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Does a family have the right to insist that mom or dad be formally admitted to the hospital rather than held for observation? My understanding is that if a person is not formally admitted to a hospital for 72 hours Medicare will not pay for a rehab stay. Thank you

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There are very strict standards physicians must meet in order to formally admit to a hospital. Those standards are Medicare standards & the doctor can’t make up conditions to admit a patient for “observation” who can be initially treated in an ER, stabilized & then sent home.

Unfortunately it’s Medicare as well as insurance company guidelines that are set for a MD to meet criteria for admission.
Doctors have to make a huge clinical decision on a person they don’t know and in my opinion always go in favor of a patient if they truly need care. If the PCP has priveleges at that hospital and makes visits there. 
However, that said, often hospitals these days, especially, dedicated to ER medicine & stabilization. The patient’s PCP often gets no say or don’t even know they were admitted until the PCP gets a notification.
Long gone are the days of going to a hospital & expecting an admission. That’s why Urgent Care centers were set up as they are considered an ER & bill accordingly.
So to answer your question, no, not anymore.
Again, Medicare & your government at work, not the hospital staff.
Sad sad sad.
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Had a similar situation with my Father who was sent to Hospital by Personal Care Facility due to low blood pressure. Once there they determined it was due to low blood sugar and he is not a diabetic. Unable to get blood sugar to stabilize so was in observation than sent to Cardiac ICU and than Medical ICU until finally was stabilized 3 days later. The entire time he was in observation or so I assume as everyone I asked said they didn't know and would have to contact the billing office but it was over a weekend. Hospital doctor felt he should be a hospice patient but had a consult with hospice and they said since he had no fatal diagnosis he wouldn't be accepted for that even though he is 95 with a lot of other medical issues. Oh well he is back in personal care facility and generally OK till the next crisis.
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I've run into this before. From the outside, it makes no sense. If they need to go to the hospital, shouldn't they be admitted to the hospital? In the end, it ends up being a medical decision. If there is a medical reason that you need to be in the hospital, then you are admitted. If they are only concerned that something might happen, you are there for observation. It makes no sense to me but it is what it is.

The thing that irritates me most is when the hospital staff keeps pressuring me to sign a document saying that I've been informed that it's observation versus admission. I refuse and tell them that I'm under no obligation to sign that. It helps them, not me. Regardless, they are only required to give oral notification. Nothing has to be signed.
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You cannot force a hospital to admit anyone. Medicare will not pay for a patient who does not meet criteria for hospitalization.

The Centers for Medicare and Medicaid (CMS) has started to look at this issue. The three-night requirement was instituted back in the day when outpatient/home health services were less comprehensive, and when individuals were not as sick and still living in their homes. According to a report I read, CMS is studying this outdated rule, realizing the negative impact it has on Medicare recipients.
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CMS has it's rules for classifying a patient as inpatient or observation; failure to follow the rules can result in a facility paying millions of dollars in fines, or in a worst case scenario, lose it's Medicare license. A patient currently must qualify as an inpatient for 3 days in order to have Medicare pay for a stay in skilled nursing; this rule is up for debate right now, but don't hold your breath.

Insurance companies make up and follow their own rules as well; generally, when Medicare comes up with a new rule or restriction, the payors adopt it if is financially beneficial to them (and not necessarily the patient) or put their own little spin on it.

As costs rise across the continuum of care, more and more cases are being classified as "observation" now, which is throwing a wrench into hospital budgets and patient and family paid support.

I can also tell you that the rules often are misunderstood, even by the health care systems who are required to follow them, so if you would like an education, go out to the Medicare site and read to your heart's content (or until you can no longer process the conflicting information provided).
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Thank you everyone for your responses.
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www.khn.org/news/observation-care-faq/amp/
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Is there no other route to Medicare-funded rehab except referral following hospital admission?

It seems a bit daft. If a clinician agrees that a patient needs in-patient therapies and refers him/her for them, why do you have to jump through the hospital hoops too? You can need intensive PT without necessarily having broken your leg.
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It is a mess and I agree with the other answers, I have just jumped through this hoop.The Dr must have strong reason for admission for example a pneumonia which he can prove with X-rays or heart failure where the patient has swollen up like a balloon. This he can use to prove this admission was correct. If on the other hand a patient comes in with a cough and low grade temperature they may be afraid things will not improve but wants to keep an eye on them because of other diseases, then the choice is observation. Everything else for treatment will not change but they will be on the observation floor of the hosp but will have to pay out of pocket for some things. Once the three midnights have passed if the patient still needs care they automatically become inpatients. The three-day rule for rehab is also strictly followed and rehab will be strongly recommended if the discharge planners feel it is not safe to send the patient home.

CM there has to be a strong reason for a patient to need inpatient rehab. Out patient PT can be achieved as an outpatient or by the PT comming to the home
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You are correct. If a person is NOT admitted to the hospital and stays 3 NIGHTS, then when they are discharged from the hospital and admitted to a nursing home/skilled rehab facility FOR REHAB Therapy (physical therapy, occupational therapy, speech therapy), Medicare WILL NOT pay. This is a HUGE problem and many, many nursing homes and nurses and social workers complain about almost every day.

So INSIST that your Mom or Dad be ADMITTED to the hospital and not "Held for Observation".
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