Medicare Reimburses for Discarded/Wasted Drugs

January 5th, 2018 - Aimee Wilcox, CPMA, CCS-P, CST, MA, MT
Categories:   Medicare   HCPCS Coding   Drugs|Pharmaceuticals|FDA  
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For years providers have lost money by discarding expensive drugs and biologicals for patient’s whose dosing is sometimes significantly less than the smallest vial of medication that can be purchased for a single dose vial or single dose unit. Because of this some providers and organizations have tried to store and use the remaining amounts for additional doses to the same patient and even for others, thinking they are using sterile needles so it should be fine. Unfortunately, because these single dose vials and units don’t have an antimicrobial preservative in them, microbes quickly grow within the vial, putting anyone at risk who may receive another dose. Sometimes there are limited quantities of drugs causing huge price increases, creating a desire to preserve what little drug remains in one of these single dose vials, but nevertheless, the risk of infection and even death is significant if a patient is exposed to these dangerous microbes. 

To help alleviate the concern for the significant loss of money by discarding these expensive drugs, on January 1, 2017, Medicare implemented a new policy that will pay for discarded drugs from single dose or single unit drugs like these. The Medicare Claims Processing Manual, Chapter 17, Section 40, states, 

       “When a physician, hospital or other provider or supplier must discard the remainder of a

        single use vial or other single use package after administering a dose/quantity of the drug

        or biological to a Medicare patient, the program provides payment for the amount of drug

        or biological discarded as well as the dose administered, up to the amount of the drug or

        biological as indicated on the vial or package label.“

What do providers have to do to get paid for the discarded drugs? 

1.  The patient must be administered the drug in an approved, Part B setting such as: 

  • Physician’s office 
  • Hospital Outpatient Setting
  • Critical Access Hospitals (CAHs)
  • Pharmacies
  • *Rural Health Clinic (RHC)
  • *Federally Qualified Health Center (FQHC)

           *influenza, pneumococcal, and Hepatitis B vaccines only

Locations not authorized to report modifier JW include: 

  • Hospital inpatient admissions that bill under the Inpatient Prospective Payment System
  • RHCs and FQHCs for drugs other than those listed above with the asterisk (*)
  • Part B drug Competitive Acquisition Program (CAP)

2.  The drug must be a separately payable Part B drug found on the FDA-approved list, which can be found at 

3.  Only single dose/unit drugs are eligible for payment with documentation of the wasted quantity are  eligible. SINGLE in this instance means the drug is purchased for a SINGLE procedure or service, for a SINGLE patient, and used just once for that patient only.  If, after the injection is administered, there is still some drug remaining in the vial, the quantity should be calculated, documented in the medical record, and discarded. It cannot be used again for another procedure or injection, even on the same patient; this is simply a safety issue. Because multi-use vials contain an antimicrobial preservative in them, they are safe for multiple uses and if drugs are wasted from those vials, they are NOT eligible for reimbursement using the JW modifier.

4.  The medical record should contain documentation of the injection (name of drug, strength, quantity, injection site, and who administered it) and the amount discarded to support the charges. 

5.  Report the service codes as you normally would; but report the discarded amount on a separate line using the same HCPCS code but with modifier JW to identify the quantity and charge as the discarded portion.

Example:    The patient was administered an injection of Ketorolac tromethamine 60mg from a single dose vial of 2ml Ketorolac tromethamine 60mg/ml. The remaining 60mg or 1 ml of the drug was wasted. 

The vial label and documentation reveals a 2ml single dose vial of Ketorolac tromethamine 60mg/ml. This means the vial contains 120mg of the drug but the provider only used half of it for this patient. The number one audit finding for overpaid or underpaid drug coding is the number of units being reported. Because code J1885 is for 15mg of the drug, you must report four (4) units to equal the 60mg (15 x 4 = 60) administered. 

Code Description  

96372          Therapeutic injection

J1885           Injection, ketorolac tromethamine, per 15 mg     (4 units)

J1885  JW     Injection, ketorolac tromethamine, per 15 mg     (4 units)


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