50 Wishes for
Medicare’s Future

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Wish #37:
Count time spent in observation (outpatient) status toward the three-day rule for nursing care

Absent elimination of the three-day stay rule, Congress should count all time a patient spends in the hospital—as an inpatient or outpatient—toward the three-day rule. Shifting hospital practices are increasing the number of Medicare beneficiaries who spend multiple days in the hospital under “observation” or “outpatient” status. These beneficiaries are not eligible for Medicare coverage of subsequent skilled nursing facility care. All days in the hospital should count toward coverage for needed skilled nursing facility care.