The U.S. House of Representatives voted 222 to 209 to pass the Senate amendment to the continuing resolution, effectively ending the government shutdown after 43 days. But what does the new law do? For the health care industry it actually does a lot.

First, the law reinstates many of the Covid-era flexibilities and payment programs in Medicare that had expired on October 1 and keeps them funded through January 30, 2026. Second, it fully funds the Food and Drug Administration through the end of September 2026. Finally, and most importantly, it wipes clean the Statutory PAYGO scorecards as of the end of this calendar year.

We will have more posts in the coming days going more deeply into each of these, but what follows now is a quick summary of what each of these provisions accomplishes. We will start with the last one first since it will have the most seismic impact on health care providers.

Statutory PAYGO Eliminated

Section 80001(d) of Division H, the last subsection of the last section of the law, states that “[e]ffective on the date of adjournment of the first session of the 119th Congress . . . the balances on the PAYGO scorecards established to paragraphs (4) and (5) of section 4(d) of [the Statutory Pay-As-You-Go Act of 2010] shall be zero.”

The Statutory PAYGO Scorecards are used by the administration to determine whether a law creates a sufficient amount of budget deficit, which would then require the government to institute across-the-board mandatory spending cuts until the deficit is paid for. In the Medicare spending world, those cuts, also known as sequestration, are limited to a maximum of 4%.

Health care providers were expecting a 4% reduction starting in January 2026 because of the deficits caused by the 2025 Reconciliation Law (f/k/a the One Big Beautiful Bill Act). That law caused nearly $3.4 trillion in deficits that was going to have to be paid for with sequestration orders that would have resulted in reductions close to the maximum until 2035.

But, thanks to the provision of this continuing resolution, those scorecards will be wiped clean when the Congress adjourns this year, meaning that the expected 4% cut in Medicare payments will not materialize. There will still be a 2% reduction in payments because of the Budget Control Act of 2011. Those cuts have been in place in some form since 2013 and will continue to be in place until 2032.

FDA Funded for Fiscal Year 2026

One of the unique features of this new law is that it included three appropriations bills that will fund sections of the government even after the underlying continuing resolution expires in January.

A continuing resolution only continues government spending at the prior year fiscal year levels through a determined date. In this case, the date is January 30, 2026. However, every continuing resolution contains a provision that makes its funding levels null and void if a full year appropriations bill is passed for that section of government before the continuing resolution expires.

In this case, the FDA does not have to wait for that to happen between now and January as the Agriculture and FDA appropriations bill was one of the three that was included in this text. The other aspect of this is that, if the government were to shut down again at the end of January because Congress is unable to reach additional agreement, the FDA (along with the U.S. Department of Agriculture) would not shut down as its funding for Fiscal Year 2026 is fully approved.

We will have more about the specific provisions of this law in the coming days.

Medicare Payment Programs Restarted

When the original continuing resolution expired on October 1, along with it went a series of health care “extenders” which Medicare providers had come to rely on, both for payment and for flexibility in their practices.

After the programs expired, the Centers for Medicare and Medicaid Services (CMS) issued a number of alerts to the community and to the Medicare Administrative Contractors (MACs) halting payment under those programs. In the notices CMS asked providers to hold back any bills that were impacted by the programs and asked MACs to halt payment on any services that might be paid under those programs and to send the payment requests back to the providers for confirmation that they would be payable.

Among those programs and extenders that expired were the following:

• Reauthorization and additional funding for the Community Health Center Fund
• The special diabetes program under Section 330B(b)(2) of the Public Health Service Act
• Various provisions related to public health emergencies.
• Increased Medicare inpatient hospital payment adjustment for low-volume hospitals
• Funding for the Medicare-Dependent Hospital program
• Add-on Medicare payments for ambulance services
• Acute Hospital Care at Home waiver authorities
• Temporary inclusion of authorized oral antiviral drugs as covered Part D Drugs
• Medicare telehealth flexibilities
• Delaying Medicaid Disproportionate Share Hospital payment reductions.

The expiration of the telehealth flexibilities was a large blow and one that generated a lot of negative press. Those flexibilities, added during the COVID-19 pandemic, among other aspects, allowed many more types of providers to provide telehealth services reimbursable by Medicare. Additionally, they removed many of the geographic restrictions on Medicare payment for telehealth and expanded the types of originating sites that could be used.

With the passage of the new continuing resolution, those programs and extenders are retroactively back in place and any services that were provided under them since October 1 and going forward should be reimburseable as though they never expired. However, as before, since they are not part of a full year appropriations bill, these programs could expire on January 30, 2026 if they are not either included in the Department of Health and Human Services appropriations bill or in some other stand alone legislative vehicle by then.

There is a lot in these bills and if the legislators are to be believed, more is coming in the next two months. Reed Smith will continue to follow developments on this and other Federal legislation. If you have questions about this law please do not hesitate to reach out to the health care lawyers at Reed Smith.