Medicare carve-out shields older hospitals from cost controls
H.R. 9468 — STAR Act · Filed by Kevin Hern (R-OK) · 4 cosponsors · Introduced Jun 25, 2026 · Reported out
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What it does
This bill adjusts Medicare payment rates for long-term care hospitals (LTCHs) by extending site-neutral payment reductions through 2032 and creating new exemptions. It adds a 'high acuity' criterion allowing certain LTCHs to avoid reduced payments if they treat patients with high-severity diagnoses immediately after discharge from acute-care hospitals, and modifies existing ICU and ventilator criteria. The primary beneficiaries are long-term care hospitals that meet the specified conditions—particularly those established before the bill's enactment—which will receive higher Medicare reimbursement rates.
Why we flagged it
The bill's operative mechanism is a targeted exemption from Medicare payment reductions for specific long-term care hospitals meeting grandfathered criteria. While framed as 'adjusting' rates, the substantive effect is to shield certain providers from cost-control measures, functioning as a narrow industry subsidy.
What the text implies
- The 'high acuity criterion' exemption may incentivize LTCHs to specialize in high-severity cases, potentially concentrating complex care in facilities with higher reimbursement, which could fragment care delivery and increase overall Medicare spending.
- The grandfathering provisions (enrollment before enactment, binding construction agreements, state certificate-of-need approval) create a protected class of older LTCHs while excluding newer entrants, potentially reducing competition and innovation in the long-term care market.
- The bill extends site-neutral reductions only through 2032, creating a sunset that may trigger future legislative battles to preserve or expand LTCH exemptions, establishing a precedent for carve-outs.
- The 'mid-build requirements' language (10% expenditure or $2.5M minimum) may be difficult to verify and enforce, creating administrative burden and potential disputes over LTCH eligibility.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
The bill preserves site-neutral payment reductions (a cost-control measure protecting Medicare beneficiaries and taxpayers) but carves out exemptions for certain LTCHs, allowing them higher payments. This creates a trade-off: some cost control remains, but the exemptions reduce savings and may increase Medicare spending, ultimately affecting beneficiary access and program sustainability.
Who stands to gain
- long-term care hospitals (LTCHs) meeting grandfathered criteria
- healthcare providers specializing in high-acuity post-acute care
Named in the bill
Centers for Medicare & Medicaid Services (CMS), long-term care hospitals (LTCHs), subsection hospitals, critical access hospitals, Medicare-Severity-Long-Term-Care-Diagnosis-Related-Groups (MS-LTC-DRGs), Social Security Act Section 1886, Title 42 Code of Federal Regulations Section 412.23
Where it stands
4 cosponsors: 4 Republicans.
- Jun 25, 2026 — Introduced · Congress.gov: “Introduced in House”
- Jun 25, 2026 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”
- Jul 15, 2026 — Markup held in committee · Congress.gov: “Committee Consideration and Mark-up Session Held”
- Jul 15, 2026 — Reported out of committee · Congress.gov: “Ordered to be Reported in the Nature of a Substitute by the Yeas and Nays: 40 - 0”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
8 lobbying clients named this bill on 8 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $4,719,000 in lobbying spend. A filing names 1 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 88% of bills with at least one filing.
Kevin Hern, the sponsor, reported $2,075,651 in PAC receipts in the 2026 cycle.
- American Hospital Association — $4,470,000 on 1 filing
- Kindred Healthcare D/b/a Scionhealth — $60,000 on 1 filing
- Pam Health, LLC — $60,000 on 1 filing
- Kindred Healthcare D/b/a Scionhealth (fka Kindred Healthcare Operating, Inc) — $39,000 on 1 filing
- National Association of Long Term Hospitals — $30,000 on 1 filing
Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (3,468 characters) on Jul 16, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Jun 2026 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 20, 2026 · page rendered 2026-10-20.
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