Special Edition
What the Shutdown Means for Derm Practices (and How to Keep Cash Coming)
Why it matters. A federal shutdown doesn’t halt medicine, but it does slow the machinery that pays for it. For dermatology practices, that means tighter cash flow, more billing vigilance, and sudden shifts in what’s covered. Understanding what’s paused, what’s payable, and what needs a modifier or ABN this week is essential to keep revenue steady and compliance intact.
Claims Holds and Payment Delays
The good news is that the core Medicare program is continuing to cover and pay for physician services, backed by advance appropriations. The federal government also has sufficient funding to cover Medicaid and the Children’s Health Insurance Program (CHIP) through the first quarter of FY 2026.
In anticipation of potential Congressional action to restore expired policies, the Centers for Medicare & Medicaid Services (CMS) instructed Medicare Administrative Contractors (MACs) to implement a temporary claims hold. This is standard practice when legislative payment provisions ("extenders") are set to expire.
Although an earlier notice suggested a broader hold, CMS later clarified that only select claims for services impacted by expired provisions (such as non-behavioral telehealth visits) will be affected.
The claims hold is typically up to 10 business days. Physicians are encouraged to continue submitting claims during this period. Due to Medicare’s statutory 14-day payment floor, this hold is expected to have a minimal overall impact on providers, as payments generally are not released until 14 days after submission anyway.
Expired Payment Adjustments
Another blow to independent practices is the expiration of the 1.0 floor for the work geographic practice cost index (GPCI), which lapsed on October 1, 2025. GPCIs adjust relative value units (RVUs) in Medicare payment to account for regional differences in the cost of providing physician services. Without Congressional action to retroactively extend this provision, some clinicians may experience a decrease in Part B reimbursement, directly affecting your clinic's bottom line.
It is worth noting that Medicare Administrative Contractors (MACs) have been instructed to implement a temporary claims hold for 10 business days specifically due to the expiration of legislative payment provisions. However, in past shutdowns, Congress has generally restored lapsed policies back to their effective date.
Lapsed Telehealth Flexibilities
For teledermatology services, the expiration of pandemic-era Medicare telehealth flexibilities on September 30, 2025, requires immediate adjustments to your scheduling and billing processes. Medicare will no longer cover generalized Medicare telehealth visits.
Absent congressional action, CMS must revert to pre-pandemic statutory limitations for telehealth, which means:
Telehealth services are limited to patients located in rural areas, defined as being outside of a Metropolitan Statistical Area (non-MSA) or within a Health Professional Shortage Area (HPSA).
A patient's home is no longer recognized as an eligible originating site for most Medicare payments. Patients must generally be located at a facility like a physician office, hospital, or Rural Health Clinic (RHC).
Clinicians can no longer provide audio-only services to Medicare patients. Audio-only services are now limited primarily to the treatment of mental/behavioral health conditions when the patient is at home.
Keep in mind that telehealth remains covered for patients being treated for mental health or substance use disorders. Also, physicians in certain Medicare Shared Savings Program Accountable Care Organizations (ACOs) can continue to provide and be paid for covered telehealth services without geographic restrictions and in the beneficiary's home.
What to Expect
The shutdown and lapse in flexibilities creates a climate of confusion and hesitation across the healthcare industry, with some providers continuing to offer services hoping for retroactive reimbursement (a significant financial risk). Since commercial payers often follow Medicare’s lead, the absence of clear federal policy creates uncertainty regarding future reimbursement for virtual care from those payers as well.
To mitigate financial risk, practices should immediately:
Review telehealth eligibility and ensure that all scheduled telehealth visits for Medicare beneficiaries meet the strict new geographic and originating site requirements.
Issue ABNs. For telehealth services that are no longer payable by Medicare on or after October 1, 2025, practitioners must evaluate providing beneficiaries with an Advance Beneficiary Notice of Noncoverage (ABN). This ensures the patient is informed of potential out-of-pocket costs before receiving non-covered services.
Monitor and potentially hold claims associated with telehealth services that may not be payable under current Medicare rules until the situation is resolved.
