Hospitals Brace for Renewed Focus on Total Joint Procedures

On August 3, 2020, two issues were approved for review and posted on the Centers for Medicare & Medicaid Services (CMS) Recovery Audit program website: 0184 – Total Hip Arthroplasty: Medical Necessity and Documentation Requirements, and 0185 – Total Knee Arthroplasty: Medical Necessity and Documentation Requirements.

In particular, the approved issues involve whether the documentation surrounding such procedures satisfy the coverage guidelines of the Local Coverage Determinations (LCDs).  Local Coverage Determinations for the various Medicare Administrative Contractors (“MACs”) can be found here.  CMS also has published a MLN Booklet on the topic of Major Joint Replacement (Hip or Knee), which is oftentimes cited by auditors and summarizes the guidelines set forth in the LCDs, which is available here.

The LCDs require that hospitals obtain and maintain documentation to support the medical necessity of surgical intervention prior to performing any surgeries.  Hospitals are required to establish that patients have advanced joint disease evidenced by pain or functional limitations, imaging studies, and failure of conservative interventions (or, if conservative interventions were considered and deemed to be ineffective or counterproductive, the documentation should include this  analysis as well).  This documentation is most frequently maintained by the physicians who provided presurgical care to the patients and is oftentimes not part of the hospitals’ records.  In order to satisfy the guidelines of the LCDs, hospitals need to adopt and implement protocols to obtain this documentation prior to performing total joint procedures.

Significantly, on the Recovery Audit webpage, CMS lists the “provider types” affected to include inpatient hospital, outpatient hospital, ambulatory surgical center, and professional services.  Historically, orthopedic physicians, although primarily responsible for documenting the LCDs’ required elements, have not been held financially responsible for any deficiencies in their documentation.  In cases where the documentation has been deemed deficient to establish medical necessity for a total joint surgery during an audit, the physicians’ professional services have been paid, while the hospitals have received overpayment demands for the surgeries.  In 2014, CMS issued guidance that allowed its contractors discretion to deny “related” claims, such as a surgeon’s claim where the hospital’s claim for the surgical procedure is denied as not reasonable and necessary; however, before now, physicians have not seen this implemented.

Of note, both total knee arthroplasty and total hip arthroplasty procedures are no longer classified as “inpatient only” procedures.  Although not specifically addressed by CMS in its issue summary, note that Recovery Auditors are no longer prohibited from reviewing total knee arthroplasty procedures for “patient status” (i.e., inpatient versus outpatient).  However, pursuant to the Calendar Year (CY) 2020 Outpatient Prospective Payment System (OPPS) Final Rule, Recovery Auditors are prohibited from reviewing total hip arthroplasty procedures for “patient status” until 2022.  Nonetheless, it is essential that hospitals ensure that the documentation establish both (1) the medical necessity of the surgery and (2) that the patient is assigned an appropriate status.

For more information, please contact Jessica L. Gustafson, Esq. or Abby Pendleton, Esq. at (248) 996-8510 or (212) 734-0128.