Section 1 Short title
This Act may be cited as the “Local Health Care Protection Act of 2026”.
Local Health Care Protection Act of 2026
A BILL
To establish an eligibility exception for the drug discount program due to cuts to the Medicaid program.
Sec. 2 Eligibility exception for the drug discount program due to cuts to the Medicaid program
In general— Notwithstanding any other provision of law, in the case of a hospital described in subsection (b) that, with respect to cost reporting periods that begin during fiscal year 2026 or a subsequent fiscal year, but do not end after September 30, 2030, does not meet the applicable requirement for the disproportionate share adjustment percentage described in subsection (c), but otherwise meets the requirements for being a covered entity under subparagraph (L), (M), or (O) of subsection (a)(4) of section 340B of the Public Health Service Act (42 U.S.C. 256b) and is in compliance with all other requirements of the program under such section, shall be deemed a covered entity for purposes of such section for the period—
beginning on the date of the enactment of this Act (or, if later, with the first of such cost reporting periods for which the hospital does not so meet such applicable requirement for the disproportionate share adjustment percentage, but otherwise meets all other such requirements for being such a covered entity and of such program); and
ending with the last of such cost reporting periods (ending not later than September 30, 2030) for which the hospital does not so meet such applicable requirement for the disproportionate share adjustment percentage, but otherwise meets all other such requirements for being such a covered entity and of such program.
Hospitals— A hospital described in this subsection is an entity that, on July 3, 2025, was a covered entity described in subparagraph (L), (M), or (O) of subsection (a)(4) of section 340B of the Public Health Service Act participating in the drug discount program under such section.
Applicable requirement for disproportionate share adjustment percentage— The applicable requirement for the disproportionate share adjustment percentage described in this subsection is—
in the case of a hospital described in subsection (a) that otherwise meets the requirements under subparagraph (L) or (M) of section 340B(a)(4) of the Public Health Service Act, the requirement under subparagraph (L)(ii) of such section; and
in the case of a hospital described in subsection (a) that otherwise meets the requirements under subparagraph (O) of such section 340B(a)(4), the requirement with respect to the disproportionate share adjustment percentage described in such subparagraph (O).
Report— Not later than 1 year after the date of the enactment of this Act, the Comptroller General of the United States shall conduct a study and submit to Congress a report on the criteria used to determine whether an entity is a covered entity and the criteria used by States to determine whether a hospital serves a disproportionate number of low income patients with special needs for purposes of section 1923 of the Social Security Act (42 U.S.C. 1396r–4). Such report shall also—
evaluate the impact of declining payments under section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 1396ww(d)(5)(F)) in rural areas, including whether such declining payments correlate with the loss of critical services such as obstetrics and gynecology, oncology, or other essential specialties;
review current proposals to revise the formula for determining payment adjustments under such section, including those put forward by the Medicare Payment Advisory Commission, the American Hospital Association, America’s Essential Hospitals, and the Children’s Health Association;
assess the strengths and weaknesses of each proposal described in paragraph (2) to inform future policy decisions;
analyze the current methodology for determining such payment adjustments, including any changes in such methodology to account for recent litigation; and
identify common factors and underlying causes that lead to a decline in such payment adjustments for hospitals, including—
whether disability determinations made by the Social Security Administration accurately reflect eligibility, particularly in light of case backlogs; and
whether limited post-acute care capacity in rural or underserved areas is impacting such payment adjustments.
Definition— In this section, the term “covered entity” has the meaning given such term in section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 256b(a)(4)).