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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 state that the patient must require intensive, comprehensive, multifaceted treatment including 24 
hours per day of medical supervision and coordination because of a mental disorder. The need for 24 hours of 
supervision may be due to the need for patient safety, psychiatric diagnostic evaluation, potential severe side 
effects of psychotropic medication associated with medical or psychiatric comorbidities, or evaluation of 
behaviors consistent with an acute psychiatric disorder for which a medical cause has not been ruled out. 
 
The acute psychiatric condition being evaluated or treated by inpatient psychiatric hospitalization must require 
active treatment, including a combination of services such as intensive nursing and medical intervention, 
psychotherapy, occupational and activity therapy. Patients must require inpatient psychiatric hospitalization 
services at levels of intensity and frequency exceeding what may be rendered in an outpatient setting, including 
psychiatric partial hospitalization. There must be evidence of failure at, inability to benefit from, or 
unacceptable risk in an outpatient treatment setting. 
 
For all symptom sets or diagnoses, the severity and acuity of symptoms and the likelihood of response to 
treatment, combined with the requirement for an intensive, 24-hour level of care, are the significant factors in 
determining the necessity of inpatient psychiatric treatment. 
 
The following parameters are intended to describe the severity of illness and intensity of service that 
characterize a patient appropriate for inpatient psychiatric hospitalization. These criteria do not represent an all-
inclusive list and are intended as guidelines. 
 
Admission Criteria (Severity of Illness): 
 
Examples of inpatient admission criteria include (but are not limited to): 
 
Threat to self, requiring 24-hour professional observation (i.e., suicidal ideation or gesture within 72 hours 
prior to admission, self-mutilation (actual or threatened) within 72 hours prior to admission, chronic and 
continuing self-destructive behavior (e.g., bulemic behaviors, substance abuse) that poses a significant and/or 
immediate threat to life, limb, or bodily function). Threat to others requiring 24-hour professional observation 
(i.e., assaultive behavior threatening others within 72 hours prior to admission, significant verbal threat to the 
safety of others within 72 hours prior to admission). Command hallucinations directing harm to self or others 
where there is the risk of the patient taking action on them. Acute disorder/bizarre behavior or psychomotor agitation or retardation that interferes with the activities of 
daily living (ADLs) so that the patient cannot function at a less intensive level of care during evaluation and 
treatment. Cognitive impairment (disorientation or memory loss) due to an acute Axis I disorder that endangers 
the welfare of the patient or others. A patient with a dementia disorder for evaluation or treatment of a 
psychiatric comorbidity (e.g., risk of suicide, violence, severe depression) warranting inpatient admission. 
A mental disorder causing major disability in social, interpersonal, occupational, and/or educational 
functioning that is leading to dangerous or life-threatening functioning, and that can only be addressed in an 
acute inpatient setting. A mental disorder that causes an inability to maintain adequate nutrition or self-care, 
and family/community support cannot provide reliable, essential care, so that the patient cannot function at a 
less intensive level of care during evaluation and treatment. Failure of outpatient psychiatric treatment so that 
the beneficiary requires 24-hour professional observation and care. Reasons for the failure of outpatient 
treatment may include increasing severity of psychiatric condition or symptom, noncompliance with 
medication regimen due to the severity of psychiatric symptoms, inadequate clinical response to psychotropic 
medications or severity of psychiatric symptoms that an outpatient psychiatric treatment program is not 
appropriate. You can find this rule in the Medicare Local Coverage Determination (LCD)- L33975, Psychiatric 
Inpatient Hospitalization. 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com. 
 
The Plan contract says that the Plan covers items and services in accordance with Medicare rules.