Government Shutdown Update: What PACE Organizations Need to Know

With the federal government shutdown stretching into its fourth week, Congress has yet to reach an agreement to fund the government for the fiscal year that began Oct. 1. Members of the House of Representatives remain in their districts, with no return to Washington scheduled. However, NPA remains hopeful that the House and Senate will pass a funding measure soon to reopen the government. We will continue to monitor developments closely and keep you informed. 

In the meantime, the Centers for Medicare & Medicaid Services (CMS) temporarily recalled an estimated 3,000 workers, nearly half the staff that had been furloughed. They were called back to support ongoing Medicare open enrollment duties and the Health Insurance Marketplace enrollment in November. Several press outlets, including The Hill, have reported that CMS will pay its staff by transferring funding collected through user fees paid by researchers for access to Medicare and Medicaid data.

Implications for PACE Organizations 

NPA does not anticipate significant disruption to PACE organization operations during the government shutdown. Based on the CMS FY 2025 Contingency Plan issued last December and other publicly available information, we have assessed the potential impact of a shutdown on the PACE community.

With the return of furloughed CMS staff, NPA is hopeful that CMS communications with PACE and other stakeholders, as well as policy issuances and clarifications, will be largely restored or improved. Much will depend on CMS staff availability and priorities, as well as the length of the shutdown.

CMS furloughed many PACE account managers, resulting in delayed responses to PACE organization questions submitted via the CMS PACE portal. With the return of furloughed staff, including account managers, NPA is hopeful that CMS communications with the PACE community will be fully restored.

Capitated Payments

The Medicare program is funded through a mandatory entitlement pathway outside of the congressional appropriations process. Only appropriated funds are affected during a government shutdown. Therefore, the capitated payments made to PACE organizations and Medicare Advantage plans, as well as other Medicare provider payments, will continue as expected.

In its FY 2025 Contingency Plan, CMS indicated that it will have sufficient funding in the second and subsequent fiscal quarters only for regular Medicaid grant awards made within 30 days of the initiation of a lapse in appropriations. Thus, state Medicaid payments could wane under an extended government shutdown.

Participant Enrollment

Administrative actions, such as benefit processing and eligibility verification, are expected to continue during a government shutdown, given that Medicare, Medicaid and other mandatory health program operations will continue.

CMS furloughed about half of its employees during part of the shutdown. This temporary staffing decline is expected to cause delays in participant enrollment processing. However, all furloughed employees were recalled on Oct. 22.

Audits

The CMS Medicare Parts C and D Oversight and Enforcement Group (MPCDOEG), the federal entity conducting PACE audits, has been largely unaffected by the government shutdown. PACE and other plan audits continue, such as audits of new PACE organizations that CMS is required to conduct annually during their three-year trial periods (42 CFR § 460.190).

However, it is unclear the extent to which there may be delays or disruptions to CMS audit processes, particularly for those PACE organizations with an imminently scheduled audit.

Initial and Expansion Applications and Waivers

The third-quarter deadline for PACE organizations to submit initial and service area expansion (SAE) applications, as well as waiver applications, was Sept. 26. The ability of CMS to review and make decisions on these new and other pending applications has been impacted due to significant staffing reductions. However, with the return of furloughed CMS staff, NPA is hopeful that PACE application processing will be prioritized, particularly given regulatorily stipulated timeframes for CMS application review and determination.

Notably, pursuant to federal PACE regulations (42 CFR § 460.20(d)), an application for an entity to become a PACE organization (initial application) is “deemed approved” if CMS fails to act on the complete application within 90 days, after the later of the date of application or the date CMS received all requested additional information (RAI). However, this status does not apply to expansion applications. 

CMS also employs “deemed approval” for waiver requests if it fails to act on the request within 90 days after receiving a complete waiver request (42 CFR § 460.28(c)). 

NPA continues to monitor congressional and administrative activities closely and will keep members apprised of key developments.