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The Government Has Shut Down... How Did We Get Here and What Does it Mean for Providers?

Published in VGM Government Relations on October 01, 2025

As expected, Democrat and Republican members of the Senate were unable to agree on terms in passing a continuing resolution (CR) ahead of the October 1 deadline, resulting in a government shutdown. But how did we get here?  

Key Issues Behind the Stalemate 

  1. Healthcare Subsidies 
    1. Democrats demanded the extension of Affordable Care Act (ACA) subsidies, which help millions afford health insurance. These subsidies are set to expire at the end of 2025, and Democrats insisted they be included in any funding bill to prevent approximately 22 million Americans from losing coverage or seeing drastic increases in premiums.  
  2. Medicaid Cuts 
    1. Democrats also sought to reverse Medicaid cuts enacted under President Donald Trump’s summer legislation, H.R. 1, known as the “One Big Beautiful Bill Act.” Republicans refused to negotiate these issues within the context of a funding bill.  
  3. Partisan Gridlock 
    1. Republicans, who control both chambers of Congress, pushed for a “clean” CR to extend funding through November 21 without policy add-ons. Democrats blocked this, arguing that healthcare provisions were essential and time-sensitive.  
  4. Senate Rules and Power Dynamics 
    1. Although Republicans hold a majority in the Senate (53 seats), they needed 60 votes to pass most legislation. This gave Democrats leverage to block GOP proposals and push for their own priorities.  
  5. Presidential Influence 
    1. President Trump signaled a willingness to use the shutdown to permanently cut federal programs and staff, directing agencies to prepare for layoffs, not just furloughs. This escalated tensions and made compromise more difficult.  

Failed Negotiations 

  • Republican Proposal: A CR to extend funding without policy changes. 
  • Democratic Proposal: A shorter-term CR with ACA subsidy extensions and Medicaid reversals. 
  • Outcome: Both bills failed in the Senate, largely following party lines. The House adjourned without further votes, and the government shut down at midnight on October 1. 

Impact 

  • Federal Employees: Over 750,000 furloughed, with another 700,000 working without pay.  
  • Essential Services: Some services (e.g., TSA, military, Medicare) continue, but many agencies face partial or full suspensions. 
  • Economic Cost: Estimated at $400 million per day in lost compensation alone. 

What Does It Mean For Providers?  

As we said in our previous article, despite a shutdown, Medicare and Medicaid reimbursements will continue. These programs are funded through mandatory spending, meaning claims processing and payments to HME providers are not subject to annual appropriations and will proceed as usual. This ensures that providers can still receive reimbursement for covered equipment and services, such as oxygen supplies, mobility aids, and CPAP machines.  

Additionally, FDA oversight of medical devices remains active, including emergency responses to product recalls and monitoring for adverse events. This helps maintain safety and compliance standards for HME products. 

However, telehealth flexibilities expired on September 30, reverting to pre-pandemic era regulations:  

  • Home-based telehealth visits for non-behavioral health services will no longer be reimbursed.  
  • Geographic restrictions will return, limiting coverage to rural areas and approved facilities.  
  • Audio-only visits will lose coverage for most services.  
  • FQHCs and RHCs will lose distant site billing privileges.  
  • Hospital-at-Home and other waivers will end.  

No one knows how long the shutdown will last and what negotiations may include at this point. It is important to remember that during a shutdown, legislators still work and still meet with constituents. Continue to advocate for legislation and the impact our essential products and services have on patients.  

Continue to stay connected with VGM Group and industry stakeholders for resources and updates as they occur.  

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