Medicare will pay for medically necessary inpatient and outpatient rehabilitation services. However, to be eligible for rehabilitation coverage, a person must meet certain criteria.

Medicare is a health insurance program that is available in different parts. Each part of Medicare provides different levels of coverage on several aspects of healthcare. Enrollment in Medicare can help to cover costs of specialist health services.

Inpatient rehabilitation involves an intensive rehabilitation therapy program, physician supervision, and coordinated care from doctors and therapists. People may require inpatient rehabilitation to recover from surgery, illness, or injury.

These services are available through clinic visits, but some people require round-the-clock doctor and nurse availability as well as several hours of therapy per day. This article explains the different levels of coverage for inpatient and outpatient rehabilitation services.

Glossary of Medicare terms

We may use a few terms in this article that can be helpful to understand when selecting the best insurance plan:

Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.
Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.
Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.
Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.

Does Medicare cover rehab?

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Medicare covers medically necessary inpatient and outpatient rehabilitation services.

If a person needs to stay in the facility to receive rehabilitation, Part A will cover the treatment. A doctor will need to verify that the beneficiary needs rehabilitation, continued supervision, and multidisciplinary care coordination for a medical condition.

Medicare Part B covers outpatient consultations and therapy sessions up to a limit of $2,330. After this, the healthcare provider will need to provide evidence that continuing treatment is necessary for recovery.

What costs might a person need to pay?

A Medicare beneficiary may be responsible for self-funding some of the costs of treatment. For example, this may be necessary if they have not met their deductible or are using services that require a coinsurance under Medicare Part B. Depending on the nature of their treatment, they may also have outstanding deductibles or coinsurance to pay.

In 2024, a $1,632 deductible applies to the first 60 days of in-patient treatment from Part A. From days 61 to 90 of inpatient care, a person will pay $408 a day. Beyond 91 days of care, a person will pay $816 a day as they use up their 60 days of lifetime reserve days. The beneficiary pays all costs if inpatient rehabilitation extends beyond 151 days.

If a hospital transfers an individual directly to an inpatient rehab facility, or a person receives admission to a rehab facility within 60 days of discharge, the person will likely have met their deductible. In this instance, they would not have to pay extra for in-patient rehabilitation services until day 61.

An individual will need to pay 20% of all Part B costs for all outpatient services or inpatient services not eligible under Part A. This includes doctor’s services a person receives during their admission. They will also need to meet a $240 deductible for outpatient services.

People on Medicare Part C, also known as Medicare Advantage, may have different costs. This is because these plans are private. A person should speak to their insurance provider about their level of coverage.

What services will Medicare cover during rehab?

Medicare pays for the following services for inpatient rehab:

skilled therapy, including physical therapy, occupational therapy, and speech/language pathology
a semi-private room
meals
nursing
prescription medications
hospital supplies and services
social worker assistance
psychological health services
prosthetic and orthotic services

The following are ineligible for coverage under Medicare:

nursing to cover private duties
an in-room television or phone, if the facility charges separately
personal effects, such as socks or toothpaste, unless a hospital provides them as part of a person’s admission
a private room

If a person pays for their room and board costs, or is ineligible for coverage under Part A, Medicare might pay for skilled therapy services from Part B instead of Part A. Depending on eligibility, both Parts A and B may cover medically necessary skill therapy at home from a Medicare-approved home health agency.

Medicare pays for home care if a person is homebound, needs on-and-off skilled care, and receives care from an approved agency. For Medicare to grant approval for home care, a Medicare beneficiary must have developed a care plan during a face-to-face consultation with a doctor.

What are the guidelines for Medicare coverage?

Medicare requires a physician’s confirmation that a person meets the following guidelines before they pay for inpatient rehabilitation care:

The individual needs full-time access to a doctor, involving direct, regular physician contact at least every 48 to 72 hours.
The beneficiary needs a registered nurse with specialized rehabilitation experience or training.
At least 3 hours of intensive therapy per day are necessary unless an individual is not well enough to withstand this amount of therapy.
A multidisciplinary team, including at least a doctor, a rehab nurse, and a therapist, is central to providing care.

Conditions such as brain injury, stroke, or spinal cord injury may qualify an individual for inpatient rehabilitation. However, not every recovery period from a condition or surgery requires inpatient rehabilitation.

For example, if a person is recovering from a knee replacement with no other complications, Medicare may not fund inpatient rehabilitation. This is because it is not medically necessary to oversee many elements of care. Outpatient therapy will need to take place at the following facilities for Medicare to pay:

a doctor or therapist’s office
Comprehensive Outpatient Rehabilitation Facilities (CORFs)
skilled nursing facilities (SNFs)
home health agencies.

What is inpatient rehabilitation care?

Inpatient rehabilitation services aim to restore quality of life to individuals who have been through life-changing surgery, illness, or injury. These life-changing events may severely impair their physical, mental, psychological, emotional, and social function.

They may have complex nursing or medical management needs. People need inpatient rehabilitation care when they require high levels of specialist care that another facility, such as an SNF, cannot provide.

Summary

Medicare pays for medically necessary inpatient and outpatient rehabilitation care after debilitating illness, injury, or surgery.

Part A pays for inpatient rehabilitation, which means a person may have to pay a deductible if they did not already meet this in the same cover period. Part B covers 80% of outpatient therapy costs up to $2,330, at which point a doctor must confirm the medical necessity of continuing therapy.

Medicare only funds inpatient rehabilitation if an individual needs round-the-clock access to doctors and specialist nurses, multidisciplinary care, and three or more daily hours of certain therapies.