Sponsors (6)
The bill improves many Medicare beneficiaries' access to Medicare-covered post-acute skilled nursing care by counting observation days as inpatient days, while raising Medicare/taxpayer costs and imposing short-term administrative burdens and possible retroactive-claim barriers for some beneficiaries.
Medicare beneficiaries: outpatient observation days will be counted as inpatient days, making more beneficiaries likely to qualify for Medicare-covered post-hospital skilled nursing facility (SNF) care.
Hospitals and CMS: the bill gives clear implementation authority to adopt the change quickly via interim regulation or program instruction, reducing administrative delay in applying the new policy.
Taxpayers and the Medicare program: increased inpatient-day counts are likely to raise use of SNF and other Medicare-covered post-acute services, increasing costs to Medicare trust funds and taxpayers.
Medicare beneficiaries seeking retroactive coverage: the requirement to file an administrative appeal within 90 days of enactment may be difficult for many to meet and could leave eligible people unable to obtain retroactive SNF coverage.
Hospitals and CMS: implementing the change will require updates to billing, documentation, and appeals procedures, creating short-term administrative burdens and potential compliance costs for health systems.
Based on analysis of 2 sections of legislative text.
Counts outpatient hospital observation days as inpatient days for Medicare post-hospital extended care eligibility and sets observation end as the discharge date unless admitted.
Treats time a Medicare patient spends under outpatient observation in a hospital as inpatient days for purposes of counting toward Medicare-covered post-hospital extended care (skilled nursing facility) eligibility, and sets the observation end date as the hospital discharge date unless the person is admitted as an inpatient. The rule applies to observation services on or after January 1, 2026, and can be applied retroactively for certain post-hospital extended care periods if an administrative appeal was filed within 90 days after enactment; HHS may implement the change by interim rule, instruction, or other means.
Official title: Amend title XVIII of the Social Security Act to count a period of receipt of outpatient observation services in a hospital toward satisfying the 3-day inpatient hospital requirement for coverage of skilled nursing facility services under Medicare.
Introduced May 21, 2026 by Susan Margaret Collins · Last progress May 21, 2026