Medicare Program; Ensuring Safety Through Domestic Security With Made in America Personal Protective Equipment (PPE) and Essential Medicine Procurement by Medicare Participating Hospitals
Published Date: 1/29/2026
Proposed Rule
Summary
Medicare wants hospitals to buy more American-made masks, gloves, and medicines to keep everyone safer and support U.S. jobs. They’re thinking about giving special awards to hospitals that do this and maybe paying them more to cover extra costs. Hospitals and the public can share their thoughts by March 30, 2026, to help shape these new rules.
Analyzed Economic Effects
4 provisions identified: 2 benefits, 1 costs, 1 mixed.
Possible Medicare Payment to Cover Higher Domestic Costs
CMS is considering a separate Medicare payment to hospitals that earn the Secure American Medical Supplies designation to cover Medicare's IPPS share of higher costs for domestically made PPE and essential medicines. CMS gives illustrations: if a hospital has 10,000 Medicare patient days, 5 N95s used per day, and a $0.20 domestic unit cost premium, the hospital would receive $10,000; using drug-cost assumptions, if Medicare's share of a hospital's drug costs is $2,000,000, essential medicines are 1% of that spend, and domestic costs are 12x, the hospital would receive $240,000.
New 'Secure American Medical Supplies' Hospital Badge
CMS is considering a publicly reported “Secure American Medical Supplies” designation hospitals could earn by buying a minimum share of PPE and 86 named essential medicines made in the USA. CMS proposes definitions (for example, >50 percent of the active pharmaceutical ingredient (API) plus the final dosage form made in the U.S. for an essential medicine) and possible phased percentage targets such as 25%, 50%, and 75% over time.
Hospital IQR Attestation Could Require Domestic Procurement
CMS is asking about adding a Hospital Inpatient Quality Reporting (IQR) structural measure that would require hospitals to attest whether they met minimum American-made percentages for PPE and essential medicines. Under existing law, hospitals in the Hospital IQR Program that fail to submit required data risk a reduction to their annual payment update equal to one-quarter of the market basket update.
Condition of Participation Option Not Pursued
CMS considered but is not pursuing a new Condition of Participation (CoP) that would require Medicare hospitals to demonstrate a commitment to procuring U.S.-made PPE and essential medicines because the only statutory penalty for CoP noncompliance is termination from Medicare, which CMS believes would be overly burdensome and create very high additional costs.
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Key Dates
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