Waste Not, Want Not: Billing Unused Drug Supplies

Physicians sometimes must discard an unused portion of a drug. If the physician (rather than the patient and/or facility) supplies the drug, Medicare may allow compensation for this “wasted” portion.

As instructed by the National Medicare guidelines for reporting drug waste found in the Claims Processing Manual, chapter 17, § 40.0, drug waste is reported in addition to the drug administered. Using the appropriate HCPCS Level II supply code, list the drug administered with the correct number of units in box 24D of the CMS-1500 claim form. You should enter the number of wasted units as a second line item. Provider documentation must verify the exact dosage of the drug injected, and the exact amount and reason for any waste.

Medicare contractors generally require that you append modifier JW Drug or biological amount discarded/not administered to any patient to identify an unused drug from single-use vials or single-use packages that are appropriately discarded.

For example, from a single-use vial that is labeled to contain 100 units, 95 units are administered to the patient and five units are discarded. The-95 unit dose is billed on one line, and the five discarded units are billed on another line with modifier JW. Both line items would be processed for payment.

You should not apply modifier JW when the actual dose of the drug or biological administered is less than the billing unit. “For example,” the Claims Processing Manual advises, “one billing unit for a drug is equal to 10 mg of the drug in a single use vial. A 7 mg dose is administered to a patient while 3 mg of the remaining drug is discarded. The 7 mg dose is billed using one billing unit that represents 10 mg on a single line item. The single line item of 1 unit would be processed for payment of the total 10 mg of drug administered and discarded. Billing another unit on a separate line item with the JW modifier for the discarded 3 mg of drug is not permitted because it would result in overpayment. When the billing unit is equal to or greater than the total actual dose that was administered and the amount discarded, the use of the JW modifier is not permitted.”

Note that Medicare will reimburse only for drugs supplied in “single-use vials,” and CMS officially encourages “physicians, hospitals and other providers to schedule patients in such a way that they can use drugs or biologicals most efficiently, in a clinically appropriate manner.”

Caution: Unique billing rules apply when reporting discarded erythropoietin stimulating agents for home dialysis. See the Medicare Claims Processing Manual, chapter 17, § 40.1 for more details.

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6 Responses to “Waste Not, Want Not: Billing Unused Drug Supplies”

  1. Audrey says:

    (Confused) So, when do you use the -JW exactly? The two examples basically say the same thing to me. In Ex#1, the single-use vial has 100 units so it stands to reason that its ‘one billing unit’ is 100, and a portion less than that is administered so you Would Not use the modifier. And that is the same example as Ex#2. “You should not apply modifier JW when the actual dose… administered is less than the billing unit.” Is there a different example you can give to help explain when to use -JW?

    I have a doctor that ordered 40mg of Depo Medrol, we only stock 80mg single use vials. In this case, since the actual dose administered is less than the billing unit (J1040 Depo Medrol 80mg) I Would Not apply the modifier on a charge for 40mg of wasted medicine, right?

    I can’t think of an example that does not fall into the Ex#2 category.

    Any Idea’s?
    Thanks,
    Audrey

  2. Sarah says:

    In this case, your practice needs to price out the drug in smaller mg/mL so you increase the units billed and can account for the unused portion. It is easier to just price the 80mg as a whole (we do this and I’m not sure why when I know we have physicians who use half) and do 1 unit. You may want to break it down by ever 5mg/10mg for pricing units to do the JW for the unused portion(s). Hope this helps.

  3. Sara says:

    What about cases in which the patient fails to show for their appointment forcing the entire amount to be discarded? Are there any options for reimbursement since nothing would have been administered?

  4. Angele says:

    Since we have to start using the JW modifier on July 1,2016 just want to make sure I am understanding this correctly. If you bill Velcade (billing unit is 0.1mg) we give the pt 2.5mg and waste 1mg . We would not report a separate line with a JW modifier and the waste. But would we still put the waste information on line 19, or just bill for the total amount of 3.5mg of velcade?

  5. debbie says:

    Do I break the medication charge up in two lines? One for being used and one for waste?

  6. Wanda Patterson says:

    Angele: If Velcade has a billing unit of 0.1mg and you are discarding 1mg then you have 10 billing units to charge for waste. (1mg)
    You would use a 2nd line with JW as the modifier. If you are not charging for this waste you are losing substantial reimbursement.

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