Understanding the Financial Impact of the Medicare Claims Hold

Elina Sabilova, Billing Specialist, WCH

A Structural Analysis of a Three-Week Payment Disruption

The October 2025 federal government shutdown introduced a crisis that exposed something most policy discussions still miss: even a temporary claims processing pause reveals a structural vulnerability in how the entire radiology specialty finances itself. When the Centers for Medicare & Medicaid Services (CMS) announced a hold on claim processing beginning October 1, then extended that hold on October 15 before finally lifting it on October 21, it wasn’t an abstract policy moment. It was a direct challenge to the financial runway that most independent radiology groups depend on for operational survival.

The challenge wasn’t academic. The Radiology Business Management Association, representing 800 imaging groups, stated flatly that the pause posed “serious financial risks.” More specifically, Linda Wilgus, co-executive director of RBMA and former radiology practice executive director, provided the concrete math: most radiology practices operate with 30 to 60 days of cash on hand. For groups where Medicare beneficiaries comprise 30% or more of the patient mix—a common scenario—even a three-week delay in reimbursement created operational stress that extended beyond simple cash management.

While CMS lifted the claims hold on October 21 and the government shutdown continues into its sixth week, the three-week disruption forced a recognition that deserves closer examination: radiology practices are built on a model where payment lags create persistent vulnerability. This isn’t new, but a government-imposed payment halt made it impossible to ignore.

The Structural Vulnerability: Why 30-60 Days Is Precarious

Understanding why a three-week claims pause represented a serious risk requires understanding how radiology practice cash flow actually works.

CMS initially maintained payment holds on select claims paid under the Medicare Physician Fee Schedule—particularly those affected by expired provisions such as Geographic Practice Cost Indices—along with claims for ground ambulance transport and Federally Qualified Health Centers. The hold was lifted on October 21, but the actual mechanics matter more than the eventual resolution.

A radiology group submits claims daily. The 14-day statutory payment floor means Medicare should pay compliant claims within 14 days. But accounts receivable benchmarks show a different reality. Days in accounts receivable should stay below 50 days at a minimum; however, 30 to 40 days is preferable. This means even in the best-case scenario, a radiology practice waits roughly 35-45 days for payment on average—not the theoretical 14 days.

Now layer in the operational reality: a practice must pay its staff weekly or biweekly. Equipment leases, service contracts, and supply vendors expect monthly payments. The gap between when a technologist is paid and when the claim for that technologist’s work gets paid is where the problem lives.

If Medicare represents 30% of patient volume, and a practice operates with 30-60 days of cash reserves, that means approximately 9-18 days of operating expenses in Medicare-specific cash. When CMS paused processing for three weeks, that buffer came dangerously close to evaporating. Cash flow typically lags productivity significantly—a high-producing month might result in poor cash flow because it takes 30, 60, or 90 days before that productivity pays off. Meanwhile, variable costs are paid during those higher productivity months.

This structure isn’t unique to radiology, but radiology’s reimbursement model makes it particularly acute. Unlike hospital departments, where cash flow is managed at the enterprise level, independent radiology groups bear direct responsibility for bridging the gap between work performed and payment received.

The Hold’s Specific Impact: Three Weeks That Exposed Everything

What made the October 2025 hold particularly damaging was both its duration and the uncertainty surrounding it. CMS initially implemented a 10-day hold, then on October 15—as the shutdown entered its third week—directed Medicare Administrative Contractors to continue holding payment for certain Medicare claims with dates of service on or after October 1. The hold wasn’t lifted until October 21, creating a three-week period where practices had to make decisions with incomplete information about when payments would resume.

The affected categories had specific implications. Geographic Practice Cost Indices, which adjust reimbursement based on regional practice costs, had expired provisions that triggered the hold. This is significant because many radiology practices operate in markets where GPCI adjustments materially affect reimbursement. During those three weeks when the hold suspended processing of these claims, it wasn’t a symbolic gesture—it was real money at specific practices that wasn’t arriving.

