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New Modifier Required on all Single-Use Drugs

Christine Woolstenhulme, QMC QCC CMCS CPC CMRS

Attention providers and suppliers, there is a new modifier in town! Starting July 1, 2023, Modifier JZ - Zero Drug wasted will be required on all claims to attest there is no drug leftover, If applicable. Meaning there is zero drug amount discarded, and there was no leftover drug administered to any patient.  This article will cover when the new modifier is reported and when it is not reported, how to report it on a claim, and other important information you need to know.

There is another modifier we should be familiar with, the JW modifier; this modifier has been required on claims since January 01, 2017, if applicable.  The JW modifier is required to be reported on claims if there was a drug amount that was discarded when using a single-dose container.  In addition, using the JW modifier indicates the drug is eligible for payment under the discarded drug policy. Therefore, CMS provides payment for the administered dose and the discarded amount. Using the JW modifier qualifies for separate reimbursement to providers and suppliers. 

It will be required to have one of the modifiers, JZ or JW, on a claim for a single dose, never both. Documentation requires the records to clearly document the portion of the drug administered, wasted, and leftover in the medical record.

Reasoning for the new JZ modifier
According to CMS, "Because of observed low compliance with JW modifier use (leading to incomplete JW modifier data) and because the discarded drug refund amounts rely on this data, we established that a separate modifier, the JZ modifier, will be required on claims for single-dose container drugs to attest when there are no discarded amounts no later than July 1, 2023. "

When is the JW and JZ modifier not used?
If the drug is not payable in the setting, then the modifiers are not required. For example, Rural Health Clinic (RHC) and 
Federally Qualified Health Centers (FQHC) are paid under a different payment system using a packaged rate. If a drug is packaged, it is not separately reportable as it is included in the payment. If a drug is assigned the status indicator N1, it is a "Packaged service/item; no separate payment made."

The modifiers are not required when billing vaccines; these are excluded as vaccines are often billed by mass immunizers using roster billing, which is not set up to accommodate modifiers. 

The JW modifier is only used for the amount identified on the package, never if there is an overfilled drug.

Less than the billing unit should not be reported using these modifiers; if there is anything less than a full unit, the provider reports the full unit was administered using the JZ Modifier.  

When are the Modifiers used? 
The modifiers will apply to all separately payable drugs assigned a payment indicator of K2- Drugs and biologicals paid separately when provided integral to a surgical procedure on the ASC list; payment based on OPPS rate. With the exceptions listed above, all claims reporting single-dose container drugs, including Not Otherwise Classified (NOC) codes, must be reported and documented in the patient's records.  If a drug has a status indicator of "G- pass through biologicals" or K- Non-passthrough drugs and non-implantable biologicals, including therapeutic radiopharmaceuticals." 

How are these reported on a claim?
When reporting the drug used on a claim, you will report two line items.

First line item:
One line will show the HCPCS or payment code with no modifier showing the number of units administered. 

Second line item
On a second line report, the same HCPCS code or payment code using the appropriate modifier. 

  • using the JW modifier and the number of units not used in the units field or,
  • using the JZ modifier attesting there were no discarded or leftover amounts 

Important Note: Be sure to read the complete update; this article is informational only and does not include all circumstances. 

Start reporting the new modifier now.
You can start using the new modifier anytime after the effective date of January 01, 2023, and I suggest starting now to avoid problems later, such as audits.  

CMS is implementing the JZ modifier in phases:

Providers and suppliers may report the JZ modifier as early as January 1, 2023
The JZ modifier is required on applicable claims beginning July 1, 2023

Lets Review 

After January 1, 2017, claims are subject to review if the JW modifier is used incorrectly.
After July 1, 2023, claims not reporting the JW or JZ modifier are subject to audits. 
On or after October 1, 2023, claims may be returned as unable to process.

When JW and JZ are not used
Status indicator N1
Overfilled drugs
Less than a full unit

When to report JW and JZ modifiers
Payment indicator of K2
Not Otherwise Classified (NOC) codes
Status indicator of "G" passthrough drugs
Status indicator of "K" non-passthrough drugs

Reporting on a claim
Use two line items, one for the drug code with units used and one with the drug code, the modifier attached, and applicable units.

As mentioned above, this article is informational only, and it is important to review this information released by the Medicare program.