HR6494-119

What This Bill Does

The Territories Health Equity Act is a large territorial health-financing package. Title I removes the general Medicaid funding caps for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa beginning in fiscal year 2026; eliminates the special FMAP limitation for Puerto Rico after fiscal year 2025; and creates Medicaid disproportionate share hospital allotments for territories, starting with a $300 million fiscal year 2026 pool allocated by each territory share of low-income or uninsured residents. Title II changes Medicare payment rules for territorial providers. It revises Puerto Rico IPPS hospital DSH calculations beginning October 1, 2025; rebases target amounts for territorial hospitals using fiscal year 2017 cost reports through 2030 and then the highest recent settled cost-report target; adds a DSH-based target increase for non-Puerto Rico territorial hospitals; removes certain Puerto Rico Medicare Part B late-enrollment penalties for a five-year window; sets a floor for Medicare Advantage benchmarks in territories beginning in 2026; and makes Part D eligible individuals enrolled in territorial Medicaid automatically treated as low-income subsidy eligible beginning January 1, 2026 while sunsetting the old enhanced allotment approach. Title III requires HHS to publish detailed Medicaid and CHIP information for each territory on the CMS website, report by February 1, 2026 on the harms from excluding territories from ACA exchanges, and establish a mechanism within three months for residents of possessions with no qualified health plan offered through an exchange to access coverage at least as broad as congressional staff coverage through the DC exchange, with premium tax credits, cost-sharing reductions, advance payments, possession reimbursement rules, DC hold-harmless language, and a special enrollment period after Secretary certification.

Who Benefits and How

Territorial Medicaid programs benefit from the end of capped federal funding and higher federal matching treatment. Low-income territorial residents benefit through more stable Medicaid financing, new territorial DSH support for safety-net hospitals, automatic Medicare Part D low-income subsidies for territorial Medicaid enrollees, and potential ACA-style subsidized coverage where no exchange plans exist. Puerto Rico hospitals benefit from revised Medicare DSH payment calculations and Medicare Part B penalty relief for affected residents. Hospitals in Guam, the Virgin Islands, the Northern Mariana Islands, and American Samoa benefit from rebased Medicare target amounts and DSH-related target increases. Small employers in possessions without exchange plans benefit if coverage access through the DC exchange creates more affordable insurance options. Researchers, policymakers, and residents benefit from CMS publication of territory Medicaid and CHIP data.

Who Bears the Burden and How

Federal taxpayers bear higher Medicaid, Medicare, Part D subsidy, premium tax credit, and cost-sharing reduction costs. CMS staff must implement cap removal, DSH allotments, hospital payment changes, benchmark floors, low-income subsidy eligibility, transparency postings, and data updates. HHS, Treasury, and OPM must build and administer the no-exchange coverage mechanism and coordinate payments to mirror-code and non-mirror-code possessions. Territorial Medicaid agencies must provide data, handle eligibility changes, and coordinate with CMS. DC exchange administrators may face operational coordination even though the bill requires DC residents and small businesses to be held harmless. Health insurers and possession governments must provide information for the ACA exchange exclusion report.

Key Provisions

• Eliminates general Medicaid funding caps for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa beginning fiscal year 2026.
• Modifies Puerto Rico FMAP limits and creates a $300 million fiscal year 2026 Medicaid DSH allotment pool for territories.
• Raises territorial hospital Medicare payments through Puerto Rico DSH revisions, target-amount rebasing, and DSH-based target increases outside Puerto Rico.
• Provides Medicare Part B late-enrollment penalty relief for certain Puerto Rico residents and sets a Medicare Advantage benchmark floor for territories.
• Requires automatic Part D low-income subsidy eligibility for territorial Medicaid enrollees starting January 1, 2026.
• Requires CMS publication of territory Medicaid and CHIP eligibility, enrollment, plan, waiver, expenditure, system, and CHIP-design information.
• Requires HHS to report on ACA exchange exclusion impacts for each territory by February 1, 2026.
• Establishes subsidized coverage access through the DC exchange for eligible residents of possessions with no available exchange plans.