Medicaid coverage for inpatient rehabilitation is not a fixed calendar period but a flexible length determined by clinical necessity and state regulations. Medicaid is a joint federal and state program providing health coverage to low-income adults, children, and people with disabilities. In this context, “inpatient rehab” typically refers to 24/7 residential treatment for Substance Use Disorder (SUD) or acute mental health conditions. Although federal law requires coverage for these services, the actual number of days approved depends on a continuous review process.
Understanding Medicaid’s Role in Rehab Coverage
Federal law establishes the foundation for Medicaid coverage of substance use and mental health treatment. The Affordable Care Act (ACA) significantly expanded this access by requiring most new Medicaid enrollees to receive coverage for Essential Health Benefits (EHB), which include mental health and SUD services. This mandate ensures that behavioral health treatment is covered by the program.
The Mental Health Parity and Addiction Equity Act (MHPAEA) applies to Medicaid programs, especially those operating through managed care organizations or alternative benefit plans. This law requires that treatment limitations for mental health and SUD benefits cannot be more restrictive than those applied to medical and surgical benefits. For instance, if Medicaid does not impose arbitrary day limits on an inpatient stay for a physical condition, it cannot impose such limits solely on a residential stay for a substance use disorder.
These federal requirements ensure that coverage decisions are based on a patient’s clinical needs rather than discriminatory benefit caps. Although parity laws require comparable coverage, they do not mandate that Medicaid cover every behavioral health service. States must cover inpatient services, and any limits applied must be consistent with limits applied to medical or surgical inpatient stays.
Factors Determining Inpatient Stay Duration
The actual length of a Medicaid-covered inpatient rehab stay is not a set number of days but is instead determined by a process called utilization review, which focuses on medical necessity. The coverage continues only as long as the treatment meets specific criteria that justify a 24/7 residential level of care.
Medical Necessity and Utilization Review
Treatment facilities must use standardized, evidence-based criteria to justify a patient’s admission and continued stay in residential treatment. The most widely accepted standard for SUD treatment is the American Society of Addiction Medicine (ASAM) Criteria, which uses a six-dimensional assessment to match a patient’s needs to the appropriate level of care.
Inpatient centers must submit a request for Prior Authorization (PA) before or immediately after admission, typically granted for an initial period of 7 to 14 days. To continue the stay, the facility must participate in concurrent reviews with the state or Managed Care Organization (MCO) to justify the patient’s ongoing need for 24-hour structure. This review process requires the treatment team to document the patient’s progress and why they cannot safely transition to a lower level of care.
State-Specific Limits
While federal parity laws restrict arbitrary limits, states maintain administrative authority and can set specific limits. Some states may initially approve a stay for a short duration, such as 30 days, before requiring further clinical justification for an extension. Other state plans may impose total annual caps on inpatient days, but these caps must be comparable to limits placed on medical or surgical hospitalizations.
Facility Type
The type of facility can also influence the covered duration, particularly for adults aged 21 to 64 receiving mental health or residential SUD treatment. Treatment in Institutional Settings for Mental Diseases (IMDs)—facilities with more than 16 beds primarily for mental disease treatment—was historically excluded from federal Medicaid funding. However, many states have obtained special waivers from the Centers for Medicare & Medicaid Services (CMS) to cover short-term stays in IMDs. These waivers often limit the covered duration to 15 to 30 days per stay or impose a total annual limit, which is a state-level administrative choice.
Navigating Coverage After Inpatient Limits are Reached
When a patient’s condition stabilizes, or the utilization review determines that the criteria for 24/7 care are no longer met, the facility must coordinate a “step-down” transition. This ensures that the patient continues to receive necessary treatment at a less intensive level of care.
Medicaid covers a robust range of less-intensive services appropriate for patients transitioning out of residential care. These services include Partial Hospitalization Programs (PHP) and Intensive Outpatient Programs (IOP). PHP provides structured therapy and medical support for several hours a day, allowing the patient to return home in the evening. IOP offers a more flexible schedule, suitable for individuals balancing treatment with work or family responsibilities. The facility’s case manager coordinates the step-down process and secures prior authorization for these next levels of care.