H.R. 10134: Local Health Care Protection Act of 2026

This bill would create a temporary exception for certain hospitals so they can keep participating in the federal 340B drug discount program even if they no longer meet one of the program’s usual eligibility tests related to their disproportionate share adjustment percentage.

What the main change does

Under current law, certain hospitals must meet specific patient-mix and payment-related requirements to qualify as 340B covered entities. This bill says that some hospitals that were already in the program on July 3, 2025 would still be treated as eligible for 340B if they lose that particular eligibility measure because of Medicaid cuts, as long as they otherwise meet the program’s rules.

This exception would apply starting on the date the bill becomes law, or when the hospital first fails the requirement if that happens later. It would last only through the hospital’s affected cost-reporting periods that end no later than September 30, 2030.

Which hospitals are covered

The bill applies only to hospitals that:

• Were already 340B covered entities on July 3, 2025;
• Are hospitals described in specific 340B categories under federal law; and
• Otherwise remain in compliance with the 340B program rules.

What problem it is trying to address

The bill is aimed at hospitals that may lose 340B eligibility because changes in Medicaid funding or related payment formulas reduce their disproportionate-share status. In practical terms, it would allow qualifying hospitals to keep buying outpatient drugs at discounted 340B prices even if they fall below the usual threshold tied to serving low-income patients.

Required federal study

The bill would also require the Comptroller General, within one year, to study and report to Congress on:

• The criteria used to decide whether an entity is a covered 340B entity;
• How states decide whether a hospital serves a disproportionate number of low-income patients with special needs for Medicaid-related payment purposes;
• How declining hospital payments in rural areas may be affecting services such as obstetrics, gynecology, oncology, and other essential specialties;
• Current proposals to change the payment formula, including ideas from several health care organizations;
• The strengths and weaknesses of those proposals; and
• Reasons hospital payment adjustments may be declining, including possible effects of Social Security disability backlogs and limited post-acute care in rural or underserved areas.

Relevant Companies

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