Tips for Compliance and Avoiding Government Investigations: Proper Disposal and Billing for Single-Use Drugs and Biological Waste and Guidelines for Managing Overfill
Continuing its aggressive efforts to combat fraud, waste and abuse in the health care system, the Federal government has focused on providers’ practices related to the disposing of and billing for single-use drugs and biological waste. Frier Levitt has noted a rise in government investigations in this area, begging the questions: “How are providers billing for waste?” and “How should providers be billing for waste?” It is crucial for medical providers to understand all waste-related requirements, including the new billing rules effective January 1, 2023 and July 1, 2023, to shield themselves and their practices from government action, particularly in this time of increased scrutiny. These rules are discussed in greater detail below.
The Centers for Medicaid and Medicare Services (“CMS”) require a provider to discard the remainder of a single-use vial or other single-use package after administering a quantity of the drug or biologic to a Medicare patient. Where all other billing conditions are satisfied (e.g., medical necessity), CMS will reimburse a provider for the dose administered as well as the discarded drug or biologic amount if the following additional requirements are met:
- The vial is a single-use vial (payment for wastage from multi-use vials is not permitted);
- The units billed, where possible, correspond with the smallest dose available for purchase from the manufacturer while minimizing any wastage; and
- Any amount of drug billed as wastage from a single-dose vial is discarded (waste from a single-dose or single-use container may not be used for another patient).
Notwithstanding the foregoing, CMS will only reimburse up to the amount of the drug or biologic as indicated on the vial or package label. Specifically, since January 1, 2011, CMS regulations have expressly prohibited billing for overfill (the amount of drug or biologic greater than the amount identified on the package or label) administered from single-use containers, including amounts pooled from more than one container, because the provider is not charged for and does not pay for any overfill.
Additionally, providers must document in the patient’s medical record the actual dose administered, the exact amount wasted, and the total amount that the vial contains as stated on its label. This kind of detailed documentation benefits providers as it supports their billing practices in cases of investigations or reviews.
Billing
As of January 1, 2023, CMS requires the use of “JW modifiers” to report and calculate refunds for discarded materials or drugs from single-use vials or packages. The JW modifier must be submitted on a separate line, such that a waste-required claim has two complete claim lines:
Claim line #1: HCPCS code for drug given; no modifier; number of units given; and calculated submitted price for ONLY the amount of drug given.
Claim line #2: HCPCS code for drug wasted; JW modifier to indicate waste (not overfill); number of units wasted; and calculated submitted price for ONLY the amount of drug wasted.
Moreover, effective July 1, 2023, CMS will require providers to use the “JZ modifier” to report that a claim is eligible for payment because there are no discarded amounts from single-dose containers. Thus, to submit claims for the administration of a non-discarded single-use drug or biologic, providers must submit one complete claim line stating:
Claim line #1 only: HCPCS code for drug given; JZ modifier to indicate no waste; number of units given to the patient; and calculate submitted price for the amount given.
How Frier Levitt Can Help
Frier Levitt helps clients avoid risky behavior that is subject to government scrutiny through the development of compliance programs and proposed conservative arrangements consistent with the complex web of healthcare laws. Our attorneys represent medical providers and medical practices in government investigations and whistleblower allegations, including allegations of improper handling of waste and double billing. Take proactive measures and contact Frier Levitt to speak with an experienced healthcare attorney.
