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 threshold simply because they were placed in outpatient observation status for some or all of their hospital stay (even when their total actual stay exceeds 3 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, average out-of-pocket charges were more than $10,000 according to the Office of Inspector General. (6) The Centers for Medicare & Medicaid Services (CMS) attempted to provide hospitals with clarity on which patients should be categorized as inpatients in its Fiscal Year 2014 inpatient payment rule. However, 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 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) The amendment made by this Act would update Medicare policy by deeming patients under observation as inpatients for the purposes of satisfying the 3-day inpatient stay requirement. Such amendment does not repeal the 3-day inpatient stay requirement, rather it simply expands the Secretary of Health and Human Service's administrative definition of inpatient for purposes of the 3-day inpatient stay requirement to include time spent under observation. As such, it is not a reprise of the Medicare Catastrophic Coverage Act of 1988, which repealed the 3-day requirement and resulted in churning of patients back