This information provides an update to the March 13 alert.
The partial federal government shutdown set to take effect on March 14 was avoided when President Trump signed the Full-Year Continuing Appropriations and Extensions Act, 2025 (CAEA 2025), into law. The CAEA 2025 funds discretionary spending programs through the end of federal fiscal year (FFY) 2025, i.e., September 30, 2025. It increases defense spending by about $6 billion and reduces domestic spending by about $13 billion as compared to FFY 2024 levels. The spending reductions cut across several programs, including $890 million in grants for healthcare facilities and equipment.
The CAEA 2025 does not include any new earmarks (special funding requests made by members of Congress) and does not incorporate any of the spending cuts identified by the Department of Government Efficiency (DOGE). (Speaker Johnson indicated DOGE cut will be addressed in the FFY 2026 budget.) Nor does it address a looming debt ceiling deadline.
If this seems like déjà vu all over again, it is. Congress faced another partial government shutdown in late December 2024. After some last-minute political wranglings, Congress passed the American Relief Act (ARA), 2025, which extended FFY 2024 funding levels through March 14, 2025. (In fact, the federal government is still operating under FFY 2022 funding levels, with some small adjustments.) Now, the CAEA 2025 kicks the can down the road to September 30, 2025.
What does this mean for the healthcare industry?
There were certain Medicare statutory funding provisions now set to expire on March 31, 2025, having been extended to that date by ARA, 2025. The CAEA 2025 extends these provisions to September 30, 2025. This includes the following:
- Temporary changes to low-volume hospital payment adjustments
- Medicare Dependent Hospital program
- Add-on payments for ambulance services
- Work geographic practice cost index (GPCI) floor used in calculating Medicare physician payments
- Acute hospital care at-home waivers
The new law also continues to delay the reduction in Medicaid disproportionate share payments to hospitals included in the Affordable Care Act of 2010. These reductions have been delayed repeatedly since 2014.
The CAEA 2025 does not include an increase in payments under the 2025 Medicare Physician Fee Schedule, which have been reduced by 2.83% over 2024 rates.
Certain COVID-19 pandemic waivers expanding Medicare coverage for telehealth services were set to expire March 31, 2025, but now will continue for an additional six months through September 30, 2025. This includes the following:
- Waiver of geographic and originating site restrictions for medical telehealth services, thus permitting Medicare coverage for medical telehealth services furnished to a beneficiary in their home
- Waiver of the initial and continuing in-person visit requirements for tele-behavioral health services imposed when the geographic and originating site restrictions were permanently eliminated for these services under the Consolidated Appropriations Act, 2021
- Coverage for telehealth services furnished by all providers eligible to bill Medicare (vs. physicians and non-physician practitioners only)
- Coverage for telehealth services furnished by rural health clinics and federally qualified health centers
- Coverage for certain audio-only telehealth services
Now with funding for FFY 2025 secured, Congress will continue its work under the budget reconciliation process for FFY 2026. We’ll keep an eye on the latest developments and keep you informed.
