To amend title XIX of the Social Security Act to establish a definition of essential health system in statute and for other related purposes.

Bill Number

H.R. 7145

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Health

Status

Introduced

Latest Action

2026-01-16: Referred to the House Committee on Energy and Commerce.

Last Updated

2026-07-01T08:09:25Z

AI-Generated Summary

Purpose

The legislation aims to formally define "essential health system" in the Social Security Act (SSA) to identify hospitals that provide a high volume of care to Medicaid and low-income patients. This definition would support targeted policies to ensure these hospitals continue delivering vital community services, particularly in the Medicaid program (Title XIX of the SSA).

Key Provisions

• Definition of Essential Health System (Added to SSA Section 1905(ll)):
• Applies to specific hospitals: Medicare acute care hospitals (subsection (d) hospitals), that are non-federal government-owned or private nonprofit.
• Hospitals must demonstrate high care volume for Medicaid and low-income patients in at least two of the three most recent fiscal years, based on one of three criteria:
• Medicaid and Low-Income Medicare Criterion: A Medicare disproportionate patient percentage of at least 35% (a measure of the share of low-income patients).
• Uncompensated Care Criterion: A Medicare disproportionate share hospital uncompensated care payment factor of 0.0005 or more (reflecting costs of unpaid care for uninsured or underinsured patients).
• State-Adjusted Low-Income Care Criterion: Ranking in the top 16th percentile (highest performers) for the above measures among similar hospitals in the state.
• Data used comes from final Medicare payment rules for recent fiscal years.
• Designation lasts 5 years, renewable if the hospital continues to qualify as a subsection (d) hospital and nonprofit/government-owned.

• Essential Health System Designation and Index (Amendments to SSA Section 1900(b)):
• Requires the Medicaid and CHIP Payment and Access Commission (MACPAC) to:
• Submit an annual list to Congress (starting 6 months after enactment, then by August 1 each year) of hospitals meeting the criteria, including new and previously designated ones.
• Publish an "essential health system index" for all Medicare acute care hospitals, calculating percentile rankings (from 0 to 100, where higher means serving more low-income patients) for the key measures:
• Compared to hospitals in the same core-based statistical area (a local area like a metro region), state, and nationally.
• Compute a composite index as the average of these rankings.
• Adds to MACPAC's agenda (SSA Section 1900(b)(2)(A)) a focus on studying payment policies that use these criteria to provide targeted financial support for essential health systems and maintain community access to their services.

Significant Changes to Existing Law

• Introduces the first statutory definition of "essential health system," which previously lacked formal criteria in Medicaid law.
• Mandates new annual reporting and indexing by MACPAC, expanding its role beyond current advisory duties on Medicaid payments and access.
• Shifts from ad-hoc identification of safety-net hospitals to a structured, data-driven process using Medicare data, potentially standardizing how Medicaid recognizes high-need providers.

Potential Impacts

• On Government Agencies: Increases workload for MACPAC in data analysis and reporting; may influence the Centers for Medicare & Medicaid Services (CMS) in future payment adjustments or Medicaid funding allocations to support these hospitals.
• On Citizens: Improves access to care for low-income, Medicaid-enrolled, and uninsured individuals by sustaining hospitals that serve them disproportionately, potentially reducing care gaps in underserved areas.
• On International Relations: No direct impacts, as the bill focuses on domestic U.S. health policy.
• Overall, could lead to more stable funding for safety-net hospitals, preventing closures and enhancing health equity without immediately changing payment rates.

Main Stakeholders Affected

• Hospitals: Primarily safety-net or disproportionate share hospitals (those serving many low-income patients), especially nonprofit or government-owned ones, which gain formal recognition and potential for targeted support.
• Low-Income Patients and Communities: Medicaid beneficiaries, low-income Medicare patients, and uninsured individuals who rely on these hospitals for essential services like emergency care and routine treatment.
• Federal and State Governments: CMS and MACPAC for implementation and oversight; states for aligning Medicaid programs with the new index to maintain access.
• Policymakers: Congress and health committees, benefiting from annual data to inform future legislation on Medicaid financing.

Notable Legal, Constitutional, or Political Implications

• Legal: Establishes clear, objective criteria tied to existing Medicare data, reducing ambiguity in identifying essential providers and enabling consistent application under Medicaid rules. No new enforcement mechanisms, but it lays groundwork for future payment reforms without altering current funding formulas.
• Constitutional: Aligns with Congress's authority under the Spending Clause to condition federal Medicaid funds on provider support, promoting general welfare without raising federalism concerns (states retain flexibility in implementation).
• Political: Bipartisan introduction (by representatives from both parties) suggests broad support for bolstering safety-net hospitals amid ongoing debates on health equity and rural/urban access; could influence budget negotiations by highlighting data-driven needs for Medicaid enhancements.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Trahan, Lori [D-MA-3]

Cosponsors (18)

Rep. Valadao, David G. [R-CA-22], Rep. Ciscomani, Juan [R-AZ-6], Rep. Carter, Troy A. [D-LA-2], Rep. Veasey, Marc A. [D-TX-33], Rep. Soto, Darren [D-FL-9], Rep. Kiggans, Jennifer A. [R-VA-2], Rep. Pettersen, Brittany [D-CO-7], Rep. Bilirakis, Gus M. [R-FL-12], Rep. Torres, Ritchie [D-NY-15], Rep. Wagner, Ann [R-MO-2], Rep. Owens, Burgess [R-UT-4], Rep. Cleaver, Emanuel [D-MO-5], Rep. Sewell, Terri A. [D-AL-7], Rep. Balderson, Troy [R-OH-12], Rep. Kennedy, Timothy M. [D-NY-26], Rep. Craig, Angie [D-MN-2], Rep. McGovern, James P. [D-MA-2], Rep. Vasquez, Gabe [D-NM-2]

Recent Actions

• 2026-01-16: Referred to the House Committee on Energy and Commerce.
• 2026-01-16: Introduced in House
• 2026-01-16: Introduced in House

Bill Versions

• To amend title XIX of the Social Security Act to establish a definition of essential health system in statute and for other related purposes. — issued 2026-01-16 — PDF (5 pages)