Title: Improving Access to Medicare Coverage Act of 2017
Policy area: Health

Summary:
Improving Access to Medicare Coverage Act of 2017
This bill amends title XVIII (Medicare) of the Social Security Act to deem an individual receiving outpatient observation services in a hospital to be an inpatient for purposes of satisfying the three-day inpatient hospital-stay requirement with respect to Medicare coverage of skilled nursing facility services.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 568 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                 S. 568

 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 3-day inpatient hospital requirement for coverage of 
           skilled nursing facility services under Medicare.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 8, 2017

   Mr. Brown (for himself, Ms. Collins, Mr. Nelson, and Mrs. Capito) 
introduced the following bill; 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 3-day inpatient hospital requirement for coverage of 
           skilled nursing facility services under Medicare.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Improving Access to Medicare 
Coverage Act of 2017''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) 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 facility.
            (2) Often patients remain under ``observation status'' in 
        the hospital for several days. These days are not counted 
        toward the 3-day inpatient stay requirement because they are 
        considered outpatient days.
            (3) Hospitals' use of observation stays has increased 
        sharply since 2006. According to the Medicare Payment Advisory 
        Commission's March 2014 report, outpatient visits, many of 
        which are observation stays, increased 28.5 percent between 
        2006 and 2012, with a simultaneous 12.6-percent decrease in 
        inpatient stays over this same 6-year time period. A study 
        published in Health Affairs found a 34-percent increase in the 
        ratio of observation stays to inpatient admissions between 2007 
        and 2009, leading the researchers to conclude that outpatient 
        observation status was becoming a substitute for inpatient 
        admission. The same study also documented increases in long-
        stay outpatient status, including an 88-percent increase in 
        observation stays exceeding 72 hours.
            (4) To health care providers, care provided during 
        observation is indistinguishable from the care provided to 
        inpatients, with all medically necessary care being provided, 
        regardless of patient status. Beneficiaries are generally not 
        informed of their inpatient or outpatient status and assume 
        that they are inpatients when they are placed in a hospital 
        bed, 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 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 and forth from non-Medicare 
        payment sources to Medicare. Such amendment simply restores the 
        original objective of the 3-day rule, which was to ensure that 
        Medicare covered skilled nursing facility stays that followed 
        hospital care for patients who stayed in the hospital for 3 
        days.
            (9) It is the intent of this Congress, through such 
        amendment, to allow access to skilled nursing care for the 
        population of beneficiaries who meet medical necessity 
        requirements for such care, but who do not satisfy the 3-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 purposes.
            (10) 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 care.
            (11) The Office of the Inspector General of the Department 
        of Health and Human Services is supportive of counting hospital 
        observation days towards the 3-day inpatient stay requirement. 
        In addition, in September 2013, 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 3-day inpatient stay 
        requirement. In addition, in a December 2016 report, 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 status.

SEC. 3. COUNTING A PERIOD OF RECEIPT OF OUTPATIENT OBSERVATION SERVICES 
              IN A HOSPITAL TOWARD THE 3-DAY INPATIENT HOSPITAL 
              REQUIREMENT FOR COVERAGE OF SKILLED NURSING FACILITY 
              SERVICES UNDER MEDICARE.

    (a) In General.--Section 1861(i) of the Social Security Act (42 
U.S.C. 1395x(i)) is amended by adding at the end the following: ``For 
purposes of this subsection, an individual receiving outpatient 
observation services shall be deemed to be an inpatient during such 
period, and the date such individual ceases receiving such services 
shall be deemed the hospital discharge date (unless such individual is 
admitted as a hospital inpatient at the end of such period).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to receipt of outpatient observation services beginning on or 
after January 1, 2017, 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 90 days after the 
date of the enactment of this Act. Notwithstanding any other provision 
of law, the Secretary of Health and Human Services may implement such 
amendment through an interim final regulation, program instruction, or 
otherwise.
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