In 2017, CMS mandated the consistent use of modifier JW (drug amount discarded/not administered to any patient) for all Medicare Part B claims for separately payable drugs with discarded drug amounts from single-use containers or single-use packages to identify and more effectively monitor billing and payment for discarded amounts of drugs. Although CMS reported that Medicare paid nearly $720 million in 2020 for discarded amounts of drugs, the agency also reported that modifier JW has relatively low compliance rates, to date, thus resulting in incomplete discarded drug data. Therefore, CMS deemed a need for the additional modifier JZ and claim rejections. (Now, it makes sense!)

As part of the 2021 Infrastructure Investment and Jobs Act, manufacturers must pay a refund to Medicare for discarded amounts that exceed 10% of total allowed charges for the drug or biologic in a given calendar quarter. Discarded drug units data for Medicare Part B in 2021 are available here. CMS previously stated a preliminary report on estimated discarded drug amounts will be issued by December 31, 2023, for the first 2 quarters of this year. The first actionable report will be released in future rulemaking. 

CMS is utilizing modifiers JW/JZ on claims to determine the refund amounts that manufacturers who exceed the threshold are required to give back. Certain Medicare Administrative Contractors (MACs) have begun to audit claims from January 17, 2017, through June 30, 2023, that did not correctly use modifier JW. Interestingly, CMS has clarified in its frequently asked questions that both modifiers are also to be used on “not elsewhere classified” (NOC) codes (included but not limited to J3490, J3590, C9399, etc), as appropriate. 

Beginning October 1, 2023, MACs will return claims as unprocessable for drugs or biologics from single-dose containers that do not use these modifiers, as appropriate. To avoid revenue cycle disturbances, it is imperative that providers are aware of how to report these modifiers. There is no time like the present to get used to using these modifiers. 

Xcenda coding specialists are monitoring other payer policies regarding appropriate use of these modifiers; please contact Milda Kaitz or Dawn Monegato for coding and billing considerations.