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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules say Total Knee Arthroplasty (TKA) 
 
TKA is considered reasonable and necessary for individuals with one or more of the following*: 
 
    1. Advanced Joint disease and all of the following (a,b,c): 
        a. The joint disease is evidenced by conventional radiography, or magnetic resonance imaging (MRI)*; 
and 
        b. Pain or functional disability attributable to the advanced joint disease; and 
        c. Unsuccessful non-surgical medical management*, when appropriate, and attempted for a minimum of 3 
months. (When non-surgical medical management is not appropriate, the medical record must clearly document 
the basis for that conclusion); 
        or 
    2. Failure of a previous osteotomy; or 
    3. Distal femur fracture; or 
    4. Malignancy of the distal femur, proximal tibia, knee joint or adjacent soft tissues; or 
    5. Failure of previous unicompartmental knee replacement; or 
    6. Avascular necrosis of the knee; or 
    7. Proximal tibia fracture 
 
*See Documentation Requirements in the attached Billing and Coding Article for additional information.  
 
You can find this information in Medicare's Local Coverage Determination (LCD): Total Joint Arthroplasty 
(L36039). 
 
The rules say that in order to qualify for coverage of both Medicare Part A inpatient services and Part B 
provider services the medical record must contain documentation that fully supports the medical necessity and 
justification of the procedure performed and must be made available to National Government Services upon 
request. When the documentation does not meet the criteria for the service(s) rendered or the documentation 
does not establish the medical necessity for the service(s), such service(s) will be denied as not reasonable and 
necessary under Section 1862(a)(1)(A) of the Social Security Act. 
 
A history and physical, discharge summary, physician progress notes and an operative report are typically in 
the hospital record for the procedures in the related LCD. Other relevant information addressing coverage 
criteria related to the patient's episode of care prior to the hospitalization, should be included in the hospital 
record (see below). Failure to include this information in the hospital record may result in denial of coverage 
for Part A services and trigger a review of the Part B provider claim to determine whether the Part B service 
rendered was reasonable and necessary. 
 
When the procedure is indicated for advanced joint disease, the following should be documented in the medical 
record: 
 
        Arthritis of the knee or hip supported by X-ray or MRI. The X-ray or MRI should demonstrate one of the 
following: 
            subchondral cysts, 
            subchondral sclerosis, 
            periarticular osteophytes, 
            joint subluxation, 
            joint space narrowing, 
            avascular necrosis, or 
            bone on bone articulations 
 
    The extent to which pain or functional disability interferes with ADLs (functional disability), increases with 
activity or increases with weight bearing. ADLs include, but are not limited to, dressing, feeding, toileting, 
grooming, physical ambulation (including balance/risk of falls), and bathing. 
    Documentation of unsuccessful non-surgical medical management. Documentation should establish a history 
of a reasonable attempt at conservative therapy as appropriate for the patient in their current episode of care. 
Clinically appropriate non-surgical medical management typically includes one or more of the following: 
        anti-inflammatory medications and/or analgesics; and/or 
        flexibility and muscle strengthening exercises; and/or 
        supervised physical therapy; and/or 
        assistive device use; and/or 
        reasonable activity restrictions; and/or 
        weight reduction as appropriate; and/or 
        therapeutic injections into the joint as appropriate. 
 
    Non-surgical medical management may be inappropriate, ineffective or counterproductive when one or more 
of the following is present: 
        bone on bone articulation; and/or 
        severe deformity; and/or 
        Severe pain (particularly at rest) and significant disabling interference with activities of daily living 
(ADL). 
 
    For patients with significant conditions or co-morbidities, such as coronary artery disease or obstructive 
pulmonary disease, the risk/benefit of the TKA or THA should be appropriately addressed in the medical 
record. 
 
Medical record documentation for other TKA and THA indications outlined in the LCD should include the 
following, when indicated: 
 
    Supporting evidence (e.g., pathology reports and referral from an Oncologist for a malignancy of the joint or 
X-ray of a fracture). 
    The extent to which pain or functional disability interferes with ADLs (functional disability), increases with 
initiation of activities or weight bearing. 
    For patients with significant conditions or co-morbidities, such as coronary artery disease or obstructive 
pulmonary disease, the risk/benefit of the TKA or THA should be appropriately addressed in the medical 
record. 
    When infection is the reason for revision TKA or THA surgery, laboratory and/or pathology reports must be 
in the medical record and all documentation regarding treatment of the infection and a physician note 
indicating that it is appropriate to proceed with surgery should be in the medical record as well. 
 
In order to meet Medicare's reasonable and necessary (R&N) threshold for coverage of a procedure, the 
documentation should clearly support both the diagnostic criteria for the indication (standard test results and/or 
clinical findings as applicable) and the medical need (the procedure does not exceed the medical need, is at 
least as beneficial as existing alternatives, and is furnished within accepted standards of medical practice in a 
setting appropriate for the patient's medical needs and condition). Lacking compelling arguments for an 
exception in the supporting documentation, the hospital (FISS claim) and physician services (MCS claim) may 
be denied. 
 
If the required criteria outlined in the Indications section above are not met, but the treating physician feels that 
performing the procedure is within the current standards of care, then the documentation must include, in 
addition to the above, other information which confirms that the services performed clearly were appropriate. 
This may include, for example, evidenced based clinical practice guidelines or published and peer reviewed 
literature in support. For example, if certain conservative measures are not necessary or appropriate for a given 
patient, it should be directly noted in the pre-procedure documentation. The clinical judgment of the treating 
physician is always a consideration if clearly addressed in the pre-procedure record and if consistent with the 
episode of care for the patient as documented in patient records and claim history. 
 
In addition to the medical necessity of the procedure itself, the medical necessity of the site of service should 
also be evident from review of the medical record. 
 
You can find this information in Medicare's Local Coverage Article: Billing and Coding: Total Joint 
Arthroplasty (A57428). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.