RAC Denials of THA, TKA Over Radiology Reports Clash With CMS Guidance, Experts Say

RAC Denials of THA, TKA Over Radiology Reports Clash With CMS Guidance, Experts Say

By Nina Youngstrom


The fate of Medicare claims for major joint replacement may now depend on whether radiology reports are in the medical record although that’s not required by CMS or local coverage determinations (LCDs), an attorney said.

Recovery audit contractors (RACs) are denying claims for total knee arthroplasty (TKA) and total hip arthroplasty (THA) when the medical records include the orthopedic surgeon’s notes on findings from the imaging tests rather than the radiologist’s interpretation, said attorney Jessica Gustafson, with The Health Law Partners in Michigan.

The RACs are way off base on this one, Gustafson tells RMC. CMS guidance on major joint replacement in its 2020 MLN booklet states that Medicare requires the “results of applicable tests” in the documentation and cites a note in the patient’s chart “along with a copy of the patient’s x-ray reports” as part of an example of a medical record that supports medical necessity.[i]

In addition, LCDs (and local coverage articles) don’t require documentation of the radiology test’s interpretation from a different provider (i.e., a radiologist versus the orthopedic surgeon or other treating physician), Gustafson said. RACs have misapprehended an LCD requirement of radiographic evidence of advanced disease to mean that a radiologist must perform an independent external read of any imaging, she said. The LCDs actually just require that the imaging demonstrate advanced disease, “so clearly a note in the physician’s office must comply with that.” The RACs’ take on this gives hospitals ample ground for appeal, although it may be an uphill battle.

“I strongly believe the RACs’ recent interpretation that the LCDs and CMS guidance more broadly requires a radiology report is not in effect, and I think that it’s dangerous,” Gustafson said. Other experts see things the same way. “As an attorney representing providers, it frustrates me.” It seems like RACs are “making up rules” and telling administrative law judges (ALJs) in hearings on appeals of claim denials that “this is what Medicare requires. It requires a radiology report. It says right here. But the LCDs do not say that.” Yet some ALJs are inclined to believe the auditors, Gustafson said. She has taken one of these appeals to the Medicare Appeals Council, which is the last stop on the traditional Medicare appeals train.

The radiologic reports seem to be the prime focus of RAC TKA and THA denials, Gustafson said. Missing preoperative images and reports also were repeatedly cited in recent examples of TKA and THA CERT error findings by the Comprehensive Error Rate Testing (CERT) contractor. And some payers won’t accept the physician’s interpretation and require the radiology report for prior authorization of TKA and THA even though Medicare Advantage plans are required to follow LCDs, said Denise Wilson, senior vice president of PayerWatch in Towson, Maryland.

Hospitals still must keep an eye on other medical necessity requirements. The biggest obstacle to prior authorization and overturning denials of total joint replacement is “not putting patients through all their paces to determine conservative therapy wasn’t going to be beneficial,” Wilson said. Medicare Advantage and other commercial payers may take the position that the orthopedic surgeon “jumped too quickly to surgery.” That’s sometimes the case even when patients can’t tolerate pain medication or physical therapy, a point that should be made in prior authorization requests and appeals of claim denials, Wilson explained at a Nov. 9 webinar sponsored by PayerWatch.

But hospitals may be able to overturn payer denials of post-operative inpatient admissions for major joint replacement, she said. After TKA and THA were removed from Medicare’s inpatient-only list, they fell under the purview of the two-midnight rule, thrusting them into a world more fraught with physician decision making on patient status. Payers have agreed to pay for post-op admissions when patients initially had the procedures as outpatients, even when their circumstances weren’t dire, Wilson said.

Payers also will approve inpatient admissions for major joint replacements from the get-go under certain circumstances, said Bernard Emkes, M.D., “If you can document the patient has an increased risk for undergoing surgical procedures, they still can be inpatient,” said Bernard Emkes, M.D., a consulting physician advisor for Ascension St. Vincent Hospital in Indiana and its former medical director of managed care. “You can get hips and knees done as inpatient but you can’t just do it as wishful thinking. There needs to be a collaboration between the hospital and orthopedic surgeons who schedule the case.”

