Visante 
Have you ever questioned…
“Is charging for waste worth the effort?”
“Am I required to charge for drug waste?”
“My organization states we have been charging for waste for over a decade, what is all the hoopla for now?”
Billing for the waste of drugs and biologicals has been embedded in the CMS manuals for many years. CMS has always encouraged providers to administer drugs in a manner that minimizes waste when clinically appropriate. For example, providers may consider scheduling patients in a way that allows multiple patient doses prepared from the same vial(s) reducing any waste. However, the direction on billing drug waste has been left murky.
In 2007 CMS revised their manual to include language surrounding discarded drugs and biologicals. Educational material and information directed by the Medicare Administrative Contractors (MAC) was unclear and contractors inconsistently mandated the use of the JW modifier (Drug amount discarded/Not administered to any patient). In 2016 CMS attempted to require the use of the JW modifier but rescinded the change requests several times pushing back the effective date. Finally, effective January 1, 2017, CMS implemented a change to Section 40 – Discarded Drugs and Biologicals of Chapter 17 of the Claims Processing Manual 100-04. The change requires the use of a JW modifier to identify unused portions of a single dose vial or package for Part B drugs and biologicals. Additionally, the unused drug or biologics must be properly discarded and documented in the patient’s medical record.
CMS has published an FAQ that provides more answers to specific questions. Listed below are a few key points to take into consideration.
- If the provider (hospital or supplier) seeks payment for the billed waste, the JW modifier is required for separately payable drugs or biologics. These are identified by the status indicator of G (Pass-Through Drugs and Biologicals) or K (Nonpass-Through Drugs and Biologicals). Status indicator N (items or services packaged into APC rates) drugs are not required to report the JW modifier.
- The unused drug or biologic must be reported on a separate line on the claim with a JW modifier and appropriately reflect the amount of drug waste in terms of billed units.
- CMS does not allow for fractional billed units; thus, when the wasted portion of the vial is less than 1 billed unit the waste should be left off the claim.
Example:
Patient X was administered cyclophosphamide 1450 mg dose with 50 mg of waste. The medical record documented the use of a 1,000 mg vial and a 500 mg vial to create the dose. This resulted in 50 mg of waste in the medical record.
Cyclophosphamide represents 100 mg per billing unit. The 50 mg of waste are less than the one billed unit; thus, cannot be reported on the claim. The dose of 1450 mg will be rounded up to 15 billed units on the claim and accounts for all the billing units in the vials. Billing for waste in the scenario would represent overbilling as the 50 mg would also round up to 1 billing unit totally 16.
Shoutouts!
“Is charging for waste worth the effort?”
YES! Organizations should work with their finance team or analyst to help determine the annual net revenue impact on your high cost drugs. Waste is inevitable and can lead to large amounts of revenue leakage for not charging.
“Am I required to charge for drug waste?”
Not necessarily. However, if you are seeking payment for the unused portion of a drug or biologic it is required that you identify the line appropriately with a JW modifier.
“My organization states we have been charging for waste for over a decade, what is all the hoopla for now?”
It is great if your organization has already developed a mechanism to apply the JW modifier; however, the regulations effective January 1, 2017 expanded the direction to all MACs to require the use of the JW modifier for unused portions of a single use vial or package for Part B drugs and biologicals AND documentation in the medical record must support the billed waste.
