Shutdown Stalemate Puts Telehealth Reimbursement at Risk

With Congress nearing another funding impasse, the future of federal telehealth reimbursement is again in question. Lawmakers have until 11:59 p.m. Tuesday to avert a government shutdown, and among the unresolved provisions is whether to temporarily extend Medicare’s authority to pay for telehealth services. A lapse in funding, even if brief, would introduce reimbursement uncertainty for thousands of providers and potentially disrupt access for Medicare beneficiaries who now rely on virtual care as a core clinical touchpoint.

While the political theatrics of shutdown brinkmanship are familiar, the downstream effects on telehealth have evolved since the COVID-19 pandemic normalized remote care delivery. What once was an emergency workaround has become a mainstay in chronic disease management, behavioral health, and transitional care. Now, payment authority for that infrastructure hangs in the balance, and without legislative action, providers may be forced to delay care or absorb uncompensated costs for virtual services delivered during the shutdown window.

Temporary Extension Fails to Advance

The most recent continuing resolution introduced by House GOP leadership included a two-month extension for telehealth coverage. However, the measure failed in the Senate, leaving Medicare’s current telehealth reimbursement provisions set to expire alongside the broader government funding authorization.

Since 2020, Congress has extended Medicare’s authority to reimburse telehealth services through short-term bills—most recently the Consolidated Appropriations Act, which allowed payment parity and broader site-of-service flexibility through September 2025. Without a new resolution, those provisions will lapse, reverting Medicare to pre-pandemic rules that sharply limited telehealth eligibility to rural patients receiving care in designated originating sites.

The American Telemedicine Association has warned that such a reversion would result in service gaps for seniors and undermine clinical continuity. In a statement issued last week, Kyle Zebley, executive director of ATA Action, called on lawmakers to “at least give providers some reassurance that they will receive back payment for essential healthcare services delivered during this shutdown.”

Operational Risk for Providers and Payers

For provider organizations, the uncertainty surrounding reimbursement is more than an administrative inconvenience. Billing systems, care scheduling, and payer communication workflows are all structured around CMS guidance. A sudden shift in eligibility or billing authorization creates risk exposure across revenue cycle management and compliance operations.

A 2024 HIMSS briefing on federal telehealth policy noted that inconsistent funding timelines prevent many health systems from scaling virtual services beyond pilot stages. Even short lapses force organizations to cancel appointments, redirect patients to in-person sites, or risk non-payment for services rendered.

Clinicians also face liability concerns. When virtual visits fall into gray zones of authorization, malpractice insurers may question coverage, particularly in cases involving medication adjustments or diagnostic decisions made without an in-person assessment. Telehealth-specific legal protections, such as state licensure compacts and HIPAA enforcement discretion, are typically tethered to federal public health authority and appropriations.

Regulatory Freeze Hits Rural and Home-Based Care Hardest

The shutdown risk compounds longstanding disparities in telehealth access. Rural health clinics, community health centers, and home-based care programs rely heavily on Medicare and Medicaid coverage for virtual services. Without continued authorization, many of these programs will be unable to bill for visits conducted via video or telephone—despite evidence of clinical efficacy and patient preference.

According to a 2023 KFF analysis, over 75% of Medicare beneficiaries used telehealth at least once during the pandemic, with higher usage among those managing chronic illnesses. The majority of these visits occurred outside of designated rural originating sites, which pre-pandemic rules would have excluded from reimbursement.

For dual-eligible patients and those with mobility limitations, virtual care is not an optional supplement—it is often the most reliable point of access. Providers who serve these populations face disproportionate financial exposure in a funding lapse, especially when reimbursement for services delivered during the shutdown is not guaranteed retroactively.

Legislative Momentum Stalls Despite Bipartisan Support

Telehealth enjoys broad bipartisan support in principle, but legislative follow-through remains fractured. Permanent reform efforts, including the CONNECT for Health Act and Telehealth Modernization Act, have repeatedly stalled amid broader political gridlock. As a result, Medicare policy continues to lurch from extension to extension, tethered to continuing resolutions and omnibus spending bills.

The U.S. Government Accountability Office (GAO) has urged Congress to develop long-term funding frameworks that balance access with fraud oversight. While telehealth fraud remains statistically rare, episodic scrutiny, such as the 2022 DOJ takedown of $1.2 billion in fraudulent virtual claims, has complicated policy momentum by fueling concerns about cost containment.

Still, both CMS and MedPAC have acknowledged the value of virtual care in reducing hospitalizations, enhancing chronic care coordination, and addressing workforce shortages. Industry groups argue that the fiscal discipline Congress demands can only be achieved if telehealth becomes a core feature of care delivery, not a stopgap.

What Shutdown Timing Means for Health Systems

If Congress fails to act, Medicare telehealth coverage will expire at midnight on September 30. The operational consequences begin immediately: claims processing systems would be updated to deny services not tied to rural originating sites, and CMS guidance would revert to pre-pandemic norms. Providers would be unable to submit claims for standard virtual visits conducted on or after October 1.

Even if funding is restored later through a retroactive continuing resolution, systems may still experience payment delays and reconciliation burdens. In past shutdowns, federal contractors struggled to retroactively apply updated billing policies, leading to audit flags and denied claims. Health systems with tight cash flow or large Medicare populations could face measurable revenue disruptions.

More critically, care continuity will suffer. Virtual behavioral health visits, post-discharge check-ins, and chronic care management touchpoints may be deferred or canceled due to reimbursement uncertainty. Vulnerable patients stand to lose the most, especially in settings without robust in-person alternatives.

Policy Uncertainty as a Long-Term Operational Threat

The shutdown threat exposes a deeper fragility in how the federal government approaches digital health infrastructure. While innovation is celebrated in theory, telehealth’s dependence on temporary legislative action makes it operationally brittle. Health systems cannot build sustainable, scalable virtual care programs without regulatory certainty.

For CIOs, compliance leads, and clinical operations teams, this situation reinforces the need for scenario planning, payer diversification, and platform flexibility. It also raises strategic questions about whether to continue investing in virtual care workflows that remain subject to congressional volatility.

Unless Congress stabilizes telehealth funding through a long-term authorization or permanent rulemaking, the current disruption may become a recurring constraint. What is framed today as a shutdown casualty may evolve into a chronic vulnerability in the health system’s digital future.