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Basis of Billing modifiers JW and JZ

HCPCS Level II modifiers JW, Drug amount discarded/not administered to any patient, and JZ, Zero drug amount discarded/not administered to any patient, are required by the Centers for Medicare & Medicaid Services (CMS) to report drugs and biologicals that are separately payable under Medicare Part B. Modifier JW must be reported on a claim for the amount of a drug that is discarded and eligible for payment. Modifier JZ is reported to attest that no amount of drug was discarded.

Effective July 1, 2023, either modifier JW or JZ is required for all claims that bill for single-dose container drugs (single-dose vials or single-use packages) that are payable separately under Medicare Part B. This includes some pharmaceuticals and contrast agents used in medical imaging. Providers must document the amount of discarded drugs in Medicare beneficiaries’ medical records in case of an audit. Effective October 1, 2023, the policy states that any claims for drugs from single-dose containers that do not have either modifier JW or JZ appended will be returned as “unprocessable” until the claims are properly resubmitted. Note that drugs drawn from multidose containers are exempt from modifiers JW and JZ.

When to use JW and JZ modifier in medical billing

Modifiers JW and JZ are mostly reported on claims from a physician’s office and hospital outpatient settings for beneficiaries who receive drugs incident to a physician’s services. The requirement for modifiers JW and JZ also applies to critical access hospitals (CAHs) because drugs are separately payable in the CAH setting.

Effective January 1, 2017, all claims with unused drugs or biologicals from single-use vials and packages appropriately discarded must make use of the JW modifier. The JW modifier identifies “drug amount discarded/not administered to any patient.”

In addition to the use of the modifier, providers will be required to document the appropriate discarding of each single-use drug or biological in the patients’ medical record when submitting claims. Note that the JW modifier is not used on claims for drugs in the Competitive Acquisition Program (CAP). This change in policy is made to more effectively identify and monitor billing and payment for discarded drugs and biologicals. For more information on the CAP and the JW modifier.

The Medicare Claims Processing Manual, Chapter 17, Section 40 provides policy detailing the use of the JW modifier for discarded Part B drugs and biologicals. The current policy allows MACs the discretion to determine whether to require the JW modifier for any claims with discarded drugs or biologicals, and the specific details regarding how the discarded drug or biological information should be documented. Be aware that in order to more effectively identify and monitor billing and payment for discarded drugs and biologicals, CMS is revising this policy to require the uniform use of the JW modifier for all claims with discarded Part B drugs and biologicals.

The JW modifier, billed on a separate line, will provide payment for the amount of discarded drug or biological. 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 shall be billed on another line by using the JW modifier. Both line items would be processed for payment. Providers must record the discarded amounts of drugs and biologicals in the patient’s medical record. The JW modifier is only applied to the amount of drug or biological that is discarded.

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

Remember: Modifier JW only applies to separately payable drugs. An FAQ from CMS regarding the appropriate use of JW modifier can be found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/JW-Modifier-FAQs.pdf.

To align with the JW modifier policy, CMS has implemented the JZ modifier to be used for attesting that there were no discarded amounts from single-use-vials, single-use package for which the JW modifier would be required if there were discarded amounts. All outpatient drug claims for single-use vials or single-use packages payable under Medicare Part B will require the JW modifier or the JZ modifier be reported on the claim to identify administered and discarded drug amounts. The JZ modifier became effective January 1, 2023, with required reporting no later than July 1, 2023, in all outpatient settings. CMS claim edits for both JW and JZ modifier began October 1, 2023.

The JW and JZ modifier policy applies to all providers and suppliers who buy and bill separately payable drugs under Medicare Part B. The JW and JZ modifiers are mostly reported on claims from the physician’s office and hospital outpatient settings for beneficiaries who receive drugs incident to physicians’ services. The JW and JZ modifier requirements also apply to Critical Access Hospitals (CAHs), since drugs are separately payable in the CAH setting.

Reference:

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/JW-Modifier-FAQs.pdf