Recent CERT denials of Medicare admissions for THA and TKA, however, indicate that reviewers are still reviewing cases with a “retroscope,” said Ronald Hirsch, M.D., vice president of R1 RCM. Physicians document the patient’s risk of perioperative complications (e.g., diabetes, morbid obesity) to support the admission under the two-midnight rule and when nothing bad happens and the patient is discharged after one midnight, the CERT denies the claim. But that’s not how CMS intended things to work, Hirsch said. The premise is the admission decision is made at the time the patient is scheduled for surgery regardless how things turned out. A faster than expected recovery doesn’t invalidate the admission.

Look to CMS Documentation Roadmap

The blueprint for documenting the medical necessity of TKA and THA appears in the MLN Booklet. The common denominators are documentation of failed modalities (e.g., medication, physical therapy), which will have to be imported from one or more physicians, as well as durable medical equipment (DME) notes (e.g., use of a walker or cane), imaging that shows advanced joint disease, and exams, especially from orthopedic surgeons, said DeAnna Fling, revenue cycle educator at US Oncology Network-McKesson Pharmaceutical Solutions and Services, at the PayerWatch webinar.

“The consult note provided by the orthopedic surgeon needs to be a very detailed description of the timeline of the patient’s advancing joint disease,” Fling said. It’s essential to show the impact on activities of daily living (ADL). Also, “hopefully the surgeon has documented which types of braces patients are using and whether the patient is confined to a wheelchair.” Physical therapy notes also should be in the medical records with frequency and changes in range of motion.

“I found when developing appeals, my Medicare administrative contractor wanted range of motion documented and how pain management alternatives with physical therapy didn’t improve range of motion,” Fling said. For example, if crepitus is documented in the progress notes, it should also appear in the appeal letter and the physician should describe the patient’s gait. “It’s helpful to remind physicians to document comorbidities that affect the patient’s joint health or outcomes after surgery and explain why a patient may not be appropriate for failed treatment plans and therefore the physician has “chosen not to use a step care approach to treating the patient.” Hospital pre-op notes also should include a list of diagnoses and possibly codes, depending on the physician.

Hirsch encourages hospitals to incorporate physician notes into the hospital chart to substantiate medical necessity in case of an audit. “You may want to consider checking the veracity of the information the physician provided to insurance companies,” he noted. For example, if the physician told the payer the patient had 12 weeks of physical therapy “but 12 weeks aren’t documented, that becomes a problem.”

When fighting denials, Fling advised hospitals to quote directly from payer medical policies or summarizing them. “You can also look at the standard of care from medical societies,” Wilson said. Payers tend to base joint replacement coverage policies on standards of care. “Look at their references,” she suggested. “They will tell you what published peer review articles they used because payment will be based on whether surgery is medically necessary.” And while Medicare has no national coverage determination for TKA or THA, many MACs have local coverage determinations (LCDs), and

Hospitals may run into prior authorization problems that have little to do with medical necessity, Fling said. “Post-COVID, obtaining an authorization for services has gotten more complicated,” she said. “To add to the complexity of payer medical policies to meet medical necessity, now I’m seeing more commercial payers outsourcing authorization work to third-party companies.”

She recommends hospitals double check patient eligibility “to ensure you are contacting the correct carrier and using the correct portal. It seems as if you have to be really careful when looking at that insurance card to understand who you are going to get the authorization from. That affects the portal used and the medical necessity guidelines. Fling said third-party vendors sometimes use different medical necessity guidelines than the payer, which requires the people who work on authorizations and appeals at hospitals to consult with their managed care departments.

