Major Hip & Knee Replacement or Reattachment of Lower Extremity

Affected Providers

Physicians, non-physician practitioners (NPPs), surgeons, and hospitals providing major hip and knee replacements or reattachment of lower extremity.

HCPCS & CPT Codes

Find the current HCPCS and CPT codes in:

• Local Coverage Determination (LCD): Lower Extremity Major Joint Replacement (Hip and Knee) (L36007)
• Article: Billing and Coding: Total Knee Arthroplasty
• Article: Billing and Coding: Total Hip Arthroplasty

These pages include local coverage information that applies to some providers and aren’t inclusive of all areas. Select your Medicare Administrative Contractor’s (MAC’s) article from the search results and review the article or policy to see if the coverage information applies to you.

Background

According to the 2024 Medicare Fee-for-Service Supplemental Improper Payment Data, the improper payment rate for major hip and knee replacements or reattachment of lower extremity is 43.6%, with a projected improper payment amount of $546.7 million.

We outline other policy requirements in LCD L36007.

Major hip and knee replacements or reattachment of lower extremity has the highest projected improper payments of all Medicare Part A service types.

Patients can get total knee arthroplasty (TKA) procedures on an inpatient or outpatient basis, assuming they meet all the criteria. This doesn’t affect the 2-midnight rule as described in the Medical Review Policies of 2-Midnight Rule section.

Denial Reasons

Medical necessity accounted for 92.8% of improper payments for major hip and knee joint replacement or reattachment of lower extremity during the 2024 reporting period, while insufficient documentation (4.5%), no documentation (1.8%), and incorrect coding (0.9%) also caused improper payments.

The primary reason for these errors is that the inpatient admission wasn’t medically necessary, and you should have billed the invasive procedure as an outpatient procedure.

Preventing Denials

Documentation Requirements

To qualify for coverage of both Medicare Parts A and B services, the patient’s medical records should show medical necessity and be complete and legible. The records — including the patient’s complete name, dates of service, and a legible signature of the physician or NPP responsible for providing the care — should be available to the contractor upon request.

Follow the signature requirements in the Medicare Program Integrity Manual, Chapter 3, section 3.3.2.4.

Medicare Program Integrity Manual, Chapter 6, section 6.5.2 has more information on conducting patient status reviews of claims for Part A payments for inpatient hospitals.

Additional Documentation Requirements Specific to Joint Arthroplasty

Any major procedure has significant benefits and risks (injury or death) that you’ll discuss with the patient. To meet Medicare’s reasonable and necessary threshold for coverage of a procedure, your documentation should clearly support the diagnostic criteria for the indication (standard test results, when appropriate, and clinical findings) and show that the procedure:

• Doesn’t exceed the medical need
• Is at least as beneficial as existing alternatives
• Is provided within accepted standards of medical practice in a setting appropriate for the patient’s medical needs and condition

We may deny both the hospital and physician services claims if they lack compelling arguments for an exception in the supporting documentation.

When the procedure is indicated for advanced joint disease, also document these in the medical record:

• Arthritis of the knee or hip supported by X-ray, magnetic resonance imaging (MRI), or computed tomography (CT). The X-ray, MRI, or CT must demonstrate 1 of the these:
• Subchondral cysts
• Subchondral sclerosis
• Periarticular osteophytes
• Joint subluxation
• Joint space narrowing
• Avascular necrosis
• Bone on bone articulations
• Pain with functional disability at the hip or knee — for example, documented pain that interferes with activities of daily living (ADLs) (functional disability), pain that’s increased with initiation of activities, pain that increases with weight bearing, or pain precluding sleep.
• A history of a reasonable attempt (typically 3 months or more) at conservative therapy as appropriate for the patient in the current episode of care — for example, documented trial of NSAIDs or contraindication to such therapy and documented supervised physical therapy.
• Diminished ADLs due to pain or disability despite non-surgical medical management.
• Risks or benefits of non-cardiac surgery, such as TKA or total hip arthroplasty (THA), for patients with significant conditions or comorbidities.

When the procedure is for indications outlined in LCD L36007 other than advanced joint disease, the medical record must include:

• Supporting evidence (for example, pathology reports and referral from an oncologist for a malignancy of the joint or X-ray of a fracture).
• Documentation of the functional disability, when hip or knee pain is indicated as a reason for the procedure (for revision or replacement TKA or THA) — for example, pain that interferes with ADLs, that’s increased with initiation of activities, or that restricts weight bearing, or impairs or precludes sleep.
• Risks and benefits of non-cardiac surgery, like TKA or THA, for patients with significant conditions or comorbidities.
• Lab or pathology reports, when infection is the reason for revision TKA or THA surgery. Also include documentation regarding treatment of the infection and a physician note indicating that it’s appropriate to proceed with surgery.

The hospital record for the procedures in LCD L36007 must include:

• A history and physical describing the present issue, how long the issue has lasted, current signs and symptoms, and any comorbidities
• Physician progress notes, to include a physical exam demonstrating any presence of deformity, range of motion abnormalities, crepitus, effusion, tenderness, or gait abnormalities
• An operative report
• Any other relevant information addressing coverage criteria related to the patient’s episode of care before the hospitalization
• Discharge summary

Note: When the patient is undergoing a bilateral knee or hip replacement, all criteria listed above would apply to the bilateral surgery when indicated. The medical record should also support the medical necessity for performing THA or TKA bilaterally.

Medical Review Policies of 2-Midnight Rule

We created 2 medical review policies (the 2-midnight presumption and the 2-midnight benchmark) and a case-by-case exception to evaluate Part A claims payment.

• 2-midnight presumption (helps guide which claims the contractor reviews): We presume hospital claims with a patient stay greater than 2 midnights after the formal admission to be reasonable and necessary for Part A payment.
• 2-midnight benchmark (helps guide which short-stay hospital claims for Part A payment a contractor reviews): We usually pay hospital claims under Part A if the admitting practitioner expects the patient to require medically necessary hospital care covering 2 or more midnights and medical record documentation supports this.
• The case-by-case exception states that for hospital stays you expect to be less than 2 midnights, an inpatient admission may be payable under Part A on a case-by-case or individualized basis if the patient’s medical record documentation supports the admitting physician or practitioner’s judgment that the patient required hospital inpatient care despite the lack of a 2-midnight expectation based on complex medical factors, including, but not limited to:
  • Medical history
  • Comorbidities
  • Current medical needs
  • Severity of signs or symptoms
  • Risk of an adverse event