07/09/2023
New Modifier JZ- Effective January 1, 2023
Effective January 1, 2017, CMS required that providers use the modifier JW (drug amount discarded/not administered to any patient) to report discarded amounts of single-dose container drugs to obtain payment for the quantity discarded. When a provider administers a prescription from a single-dose container to a Medicare beneficiary, CMS provides payment for the administered and discarded amounts.
The discarded amount is any amount that is not part of the prescribed dose and is not intended to have a therapeutic effect on the patient. Typically, the labeled amount on the drug container minus the dosage administered equals the discarded amount.
Because CMS observed low compliance with JW modifier usage in the past and because the discarded drug refund amounts rely on this data, CMS has established a separate modifier, JZ (zero drug amount discarded/not administered to any patient), to be reported on claims for single-dose packaged drugs to attest when there are no discarded amounts. The JZ modifier is effective January 1, 2023, but isn’t required on claims until July 1, 2023. Claims with drugs from single-dose containers without the JZ or JW modifier after July 1 may be subject to provider audits. Claims that do not report the modifiers as appropriate on or after October 1, 2023, may be returned as unable to be processed.
Applicable Settings for the JW and JZ Modifiers
CMS requires the JW and JZ modifiers for providers and suppliers who buy and bill separately payable drugs under Medicare Part B. This commonly occurs in physician’s offices, outpatient settings, and critical access hospitals for beneficiaries who receive drugs incident to physicians’ services. This requirement does not extend to rural health clinics, federally qualified health centers, or hospital inpatient admissions that providers bill under the Inpatient Prospective Payment System.
Appropriate Use of Modifier JW
When a provider administers a single-dose container, and there are discarded amounts, the provider must file a claim with two lines for the drug. Both line items will be processed for payment:
One claim line must include the billing and payment code (such as a Healthcare Common Procedure Coding System code (HCPCS)) with no modifier and the number of units administered in the unit field.
The second claim line must include the same billing and payment code as the previous one. However, providers must attach modifier JW and include the number of units discarded in the unit field.
Appropriate Use of Modifier JZ
When a provider administers a single-dose container drug, and there are no discarded amounts, the provider must file a claim with one line for the drug.
The claim line must include the billing and payment code (such as an HCPCS code), the JZ modifier, and the number of units administered in the units’ field.
New Billing and Coding Processes Around Discarded Drug Amounts
CMS has no specific requirements regarding the method, format, or where the discarded amount of the drug is documented within the EHR. However, CMS expects providers to maintain accurate medical records regarding drug waste for every beneficiary.
Facilities may need to introduce new processes so that the information regarding drug waste flows efficiently from clinicians to the coding and billing staff. Some EHRs allow the clinician to input the dosage into an order set, then complete and document an auto calculation of the waste on the order set.
CMS will accept an automatic calculation of discarded amounts if the discarded amount is accurately documented. Some coding or billing systems may auto-populate drug codes with appropriate modifiers based on information within the EHR.
For example, a facility’s EHR may not allow for this type of automation and can’t be customized to auto-calculate waste and auto-populate the waste modifiers. In this case, organizations need to consider the following factors:
Who will document this information, and when will they document it during the patient’s visit?
How will they document it? Will the provider manually calculate the waste every time, or can they build standardization into the record when the waste for certain types of drugs is consistent for every patient?
Where in the record will providers document the waste? The documentation needs to be easily accessible to whoever is coding the record.
The Bottom Line: Be Consistent
Consistency is critical to a successful process and reducing errors and delays in billing and coding.
For more detailed information from CMS regarding discarded drugs and biologicals and modifiers JW and JZ, see these recently published frequently asked questions: Discarded Drugs and Biologicals – JW Modifier and JZ Modifier Policy.
