This cross-sectional study measures the differences in length of stay at inpatient rehabilitation services and health outcomes between traditional Medicare and Medicare Advantage beneficiaries. Importance Enrollment in Medicare Advantage (MA) has been increasing and has reached one-third of total Medicare enrollment. Because of data limitations, direct comparison of inpatient rehabilitation services between MA and traditional Medicare (TM) beneficiaries has been very scarce. Subgroups of elderly individuals admitted to inpatient rehabilitation facilities (IRFs) may experience different care outcomes by insurance types. Objective To measure the differences in length of stay and health outcomes of inpatient rehabilitation services between TM and MA beneficiaries in the US. Design, Setting, and Participants This multiyear cross-sectional study used the Uniform Data System for Medical Rehabilitation to assess rehabilitation services received by elderly (aged >65 years) Medicare beneficiaries in IRFs between 2007 and 2016 for stroke, hip fracture, and joint replacement. Generalized linear models were used to assess whether an association existed between Medicare insurance type and IRF care outcomes. Models were adjusted for demographic characteristics, clinical conditions, and facility characteristics. Data were analyzed from September 2018 to August 2019. Exposures Medicare insurance plan type, TM or MA. Main Outcomes and Measures Inpatient length of stay in IRFs, functional improvements, and possibility of returning to the community after discharge. Results The sample included a total of 1 & x202f;028 & x202f;470 patients (634 & x202f;619 women [61.7%]; mean [SD] age, 78.23 [7.26] years): 473 & x202f;017 patients admitted for stroke, 323 & x202f;029 patients admitted for hip fracture, and 232 & x202f;424 patients admitted for joint replacement. Individuals enrolled in MA plans were younger than TM beneficiaries (mean [SD] age, 76.96 [7.02] vs 77.95 [7.26] years for stroke, 79.92 [6.93] vs 80.85 [6.87] years for hip fracture, and 74.79 [6.58] vs 75.88 [6.80] years for joint replacement) and were more likely to be black (17 & x202f;086 [25.5%] vs 54 & x202f;648 [17.9%] beneficiaries) or Hispanic (14 & x202f;496 [28.5%] vs 24 & x202f;377 [8.3%] beneficiaries). The MA beneficiaries accounted for 21.8% (103 & x202f;204 of 473 & x202f;017) of admissions for stroke, 11.5% (37 & x202f;160 of 323 & x202f;029) of admissions for hip fracture, and 11.8% (27 & x202f;314 of 232 & x202f;424) of admissions for joint replacement. The MA beneficiaries had shorter mean lengths of stay than did TM beneficiaries for both stroke (0.11 day; 95% CI, -0.15 to -0.07 day; 1.15% shorter) and hip fracture (0.17 day; 95% CI, -0.21 to -0.13 day; 0.85% shorter). The MA beneficiaries also had higher possibilities of returning to the community than did TM beneficiaries, by 3.0% (95% CI, 2.6%-3.4%) for stroke and 5.0% (95% CI, 4.4%-5.6%) for hip fracture. The shorter length of stay and better ultimate outcomes were achieved without substantially compromising the intermediate functional improvements. Facility type (freestanding vs within an acute care hospital) and patient alternative payment sources other than Medicare (none vs other) partially explained the differences between insurance types. Conclusions and Relevance This study suggests that MA enrollees experience shorter length of stay and better outcomes for postacute care than do TM beneficiaries in IRFs. The magnitude of the differences depends on treatment deferability, patient sociodemographic subgroups, and facility characteristics. Question Do Medicare Advantage beneficiaries experience different care services and outcomes from inpatient rehabilitation facilities than traditional Medicare beneficiaries do? Findings In this multiyear cross-sectional study of more than 1 million inpatient rehabilitation facility admissions (473 & x202f;017 for stroke, 323 & x202f;029 for hip fracture, and 232 & x202f;424 for joint replacement), Medicare Advantage beneficiaries had a shorter mean length of stay (1.15% shorter for stroke and 0.85% shorter for hip fracture) and a greater likelihood of returning to the community (3.0% for stroke and 5.0% for hip fracture) than did traditional Medicare beneficiaries, without substantially compromising their functional improvements. Meaning These findings suggest that policy makers may consider using strategies in managed care to further improve care quality and control costs.