Support Observation Status Legislation

Many Medicare residents entering into a skilled nursing facility (SNF) are coming from the acute hospital setting. In order to receive paid Medicare SNF benefit they must have received inpatient status for three consecutive days during their hospital stay.

Medicare beneficiaries are unaware that they have not been placed in inpatient status but rather left in observation status. “Observation” is the term used to describe the outpatient status of a patient who is in a hospital, but not as an inpatient. Although the Medicare Manuals limit observation to 24-48 hours, many beneficiaries nationwide are experiencing extended stays in acute care hospitals under observation. A major consequence for beneficiaries of not being classified as an inpatient is that their subsequent stays in a SNF are not covered by Medicare.

As a consequence of the classification of a hospital stay as outpatient observation, beneficiaries are charged for various services they received in the acute care hospital, including their prescription medications.  They are also charged for their entire subsequent SNF stay, having never satisfied the statutory three-day hospital stay requirement.

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