The government shutdown directly affects CMS operations, leading to staffing reductions and furloughs of 47% of agency staff. While essential operations continue, you should expect slowdowns or suspensions in several non-discretionary areas:
New policy development and guidance, including pending rulemaking, are likely on hold, as only actions "necessary for the protection of life and property" will generally be published.
Oversight of major contractors (like the Medicare Call Center) and beneficiary casework may be suspended, potentially slowing complaint resolution.
Routine health care facility surveys and certifications are generally suspended, focusing instead only on investigating the most serious complaints of patient harm.
Two key areas require continued monitoring:
No Surprises Act (NSA) Independent Dispute Resolution (IDR)
The IDR process used for resolving out-of-network claims under the NSA remains open during the shutdown. This is because the process is largely funded by administrative fees and is not dependent on government funding. However, CMS warned that a prolonged lapse in funding might cause delays in the review and processing of IDR complaints and response times to inquiries. Practices should continue to submit claims for dispute.Private Payer Coding Policy
Dermatology practices must maintain excellent documentation, especially for Evaluation and Management (E/M) services. While Cigna delayed the controversial implementation of its automatic E/M downcoding policy in California pending regulatory review, the carrier initiated a pre-payment review of level 4 and 5 E/M CPT codes for physicians identified as outliers in all other states. This scrutiny means practices must be ready to support their higher-level E/M coding with robust medical records, as disputing adverse decisions requires submitting documentation and facing administrative burdens.
Monitoring your MAC’s website and CMS updates is essential for the latest information on the claims hold and payment updates. Historically, when Congress passes legislation to reopen the government, funding and policies are made retroactive; however, until that occurs, practices must operate under current statutory constraints.
Bottom line. Most effects should be temporary if Congress restores funding and retroactively extends policies, but you can’t count on that timing. Continue submitting claims, tighten eligibility and documentation for every virtual visit, and communicate transparently with patients about possible coverage gaps. Treat this period like a stress test for your billing systems: if your processes can handle this disruption, they’re ready for anything the next policy swing brings.
Q: Will Medicare Fee-for-Service payments stop, and how will the temporary claims hold affect our cash flow?
A: The good news for your RCM is that core entitlement programs are continuing. Medicare, Medicare Advantage, Medicaid, and the Children’s Health Insurance Program (CHIP) payments are expected to continue because these programs are backed by advance appropriations or have sufficient funding (Medicaid/CHIP is funded through the first quarter of FY 2026).
However, due to the expiration of key legislative payment provisions ("extenders"), Medicare Administrative Contractors (MACs) have been instructed to implement a temporary claims hold. This is a standard procedure intended to ensure payment accuracy in case Congress retroactively restores the lapsed policies.
Initially, the claims hold suggested a broader payment pause, but CMS clarified that only select claims for services impacted by the expired provisions will be held, such as those for non-behavioral telehealth visits.
The hold is typically up to 10 business days. This is expected to have a "minimal impact" on providers because Medicare already has a statutory 14-day payment floor, meaning payment is often held for two weeks anyway. You should continue submitting claims, but payment will not be released until the hold is lifted. MACs will continue to perform all functions related to Medicare Fee-for-Service claims processing and payment for services not impacted by the expired extenders.
Q: Which financial extender lapsed that could directly decrease our Medicare Part B reimbursement rates?
A: A crucial financial provision that lapsed is the 1.0 floor for the work Geographic Practice Cost Index (GPCI). This GPCI is part of the formula that adjusts relative value units (RVUs) in Medicare payment to account for regional differences in the cost of providing physician services.
This provision expired on October 1, 2025. Without Congressional action to retroactively extend the 1.0 GPCI floor, some clinicians may experience a decrease in Medicare Part B reimbursement, directly affecting your practice's profitability. Extending the GPCI provision is necessary to prevent this cut.
Q: What are the immediate, critical restrictions now placed on Medicare telehealth services for dermatology, and who is exempt?
