Medicare has implemented a new modifier — JZ — to indicate that an injected drug had no wastage. What does this mean?

Q. What is the Medicare policy for discarded drugs?

A. When a provider discards remaining drug in a single-use container after administering a dose, Medicare provides payment for the discarded amount, as well as the dose administered, up to the amount designated in the single-use container.

The discarded amount is not part of the prescribed dose. It is the labeled amount on the container minus the prescribed amount of drug administered to the patient. For example, a single-use vial contains 10 units of drug and 8 units were administered, leaving 2 units that were discarded. Medicare pays for all 10 units.

Q. Why did CMS establish a discarded-drug policy?

A. To encourage practice efficiency, CMS asked physicians not to waste drugs unnecessarily. In ophthalmology, this initially applied to Botox (onabotulinumtoxinA, Allergan) vials that might be shared between patients. Any residual amount in the vial that was discarded was reimbursed when the claim identified it with the JW modifier.

The Infrastructure Investment and Jobs Act requires manufacturers to refund CMS for discarded drugs. Due to observed low compliance with JW modifier usage and incomplete JW modifier data, the JZ modifier is required on claims for single-dose drugs effective July 1, 2023, to attest when there are no discarded amounts.

Q. What modifiers apply to claims for drugs provided in single-use containers?

A. Two HCPCS modifiers exist: JW and JZ (https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/jw-modifier-faqs.pdf ).

• Modifier JW – Discarded drug not administered. Drug amount discarded/not administered to any patient. JW is required on a claim to report at least 1 unit of drug that is discarded and eligible for payment.
• Modifier JZ – Zero drug wasted. Zero drug amount discarded/not administered to any patient. Effective July 1, 2023, JZ should only be used for claims that bill for a single-dose drug container. Modifier JZ is always required where the JW modifier would be used if there were discarded amounts.

In other words, for most drugs, either JW or JZ will be used on claims.

Q. Would you provide some examples?

A. For JW – A provider obtains a single-dose container that is labeled to contain 100 units of a drug. She administers 95 units to the patient and 5 units are discarded. The 95-unit dose is billed on one line, while the discarded five units must be billed on another claim line with the JW modifier. Both line items would be processed for payment.

As for JZ – A provider obtains a single-dose vial that is labeled to contain 4 units of a drug. She draws up 4 units in a syringe and administers it to the patient, then discards the empty vial containing a damp residue as well as the syringe with a tiny amount of leftover fluid in the dead space. The 4-unit dose is billed on one line with the JZ modifier.

Q. When do modifiers JW and JZ not apply?

A. Modifiers JW and JZ do not apply:

• To drugs supplied in multiple-dose containers
• In Rural Health Clinics
• In Federally Qualified Health Centers
• In the Inpatient Prospective Payment System
• To drugs not separately payable in ASCs or HOPDs
• To vaccines

Q. What happens when a drug doesn’t have a specific code?

A. HCPCS codes J3490, J3590, J7999 and C9399 do not specifically identify a drug or units. Nevertheless, CMS requires JW and JZ modifiers for drugs from single-use containers. For example, a single-dose syringe of compounded Avastin (J7999) contains 1 unit; all of it was administered to the patient, so there is no discarded drug; use modifier JZ.

Q. When the administered dose is less than 1 unit contained in a vial, how should it be billed?

A. Bill for entire vial using one unit on the claim for the drug together with the JZ modifier. It is not possible to bill for fractional billing units with the JW modifier (www.cms.gov/files/document/mm13056-new-jz-claims-modifier-certain-medicare-part-b-drugs.pdf ).

Q. How is overfill handled?

A. Overfill is any amount of drug greater than the amount identified on the package or label. CMS regulations expressly prohibit billing for overfill. The JW modifier does not apply to overfill.

Q. Does discarded medication need to be documented in the medical record?

A. Absolutely. The procedure note should include all pertinent information about the drug: name, strength, NDC number, identification such as lot number if available, dose administered and amount discarded. Any discarded amount less than 1 unit cannot be reported on a claim. In that case, your note would say, “any residual medication less than one unit was discarded.”

Q. Will other payers require modifiers JW and JZ?

A. Other payers, including Medicare Advantage plans, are not required to follow Medicare guidelines in this area. We think most will accept these modifiers, even if they are not required.

Unless you receive other instructions, or experience shows that claims are not processing correctly, it is probably a practical approach to use the modifiers on all claims. OM

Suzanne L. Corcoran, COE, is vice president of Corcoran Consulting Group. She can be reached at (800) 399-6565 or www.corcoranccg.com .