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Coding & Billing
When Medicare Won't Cover Knee Arthroscopy
Lolita Jones
Publish Date: October 10, 2007   |  Tags:   Financial Management

Lolita Jones, RHIA, CCS Important news if your facility hosts orthopedic cases: You may no longer bill Medicare for arthroscopic debridement and lavages if those procedures are performed alone for patients with severe osteoarthritis. Medicare's decision was hardly unexpected, given the much-publicized July 2002 New England Journal of Medicine study concluding that debridements and washouts were ineffective for severe osteoarthritis patients who didn't also have mechanical knee problems. Here's what the coverage ruling means to you.

Lolita Jones, RHIA, CCS\ Not as bad as it might seem
The ruling, which took effect July 11, isn't as limiting as it might seem. Reimbursement for all other indications for debridement for patients without severe osteoarthritis remain at your Medicare carrier's discretion. These indications include patients with mechanical symptoms such as locking, snapping or popping, limb and knee joint alignment, and treating less severe or earlier stages of degenerative arthritis.

The ruling doesn't affect cases involving patients with softening or blistering of knee cartilage or patients with fragmentation of less than 1cm. It only excludes doing lavages alone to treat pain for grade 3 (cartilage fragmentation or fissuring in an area greater than 1cm) and 4 (cartilage erosion down to the bone) osteoarthritis patients or doing debridement as the lone surgical treatment. Debridements and lavages may still be reimbursable if they're used in combination with other therapies. Let's look at an example of a case in which you can't get paid by Medicare and then one where you can.

When it's not covered
Your orthopod schedules a patient with severe osteoarthritis of the patellofemoral joint. About a year ago, the patient had debridement of an osteochondral lesion on the lateral facet of the patella and debridement of the trochlea and Carticel transplant to the trochlea, which failed. But the patient has a fairly good articular surface that hasn't deteriorated during the course of recent exams. Because of persistent crepitus and pain at the patellofemoral joint, the orthopod admits the patient for arthroscopic debridement.

Study: Knee Arthroscopy for Arthritis no Better than Placebo Procedure

Knee arthroscopy for arthritis works no better than a sham procedure in which patients were sedated while surgeons pretended to operate, according to the July 2002 New England Journal of Medicine study "A Controlled Trial of Arthroscopic Surgery for Osteoarthritis of the Knee." This controlled trial involved 180 Veterans Administration hospital patients with osteoarthritis of the knee who were randomly assigned to receive arthroscopic debridement, arthroscopic lavage or placebo surgery. In the sham arm of the study, patients had a knife stuck in their skin to create three superficial incisions in the knee. An assistant sloshed water in a bucket to make the sound of a knee being flushed clean. Outcomes assessed over two years show patients who had arthroscopic debridement or arthroscopic lavage didn't benefit any more than patients who underwent the placebo procedure.

Examination under anesthesia reveals a stable knee with a full range of motion and no effusions. "The evidence of the previous Carticel transplant in the trochlea had significant fibrous tissue, which had ingrowth on it," according to the surgeon's op report. "I debrided it first with a full radius resector, and then performed thermal arthroplasty both on the trochlea and the patella, getting a fairly smooth joint surface."

Hopefully, before you scheduled and performed the procedure, you obtained an advanced beneficiary notice (ABN) signed by the Medicare beneficiary receiving the procedure and coverage approval from your Medicare carrier. In lieu of this, your coders should report:

715.96 Osteoarthrosis, unspecified whether generalized or localized, lower leg

29877-GZ Arthroscopy, knee, surgical; debridement/shaving of articular cartilage (chondroplasty)

Modifier -GZ identifies an "item or service expected to be denied as not reasonable and necessary" when the beneficiary hasn't signed an ABN. Use -GZ for the so-called "medical necessity" denials. It notifies Medicare that you expect that it won't cover the service. You're also sending a clear signal that you want to reduce the risk of a mistaken allegation of Medicare fraud or abuse. To avoid non-payment scenarios such as these, designate a staff member to verify Medicare coverage at the time the physician or physician's office schedules the procedure.

Finding Your Carrier's Policy

Your local carrier's policy on covering arthroscopic debridement and lavages for osteoarthritis patients may or may not carry additional stipulations that aren't spelled out in Medicare's national coverage decision. To locate your carrier's Local Medical Review Policies (LMRP), visit writeOutLink("www.cms.hhs.gov/mcd",1).

When it is covered
Your orthopod schedules a case where he performs arthroscopic chondroplasty for a patient with "grade 2 to 3 chondromalacia" of the medial and lateral femoral condyles.

"The suprapatellar pouch and patellofemoral joint were normal," the surgeon indicates in the operative note. "Medial compartment was also normal. There was a grade 2 to 3 chondromalacia of the medial and lateral femoral condyles. I debrided these as well using a turbo whisker. The gutters were normal. The anterior and posterior cruciate ligaments were intact. The knee was copiously irrigated with Ringer's followed by Marcaine with epinephrine. Wounds closed with 5-0 nylon sutures and sterile dressings applied."

Medicare should cover this type of case, unless your carrier has published a Local Medical Review Policy (LMRP) indicating that it won't cover debridement when performed for chondromalacia (see "Finding Your Carrier's Policy"). Your coders will likely be able to bill the case as:

Chondromalacia of patella
29877-RT Arthroscopy, knee, surgical; debridement/shaving of articular cartilage (chondroplasty) ? right side

Communicate with your docs and coders
Make sure that your orthopods and your coders alike are aware of the specific conditions under which you can and can't bill Medicare for washouts and debridements. When in doubt, have the surgeon explain why the osteoarthritis patient's condition indicates medical necessity within the terms Medicare spells out, including whether it fits within your local carrier's discretion for reimbursing these procedures.