Does Medicare Cover Rehab After Knee Replacement?

Medicare provides health insurance for individuals aged 65 or older, some younger people with disabilities, and those with End-Stage Renal Disease. After knee replacement surgery, rehabilitation is often necessary to regain mobility and strength. Understanding how Medicare covers these services, including the types of coverage and conditions, is important for beneficiaries.

Understanding Medicare Coverage for Rehabilitation

Medicare offers coverage for rehabilitation services through Original Medicare Parts A and B, and Medicare Advantage Plans (Part C). The specific coverage depends on where the services are received and the nature of the care. These parts work together to provide comprehensive support for recovery needs.

Medicare Part A (Hospital Insurance)

Medicare Part A covers inpatient rehabilitation care in settings like skilled nursing facilities (SNFs) or inpatient rehabilitation facilities (IRFs). For SNF coverage, Part A generally covers up to 100 days per benefit period. The first 20 days are typically covered in full after the deductible is met, with a daily coinsurance applying for days 21 through 100. In an IRF, Part A covers services for the first 60 days in a benefit period after the deductible, with daily coinsurance for days 61-90 and lifetime reserve days thereafter.
Covered services in these inpatient settings include:
Physical therapy
Occupational therapy
Speech-language pathology
A semi-private room
Meals
Nursing services
Prescription medications

Medicare Part B (Medical Insurance)

Medicare Part B covers outpatient rehabilitation services, often necessary after a knee replacement. This includes physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP) when provided in various outpatient settings. Services can be received in a doctor’s or physical therapist’s office, an outpatient rehabilitation facility, or a hospital outpatient department. Part B also covers certain home health services if medically necessary. There is no annual cap on the costs Medicare will cover for medically necessary outpatient therapy.

Medicare Part C (Medicare Advantage Plans)

Medicare Part C offers an alternative way to receive Medicare benefits. These plans are provided by private insurance companies approved by Medicare and must cover at least the same services as Original Medicare Parts A and B. Medicare Advantage Plans may have different rules, costs, and networks for rehabilitation services. Beneficiaries should review their specific plan details to understand how rehabilitation coverage applies.

Medicare’s Eligibility Requirements for Rehabilitation

Medicare’s coverage for rehabilitation is not automatic; specific criteria must be met. All rehabilitation services must be “medically necessary” and prescribed by a doctor. This means the services are needed to diagnose or treat a condition or injury, or to improve a person’s functioning. Without a doctor’s order, Medicare will not cover the rehabilitation.

Skilled Care Requirement

A central concept for Medicare coverage, particularly in inpatient settings, is the “skilled care” requirement. Skilled care involves services that can only be provided by, or under the supervision of, qualified professionals like physical therapists, occupational therapists, or skilled nurses. This differs from custodial care, which is non-medical care that helps with daily living activities. For Medicare to cover rehabilitation, the care must be skilled and necessary for improvement or maintenance of function. There must also be a reasonable expectation that the patient’s condition will improve or be maintained with the skilled services. This is sometimes referred to as “rehabilitation potential.” The Jimmo v. Sebelius ruling clarified that Medicare covers skilled care even if the goal is to maintain function or prevent decline, not solely to achieve improvement. This “maintenance standard” ensures that individuals needing ongoing skilled therapy to prevent deterioration of their condition can still receive coverage.

3-Day Hospital Stay Rule

For inpatient skilled nursing facility (SNF) coverage under Part A, a “qualifying inpatient hospital stay” of at least three consecutive days is generally required. This means the patient must have been admitted to a hospital as an inpatient for at least three days, not counting the day of discharge. This prior hospitalization must occur within 30 days of entering the SNF, and the SNF care should be for a condition related to the hospital stay. Some Medicare Advantage Plans or specific Medicare initiatives may waive this 3-day rule.

Patient Costs and Financial Planning

Understanding the potential out-of-pocket costs associated with Medicare-covered rehabilitation is important for financial planning. Original Medicare involves deductibles, coinsurance, and specific benefit periods that can impact a beneficiary’s financial responsibility. These costs vary depending on the Medicare part and the setting where services are received.

Medicare Part A Costs

Medicare Part A has a deductible for each benefit period, not annually. For 2025, the Part A deductible is $1,676. A benefit period begins when a beneficiary is admitted as an inpatient to a hospital or skilled nursing facility and ends when they have not received inpatient hospital or SNF care for 60 consecutive days. If a new benefit period begins, a new deductible applies.

For skilled nursing facility (SNF) care covered by Part A, beneficiaries typically pay nothing for the first 20 days after meeting the Part A deductible. From days 21 to 100 within a benefit period, a daily coinsurance applies, which is $209.50 per day in 2025. After day 100 in a benefit period, the beneficiary is responsible for all costs. For inpatient rehabilitation facility (IRF) stays, after the Part A deductible, there is typically no cost for days 1-60, a daily coinsurance for days 61-90, and then higher coinsurance for up to 60 lifetime reserve days.

Medicare Part B Costs

Medicare Part B has an annual deductible, which is $257 in 2025. After this deductible is met, beneficiaries typically pay 20% of the Medicare-approved amount for most Part B-covered services, including outpatient rehabilitation therapies. There is no yearly limit on what a beneficiary pays out of pocket with Original Medicare unless they have supplemental coverage.

Medicare Advantage and Medigap

Medicare Advantage Plans (Part C) must cover all services included in Original Medicare Parts A and B, but they can have different cost-sharing structures, including varying deductibles, copayments, and coinsurance amounts. These plans may also have network restrictions. Many beneficiaries opt for Medigap (Medicare Supplement Insurance) plans to help cover some of the out-of-pocket costs left by Original Medicare, such as deductibles and coinsurance. Medigap policies can significantly reduce a beneficiary’s financial exposure by paying for a portion or all of these remaining costs.

Accessing Services and Appealing Denials

Initiating Medicare-covered rehabilitation services typically begins with a doctor’s referral or order. A physician must certify that the rehabilitation is medically necessary and outline the specific services required for recovery.

Finding Providers and Prior Authorization

Beneficiaries can use Medicare’s online tools or contact their Medicare plan directly to locate healthcare providers and rehabilitation facilities that accept Medicare. It is important to confirm a provider’s Medicare participation status to avoid unexpected costs.

In some cases, particularly with Medicare Advantage Plans or for certain services, prior authorization may be required before rehabilitation begins. This is a procedural step where the plan reviews the medical necessity of the proposed treatment before it is rendered. Understanding and completing any necessary prior authorization processes can prevent denial of coverage.

Appealing Denials

Beneficiaries have specific rights regarding their Medicare coverage, including the right to receive a notice if services are ending or being denied. If Medicare denies coverage for rehabilitation services, beneficiaries have the right to appeal this decision. The appeals process involves several steps, starting with an initial appeal, followed by reconsideration, and potentially an Administrative Law Judge hearing. It is crucial to act promptly and gather all supporting documentation, such as medical records and doctor’s orders, when appealing a denial.