My 88 year old dad clearly needs rehab that his doctor's recommend but the insurance is denying it? What can I do?

Are you talking about rehab at an inpatient facility, or outpatient? If inpatient, then I agree with what others have said about hospitalization first. If outpatient, the doctor can order it anytime. If he's substantially housebound, they will come to his location. Otherwise, he will go to the PT facility.

TopTeach, does he have some insurance coverage other than Medicare?

PT is sent to the facility per doctor order where my mom stays and an RN visits her. She fell and broke her pelvis after a small stroke.

Recommend does not equal prescribed. Will doc prescribe rehab?

You argue.

Patiently, doggedly, always politely, and having checked the terms and conditions of your father's health insurance policy (e.g. does the three midnights rule that BB mentions apply in your father's case?).

So

1. Check your father's cover. Make sure it entitles your father to the treatment being recommended by his doctor.*
2. Make sure you have all your paperwork marshalled in front of you.
3. Get on the phone.
4. Keep talking until you win.

*If it doesn't, please come back and say why not. There may be ways to close policy loopholes or comply with requirements that will enable your father to claim.

Was dad admitted to the hospital for three midnights? That is a requirement for MEDICARE paying for rehab, I believe.

Are there Pts at his AL who could give him therapy on an outpatient basis?

Find out what the basis of the denial is. Then work with the discharge planners and his doctor to appeal.