Some of the injectable drugs used in a retina practice, such as Eylea (Regeneron) and Lucentis (Genentech), contain a significant volume of overfill; creative offices occasionally inquire about using the overfill and/or billing it to a third-party payer. Let’s take a look at the issues involved.

WHAT JW HAS TO SAY

Modifier JW is defined in CPT as “Drug amount discarded/not administered to any patient.” Over the years, some Medicare contractors required its use and others did not.

In June 2016, CMS published Transmittal 3538 on the use of modifier JW, and created a lot of confusion. The transmittal states, “Effective January 1, 2017, when processing claims for Part B drugs and biologicals … the use of the JW modifier to identify unused drugs or biologicals that are appropriately discarded is required.” The transmittal further requires providers to document any discarded drug in the chart by stating, “Also, effective January 1, 2017, providers are required to document the discarded drug or biological in the patient’s medical record.”¹

Since the release of the transmittal, we are receiving questions such as, “Do I have to report the discarded overfill on a claim?” and “What documentation is required in the medical record?”

The transmittal failed to provide clarity regarding reporting for discarded drug related to manufacture overfill, vs discarded drug that was included in the FDA-labeled volume dosage. On Aug. 26, 2016, CMS released an FAQ discussing the JW modifier and Transmittal 3538. They clarified the confusion raised in the transmittal by stating, “The modifier is not required if no discarded drug is being billed to any payer.” The FAQ further stated, “The JW modifier must not be used to report overfill wastage.”²

ON WASTED AND/OR DISCARDED DRUGS

The Centers for Medicare & Medicaid Services (CMS) provides guidance regarding discarded drugs and biologicals. The Medicare Claims Processing Manual (MCPM) Chapter 17 §40, Discarded Drugs and Biologicals, states:

“The CMS encourages physicians, hospitals and other providers and suppliers to care for and administer to patients in such a way that they can use drugs or biologicals most efficiently, in a clinically appropriate manner.

When a physician, hospital or other provider or supplier must discard the remainder of a single use vial or other single use package after administering a dose/quantity of the drug or biological to a Medicare patient, the program provides payment for the amount of drug or biological discarded as well as the dose administered, up to the amount of the drug or biological as indicated on the vial or package label.”³

As you can see, CMS provides reimbursement for wasted/discarded drugs. However, MCPM stipulates reimbursement for the discarded drug up to the amount on the package label. The amount of drug enumerated on the package label does not include manufacturer overfill.

CMS reimburses drugs based on average sales price (ASP). The ASP is determined by using the amount of product listed on the FDA approved label. The final rule for the 2011 Medicare Physician Fee Schedule (MPFS) addresses the ASP calculation and intentional overfills in 42 Code of Federal Regulations (CFR) Chapter IV §414.904(a)(3):³

“(i) CMS calculates an average sales price payment limit based on the amount of product included in a vial or other container as reflected on the FDA approved label.

(ii) Additional product contained in the vial or other container does not represent a cost to providers and is not incorporated into the ASP payment limit.

(iii) No payment is made for amounts of product in excess of that reflected on the FDA-approved label.”

The comments section of 42 CFR addresses the issue of overfill billing directly by stating:

“We further understand that when a provider purchases a vial or container of product, the provider is purchasing an amount of drug defined by the product packaging or label. Any excess product (that is, overfill) is provided without charge to the provider. In accordance with our current policy as explained above, providers may not bill Medicare for overfill harvested from single use containers, including overfill amounts pooled from more than one container, because that overfill does not represent a cost to the provider.”⁴

Clearly, only the amount on the FDA-approved package label is reimbursed as part of the ASP.

DISPOSAL INSTRUCTIONS

We receive further questions about what — if anything — should be documented regarding the disposal of the overfill. The August 2016 FAQ also discusses the required documentation for discarded drugs. “CMS expects that providers and suppliers will maintain accurate (medical and/or dispensing) records for all beneficiaries as well as accurate purchasing and inventory records for all drugs that were purchased and billed to Medicare.”⁴ Single-dose vials for drugs, like Lucentis and Eylea used per FDA labeling, do not contain any billable discarded drug. However, in order to avoid questions from third-party payers, chart notes and operative reports should include notations regarding the discarded overfill. Most physicians delivering intravitreal injections have detailed templates describing the procedure, including the dosage administered. We recommend adding statements to the template or operative report about the discarded overfill. For example, the note could read, “Manufacturer overfill was appropriately discarded.”

Retina practices are experiencing significant confusion regarding the reporting and chart documentation of wasted and discarded drug(s). When the waste represents manufacturer overfill, document the disposal in the operative report, but do not add it to your claim using the JW modifier. RP

REFERENCES

1. Centers for Medicare and Medicaid Services. CMS Transmittal 3538. Change Request 9603. Published June 9, 2016. Effective January 1, 2017. https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R3538CP.pdf . Accessed March 16, 2017.
2. Centers for Medicare and Medicaid Services. JW modifier: drug/biological amount discarded/not administered to any patient frequently asked questions. August 26, 2016. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/JW-Modifier-FAQs.pdf . Accessed March 16, 2017.
3. US Government Printing Office. CY 2011 PFS final rule. Federal Register. 2010; 75(228) §414.904 average sales price as the basis for payment. https://www.gpo.gov/fdsys/pkg/FR-2010-11-29/pdf/2010-27969.pdf . Accessed March 16, 2017.
4. Centers for Medicare and Medicaid Services. CMS Medicare claims processing manual chapter 17§40 discarded drugs and biologicals. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c17.pdf . Accessed March 16, 2017.