for purposes of satisfying eligibility requirements for medically prescribed Medicare coverage of post-hospital care in a skilled nursing facility. (5) Older Americans and people with disabilities who are hospitalized but do not meet the 3-day inpatient hospital stay requirement simply because they were placed in outpatient observation status for some or all of their hospital stay (even when their total actual stay exceeds three days in the hospital) can face a significant and unexpected financial burden, which can amount to thousands of dollars, for skilled nursing facility care. Among beneficiaries who received care in a skilled nursing facility that Medicare did not cover, the average out-of-pocket charges were more than $10,000, according to the Office of Inspector General of the Department of Health and Human Services. (6) The Centers for Medicare & Medicaid Services (CMS) attempted to provide hospitals with clarity on which patients should be categorized as inpatients in the inpatient hospital payment rule for fiscal year 2014. However, this rule fails Medicare beneficiaries because it does not address the problem and explicitly states that days spent in observation status do not count for purposes of satisfying the 3-day inpatient stay requirement. (7) Because of CMS’ policy which indicates days under observation do not count towards the 3-day inpatient stay requirement, some patients under observation and their families will continue to face a significant, often insurmountable financial burden if they need skilled nursing care after their hospital stay. (8) This Act updates Medicare policy by deeming patients under observation as inpatients for the purposes of satisfying the Medicare 3-day inpatient stay requirement. This Act does not repeal the 3-day inpatient stay requirement