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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules say that payment for inpatient psychiatric hospital services is to be made only for active treatment. 
For services to be designated as active treatment they must: 
 
1. be provided under an individualized treatment or diagnostic plan; 
 
2. reasonably be expected to improve the patients condition, or for the purpose of diagnosis; and 
 
3. be supervised and evaluated by a physician.   
You can find these rules in the Centers for Medicare and Medicaid Services, Internet Only Manual, Publication 
100-02, Medicare Benefit Policy Manual, Chapter 2, Sections 30.2.2 and 30.2.2.1. 
 
The rules say that Medicare will not pay any expenses for items or services which are not medically necessary 
and reasonable for the diagnosis or treatment of illness or injury. This exclusion extends to claims for services 
which are provided in inappropriate settings. You can find this rule in the Social Security Act, Section 
1862(a)(1). 
 
The rules say Indications and Limitations of Coverage 
 
A. Inpatient Hospital Stay for Alcohol Detoxification 
 
Many hospitals provide detoxification services during the more acute stages of alcoholism or alcohol 
withdrawal. When the high probability or occurrence of medical complications (e.g., delirium, confusion, 
trauma, or unconsciousness) during detoxification for acute alcoholism or alcohol withdrawal necessitates the 
constant availability of physicians and/or complex medical equipment found only in the hospital setting, 
inpatient hospital care during this period is considered reasonable and necessary and is therefore covered under 
the program. Generally, detoxification can be accomplished within two to three days with an occasional need 
for up to five days where the patients condition dictates. This limit (five days) may be extended in an 
individual case where there is a need for a longer period for detoxification for a particular patient. 
 
In such cases, however, there should be documentation by a physician which substantiates that a longer period 
of detoxification was reasonable and necessary. When the detoxification needs of an individual no longer 
require an inpatient hospital setting, coverage should be denied on the basis that inpatient hospital care is not 
reasonable and necessary as required by 1862(a)(l) of the Social Security Act (the Act). Following detoxification a patient may be transferred to an inpatient rehabilitation unit or discharged to a residential 
treatment program or outpatient treatment setting. 
 
B. Inpatient Hospital Stay for Alcohol Rehabilitation 
 
Hospitals may also provide structured inpatient alcohol rehabilitation programs to the chronic alcoholic. These 
programs are composed primarily of coordinated educational and psychotherapeutic services provided on a 
group basis. Depending on the subject matter, a series of lectures, discussions, films, and group therapy 
sessions are led by either physicians, psychologists, or alcoholism counselors from the hospital or various 
outside organizations. In addition, individual psychotherapy and family counseling (see 70.1) may be 
provided in selected cases. These programs are conducted under the supervision and direction of a physician. 
Patients may directly enter an inpatient hospital rehabilitation program after having undergone detoxification in 
the same hospital or in another hospital or may enter an inpatient hospital rehabilitation program without prior 
hospitalization for detoxification. 
 
Alcohol rehabilitation can be provided in a variety of settings other than the hospital setting. In order for an 
inpatient hospital stay for alcohol rehabilitation to be covered under Medicare it must be medically necessary 
for the care to be provided in the inpatient hospital setting rather than in a less costly facility or on an outpatient 
basis. Inpatient hospital care for receipt of an alcohol rehabilitation program would generally be medically 
necessary where either (l) there is documentation by the physician that recent alcohol rehabilitation services in 
a less intensive setting or on an outpatient basis have proven unsuccessful and, as a consequence, the patient 
requires the supervision and intensity of services which can only be found in the controlled environment of the 
hospital, or (2) only the hospital environment can assure the medical management or control of the patients 
concomitant conditions during the course of alcohol rehabilitation. (However, a patients concomitant 
condition may make the use of certain alcohol treatment modalities medically inappropriate.) 
 
In addition, the active treatment criteria (see the Medicare Benefit Policy Manual, Chapter 2, Inpatient 
Psychiatric Hospital Services, 20) should be applied to psychiatric care in the general hospital as well as to 
psychiatric care in a psychiatric hospital. Since alcoholism is classifiable as a psychiatric condition the active 
treatment criteria must also be met in order for alcohol rehabilitation services to be covered under Medicare. 
(Thus, it is the combined need for active treatment and for covered care which can only be provided in the 
inpatient hospital setting, rather than the fact that rehabilitation immediately follows a period of detoxification 
which provides the basis for coverage of inpatient hospital alcohol rehabilitation programs.) 
 
Generally 16-19 days of rehabilitation services are sufficient to bring a patient to a point where care could be 
continued in other than an inpatient hospital setting. An inpatient hospital stay for alcohol rehabilitation may be 
extended beyond this limit in an individual case where a longer period of alcohol rehabilitation is medically 
necessary. In such cases, however, there should be documentation by a physician which substantiates the need 
for such care. Where the rehabilitation needs of an individual no longer require an inpatient hospital setting, 
coverage should be denied on the basis that inpatient hospital care is not reasonable and necessary as required 
by Section 1862 (a)(l) of the Act. 
 
Subsequent admissions to the inpatient hospital setting for alcohol rehabilitation follow-up, reinforcement, or 
recap treatments are considered to be readmissions (rather than an extension of the original stay) and must 
meet the requirements of this section for coverage under Medicare. Prior admissions to the inpatient hospital 
setting - either in the same hospital or in a different hospital - may be an indication that the active treatment 
requirements are not met (i.e., there is no reasonable expectation of improvement) and the stay should not be 
covered. Accordingly, there should be documentation to establish that readmission to the hospital setting for 
alcohol rehabilitation services can reasonably be expected to result in improvement of the patients condition. 
For example, the documentation should indicate what changes in the patients medical condition, social or 
emotional status, or treatment plan make improvement likely, or why the patients initial hospital treatment was 
not sufficient. 
 C. Combined Alcohol Detoxification/Rehabilitation Programs 
 
Medicare Administrative Contractors (MACs) should apply the guidelines in A. and B. above to both phases of 
a combined inpatient hospital alcohol detoxification/rehabilitation program. Not all patients who require the 
inpatient hospital setting for detoxification also need the inpatient hospital setting for rehabilitation. (See 
Section 130.1 for coverage of outpatient hospital alcohol rehabilitation services.) Where the inpatient hospital 
setting is medically necessary for both alcohol detoxification and rehabilitation, generally a 3-week period is 
reasonable and necessary to bring the patient to the point where care can be continued in other than an inpatient 
hospital setting. Decisions regarding reasonableness and necessity of treatment, the need for an inpatient 
hospital level of care, and length of treatment should be made by A/MACs based on accepted medical practice 
with the advice of their medical consultant. (In hospitals under PSRO review, PSRO determinations of medical 
necessity of services and appropriateness of the level of care at which services are provided are binding on 
A/MACs for purposes of adjudicating claims for payment.) You can find this information in Medicare's 
National Coverage Determination (NCD): Inpatient Hospital Stays for Treatment of Alcoholism (130.1). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.