After facing the challenging headwinds of reconciliation in 2025, America’s Essential Hospitals members have kicked off 2026 with strong advocacy momentum on Capitol Hill—advancing policies that recognize and support the vital role of essential hospitals nationwide.
Funding Package Wins: DSH, Section 203, Hospital at Home, Telehealth, and More
The recently enacted fiscal year (FY) 2026 funding package included several major priorities for essential hospitals:
- Disproportionate share hospital (DSH) funding relief: Two-year elimination of the scheduled 2026 and 2027 Medicaid DSH cuts, leaving only one year ($8 billion) of cuts left
- A fix to the Medicaid dual eligibility shortfall issue, known as “Section 203,” for which the association has advocated for years
- Telehealth: Two-year extension of key Medicare telehealth flexibilities that ensures continued access to virtual care for underserved patients and stability for hospitals that have invested heavily in telehealth infrastructure
- Key maternal health investments:
- $818.7 million for the Title V Maternal and Child Health Services Block Grant
- $113.5 million for Centers for Disease Control and Prevention’s (CDC’s) Safe Motherhood and Infant Health portfolio
- $23 million for CDC’s Surveillance for Emerging Threats to Mothers and Babies
- $15 million for rural maternal and obstetrics grants
- $12 million for the Maternal Mental Health and Substance Use Disorder program
- $8 million for the National Maternal Health Hotline
- $5 million for the Newborn Essentials Supplies Toolkits Act, among other provisions
- Additional Health Care Provisions:
- Extending the Medicare-Dependent Hospital program enhanced payments and Low-Volume Hospital enhanced payments through 2026
- Extending the Teaching Health Center Graduate Medical Education program through FY 2029
- Authorizing Medicare coverage for multi-cancer early detection screening tests
- Reforming pharmacy benefit managers (PBMs), including by:
- Placing new limits on PBM compensation models in Medicare
- Requiring additional transparency for PBM payment structures
- Strengthening oversight
These wins reflect sustained, coordinated advocacy and underscore the impact of member voices in federal policymaking. We will continue building on this momentum as we advance designation legislation and other priorities in 2026.
One disappointment with the package—and an area of focus for 2026—is requirements for separate identification numbers and attestations for off-campus outpatient departments, which will increase administrative burden for essential hospitals. “Site-neutral” policies are cuts to Medicaid, and the association will continue to educate lawmakers about how they harm essential hospitals. View our one-pager on the issue and join us in our advocacy.
Essential Health System Designation
Among our collective top priorities, establishing a federal essential health system designation continues to gain bipartisan traction. Representatives across the aisle are engaging with the Reinforcing Essential Health Systems for Communities Act (H.R. 7145), which Reps. Lori Trahan (D-Mass.) and David Valadao (R-Calif.) reintroduced on Jan. 16.
The association is excited about the designation that captures the unique patient mix of essential hospitals. Recent Hill conversations and member outreach have helped advance awareness about the legislation, and conversations to introduce a parallel Senate bill are ongoing.
340B Drug Pricing Program
Advocacy to defend and strengthen the 340B program is constantly underway on behalf of members. Most recently, our team has updated two one-pagers on the issue to sharpen our collective advocacy. The first is a more general one-pager on the program, and the second has sharper talking points in response to the current moment.