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Hospital Alert - Medicare Update Mandates the Use of Modifier JW for Billing Discarded Drug Waste

Discarded pharmaceuticals and the high cost of drugs continue to receive attention in the news, as well as from the Centers for Medicare and Medicaid Services (CMS). In response to these concerns, CMS recently issued a mandate updating the use by hospitals of the JW modifier to document discarded drugs or biologicals in patient’s medical records.

On April 29, 2016, CMS issued Transmittal 3508 requiring that all Medicare Administrative Contractors require providers to submit their claims for discarded drugs or biologicals not administered to the patient using the JW modifier. Although CMS initially issued guidance in its Transmittal 1248 on May 25, 2007 on the use of the Modifier JW, Drug Amount Discarded/Not Administered to Any Patient; the Medicare Administrator Contractors (MACs) had not required its use. Now, effective July 1, 2016, providers MUST include the Modifer JW on all applicable claims to their MAC.

Providers need to be careful when assigning HCPCS codes to include the name of the drug or biological being administered and properly determine the conversion factor to report the correct units of service on the claim. The provider will need to properly document the patient’s medical record to reflect that the final dose given to the patient is the same number of HCPCS code units reported on the claim.

As more attention is given to the high cost of drugs, providers can expect the billing of such drugs will receive continued attention. A few points to watch include being careful that the discarded waste is billed only for a drug from a single dose vial (SDV), as billing for waste from a multi-dose vial is not allowed. Second, when billing for discarded waste, be sure the patient’s medical record includes proper documentation to demonstrate the billed unit of service for both the administered dose as well as the discarded waste is included.

With the enforcement date of July 1, 2016 rapidly approaching, providers need to take care to ensure that their billing practices reflect these new requirements. If you have any questions, we can help.

By Denise Bloch

Denise Bloch

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