This bill modifies Medicare's rules for designating rural hospitals as critical access hospitals, which receive special funding and regulatory flexibility. Currently, critical access hospitals must meet strict criteria, but this legislation allows states to designate certain facilities as critical access hospitals starting October 1, 2026, if they meet at least three of five new criteria focused on serving military families and tribal communities. The qualifying criteria include serving TRICARE beneficiaries and veterans in rural areas, deriving significant revenue from military healthcare services (either 8 percent of overall revenue or 15 percent of labor and delivery services), not being a sole community hospital, or being located on a Native American reservation. The bill also allows these designated hospitals to establish psychiatric and rehabilitation units without the bed limitations normally imposed on critical access hospitals. The legislation primarily affects rural hospitals in states that choose to use this designation authority, as well as military families, veterans, and tribal members seeking healthcare access in underserved rural areas.
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