payers, and Risk Managers

This moment raises complex challenges for insurers and intermediaries in Medicare and Medicare Advantage. Here are some of the key angles and risks to watch:

Risk or Challenge	Implication for Insurers / Payers
Cash Flow & Claims Timing	Delays in CMS/macro payments may ripple into downstream reimbursement timing for providers and payers.
Telehealth Coverage Gaps	When traditional Medicare withdraws coverage, providers may push patients toward Medicare Advantage or supplemental plans—impacting plan mix, utilization, and cost projections.
Provider Financial Strain	Smaller or rural practices may be most vulnerable to payment delays. Insurers may see provider network stress, closures, or consolidation.
Compliance & Adjudication Complexity	Differentiating which claims are on hold, which are covered, and which are denied will add layers to claims adjudication systems.
Patient Access & Disruption	Patients losing telehealth access may shift to in-person care or delay care altogether, altering utilization patterns.
Legislative Contingency Risk	Much hinges on whether Congress retroactively restores telehealth flexibilities—and whether payments will be made later for held claims.

These challenges require active scenario planning. Insurers should model the impact of delayed payments, incorporate provider fallback behaviors, and stress-test network stability under severe cash flow pressure.

Advice for Industry Leaders: Proactive Steps & Strategic Posture

Here’s how decision-makers in the insurance space can respond:

Monitor CMS and MAC updates continuously. The official 10-business-day hold is standard when payment “extenders” expire—but it can stretch if the shutdown continues.
Segment your analysis by provider type. Practices heavily dependent on Medicare reimbursements or telehealth income are more exposed.
Review contract terms and cash flow buffers. Networks should understand which payment pools or advances might cushion disruptions.
Reassess telehealth assumptions. With fewer telehealth services covered in traditional Medicare, demand may tilt toward insured plans that maintain broader telehealth networks.
Prepare for retroactive reconciliation. If Congress restores flexibilities, payers may need to reprice or re-adjudicate previously held claims.
Support provider partners. Early communication and flexible contracting may help key providers stay afloat and maintain access.

The Broader Takeaway

This shutdown is more than a political standoff—it’s a stress test on the Medicare claims and telehealth architecture. Even as core Medicare payments continue, the trimming back of flexibilities and the imposition of temporary holds exposes fault lines in reimbursement systems and provider-payer relationships.

For insurers and payers, the moment calls for flexibility, close operational monitoring, and readiness for post-shutdown reconciliation. The policy winds are volatile, and the downstream impact on networks, utilization, and risk modeling could be substantial.

“We may never have had a more visible example of how fragile compensation flows are in a nationally structured medical program.” — John Carter, health policy analyst

Time matters here: as legislative action or inaction play out in Washington, the insurance industry must stay nimble, informed, and proactive.