This bill creates a temporary exception so certain hospitals can remain eligible for the 340B drug discount program even if they stop meeting the required disproportionate share (DSH) adjustment percentage because of cuts to Medicaid. It applies to hospitals that were 340B covered entities on July 3, 2025 and who otherwise meet 340B program rules under subparagraph (L), (M), or (O) of section 340B(a)(4). The exception covers cost-reporting periods that begin in fiscal year 2026 and end no later than September 30, 2030.
The bill also requires the Comptroller General (GAO) to submit a report to Congress within one year. The report must describe how covered-entity status and state DSH determinations are made, evaluate the impact of declining payments under section 1886(d)(5)(F) in rural areas (including possible links to loss of services like obstetrics or oncology), review proposals to change the payment adjustment formula, assess those proposals, analyze the current methodology (including recent litigation effects), and identify factors that lead to declines in payment adjustments, such as Social Security disability processing and limited post-acute care capacity.
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The bill's stated purpose is to preserve 340B eligibility for certain hospitals that lose the DSH adjustment percentage due to cuts in Medicaid, and to direct a GAO study to examine payment changes and their causes.
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