H.R. 7145 creates a new legal definition of "essential health systems" under Medicaid law to identify hospitals that serve high volumes of low-income and uninsured patients. A hospital qualifies as an essential health system if it is a non-federal, nonprofit hospital that meets at least one of three criteria—having at least 35 percent Medicare patients from low-income backgrounds, providing substantial uncompensated care, or ranking in the top 16th percentile for low-income care in its state—for at least two of the last three fiscal years. Once designated, hospitals maintain this status for five-year periods and are subject to redesignation thereafter. The bill requires the Medicare Payment Advisory Commission (MACPAC) to publish a list of qualifying hospitals and create an "essential health system index" within six months of enactment and annually thereafter, ranking each hospital's performance on these measures at the regional, state, and national levels. The legislation also directs MACPAC to study how Medicaid payment policies could use this new definition to provide targeted financial support for these hospitals and ensure continued access to critical community health services they provide.
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