Medicare Compliance & Reimbursement

Dodge denial code 5J504 (Need for service/item not medically and reasonably necessary).

A new wave of audits may threaten claims for total joint replacement (TJR) procedures in 2014, at least for physicians and hospitals who fail to revisit existing guidelines for documenting medical necessity for DRG 470.

Background: In 2011, MACS and then RACs began auditing and denying numerous claims for procedures including lower-extremity TJRs, after prepayment probes and other audits revealed that providers failed to make an adequate case for the medical necessity of the expensive procedures. 

Recently, recovery auditor Connolly Inc. added to its CMS Approved Audit Issue list an item concerning physician claims and the “incorrect billing of major joint replacement procedures” resulting in “overpayments not in accordance with billing requirements outlined in Local Coverage Determinations.” Although the item was linked specifically to Region C and an LCD from First Coast Services Options, the search for problematic claims isn’t likely to stop there. There are also reports in 2014 of MACs issuing an increasing number of additional documentation requests (ADRs) related to DRG 470 (Joint replacement).

How should you respond? When the Centers for Medicare and Medicaid Services issued a related MLN Matters article in 2012, the agency made clear that cursory rationales for surgery wouldn’t pass muster. Bolding for emphasis words including “detailed” and “progress notes,” the agency stressed that physicians should steer clear of “[notes] consisting of only conclusive statements.”

Open to denial, for example, might be a justification that said simply, “Mrs. Smith is a female, age 70, with chronic right knee pain. She states she is unable to walk without pain and pain meds do not work. Therefore, she needs a total right knee replacement.”

When it comes to documenting medical necessity in the physician record, evidence of failed prior conservative treatments is a must. A simplistic statement such as “bone on bone” definitely won’t fly. Rather, tell each patient’s clinical story in detail, including relevant clinical diagnoses and observations (“end-stage osteoarthritis of the right knee”), progress over time (worsened over the past ten years, NSAIDs began to cause gastric distress in March 2013, no functional improvement with physical therapy). You may even want to address attempts at weight loss, hints CMS in its MLN Matters coverage of the topic.

There is evidence that providers can work with MACs to pave the way for claims that pass muster. In 2011, First Coast Service Options, the MAC in Florida at the time, worked with provider groups including the AAOS and the American Association of Hip and Knee Surgeons to develop a local coverage determination that proved to guide surgeons (and hospitals) to fewer denials. Key was rethinking an outdated requirement that based “medical necessity” in large part on documentation that a 12-week trial of physical therapy was provided before moving to a surgical solution.

The right place: Some hospitals face claims denials in spite of a surgeon’s detailed explanation of medical necessity. Why? They failed to include the necessary documentation in the record that matters most to the health of their claim — the hospital record — the documentation that is subject to review in the case of a CERT audit.

A must in the hospital record — which consists of the operative report for the procedure (including observed pathology), the daily progress notes for inpatients, and the discharge plan and orders — is a detailed account of patient history. Think ADL limitations, safety risks, contraindications of other interventions, characterization of pain. Also essential are physical exam findings (gait description and range of motion descriptions, visual deformity reports), investigations including radiological findings, and impression (e.g., “total knee arthroplasty indicated”). 

“To avoid denials, records should contain enough detailed information to support the medical necessity of the procedure,” urged Dr. James Cope, MD, a CMS senior medical director, speaking to an audience of AAOS physician leaders. “You probably have this information in your office records, but it needs to be in the record that we see — which is the hospital record.”

Contractors’ audits often focus on the hospital, but physicians also need to stay vigilant in maintaining their clinical documentation. An auditor who spots shoddy documentation in the hospital record is likely to push to the next level with a review of physician’s documentation of medical necessity. Even post-payment reviews of related physician claims may be triggered.

Reinforcements: Coders can and should follow the lead of physicians in re-familiarizing themselves with documentation guidelines available from CMS and its various contractors (see Resources on page 50). If they spot a red flag, they can work with hospital case managers to identify shortcomings in documentation — and the hospital can then be proactive in requesting additional documentation from the surgeon or other clinical staff.