,,ii  #aaeth ,,congress  #ast ,session  
,s4 #efh  ,,in ,,the ,,senate ,,of ,,the
 ,,united ,,states  ,march #h1 #bjag,mr4
 ,brown 7for himself1 ,ms4 ,collins1    
,mr4 ,nelson1 and ,mrs4 ,capito7        
introduced the following bill2 which was
 read twice and referred to the         
,committee on ,finance  ,a ,,bill  ,to  
amend title ,,xviii of the ,social      
,security ,act to count a period of     
receipt of outpatient observation       
services in a hospital toward satisfying
 the #c-;day inpatient hospital         
requirement for coverage of skilled     
nursing facility services under         
,medicare4  #a4 ,short title ,this ,act 
may be cited as the ,improving ,access  
to ,medicare ,coverage ,act of #bjag4   
#b4 ,findings ,congress finds the       
following3 7#a7 ,medicare requires      
beneficiaries to be hospitalized for    
medically necessary inpatient hospital  
care for at least three consecutive days
 before covering post-hospital care in a
 skilled nursing facility4  7#b7 ,often 

patients remain under observation status
 in the hospital for several days4      
,these days are not counted toward the  
#c-;day inpatient stay requirement      
because they are considered outpatient  
days4  7#c7 ,hospitals' use of          
observation stays has increased sharply 
since #bjjf4 ,according to the ,medicare
 ,payment ,advisory ,commission's ,march
 #bjad report1 outpatient visits1 many  
of which are observation stays1         
increased #bh4e percent between #bjjf   
and #bjab1 with a simultaneous          
#ab4f-percent decrease in inpatient     
stays over this same #f-year time       
period4 ,a study published in ,health   
,affairs found a #cd-percent increase in
 the ratio of observation stays to      
inpatient admissions between #bjjg and  
#bjji1 leading the researchers to       
conclude that outpatient observation    
status was becoming a substitute for    
inpatient admission4 ,the same study    
also documented increases in long-stay  
outpatient status1 including an         

#hh-percent increase in observation     
stays exceeding #gb hours4  7#d7 ,to    
health care providers1 care provided    
during observation is indistinguishable 
from the care provided to inpatients1   
with all medically necessary care being 
provided1 regardless of patient status4 
,beneficiaries are generally not        
informed of their inpatient or          
outpatient status and assume that they  
are inpatients when they are placed in a
 hospital bed1 only to find out that    
such care was not counted for purposes  
of satisfying eligibility requirements  
for medically prescribed ,medicare      
coverage of post-hospital care in a     
skilled nursing facility4  7#e7 ,older  
,americans and people with disabilities 
who are hospitalized but do not meet the
 #c-;day inpatient hospital threshold   
simply because they were placed in      
outpatient observation status for some  
or all of their hospital stay 7even when
 their total actual stay exceeds #c days
 in the hospital71 can face a           

significant and unexpected financial    
burden1 which can amount to thousands of
 dollars1 for skilled nursing facility  
care4 ,among beneficiaries who received 
care in a skilled nursing facility that 
,medicare did not cover1 average        
out-of-pocket charges were more than    
#aj1jjj according to the ,office of     
,inspector ,general4  7#f7 ,the ,centers
 for ,medicare  ,medicaid ,services     
7,,cms7 attempted to provide hospitals  
with clarity on which patients should be
 categorized as inpatients in its       
,fiscal ,year #bjad inpatient payment   
rule4 ,however1 this rule fails         
,medicare beneficiaries because it does 
not address the problem and explicitly  
states that days spent in observation do
 not count for purposes of satisfying   
the #c-;day inpatient stay requirement4 
7#g7 ,because of ,,cms' policy1 which   
indicates days under observation do not 
count towards the #c-;day inpatient stay
 requirement1 some patients under       
observation and their families will     

continue to face a significant1 often   
insurmountable financial burden if they 
need skilled nursing care after their   
hospital stay4  7#h7 ,the amendment made
 by this ,act would update ,medicare    
policy by deeming patients under        
observation as inpatients for the       
purposes of satisfying the #c-;day      
inpatient stay requirement4 ,such       
amendment does not repeal the #c-;day   
inpatient stay requirement1 rather it   
simply expands the ,secretary of ,health
 and ,human ,service's administrative   
definition of inpatient for purposes of 
the #c-;day inpatient stay requirement  
to include time spent under observation4
 ,as such1 it is not a reprise of the   
,medicare ,catastrophic ,coverage ,act  
of #aihh1 which repealed the #c-;day    
requirement and resulted in churning of 
patients back and forth from            
non-,medicare payment sources to        
,medicare4 ,such amendment simply       
restores the original objective of the  
#c-;day rule1 which was to ensure that  

,medicare covered skilled nursing       
facility stays that followed hospital   
care for patients who stayed in the     
hospital for #c days4  7#i7 ,it is the  
intent of this ,congress1 through such  
amendment1 to allow access to skilled   
nursing care for the population of      
beneficiaries who meet medical necessity
 requirements for such care1 but who do 
not satisfy the #c-;day inpatient stay  
requirement simply because some or all  
of their time in the acute care hospital
 is characterized as outpatient         
observation status for billing purposes4
  7#aj7 ,it is the understanding of this
 ,congress that the ,secretary of       
,health and ,human ,services will       
monitor patterns of behavior to ensure  
that providers deliver appropriate and  
needed levels of care4  7#aa7 ,the      
,office of the ,inspector ,general of   
the ,department of ,health and ,human   
,services is supportive of counting     
hospital observation days towards the   
#c-;day inpatient stay requirement4 ,in 

addition1 in ,september #bjac1 the      
congressionally established ,commission 
on ,long-,term ,care recommended that   
the ,centers for ,medicare  ,medicaid   
,services count time spent in           
observation status toward meeting       
,medicare's #c-;day inpatient stay      
requirement4 ,in addition1 in a         
,december #bjaf report1 the ,office of  
the ,inspector ,general of the          
,department of ,health and ,human       
,services found that an increased number
 of ,medicare beneficiaries classified  
as outpatients are paying more for care 
that is substantively similar and have  
limited access to skilled nursing       
facility care due to their patient      
status4  #c4 ,counting a period of      
receipt of outpatient observation       
services in a hospital toward the       
#c-;day inpatient hospital requirement  
for coverage of skilled nursing facility
 services under ,medicare  7a7 ,in      
general ,section #ahfa7;i7 of the       
,social ,security ,act 7#db ,u4,s4,c4   

#aciex7i77 is amended by adding at the  
end the following3 ,for purposes of this
 subsection1 an individual receiving    
outpatient observation services shall be
 deemed to be an inpatient during such  
period1 and the date such individual    
ceases receiving such services shall be 
deemed the hospital discharge date      
7unless such individual is admitted as a
 hospital inpatient at the end of such  
period744  7b7 ,effective date ,the     
amendment made by subsection 7a7 shall  
apply to receipt of outpatient          
observation services beginning on or    
after ,january #a1 #bjag1 but applies to
 a period of post-hospital extended care
 services that was completed before the 
date of the enactment of this ,act only 
if an administrative appeal is or has   
been made with respect to such services 
not later than #ij days after the date  
of the enactment of this ,act4          
,notwithstanding any other provision of 
law1 the ,secretary of ,health and      
,human ,services may implement such     

amendment through an interim final      
regulation1 program instruction1 or     
otherwise4