This bill proposes to amend title XVIII of the Social Security Act to enhance Medicare coverage for skilled nursing facility (SNF) services by modifying the existing requirement for a 3-day inpatient hospital stay . Currently, beneficiaries must meet this inpatient threshold to qualify for Medicare-covered SNF care, which can be a barrier for those who spend extended periods in hospital observation status without formal admission. The core provision of this legislation is to count the time an individual receives outpatient observation services in a hospital towards satisfying this crucial 3-day inpatient requirement. For SNF eligibility purposes, individuals in observation status would be deemed to be inpatients during that period, with the end of observation services acting as the discharge date. This change, effective for services on or after January 1, 2026 , aims to significantly improve access to Medicare-covered post-hospital extended care.