HR3954-119

What This Bill Does

The Improving Access to Medicare Coverage Act fixes a common Medicare coverage gap. Medicare generally covers skilled nursing facility care only after a qualifying three-day inpatient hospital stay. Hospitals may keep patients under outpatient observation status for days even though the patient is in the hospital and may later need skilled nursing care. The bill says a Medicare beneficiary receiving outpatient observation services is deemed to be an inpatient during that period for purposes of the skilled nursing facility three-day stay rule, and the date observation ends is treated as the discharge date unless the person is admitted as a hospital inpatient at the end of observation. The rule applies to observation services beginning January 1, 2026. For post-hospital extended-care services already completed before enactment, it applies only if an administrative appeal is or has been filed within 90 days after enactment. HHS may implement through interim final regulation, program instruction, or otherwise.

Who Benefits and How

Medicare observation patients benefit because hospital observation days count toward skilled nursing facility coverage. Medicare beneficiaries needing rehabilitation benefit if observation status no longer blocks post-hospital SNF coverage. Skilled nursing facilities benefit from more Medicare-covered admissions after observation stays. Families of Medicare patients benefit if fewer patients face unexpected private-pay nursing facility bills.

Who Bears the Burden and How

CMS Medicare policy staff must implement the observation-status counting rule by 2026. Medicare contractors must process claims and appeals under the new discharge-date and observation-time rules. Hospitals must document observation periods in ways that support SNF eligibility determinations. Federal taxpayers bear higher Medicare spending if more SNF stays qualify for coverage.

Key Provisions

• Provides that outpatient observation services count as inpatient time for the Medicare three-day SNF stay requirement.
• Treats the end of observation services as the hospital discharge date unless inpatient admission follows.
• Applies the rule to observation services beginning January 1, 2026.
• Allows specified completed-care appeals within 90 days after enactment.
• Authorizes HHS implementation through interim final regulation, program instruction, or other methods.