Local Health Care Protection Act of 2026
- Sponsor
- Rep. Scholten, Hillary J. [D-MI-3]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Aug 20, 2026
Bottom line
The bill provides a temporary lifeline for certain hospitals to maintain access to discounted prescription drugs through the 340B program, aiming to protect healthcare services for low-income patients amidst potential Medicaid funding reductions.
What it actually does
This bill creates a temporary exception for certain hospitals to remain eligible for the 340B drug discount program, even if they no longer meet the disproportionate share adjustment (DSH) percentage requirement due to Medicaid cuts. The exception applies to hospitals that were already 340B covered entities on July 3, 2025, for cost reporting periods beginning in fiscal year 2026 but not ending after September 30, 2030. It also mandates a Comptroller General study on 340B eligibility criteria and the impact of declining Medicare DSH payments.
Proponents argue
Proponents argue that this bill is crucial for protecting vulnerable hospitals, particularly those serving a disproportionate number of low-income patients, from losing vital drug discounts due to Medicaid cuts. They contend that maintaining 340B eligibility allows these hospitals to continue offering essential services, such as obstetrics, oncology, and other specialties, which might otherwise be jeopardized, especially in rural and underserved areas. This temporary measure provides stability while broader issues related to DSH payments are studied.
Opponents contend
Opponents might argue that expanding 340B eligibility, even temporarily, could further strain drug manufacturers, who bear the cost of these discounts, potentially impacting their ability to fund research and development for new medicines. They may also raise concerns about the overall growth and oversight of the 340B program, suggesting that a temporary exception could set a precedent or mask underlying inefficiencies rather than addressing the root causes of hospital financial instability or DSH payment issues.
The bill is concise and can be read and understood quickly by an informed reader.
Section 2(a)-(c)
Temporary 340B Eligibility Exception
This provision allows certain hospitals to continue participating in the 340B drug discount program even if they no longer meet the specific federal requirement for a disproportionate share adjustment (DSH) percentage. This exception applies if the hospital was already a 340B entity on July 3, 2025, and if the failure to meet the DSH requirement occurs during cost reporting periods starting in fiscal year 2026, but not extending beyond September 30, 2030. The goal is to prevent hospitals from losing access to discounted drugs solely due to changes in Medicaid funding that impact their DSH status.
Supporters argue
Supporters argue this provision is essential to prevent a 'cliff effect' where hospitals lose critical 340B savings due to external factors like Medicaid cuts, which are often beyond their control. They contend that these savings are reinvested into patient care, particularly for vulnerable populations, and losing them would force service reductions or closures, especially in rural areas.
Critics contend
Critics might argue that this exception further expands the 340B program without addressing its underlying complexities or potential for abuse. They may contend that it places additional financial burden on drug manufacturers and could divert the program from its original intent, rather than encouraging hospitals to adapt to changing DSH requirements or seeking more sustainable funding solutions.
Tradeoffs
The provision balances the immediate need to support safety-net hospitals and patient access to care against concerns about the long-term sustainability and scope of the 340B program and its impact on pharmaceutical innovation and pricing.
Section 2(d)
Comptroller General Study and Report
This section mandates that the Comptroller General of the United States conduct a study and submit a report to Congress within one year of the bill's enactment. The study will examine the criteria used to determine 340B covered entity status and state-level criteria for identifying hospitals serving a disproportionate number of low-income patients. It will also evaluate the impact of declining Medicare DSH payments in rural areas, review proposals to revise payment formulas, analyze current payment methodologies, and identify factors contributing to declines in these payments, including issues with Social Security Administration disability determinations and post-acute care capacity.