How to properly code waste of drugs and when it's appropriate

The use of some coding modifiers can be confusing, but proper understanding of these modifiers is important. Running afoul of proper use can result in our practices coming under scrutiny, as is the case with recent increases in oversight related to modifier JW.

JW modifier overview

Although we often discard some unused drug, we do not always bill for it — even though we should always document the discard since it may provide more evidence the “leftover” was not used on another patient.

The JW modifier appears in CPT and payer manuals as follows: “Drug Amount Discarded/Not Administered to any Patient.”

Medicare has a short document on the JW modifier that is quite good;¹ it was produced when they required all Medicare Administrative Contractors (MACs) to do this uniformly. Medicare notes that this modifier is “used on a Medicare Part B drug claim to report the amount of drug or biological ... that is discarded and eligible for payment under the discarded drug policy. The modifier shall only be used for drugs in single dose or single use packaging.”

Noridian, the MAC for some western U.S. states, notes the below in a Local Coverage Article on the subject: “If the provider must discard the remainder of a single-use vial or other package after administering the prescribed dosage of any given drug, Medicare may cover the amount of the drug discarded along with the amount administered. The following elements must be followed in order for the discarded amount to be covered.

• The vial must be a single-use vial. Multi-use vials are not subject to payment for any discarded amounts of the drug.
• The units billed must correspond with the smallest dose (vial) available for purchase from the manufacturer(s) that could provide the appropriate dose for the patient, while minimizing any wastage.
• Any amount of drug billed as wastage from a single-dose vial, must actually be discarded and may not be used for another patient regardless of whether or not that other patient has Medicare.”

Applicable drugs

Perhaps the two most common billable drugs we encounter that have billable wastage and we report with modifier JW are Triesence (triamcinolone acetonide suspension, Novartis) and chemodenervation drugs like botulinum toxin (Botox, Allergan).

Let’s use Botox billing as an example. The HCPCS code for this drug is J0585, and it is listed as “per unit.” A new single use vial is pierced. It has 100 billable units of drug (notice we are using units here, not milligrams, etc). The patient has a covered condition for the drug and only 30 units are used. No other patients are scheduled. The practice would chart the discard in the medical record and then their claim would look like this:

1. One line of the claim shows: J0585, 30 units
2. A second line is required to report the wastage; that shows: J0585-JW, 70 units.
3. All 100 units are payable here when properly documented.

Noridian goes on to specify: “Please clearly document in the patient’s medical record the actual dose administered in addition to the exact amount wasted and the total amount of the vial is labeled to contain … Medicare requires discarded drugs be reported with the JW modifier on a separate line, the total number of discarded units reported should not include amounts of the drug also included on the administered line due to the rounding up of units.”

When not to use

Importantly, there are situations where you do NOT bill for discarded drug. Those are:

1. When the dose you are using on a patient for the billable drug comes from a multi-dose vial. This drug goes back on the shelf, of course, as it is still good and can be used later.
2. When the drug or biological administered has a dose that is less than the HCPCS billing unit. The Medicare Claims Processing Manual has a good example.² It notes “… if one billing unit for a drug is equal to 10 mg of the drug in a single-use vial, and a 7 mg dose is administered to a patient resulting in 3 mg remaining drug being discarded, then the 7 mg dose is billed using one UOS [unit of service] that represents 10 mg on a single line item. The single line item would be processed for payment of the total 10 mg of the drug administered and discarded. Billing another unit on a separate line item with the JW modifier for the discarded 3 mg of the drug is not permitted because it would result in an overpayment.”
3. When you bill for the entire amount in a vial — even if there is some drug left in the vial. Any drug here is designated as “overfill” — the manufacturer put it there to ensure you get the proper amount drawn up. Overfill is not wastage and cannot billed – of course, nor can it be used on any other patient. (Violations of this point have caused some providers and practices to get into big legal trouble.) Example of drugs we encounter that have “overfill” are drugs like Lucentis (ranibizumab, Genentech) and Eylea (aflibercept, Regeneron).

Bill for discard

Be sure to properly document discard of any unused billable drugs in every case. When there is actual wastage as defined by the payer as separately billable, do not forget to code appropriately and use modifier JW. Failure to do so may cause payers, or their designees, to ask to be repaid — even years afterwards.

Lastly, please stay safe. And, as always, “good coding to you.” OP

REFERENCES:

1. Centers for Medicare & Medicaid Services (CMS). JW Modifier: Drug/Biological Amount Discarded/Not Administered To Any Patient Frequently Asked Questions. 08/26/2016. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/JW-Modifier-FAQs.pdf . Accessed March 15, 2021.
2. CMS. Medicare Claims Processing Manual. Chapter 17, Section 40. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c17.pdf . Accessed March 15, 2021.