What it Takes to Get Paid for Discarded Drugs

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  • October 30, 2013
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Medicare payers may require you to report discarded amounts of single-use drugs or biologicals as separate line items with modifier JW Drug or biological amount discarded/not administered to any patient appended. In every case, however, practitioners must document unused portions in the patient record. If a recent Office of Inspector (OIG) review is any indication, however, practitioners may need to be informed of this requirement.
According to the OIG report, which reviewed some 2010 Medicare Part B claims for Xolair (omalizumab) paid by NHIC, Corp.—the Medicare administrative contractor (MAC) for jurisdiction 14—practitioners are generally unaware of this documentation requirement. This may be due to the fact that nowhere in the Medicare Claims Processing Manual, under the section for discarded drugs and biologicals, does it say anything about documenting discarded drug amounts.
Regardless, Medicare pays for the entire single-use vial/package (up to the amount indicated on the vial or package label); therefore, MACs expect practitioners to document in the patient record the drug/biological product, date, time, and number of units that were administered and that were discarded.
Documentation is required—that much is clear—but what is the protocol for billing unused portions of a single-use drug/biological?
The Centers for Medicare & Medicaid Services (CMS) provides this example in the Medicare Claims Processing Manual, chapter 17, section 40:

“For example, a single use vial that is labeled to contain 100 units of a drug has 95 units administered to the patient and 5 units discarded. The 95 unit dose is billed on one line, while the discarded 5 units may be billed on another line by using the JW modifier. Both line items would be processed for payment.”

Discarded units “may be” billed on another line by using the JW modifier. That’s rather ambiguous. What would happen if you didn’t report discarded units on a separate line with modifier JW? The answer is: It depends on the MAC.
NHIC, Corp. for example, doesn’t require the use of modifier JW. “Providers who wish to voluntarily use the JW modifier to report wastage may do so on a separate line (both lines will be paid),” according to a Sept. 30 provider education article posted on the MAC’s website.
WPS Medicare doesn’t require providers to use modifier JW modifier either. This Part B MAC for jurisdiction 5 gives providers an option: “They can bill separately, identifying the discarded portion with the JW modifier or bill both the administered and discarded portions combined without the JW modifier.”
CGS Administrators, LLC, has a different stance. Effective Jan. 1, 2012, this A/B MAC for jurisdiction 15 requires providers seeking drug waste reimbursement to report the wasted portion of the drug on a separate claim line with modifier JW appended.
Clearly, to get a definitive answer for how you should submit claims for drug waste, you’ll need to speak to the payer directly.
As a rule, though, if you choose to use modifier JW, apply it only to the line item reporting the wasted amount of drug/biological. And do not use modifier JW at all if the actual dose of the drug/biological is less than the billing unit.

“For example,” CMS offers in Pub. 104, chapter 17, section 40, “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.”

Renee Dustman
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Renee Dustman, BS, AAPC MACRA Proficient, is an executive editor at AAPC. She holds a Bachelor of Science degree in Media Communications - Journalism. Renee has more than 20 years experience in print production and content management. Follow her on Twitter @dustman_aapc.

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