Additionally, CMS urged physicians who perform telehealth services not payable after October 1 to consider sending beneficiaries an advanced notice of noncoverage. This created secondary complications for practices offering remote supervision or teleradiology services, which have become material revenue lines for many groups since 2020. While teleradiology interpretation services remained covered, other telehealth services faced restrictions that added complexity during an already stressful period.

The Broader Context: Reimbursement Cuts Compound the Crisis

The claims hold didn’t occur in isolation. It happened six months into a year where radiology practices were already absorbing significant Medicare reimbursement reductions. The Medicare Physician Fee Schedule conversion factor for 2025 is $32.3465, compared with $33.2875 that was in effect for most of 2024. That’s a 2.83% reduction applied across the board.

The specific impacts vary by modality. According to CMS estimates in the final rule, most radiology is experiencing 0% aggregate change, but interventional radiology is seeing a 2% decrease. For interventional practices, this meant they were already operating with reduced margins when the hold hit. A three-week payment disruption applied directly to reduced revenue streams.

Even more specifically, CT colonography screening reimbursement is limited by the OPPS cap, reducing global reimbursement from $699.98 to $350.40. This created a scenario where newer procedures launched in 2025 with significantly compressed margins, making even temporary cash disruptions more problematic.

Practice Response and the Triage Problem During the Hold

The three-week hold forced difficult operational decisions. Practices had to assess not just whether they could maintain payroll, but whether they could continue making equipment payments, maintaining service contracts, or retaining staff during the pause. The uncertainty about when the hold would lift made planning especially difficult.

Some practices delayed equipment purchases. Others reduced discretionary spending on supplies. A few considered temporary staffing adjustments. But these weren’t trivial decisions—they represented strategic choices about how long the practice could sustain itself if the payment hold extended beyond three weeks.

The fundamental issue is that radiology practices lack the capital reserves that allow enterprises to absorb shocks. Typical profit margins in healthcare practices range from 1-20%, with many in the lower end of that range. A practice with 5% margins operating on 30-60 days of cash is structurally vulnerable to any payment disruption longer than 4-6 weeks.

The three-week hold came dangerously close to that threshold for practices with heavy Medicare dependence. This vulnerability isn’t a practice-management problem. It’s a feature of how medical practice reimbursement works systemically.

The Policy Silence Around Structural Risk

What’s notable is that the shutdown discussion at legislative and regulatory levels didn’t engage with this underlying vulnerability. The conversation focused on whether claims would eventually be processed and paid, which they were on October 21. But no one seriously addressed why independent medical practices are structured to operate with minimal cash reserves in a reimbursement system that naturally creates payment lags.

This gap between policy discussion and operational reality matters because it indicates a misalignment in how policymakers understand medical practice economics. When CMS designs a 14-day payment floor, it presumably assumes practices can bridge the gap between service delivery and payment. But if actual payment cycles are 35-45 days, and practices operate on 30-60 days of cash, the 14-day floor isn’t protective—it’s theoretical.

The three-week hold exposed that gap in real time. But the response focused on resuming processing, not on reconsidering the structural model.

What the Three-Week Crisis Revealed

For radiology practices, the immediate lessons are operational. Linda Wilgus’s statement about the threat to “operational stability” wasn’t hyperbolic—it was empirical. The three-week hold demonstrated that practices with heavy Medicare dependence face cash flow vulnerability as a present risk, not a theoretical concern.

The October experience suggests several necessary responses:

Immediate risk mitigation: Practices should evaluate emergency lines of credit before the next crisis, not during it. Establishing relationships with lenders and understanding borrowing capacity needs to happen during normal operations.

Cash reserve targets: The traditional 30-60 day cash reserve target may be insufficient in an environment where government payment holds can extend three weeks or more. Practices might need to target 60-90 days, despite margin pressures.

Payment acceleration: Negotiating payment acceleration terms with private payers becomes more critical when Medicare—which cannot be negotiated with—represents 30%+ of revenue and demonstrates willingness to pause payments during federal funding disputes.

