The government shutdown is already beginning to affect some therapists. In particular, if you billed Medicare for services you provided clients in October, your claims payment may be delayed.

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With the start of the shutdown on October 1st, the Centers for Medicare and Medicaid Services (CMS) announced that they were pausing claims payments to providers.

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That decision was reversed on October 16th. But, depending on when they submitted claims to CMS, some therapists are still feeling the impact.

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Here’s how the CMS pause affected therapists, and what you can do to protect your practice from similar events in the future.

How the shutdown impacts therapists who bill Medicare

On October 1st, the CMS instructed their Medicare Administrative Contractors (MACs) to put a hold on all claim payments typically made:

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• Under the Medicare Physician Fee Schedule (including therapy services)
• For ground ambulance transport
• To Federally Qualified Health Centers (FQHCs)

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Claims payments for telehealth services, including those for behavioral health, were also put on hold.

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On October 16th, that hold was lifted. 

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Therapists and other healthcare providers who filed claims between October 1st and October 16th may find their payments delayed due to the hold. 

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For self-employed therapists who earn a significant share of their revenue from Medicare claims payments, the hold may have been cause for alarm. 

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When you run your own practice, even a temporary decrease in cash flow can make it difficult to cover operating expenses such as rent and business insurance. It can also impact your ability to make timely interest payments on debt, including interest on business loans and lines of credit.

Will Medicare claims payments be put on hold again?

There is no evidence to indicate that Medicare claims payments will once again be put on hold due to the shutdown.

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However, the government shutdown is a developing situation with no end in sight. For updates on Medicare-related issues, subscribe to the Medicare Learning Network newsletter.

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How to protect your therapy practice from cash flow problems

Service stoppages like the CMS payments pause are not the only events that can have an adverse effect on your practice’s cash flow.

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Other changes to public healthcare coverage can have an impact. For instance, modifications to Affordable Care Act (ACA) coverage—the point of contention which led to the current government shutdown—could reduce the number of potential clients who can afford coverage. That may have a trickle-down effect on your client list.

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But your practice’s cash flow may also dip because of:

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• Seasonality
• Client churn
• Work absences or reduced hours
• National and local economic conditions that limit individuals’ ability to afford therapy
• Processing delays for private insurance claims

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Here are some actions you can take now to defend your practice against negative cash flow.

1. Start an emergency fund

It’s never too soon to start setting aside emergency savings—both personally and for your practice.

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Even if your budget offers little leeway for setting aside funds, making small, regular contributions to a savings account now may pay off later. 

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For more, check out our guide to emergency savings for therapists.

2. Open a line of credit

In a pinch, a business line of credit can help you cover operating expenses during periods when your cash flow slows.

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While borrowing money to pay your practice’s overhead costs is never a long-term solution, it can close temporary gaps in revenue. Just be sure to follow good debt management strategies, and budget for paying back the principal plus interest.

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Using a line of credit is preferable to using a business credit card or loan. The interest rate is significantly lower than a credit card, and it doesn’t have the same strict repayment term as a loan.

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You can learn more from The Complete Guide to Credit for Therapists. 

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3. Build a budget that adapts to your practice

Your business’s operating budget is not written in stone. You should periodically update your budget so it’s in line with how your practice is performing financially. That includes making adjustments to account for changes in cash flow.

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If you’ve never used a budget for your practice before, How to Build a Budget for Your Therapy Practice will help you get started. 

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Then check out The Complete Budgeting Guide for Therapists. It covers what you need to know about personal budgeting when you run your own practice—including how to pay yourself and prepare for unexpected expenses.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 

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Bryce Warnes is a West Coast writer specializing in small business finances.

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