Premier Responds to CMS Notice on Incentives for Procurement of US-Manufactured Medical Supplies by Hospitals

Premier submitted comments in response to CMS' advance notice of proposed rulemaking seeking input on options to strengthen the resilience of the US healthcare supply chain, including for American-made personal protective equipment (PPE) and essential medicines. CMS is requesting feedback on approaches that would account for the additional costs hospitals face when purchasing domestically manufactured products and is also considering a new "Secure American Medical Supplies" designation for hospitals that demonstrate a strong commitment to domestic procurement.

In its comments, Premier urges CMS and other policymakers to advance policies that strengthen the healthcare supply chain, including by expanding domestic manufacturing of critical pharmaceuticals and medical devices and incentivizing the purchase of US-made products. Premier specifically recommends that CMS work with other federal agencies and Congress to:

• Expand the existing Inpatient Prospective Payment System (PPS)/Outpatient PPS payment adjustment for domestically produced NIOSH-approved N95 respirators to additional critical medical supplies and pharmaceuticals where domestic capacity exists or is emerging.
• Ensure any "Secure American Medical Supplies" hospital designation and associated Medicare payment be designed to succeed by minimizing provider reporting burden, using a national benchmark methodology, operating on a non-budget-neutral basis and structuring exclusively around positive financial incentives.
• Forgo adoption of an attestation-based domestic procurement structural measure within the Hospital Inpatient Quality Reporting Program, as such a measure would not assess outcomes or quality and would depart from consensus-based measure development principles.
• Strengthen incentives that support domestic manufacturing, such as targeted tax incentives to expand domestic manufacturing capacity and improve price competitiveness.
• Implement regulatory improvements to streamline the approval of new domestic entrants in the healthcare product market.

Treat cybersecurity as a core element of supply chain resilience and incorporate baseline cybersecurity and traceability expectations into any hospital domestic procurement designation or incentive framework.