Reporting Drug Wastage with Modifier JW and NEW Modifier JZ

Modifiers are two-character codes that are added to to HCPCS Level I (CPT) or Level II codes to modify the code description to describe a service or procedure that is slightly different than the code description represents. When applied to a code, modifiers mean the code description has been changed from its original description..

For example, modifier 25 is added to Evaluation and Management (E/M) codes to report that the E/M service that would otherwise be bundled into the payment for the procedure performed on the same date actually should be separately reimbursed.

Modifiers TC and 26 are used to explain how some procedures can be divided into a technical component and a professional component for reimbursement. For example, hospitals own imaging machines and pay radiology technicians to perform imaging procedures. When the procedure is billed, the hospital reports the CPT code with modifier TC so the payer knows to only pay a percentage of the global fee for just the technical portion of the procedure. The remaining percentage of the global fee is paid for the professional component (modifier 26) when the radiologist or physician documents a professional interpretation of the imaging results. 

When both the technical component and the professional component are performed by the same physician, it is referred to as billing for the global service. Modifiers TC and 26 are not reported when the global service is reported, and the physician who performs the global service is paid at 100% of the fee schedule. 

HCPCS modifier JW - Drug amount discarded/not administered to any patient was first introduced in 2003, as many single use drugs come in sizes that do not perfectly match the dosage prescribed for each patient, resulting in wasted product and at times significant financial loss. Single-use or single-dose vials are labeled as such by manufacturers to indicate the absence of an antimicrobial preservative, which is present and protective in multi-use vials.  Single-dose vials should never be used more than once or for multiple patients, even if the top has been wiped down with alcohol and it has been refrigerated between uses. Lack of this antimicrobial preservative makes single-dose vials susceptible to contamination if used for more than one patient or multiple times for the same patient.

Medicare Administrative Contractors (MACs) were allowed to choose whether to require the JW modifier and could also issue jurisdiction-specific instructions for its use. However, not all MACs did so nor were all requiring all discarded drugs to be reported with modifier JW. This created a less-than-ideal reporting system for identifying the quantity of drugs wasted, impacting the ability for CMS to seek reimbursement from manufacturers for the wasted amounts. As such, in 2017, CMS issued a new policy requiring providers and suppliers to report the JW modifier on all claims that bill for drugs and biologicals separately payable under Medicare Part B with unused and discarded amounts from single-dose containers or single-use packages. The amounts discarded must also be documented in the Medicare beneficiary’s medical records. This allows Medicare to accurately calculate wasted products by drug and number of units to support reimbursement to Medicare from the manufacturers for the wasted amount Medicare paid on provider claims.

Note:  The JW modifier is only reportable with the amount of the drug discarded or wasted, and not to the amount administered. 

While the changes made back in 2017 have helped significantly, there have still been some incorrect reporting and overpayments taking place. To improve reporting and encourage accurate coding, Medicare introduced a new modifier with an effective date of January 1, 2023 – JZ - Zero drug amount discarded/not administered to any patient. This modifier description is fairly self-explanatory, in that when a provider performs a procedure in which the entire amount of the drug is administered, with no wasted amount, the provider must report modifier JZ with the JXXXX supply code to ensure proper reimbursement. Providers who fail to add modifier JZ will have claims returned, unpaid, until corrected claims are submitted with the proper modifier. 

Examples: The following two examples show proper application of these modifiers: 

1. The provider documented in the medical record an intramuscular injection of triamcinolone acetonide (Kenalog) 40 mg into the left elbow with no wasted drug. As the single-dose vial contained 40 mg/mL in a 1 mL vial, the coding would be as follows:
   • 96372 x 1 unit (injection administration code)
   • J3301-JZ x 4 units
2. The provider documented an intramuscular injection of triamcinolone acetonide (Kenalog) 20 mg into the left elbow with 20 mg wasted. As the single-dose vial contained 40 mg/mL in a 1 mL vial, the coding would be as follows: 
   • 96372 x 1 unit
   • J3301 x 2 units
   • J3301-JW x 2 units 

Note: Always add the amount administered and the amount wasted together to ensure the total units match up with what was actually reported. 

Common Denial Reasons

The following are some common reasons claims with modifier JW may be denied or a refund due to overpayment may be demanded: 

• Documentation includes what was administered but not the amount of the drug wasted.
• Coders reported the entire number of units on one line instead of breaking into two lines on the claim form, one with the amount administered and one with the amount wasted and modifier JW.
• The amount administered and amount wasted, when added together do not equal the total single-dose vial quantity.
• The JXXXX code description identifies the strength or quantity of the drug per unit but the coder misinterprets this and reports it incorrectly, resulting in either overpayment or underpayment.
• The claim includes a JXXXX HCPCS code and documentation to support the entire amount of the drug was used, but modifier JZ was not reported with the HCPCS code.

As always, take the time to review the coding and billing policies for the beneficiary’s payer to ensure correct units are being reported. Always remember that when looking at prior dates of service, make sure you are auditing or reviewing records based on the guidelines and policies that were in effect on the date of the service being reviewed. 

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