Hospitals Overturned Denials of Patients Admitted Post-Op

Apart from the medical necessity of the procedure itself, hospitals face denials for inpatient admissions when payers contend TKA or THA patients should have been treated as outpatients with observation, Wilson said. Hospitals may be able to overturn them, however, as four recent cases show of claims for patients who were admitted post-op. “It would be very difficult in today’s payer market to be able to justify inpatient from the beginning of the admission,” she said. “Today inpatient typically means your patient is pretty sick.” If patients are ill enough for inpatient admission, they’re not good candidates for major joint replacement, with some exceptions, Wilson explained. Other experts disagree with that view, however.

In one case that went to an external appeal, a 63-year-old man was admitted post op after a THA and stayed in the hospital for one day. He was obese and had type two diabetes and hypertension. After the inpatient claim was denied by a commercial payer, a Blue Cross Blue Shield PPO, which instead approved payment for observation, the hospital appealed to an external reviewer. The appeal was partly based on a Sept. 8, 2021, Blue Cross Blue Shield policy that states “those patients with post-op complications related to the below conditions can be upgraded to an inpatient level of care when appropriate and will be reviewed on a case-by-case basis.” On the list of conditions is diabetes mellitus with an HbA1C greater than or equal to seven percent and body mass index (BMI) greater than or equal to 40 kg/m2.

In the appeal to the external reviewer, the hospital pointed out that the patient’s blood glucose was elevated and required around-the-clock glucose monitoring, and that he had comorbidities (e.g., diabetes). The hospital won the appeal, although Wilson was surprised by the victory because the patient’s BMI was 30 and there was no documentation of elevated HbA1C although he has diabetes.

The external reviewer, Maximus, agreed to the payer should cover the admission on the grounds that “a patient with complex medical problems would be a legitimate reason to admit a patient after surgery” and the patient met the threshold of complex medical problems.

Depending on payer policy, external review is available to members with employer group coverage after the appeal has been denied after the second level and available to members with individual coverage after the appeal has been denied at the first level, Wilson said. An independent review organization will do a “complete re-examination of your case.” In this case, the hospital filed the appeal directly versus on behalf of the patient.

Admitting High-Risk Patients Before Surgery 

Post-op admission is not the only reason why patients having elective joint replacement should be inpatients, some experts say. “We still believe a lot of patients should be inpatients,” Emkes noted.

Ascension St. Vincent has a new program that led to an 80% approval rate from private payers for inpatient admissions of high-risk patients having TKAs and THAs, Emkes said. “What we have tried to do is build a good structure that allows us to make patients inpatient but often keep them only one day.” The hospital coordinates with the offices of orthopedic surgeons to ensure they schedule inpatient admissions for certain high-risk patients and request prior authorization.

Potentially high-risk joint replacement candidates are evaluated two weeks before surgery to ensure the hospital understands their clinical picture beyond the listed diagnoses, he said. Seven diagnoses put the patients in more perioperative peril, including a history of stroke, asthma, and atrial fibrillation with use of an anti-coagulant, Emkes said. “Some plans will say unless their risk is actualized, we won’t pay inpatient,” he noted. The hospital counters that with a frailty score for patients, which indicates their level of weakness and debilitation. The program is expensive but it yields a healthy return in MS-DRG reimbursement for major joint procedures, Emkes said.

Hirsch urges hospitals to consider whether inpatient reimbursement will be higher than outpatient reimbursement for a particular case before they pursue it. Medicare has said it recognizes that patients with comorbidities require more monitoring in the perioperative period, and the way Medicare recognizes that is by allowing inpatient admissions that usually result in higher payments to hospitals for the additional care patients will require, he said. Because Medicare Advantage plans get to make their own rules about status and payments, “if patients are at higher risk, it’s in the hospital’s interest to figure out what status gets them more reimbursement.” If their contract generates more revenue for outpatient TKA or THA, it makes sense to accept the outpatient authorization.

Contact Wilson at denise@ahdam.org and Emkes at bjemkes@ascension.org, Hirsch at RHirsch@R1RCM.COM, Gustafson at JGustafson@thehlp.com and Fling at  DeAnna.Fling@McKesson.com.

[i] https://go.cms.gov/3El0gnL