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Reporting Drug Wastage

May 2024, Vol 14, No 5
Jan Hailey, MHL, CMC, CMCO, CMIS, CMOM, CMCA-E/M
Independent Healthcare Consultant
Elkhart, IN

The Centers for Medicare & Medicaid Services recently released updates to the Healthcare Common Procedure Coding System (HCPCS) Level II file that went into effect on January 1, 2024. These changes include multiple new codes for drugs used to treat lung cancer, breast cancer, leukemia, and lymphoma.

With so many new drugs on the list this year, providers may face challenges in determining whether discarded amounts of the drug can be reported. Waste can be reported only for single-use vials. Providers can refer to the drug packaging to determine if the drug is single- or multi-use. Multi-use vials do not qualify for payment for wastage under Medicare policy.

With so many new drugs on the list this year, providers may face challenges in determining whether or not discarded amounts of the drug can be reported.

Any amount of drug billed as wastage from a single-dose vial must be discarded and may not be used for another patient. Documentation in the patient’s medical record must include the actual dose administered and the amount wasted. Medicare requires discarded drugs be reported with the JW modifier on a separate line. In the event that the entire single-use vial is administered, attach modifier JZ to indicate no wastage occurred.

To submit claims for a waste-required claim, submit 2 complete claim lines.

Claim line #1:

  • HCPCS code for the drug given
  • No modifier
  • Number of units given to the patient
  • Calculate the submitted price for ONLY the amount of drug given

Claim line #2:

  • HCPCS code for drug wasted
  • JW modifier to indicate waste
  • Number of units wasted
  • Calculate the submitted price for ONLY the amount of drug wasted

To submit claims for a nondiscarded claim, submit 1 complete claim line.

Claim line:

  • HCPCS code for the drug given
  • JZ modifier to indicate no waste
  • Number of units given to the patient
  • Calculate the submitted price for the amount given

Medicare’s policy on discarded drugs is designed to prevent wastage and ensure efficient use of medications. Under the policy, providers are required to report the JW modifier on claims for drugs with unused and discarded amounts from single-dose containers or single-use packages, which are separately payable under Medicare Part B. This allows Medicare to provide payment for the discarded amount in addition to the dose administered, up to the amount indicated on the vial or package label. The JZ modifier must be reported for drugs with no discarded amounts. The policy encourages providers to administer drugs in a clinically appropriate and efficient manner, aiming to minimize waste while ensuring patient care is not compromised.

Sources

Centers for Medicare & Medicaid Services. Billing and coding: JW and JZ modifier billing guidelines. March 21, 2024. Accessed April 26, 2024. www.cms.gov/medicare-coverage-database/view/article.aspx?articleid=55932

Williford M. Oncologists may be tripped up by HCPCS coding changes. OBR Oncology. February 14, 2024. Accessed April 26, 2024. www.obroncology.com/article/oncologists-may-be-tripped-up-by-hcpcs-coding-changes

About the Reviewer

Portrait of Jan Hailey

Jan Hailey is a WPS Government Health Administrators (Medicare) Provider Outreach and Advisory Group member and has been instrumental in developing Practice Management Institute’s Workforce Initiatives program. She has a Master of Health Leadership degree and five professional certifications in office management, coding, insurance processing, auditing, and compliance.

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