What you are probably dealing with is luxating patella, a common issue with yorkies. If you want a second opinion, I would get it from a board certified surgeon who specializes in orthopedics. You can ask your vet for a referral to one ... and if he does not have one he recommends, you can search for one at
www.acvs.org
What your vet is doing is not an uncommon approach when a knee is causing issues. Sometimes the inflammation will go down with meds and rest.
Here is a link on their website that explains luxating patella:
https://www.acvs.org/small-animal/patellar-luxations
He also could have torn a ligament. A link about that:
https://www.acvs.org/small-animal/cr...gament-disease
Two other links that might be helpful:
Yorkie Haven Rescue - Patellar Luxation Info Yorkie Haven Rescue - Cranial Cruciate Ligament Tear Info