This bill aims to amend Medicare's coverage criteria for skilled nursing facility (SNF) services by allowing time spent receiving outpatient observation services in a hospital to satisfy the mandatory 3-day inpatient hospital stay requirement . Currently, beneficiaries classified as outpatients, even after extended hospital observation, may be ineligible for subsequent SNF coverage. The proposed amendment would deem individuals receiving outpatient observation services as inpatients for the purpose of meeting this prerequisite, thereby expanding access to crucial post-hospital SNF care. The legislation clarifies that the end date of observation services will be considered the hospital discharge date, unless the individual is formally admitted as an inpatient. These changes are slated to apply to outpatient observation services provided on or after January 1, 2026 . There is also a provision for limited retroactive application to certain past services if an administrative appeal is initiated within 90 days of the bill's enactment.