CMS delays widespread, mandatory adoption of Modifier JW for billing of drug wastage

Date: June 15, 2016

The Centers for Medicare & Medicaid Services (CMS) recently issued a Transmittal that mandated use of modifier JW on claims for “discarded drug or biological amount not administered to any patient”. The May 24, 2016, document was scheduled to go into effect on July 1, 2016.

This Transmittal (3530) was quickly rescinded and replaced by Transmittal 3538, which was issued on June 9, 2016. Transmittal 3538 notes the new implementation date will be January 1, 2017. You can link to the newest Transmittal here.

Formerly, MAC policies varied – not all required the use of modifier JW to record billing discarded drug or biological. The new policies in Transmittals 3530 and 3538 make this requirement universal across all MACs, and also added to the requirements. Both documents note that all discarded drugs or biologicals must be documented within the medical record (operative note) for that date of service. Many practices already do this, but if your procedure notes have not been complete in this regard it is clear that you should immediately adopt this practice. Transmittal 3538 notes the following:

Effective January 1, 2017, when processing claims for Part B drugs and biologicals (except those provided under CAP), the use of the JW modifier to identify unused drugs or biologicals that are appropriately discarded is required.

Also, effective January 1, 2017, providers are required to document the discarded drug or biological in the patient’s medical record. CMS is removing the contractors’ discretion to determine whether the JW modifier is required for claims with discarded drugs and biologicals.

The JW modifier is not used on claims for CAP drugs and biologicals.

What is not clear is whether an unused drug or biological should appear on claims in all situations with modifier JW — even if there is no reimbursement expected. Corcoran Consulting Group has asked for clarity related to the use of intravitreal drugs. We also asked whether other longstanding methods for billing related to drugs used for chemodenervation (e.g., Botox®) would remain as they are. We will promptly post our response if it provides clarity in either situation.

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