The Centers for Medicare & Medicaid Services (CMS) recently announced a change in policy regarding the use of the JW modifier for discarded Part B drugs and biologicals. Change Request (CR) 9603 was released to alert Medicare Administrative Contractors (MACs) and providers of this change in policy. Under the new policy, all MACs will be required to uniformly enforce the use of the JW modifier for discarded Part B drugs and biologicals. Previous to this change, local MACs were allowed to decide whether their providers had to use the JW modifier. Originally the change was scheduled to go into effect on July 1, 2016, however that has now been delayed until January 1, 2017. At that time providers will be required to:

  • Use the JW modifier for claims with unused drugs or biologicals from single use vials or single use packages that are appropriately discarded (except those provided under the Competitive Acquisition Program (CAP) for Part B drugs and biologicals). As a reminder, under (CAP) for Part B Drugs, physicians are given the choice of buying and billing Medicare Part B drugs and biologicals under the average sales price system or buying them through a competitive bidding process from vendors (Medicare Modernization Act of 2003, Section 1847B, effective July 1, 2006).
  • Document the discarded drug or biological in the patient’s medical record when submitting claims with unused Part B drugs or biologicals from single use vials or single use packages that are appropriately discarded.

For example, as noted on the CMS website, a single use vial that is labeled to contain 100 units of a drug has 95 units administered to the patient and 5 units discarded. The 95 unit dose is billed on one line, while the discarded 5 units are billed on another line by using the JW modifier. Both line items would be processed for payment assuming that the appropriate documentation in the medical record is also present.

The JW modifier is only applied to the amount of drug or biological that is discarded. Of note, a common situation where the JW modifier is not permitted is when the actual dose of the drug or biological administered is less than the billing unit. For example, one billing unit for a drug is equal to 10mg of the drug in a single use vial. A 7mg dose is administered to a patient while 3mg of the remaining drug is discarded. The 7mg dose is billed using one billing unit that represents 10mg on a single line item. The single line item of one unit would be processed for payment of the total 10mg of drug administered and discarded. Billing another unit on a separate line item with the JW modifier for the discarded 3mg of the drug is not permitted because it would result in an overpayment. Therefore, when the billing unit is equal to or greater than the total actual dose and the amount discarded, the use of the JW modifier is not permitted.

It should also be noted that billing for wastage and/or using the JW modifier for drugs supplied in a multi-dose vial is prohibited.

Organizations should carefully examine their internal billing processes to understand how this change might impact them with an eye toward risk for revenue reduction and risk for compliance. This is a great opportunity for pharmacy to establish a dialogue with hospital revenue cycle to clearly understand what happens to the charges once they leave the pharmacy system. Far too often we see a disconnect between these departments and, while pharmacy operating statements reflect the gross revenue numbers and look great, what is actually being billed is far less due to issues with documentation.

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