Revenue diversification: Reducing Medicare dependence where possible provides some buffer against future holds, though this is easier said than done given Medicare’s dominant position in many markets.

Monitoring and early warning: The three-week hold happened gradually—first 10 days, then an extension on October 15, then finally lifted October 21. Practices need systems to monitor federal funding situations and CMS directives in real time, not after payment problems emerge.

Systemic Questions the Crisis Raised

Beyond individual practice responses, the October 2025 hold highlighted a question policymakers should address: why do independent medical practices operate with such thin cash buffers in a reimbursement system that guarantees payment delays and occasionally pauses processing entirely?

The answer involves historical practice finance, provider bargaining power, and systemic assumptions about how healthcare economics function. But the question itself—why this vulnerability exists and whether it’s acceptable—deserves policy attention it currently doesn’t receive.

The Medicare payment system operates under budget neutrality principles and statutory payment floors, but these protections assume continuous processing. When processing pauses for three weeks during federal shutdowns, those protections become theoretical. Yet there’s no policy mechanism to help practices bridge these gaps, despite the predictable frequency of federal funding disputes.

The Ongoing Vulnerability

The October 2025 hold was lifted on October 21. Claims resumed processing. The government shutdown continues into its sixth week, but Medicare payments are flowing again for most services. From a claims processing perspective, the immediate crisis ended.

But the underlying structural vulnerability remains: radiology practices are one extended payment cycle away from serious operational risk, and that’s a feature of the system, not a bug that gets fixed when specific holds end.

The three weeks between October 1 and October 21 demonstrated several things:

The 14-day payment floor is largely theoretical in normal operations, with actual payment cycles running 35-45 days

Cash reserves of 30-60 days provide minimal buffer against payment disruptions that can extend three weeks

Government funding disputes directly impact practice viability, not just reimbursement rates

Policy discussions focus on eventual payment rather than operational survival during disruptions

Independent practices bear structural vulnerability that hospital-based departments don’t face

The October hold resolved, but it revealed something that persists: the radiology delivery model—particularly independent practices with significant Medicare dependence—operates with structural financial vulnerability that periodic payment disruptions expose but that policy discussions still don’t meaningfully address.

The question isn’t whether another payment hold will occur during future federal funding disputes. The question is whether the radiology practice community and policymakers will use the October 2025 experience to address the underlying structural vulnerability, or whether we’ll simply wait for the next shutdown to expose the same problems again.

References

American College of Radiology. (2025, October). CMS Maintains Hold on Medicare Claim Payments. ACR News and Publications.

American College of Radiology. (2025, October 21). Medicare Lifts Hold on Claim Processing. ACR News and Publications.

American College of Radiology. (2025, October). Medicare Telehealth Flexibilities Impacted by Government Shutdown. ACR News and Publications.

Centers for Medicare & Medicaid Services. (2025, October 1). Medicare Claims Processing Hold Initial Directive. CMS Guidance to Medicare Administrative Contractors.

Centers for Medicare & Medicaid Services. (2025, October 15). Medicare Claims Processing Hold Extension. CMS Guidance to Medicare Administrative Contractors.

Centers for Medicare & Medicaid Services. (2025, October 21). Medicare Claims Processing Hold Lifted. CMS Guidance to Medicare Administrative Contractors.

Foley & Lardner LLP. (2025, October). Medicare Telehealth Flexibilities Have Expired. Legal Analysis.

Healthcare Administrative Partners. (2025). Medicare Finalizes 2025 Fee Schedule Cut. HAPUSA Analysis.

Healthcare Administrative Partners. (2025, March). What Radiology Practices Need to Know About the Federal Government Shutdown. Practice Management Resources.

Medisys Data. (2025, February). Medicare Reimbursement Cuts: A Radiology Practice Guide for 2025 and Beyond. Practice Management Resources.

Radiologist Business Management Association. (2025, October 16). Statement on Medicare Claims Processing Pause. RBMA Position Paper.

Radiology Business Magazine. (2025, October 16). Medicare Halts Claim Processing, Posing Serious Financial Risk to Radiology Practices. Industry News.