Practice Management Alert

Feds: Use JW for some discarded drugs.

If your practice loses money on discarded drugs or biologicals that the physician doesn’t need to treat the patient, you’re in luck.

On July 1, things will change concerning how you report discarded drugs for Medicare. That’s the day the new CMS change request (CR 9603) for the JW modifier (Drug amount discarded/not administered to any patient) goes into effect, CMS says in MLN Matters article MM9603.

Benefit: The change will be a boon to offices who are hemorrhaging cash due to unused drugs/biologicals. When a provider treats a patient with a single-use vial of a drug, and doesn’t use the entire portion, the rest of the doses often gets thrown away. With modifier JW, you’ll be able to report the entire vial supply — in certain situations.

The change will be welcomed by anyone who has lost money on single-use vials of drugs, says Marvel Hammer, RN, CPC, CCS-P, ACS-PM, CPCO, owner of MJH Consulting in Denver, Co.

“This is great news for providers who have been confused about when to use the JW modifier,” Hammer explains. “Obviously, this change will eliminate lost revenue due to unused portions of drugs and biologicals.”

Medicare Makes Blanket Decision on JW

This CR will provide the definitive modifier JW rules for all Medicare payers in the nation. Formerly, each Medicare administrative contractor (MAC) determined whether or not providers had to append modifier JW to the code to reflect that they hadn’t used some of the drug. In an effort to standardize policies, CMS is now requiring everyone to use the JW modifier, as well as including a note in the patient’s chart on the discarded drug.

“Effective July 1, 2016, claims for discarded drug or biological amount not administered to any patient, shall be submitted using the JW modifier,” CMS says in the article. “Also, effective July 1, 2016, providers must document the discarded drugs or biologicals in [the patient’s] medical record.”

Benefit: Reporting modifier JW will allow payment for the amount of discarded drug or biological, in certain situations, CMS reports.

For instance, let’s say your provider treats a patient with 95 units of a single-use 100-unit vial of a drug and discards the remaining 5 units. According to CMS transmittal R3508, you would code for the 95 units of the drug on one line, and the 5 remaining units on another line with modifier JW appended.

Remember, JW Not for All Unused Drugs

The CR does not open the door to using modifier JW in all discarded drug/biological situations. CMS does prohibit coding for the discarded drug with JW when “the actual dose of the drug or biological administered is less than the billing unit,” CMS reports.

“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,” CMS reports.

Explanation: “The single line item of 1 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 drug is not permitted because it would result in 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,” CMS continues.

Medicare also makes clear that the JW modifier is only for single-use vial or package drugs and biologicals, Hammer explains.

According to Chapter 17 of the Medicare Claims Processing Manual: “Multi-use vials are not subject to payment for discarded amounts of drug or biological.”

To read the transmittal for yourself, go to: https://www.cms.gov. Then, type in “R3508CP” in the search box in the right corner of the page. On the results page, click on the “R3508CP — Centers for Medicare & Medicaid Services” link.