We provide an integral estimate for a non-divergence (non-variational) form second order elliptic equation a ij u ij = u p , u ≥ 0, p ∈ [0, 1), with bounded discontinuous coefficients a ij having small BMO norm. We consider the simplest discontinuity of the form x ⊗ x|x| −2 at the origin. As an application we show that the free boundary corresponding to the obstacle problem (i.e. when p = 0) cannot be smooth at the points of discontinuity of a ij (x).To implement our construction, an integral estimate and a scale invariance will provide the homogeneity of the blow-up sequences, which then can be classified using ODE arguments.2010 Mathematics Subject Classification. 35R35, 35B65.