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The Government Shut Down and Its Impact on Public Health*

Written by Nili S. Yolin

In the early morning of October 1, 2013, the U.S. federal government officially went dark. The shutdown came in the aftermath of the Senate’s decisive vote to reject a House plan that would have kept the government funded for several more months but delayed implementation of key portions of the Affordable Care Act (ACA) for one year.

The impact of the shutdown will be felt across all healthcare sectors as many federal employees face furloughs of unknown duration. In particular, the Department of Health and Human Services (HHS) announced in its Contingency Staffing Plan that over half of its employees will be furloughed. HHS’s Plan is based upon federal guidance that allows agency programs to continue only if they either do not rely on annual appropriations, or they involve the safety of human life or the protection of property.[1]/ According to HHS, the following programs and services will continue:

  • Funding for Medicaid and the Child Health Insurance Program will continue uninterrupted because funding has already been set aside for these programs.
  • Funding for Medicare will likewise continue uninterrupted but only in the short term. If the political impasse stretches beyond several weeks, the program could be disrupted by the reduction in HHS staff.
  • The Centers for Medicare & Medicaid Services (CMS) will continue to implement the ACA, “including coordination between Medicaid and the Marketplace, as well as insurance rate reviews, and assessment of a portion of insurance premiums that are used on medical services.”[2]/
  • State and federal health insurance exchange programs will open as planned, though it is not clear how the information technology (IT) that underpins the exchanges will function since they are operated by government contractors.[3]/
  • The National Institute of Health (NIH) will continue to provide patient care for current NIH Clinical Center[4]/ patients.
  • The Food and Drug Administration (FDA) will be able to operate only for “vital activities” such as high risk recalls and other “critical public health issues.”
  • Substance Abuse and Mental Health Services Administration will continue programs such as the Suicide Prevention Lifeline using the balance of available grants.
  • Other programs supported through mandatory funding such as the Centers for Disease Control and Prevention (CDC) Global HIV/AIDS Program will continue.

However, several programs important to public health will be disrupted if a congressional compromise cannot soon be reached. For example:

  • Outside of matters related to “imminent threats to the safety of human life or protection of property,” CMS, FDA, NIH and other federal agencies will not publish regulations or other guidance during the shutdown.
  • CMS will not fund task forces that work to prevent healthcare fraud and abuse, and will scale back on Medicare provider audits.
  • The CDC seasonal influenza program, which tracks flu outbreaks and certain infectious diseases, will come to a halt.
  • No new patients will be admitted to the NIH Clinical Center. NIH-funded researchers may continue to work for as long as their money holds out but additional funds will not be released during the shutdown.
  • The FDA will not be able to support much of its food safety activities, such as routine inspections and public notification programs. The FDA’s laboratory research and some compliance and enforcement activities will be suspended.
  • No action will be taken on any grants related to medical research, improvement of the healthcare system, and monitoring of substance abuse programs.

Although providers can take comfort in the fact that Medicare and Medicaid program reimbursement will proceed, a government shutdown for any period of time beyond three or four weeks could impede certain critical administrative functions, such as Medicare claims processing, and therefore impact their pocketbooks. Likewise, while substantial ACA implementation will continue, long term furloughs could affect certain components of the law (such as the exchanges) because they depend on government employees to help run the IT component, among other aspects of the program. Thus, the magnitude of the shutdown’s impact will depend on how long it endures.

*Copyright 2013, American Health Lawyers Association, Washington, DC. Reprint permission granted.

[1]/ Opinion of the Office of Legal Counsel, Department of Justice, Government Operations in the Event of a Lapse in Appropriations, 1995 WL 17216091 (Aug.16, 1995) at pp. 3-4: see also, Effect of Appropriations for Other Agencies and Branches on the Authority to Continue Department of Justice Functions During the Lapse in the Department’s Appropriations, 19 Op. O.L.C. 337, 1995 WL 917146 (Dec. 13, 1995).

[2]/ Contingency Staffing Plan, pp.2-3.

[3]/ CMS has not publicly stated whether the IT contracts are already issued and funded.

[4]/ The NIH Clinical Center is the agency’s research hospital.

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Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.