CMS Requires Modifier -JW Starting July 1
by Valerie A. Rinkle, MPA
On April 29, CMS released MLN Matters Article MM9603 and change request (CR) Transmittal R3508CP regarding use of JW modifier for drug wastage. The transmittal succinctly states:
Effective July 1, claims for discarded drug or biological amounts not administered to any patient, shall be submitted using the JW modifier. Also, effective July 1, providers must document the discarded drugs or biologicals in patient's medical record.
This CR updates section 40 - Discarded Drugs and Biologicals of Chapter 17 of the Medicare Claims Processing Manual 100-04. CMS says the change is being made to more effectively identify and monitor billing and payment for discarded drugs and biologicals. Therefore, CMS is revising its claims processing policy to require the uniform use of the JW modifier for all claims with discarded Part B drugs and biologicals. It is hard not to wonder whether this change is, in part, a response by CMS to a study published earlier this year by the Memorial Sloan Kettering Cancer Center about drug wastage. However, that study focused much more on manufacturer practices that lead to wastage than provider practices.
Previously, claims reporting requirements and modifier JW instructions were issued with CR 6711 on April 30, 2010, where the reporting of modifier JW was optional and left to MAC discretion. Modifier JW specifies the portion of a single dose vial (SDV) or single use package that was not administered to the patient. Subsequently, CMS issued a few follow-up transmittals that required JW reporting in certain circumstances, such as with ESRD providers. However, any remaining contractor discretion is now being removed by CMS in the new transmittal. This means that all providers, suppliers, and physicians billing for Part B administered drugs must follow documentation and billing requirements regarding drug wastage.
Instructions regarding drug wastage have been in the manual since before 2003. These instructions have encouraged physicians, hospitals, and other providers of Part B drugs to schedule patients in such a way that they can use drugs or biologicals in the most efficient and clinically appropriate manner. This practice is to avoid drug wastage, but if a Part B drug provider had to discard the remainder of a single use vial or other single use package after administering a dose to a patient, CMS allowed payment for the amount of drug or biological discarded along with the amount administered, up to the amount of the drug or biological as indicated on the vial or package label. Note that these instructions only apply to single-dose vials, not to multi-dose vials where the actual dosage administered must be billed per the HCPCS definition for the drug. No billing of wastage is allowed for multi-dose vial drugs. Also, the instructions do not apply to drugs or biologicals under the Competitive Acquisition Program (CAP).
While the new requirements can be stated succinctly, the operational issues to ensure compliance are anything but straightforward. It is critical when following this new requirement that the amount of each drug purchased from the manufacturer needs to be in the smallest package size available or closest to the dosage amount. Availability of package sizes and the dosage definitions for the HCPCS codes to correctly bill the drugs are two factors that make this new requirement challenging to implement. Remember, a manufacturer may sell and distribute a smaller vial, but on the particular day when a dose is being administered, the provider may not have that smallest vial available. For that particular day, the only amount that can be billed appropriately is the amount administered. In this case, the wastage is a cost to the facility and would not qualify for payment. This scenario could impact pharmacy supply chain ordering and stocking practices for certain drugs.
To view the complete article that appeared on Medicare Compliance Watch, click here.