Key Facts on Billing Drug Wastage

In 2017, the Centers for Medicare & Medicaid Services (CMS) released claims-processing guidance clarifying the use of the JW modifier and how to bill Medicare for discarded drugs and biologics. This billing guideline is still in effect for all providers. The intent of the wasted/discarded drugs and biologics coding policy is to minimize waste and/or abuse.

When a physician, other provider, hospital or supplier must discard the remainder of a single-dose vial (SDV) or other single-use package after administering a dose/quantity of the drug or biologic agent to a  patient, Medicare will reimburse for the discarded amount, as well as the dose administered, up to the amount indicated on the vial or package label. Per Medicare guidelines the amount administered must be reported on one line and the amount of drug not administered (i.e., wasted) on a separate line with the modifier JW. The JW must be appended to the associated Healthcare Common Procedure Coding System (HCPCS) code.

The JW modifier is applicable only to the amount of the drug discarded or wasted, and not to the amount administered. Further, the amount wasted and identified by the JW modifier must be at least equal to one billing unit. For example, if the HCPCS code is reportable in 10 mg increments and 7 mg of a 10 mg SDV is administered, report the entire billing unit without a separate line for the amount wasted. If a HCPCS code is reportable in 10 mg increments and 70 mg from a 100 mg SDV is administered, the provider may report seven bill units as administered, and on a separate line report three units with the JW modifier appended to the HCPCS code to indicate the drug amount discarded.

To avoid any overpayment for drugs billed, always round up the amount administered to the next billing unit and round down the amount of drug discarded. For example, if an HCPCS code is reportable in 10 mg increments and the provider administers 77 mg from a 100 mg SDV, report eight units as administered and, on a separate line, report two units with the JW modifier appended to the HCPCS code to indicate the amount discarded.

As always, Medicare expects the administration of drugs to be scheduled and performed in an efficient manner, minimizing the amount of drug wastage.

The JW modifier is not permitted to identify discarded amounts from a multi-dose vial (MDV).

Key Billing Guidelines

• Ensure drug amounts administered to patients are accurately reported in terms of the dosage specified in the long descriptor for the applicable HCPCS codes. The short descriptors are limited to 28 characters, so they do not always capture the complete drug description.
• When submitting Medicare claims, units of service should be reported in multiples of the dosage included in the long HCPCS code descriptor. If the amount given is not a multiple of the number provided in the HCPCS code description, the provider should round up to the nearest whole multiple of the described dosage.
• If the provider must discard the remainder of a single-use vial or other package after administering the prescribed dosage of any given drug, Medicare may cover the amount of the drug discarded along with the amount administered. The following elements must be followed for the discarded amount to be covered. 
  1. The vial must be a single-use vial. Multi-use vials are not eligible for payment of any discarded drug amounts.
  2. The units billed should, where possible, correspond with the smallest dose (or vial) available for purchase from the manufacturer(s) that could provide the appropriate dose for the patient, while minimizing wastage.
  3. Any amount of drug billed as wastage from a single-dose vial must be discarded and may not be used for another patient, regardless of whether or not that other patient has Medicare.
• Providers should clearly document in the patient’s medical record the actual dose administered in addition to the exact amount wasted and the total amount the vial is labeled to contain. Detailed documentation will help practices justify billing of wasted drug in the event of a medical review.
• Medicare requires discarded drugs be reported with the JW modifier on a separate line. The total number of discarded units reported should not include amounts of the drug also included on the administered line due to rounding.
• Verify the amount of drug administered to the patient, then convert that amount to the proper units for billing.

To submit a waste-required claim, providers must submit two complete claim lines.

1. Claim line #1 should include: 

• HCPCS code for drug given;
• No modifier;
• Number of units given to the patient; and
• Calculated submitted price for ONLY the amount of drug given.

2. Claim line #2 should include:

• HCPCS code for drug wasted;
• JW modifier to indicate waste;
• Number of units wasted; and
• Calculated submitted price for ONLY the amount of drug wasted.

Billing Examples

Example #1

Rituximab is available in single-use vials of 100 mg/10 mL and 500 mg/50 mL. The CPT/HCPCS code and description for rituximab is J9312, rituximab 10mg. If 750 mg of rituximab is administered, it is appropriate to bill for 75 units J9312 because the CPT/HCPCS code J9312 defines the unit for rituximab as 10mg. If 800 mg total are utilized, but only 750 mg are administered, then 50 mg are wasted and documented in the medical record. Because the administered amount requires billing 75 units of J9312, 50 mg of wastage is billed on a separate service line as five units of J9312, along with the JW modifier, that is not utilized.

Example #2

J1745 is the CPT/HCPCS code for infliximab 10 mg, but the drug is sold as 100 mg of lyophilized infliximab in a 20 ml vial. If the patient received 360 mg of infliximab, the correct way to bill this is J1745 x 36 (36 x 10 = 360 mg); four units were wasted, so 40 mg would have to be documented as drug wastage and coded with the JW modifier to indicate drug wastage.

Additional Reminders

Providers are responsible for submission of accurate documentation of services performed and are expected to submit claims for services rendered using valid CPT/HCPCS code combinations. Documentation is expected to be maintained in the patient’s medical record and be made available to payers upon request. The medical record should include the name of the drug, dosage, route of administration and time and date given. When a portion of the drug is discarded, the medical record must clearly document the amount administered and the amount wasted.

Keep in mind, although the JW modifier was created by the CMS, its use is not limited to CMS members or plans. Practices will need to verify with payers their policy and guidelines for drug wastage because every reimbursement type is determined by the patient’s plan and covered services.

For questions on drug wastage or additional information on coding and documentation guidelines, contact the ACR practice management department at [email protected]. For additional information on drug wastage guidelines, refer to CMS Medicare Claims Processing Manual, Chapter 17, Drugs and Biologicals.

Table: Billing Drug Wastage Do’s & Don’ts