By Stacey Hall, RHIT, CPC, CCS-P, RCC, VP, Corporate Coding and Education
Radiologists have a lot of questions regarding Medicare guidelines and documentation requirements for discarded drug amounts when using single-use vials. The questions below have been answered using the information from the CY2023 Final Rules for Medicare Physician Fee Schedule (MPFS) CMS-1770-F and the Medicare Discarded Drugs FAQ.
Q1. What changes are being made to the discarded drug policy?
Medicare is now requiring that the discarded drug amount associated with single-use vials be reported on all claims including when there is no waste for a particular study.
When some of the drug from a single-dose vial is discarded, the specific amount must be reported using the JW modifier as a separate line item on the claim. This has been optional in the past, but the final rule states that it is now required to use this modifier when applicable.
When the entire single-use vial is used, and there is no discarded amount, the JZ modifier has been created for claims reporting. When there is no discarded amount, the JZ modifier will be added to the single line item on the claim representing the drug given.
Medicare will expect to see either the JW or JZ modifier on all claims when a drug from a single-use vial is submitted.
Q2. There are several dates associated with this new rule. When does this actually go into effect?
January 1, 2023 – This is the effective date of the new rules.
July 1, 2023 – CMS provided a 6-month delay in the requirement for the use of this modifier. The use of the modifier will be required on this date; however, Medicare will not yet perform claims processing edits on its use.
October 1, 2023 – Beginning on this date, applicable claims submitted to Medicare without either the JW or JZ modifiers will not be accepted. Claims that do not report the modifiers as appropriate on or after October 1, 2023, will be returned as un-processable until claims are properly resubmitted.
Q3. Why has Medicare implemented this policy?
CMS will be requesting refunds from manufacturers for certain single-use vial/packaged drugs when the discarded amount exceeds more than 10% of total charges for the drug in any given quarter.
CMS found that the use of the JW modifier varies among providers when reporting the discard amount for single-use vials and that approximately 2/3 of providers have never used the modifier.
Due to the impact that incomplete data related to drug discarded amounts could have in calculating refunds by manufacturers, CMS is requiring the use of the JW modifier and created modifier JZ to attest when there is no discarded amount for a particular drug.
Q4. Will the JW and JZ modifiers be required for a drug that is not considered a refundable drug?
Yes. CMS has stated that even though only certain drugs will be considered for a refund, the JW and JZ modifiers will be required on all single-dose vial/packaged drugs regardless as to if they are considered a refundable drug.
Q5. How will Medicare know that a single-use vial was used?
All claims that include a HCPCS code for a drug require that a National Drug Code (NDC) be added to the claim. The NDC identifies the drug as either a single or multi-use vial.
Q6. What documentation will be necessary for Zotec to properly report discarded amounts to Medicare?
Because all applicable claims without a JW or JZ modifier will ultimately not be accepted by Medicare, Zotec must be able to accurately report the discarded amount for all single-use vials.
Documentation should include the following elements:
Q7. Will an RFI process be implemented to request discarded drug amounts?
Yes. Because Medicare will require either a JW or JZ modifier for all drugs from a single-use vial, an RFI process must be implemented when the information needed to calculate the discarded amount is not provided.
This will only be implemented for Medicare patients.
If Zotec is not able to calculate the discarded amount based on the documentation provided for a Medicare patient, the case will be sent back through the RFI asking for the information. Zotec will never assume that there was no waste for a particular case. In other words, there must be documentation that there was no discarded amount, or the calculation must equal zero for us to apply the JZ modifier.
If the RFI expires or the provider selects “no change,” and the discard amount cannot be appropriately calculated, then the claim will be submitted without the drug included because Medicare requires either a JW or JZ modifier to process the claim.
For example, if Zotec is not able to calculate the discarded amount based on the documentation provided for a Medicare patient, the case will be sent back through the RFI asking for the information. Zotec never assumes that there was no waste for a particular case.
Medicare has stated they will be performing audits to determine the accuracy of the JW and JZ modifier. They will use information from the dictated report, medical and/or dispensing records, and purchasing and inventory records to ensure accurate claims were submitted.
Q8. Are there any other requirements that should be considered when implementing this policy?
Medicare states that the units billed should, when possible, correspond with the smallest vial available for purchase from the manufacturer(s) that could provide the appropriate dose for the patient, while minimizing any wastage.
For example, if a drug is supplied in a 100 mg vial and a 400 mg vial, and the physician needs to administer 300 mg of the drug, three 100 mg vials should be used rather than using 300 of a 400 mg vial and then discarding 100 mg.
Q9. Where can I get more detailed information regarding this policy?
CMS has published an FAQ that answers the above questions in more detail as well as addresses several other areas not covered in this document.
Medicare Program Discarded Drugs and Biologicals – JW Modifier and JZ Modifier Policy FAQ
Noridian Medicare Billing and Coding: JW and JZ Modifier Billing Guidelines