A: The expiration of the Medicare telehealth flexibilities on September 30, 2025, requires immediate and stringent changes to how your practice bills for virtual care for traditional Medicare patients. Absent Congressional action, CMS must revert to pre-pandemic statutory limitations for all services that are not behavioral or mental health services:
Geographic Limits Reinstated: Telehealth services are restricted to patients located in rural areas (outside of a Metropolitan Statistical Area or within a Health Professional Shortage Area).
Originating Site Restriction Reinstated: The patient must be located at an eligible originating site (e.g., a medical facility, physician office, or RHC/FQHC) when receiving the service. A patient’s home is generally no longer recognized as an originating site for Medicare payment.
Audio-Only Services Lapsed: The ability to provide most audio-only services to Medicare patients has lapsed, now limited primarily to behavioral health conditions when the patient is at home.
Exceptions: Clinicians in applicable Medicare Shared Savings Program Accountable Care Organizations (ACOs) are allowed to provide and receive payment for covered telehealth services to certain Medicare beneficiaries without geographic restriction and while the beneficiary is in their home. There is no special application or approval process for these ACO participants.
Q: How do we protect our RCM from non-covered telehealth claims, and what is the risk of providing services while waiting for Congress to act?
A: Providers who continue offering telehealth services in hopes of retroactive reimbursement once the government reopens are taking a "significant risk for these organizations". The expiration of flexibilities has triggered a "climate of confusion and hesitation" across the healthcare industry. Furthermore, because commercial payers often follow Medicare’s lead, the absence of clear federal policy creates uncertainty, leading providers to fear that future commercial reimbursement for virtual care may "dry up," prompting them to reconsider their telehealth programs.
To protect your RCM and remain compliant, you must take immediate action:
Issue ABNs: For telehealth services that are no longer payable by Medicare on or after October 1, 2025, practitioners should evaluate providing beneficiaries with an Advance Beneficiary Notice of Noncoverage (ABN).
Hold Claims: Practitioners may choose to hold claims associated with telehealth services that are not payable under current Medicare rules until the situation is resolved by Congress.
Q5: Is the No Surprises Act dispute process continuing, and are we still facing private payer E/M audits during the shutdown?
A: Yes, administrative burdens continue from both federal non-shutdown operations and private payers:
No Surprises Act (NSA) IDR: The Independent Dispute Resolution (IDR) process used for resolving out-of-network claims under the NSA remains open during the shutdown. This is because the IDR process is funded largely by administrative fees and is not dependent on government appropriations. However, CMS did warn that a prolonged lapse in funding could lead to delays in the review and processing of IDR complaints.
Private Payer E/M Audits: Payer scrutiny of Evaluation and Management (E/M) codes remains an active threat to dermatology RCM:
California Policy Delayed: Cigna delayed the implementation of its controversial "Evaluation and Management Coding Accuracy" reimbursement policy in California following a regulatory inquiry. This policy would automatically downcode higher-level E/M services if Cigna determined documentation was insufficient.
National Pre-Payment Review Active: Despite the shutdown and the California delay, Cigna initiated a pre-payment review effective October 1, 2025, of level 4 and 5 E/M CPT codes for physicians identified as outliers in all other states. Practices outside California must ensure robust documentation to support their high-level coding, as disputing adverse decisions requires filing an appeal and submitting medical records.
CMS Guidance and Compliance
Medicare Telehealth Coverage definitive rules now that statutory limits are reinstated
Advance Beneficiary Notice (ABN) forms and instructions for when services may not be covered
ACO Telehealth Flexibilities MSSP ACO telehealth without geographic limits and with home as originating site
HHS Contingency Plan what continues and what’s furloughed at HHS
Advocacy and Professional Association Updates
AMA Advocacy Update (Oct 10) status of funding talks, telehealth flexibilities, and GPCI floor
AMA Advocacy Update (Oct 3) initial guidance on shutdown impacts and expiring policies
SkinPAC advocacy support for physician payment reform
Medicare Advocacy why most Medicare administration continues during a shutdown
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That’s it for this week.
This one was super fun. Hope you enjoyed it too.
