Domestic purchasing incentives for certain hospitals

Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is amended by inserting the following after section 1866G: 1866H. Pilot program incentivizing domestic purchases of personal protective equipment and medical consumables by certain hospitals (a) In general Not later than 2 years after the date of enactment of this section, the Secretary shall establish a pilot program (referred to in this section as the Program) that meets the requirements of this section to incentivize eligible hospitals (as defined in subsection (b)) to meet the domestic purchasing requirements (as described in subsection (c)). (b) Eligible hospitals defined (1) Eligible hospital In this section, subject to paragraph (3), the term eligible hospital means a hospital— (A) identified by the Secretary under paragraph (2); and (B) that agrees to meet the purchasing requirements described in subsection (c). (2) Identification The Secretary shall identify each hospital that, during the period beginning on the date that is 5 years prior to the date of enactment of this section and ending on the date of such enactment, received payment under this title in an amount greater than the average amount of payment received by hospitals under this title during such period. (c) Domestic purchasing requirement (1) In general Subject to paragraph (2), the domestic purchasing requirement described in this subsection is a requirement that not less than 40 percent of the personal protective equipment and medical consumables purchased by an eligible hospital that is participating in the Program shall be domestic products. (2) Percentage adjustment The Secretary may adjust the percentage described in paragraph (1) to account for instances of supply chain disruptions, natural disasters, or national emergencies, as determined by the Secretary. (3) Attestation for domestic products (A) Submission to eligible hospitals Each eligible hospital participating in the Program shall require the manufacturer of each medical consumable and personal protective equipment that the hospital relies on to meet the domestic purchase requirements described in this subsection to annually submit to the hospital an attestation form described in subparagraph (B) that such consumable or equipment is a domestic product. (B) Development of form The Secretary shall develop an attestation form in which a manufacturer described in subparagraph (A) shall attest under penalty of perjury that the medical consumable or personal protective equipment purchased by an eligible hospital is a domestic product. (4) Submission of data The Secretary shall require each eligible hospital participating in the Program, to submit as part of any cost report required under this title— (A) the total dollar amount and quantity of personal protective equipment and medical consumables purchased by such hospital during the cost reporting period that are domestic products; (B) the percentage of the total amount of personal protective equipment and medical consumables purchased by such hospital during the cost reporting period that are domestic products; and (C) each attestation form submitted to the hospital under paragraph (3)(A). (d) Decreased reimbursement rate (1) In general For discharges occurring after the third year of the Program, for each eligible hospital participating in the Program, the Secretary shall— (A) determine, using the data submitted under paragraph (4) of subsection (c), if such hospital met the purchasing requirements described in such subsection with respect to the preceding year; and (B) decrease the payment amount that would otherwise be made under the applicable payment system by the applicable percent (as defined in paragraph (2)). (2) Applicable percent defined In this subsection, the term applicable percent means with respect to an eligible hospital that failed to meet the purchasing requirements— (A) for 1 year, 2 percent; (B) for 2 years, 3 percent; (C) for 3 years, 4 percent; (D) for 4 years, 5 percent; (E) for 5 years, 6 percent; (F) for 6 years, 7 percent; and (G) for 7 years, 8 percent. (3) Length of decreased rate Any deduction in payment made pursuant to this subsection shall remain in effect after the termination of the Program. (e) Reimbursement of domestic products (1) In general For discharges occurring in each year of the Program, for each eligible hospital participating in the Program, the Secretary shall, from amounts transferred to the Secretary under section 3(c) of the Domestic Manufacturing Revitalization Act of 2026, annually reimburse such hospital the dollar amount submitted by such hospital pursuant to subsection (c)(4)(A). (2) Transfer to Federal Hospital Insurance Trust Fund After the Secretary reimburses each hospital under paragraph (1), the Secretary shall transfer any remaining amounts transferred to the Secretary under section 3(c) of the Domestic Manufacturing Revitalization Act of 2026, to the Federal Insurance Trust Fund under section 1817. (f) Voluntary participation by certain other hospitals The Secretary shall establish a process under which a hospital not identified by the Secretary under subsection (b)(2) may elect to participate in the Program. In the case where a hospital makes an election under the preceding sentence, the hospital shall be deemed to be an eligible hospital under this section. (g) Trade agreements and Buy American Act (1) In general The requirements of this section shall apply notwithstanding any requirements under the Government Procurement Agreement, any trade agreement to which the United States is a party, or waiver under chapter 83 of title 41, United States Code (commonly known as the Buy American Act). (2) Government Procurement Agreement defined For purposes of this subsection, the term Government Procurement Agreement means the Agreement on Government Procurement referred to in section 101(d)(17) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(17)). (h) Additional definitions In this section: (1) Domestic product (A) In general (i) Definition Except as described in subparagraph (B), the term domestic product, with respect to a medical consumable or personal protective equipment, means such a consumable or equipment that meets the following requirements: (I) The final assembly or processing of such consumable or equipment occurs in the United States. (II) Not less than the applicable percent of the total cost of components (as defined in subparagraph (C)) of such consumable or equipment is from domestic content. (ii) Applicable percent For purposes of clause (i)(II), the term applicable percent means— (I) with respect to a year of the Program occurring before the fourth year of the Program, 60 percent; and (II) with respect to the fourth year and subsequent years of the Program, 75 percent. (B) Textile-based personal protective equipment With respect to textile-based personal protective equipment, such as masks, gowns, gloves, and other equipment determined appropriate by the Secretary, the term domestic product means such equipment that meets the following requirements: (i) Each stage of production of the textile-based personal protective equipment occurs in the United States. (ii) Each textile, fabric, or fiber that comprises such equipment is grown, reprocessed, reused, or produced in the United States. (C) Total cost of components For purposes of subparagraph (A), the term total cost of components means— (i) with respect to a component of a medical consumable or personal protective equipment purchased by the manufacturer of such consumable or equipment, the acquisition costs of such component, including transportation costs and any tariff or duty applicable to such component; and (ii) with respect to a component of such consumable or equipment manufactured by the manufacturer of such consumable or equipment, the manufacturing costs of such component, including transportation and overhead costs attributable to the component, minus any profit and final assembly cost attributable to the component. (2) Medical consumable The term medical consumable means— (A) a medical or surgical instrument such as a syringe, needle, infusion pump, forcep, and scalpel; (B) a medical or surgical supply, such as an intravenous bag, catheter, tracheostomy tube, anesthesia equipment, gauze, bandage, suture, and any diagnostic or laboratory reagent; and (C) any related part or component determined appropriate by the Secretary. (3) Personal protective equipment The term personal protective equipment means equipment used for the protection of individuals in a health care setting and includes a surgical mask, N95 respirator, glove, gown, and any other related medical part or component determined appropriate by the Secretary. (i) Implementation This section shall be implemented through notice and comment rulemaking. (j) Termination The Program shall terminate on the date that is 9 years after the date on which the Secretary implements the Program..