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Medicare Delays Mandate on Claims for Unused Part of Drug Doses

Kate Traynor

Kate TraynorNews Writer
News Center

Hospital clinics and outpatient departments that bill Medicare for unused portions of certain medications recently gained six additional months to meet newly mandated documentation and billing requirements.

In a June 10 communication, the Centers for Medicare and Medicaid Services (CMS) announced that Medicare administrative carriers (MACs) must delay until January 1, 2017, implementation of a policy requiring the use of the "JW" modifier on Part B claims for appropriately discarded leftovers from single-use vials or packages.

CMS introduced the JW modifier—a code that essentially enables itemized billing for the unused portion of certain medication vials—in 2007. But the agency allowed each MAC to decide whether to require the use of this billing mechanism or, instead, reimburse for wasted medication without separately itemizing it.

That changed this past April, when the agency announced that MACs, by July 1, 2016, must require that claims include a separate line with the JW modifier to account for billed waste medication. In addition, each claim must be supported by documentation in the patient's medical record that includes the amount of medication wasted.

Hospitals aren't required to bill for wasted medications, but those that don't are missing out on full reimbursement for eligible products.

The June 10 communication from CMS did not specify the reason for the implementation delay.

But Jillanne Schulte, ASHP's director of federal regulatory affairs, said ASHP, the American Hospital Association, and other stakeholders in June asked CMS for a delay of at least six months to allow time for extensive upgrades to electronic health record (EHR) systems and staff training.

Charles Downs, informatics pharmacist for Trivergent Health Alliance in Hagerstown, Maryland, said the reprieve is probably good news for many hospitals.

"This requires a good bit of setup. And EHRs are really the issue here, in that they weren't really designed to handle this well," Downs said of the coding requirements.

Downs said submitting a clean claim that includes the JW modifier requires that EHR and billing systems work smoothly together and that billing and pharmacy personnel are able to monitor whether claims are prepared accurately.

The problem, he said, is that the billing department "is a silo" in many hospitals.

"Trying to work with them and trying to see what's happening is not the easiest thing in the world. So that's what we're dealing with," he said.

CMS's policy applies to single-use vials or packages of medications reimbursed under Medicare Part B that are acquired outside of Medicare's competitive acquisition program. Billing for unused portions of multiple-dose vials is not permitted, and the JW modifier cannot be used when the administered medication dose is less than the billing unit for that medication.

Downs said Trivergent is in the process of implementing waste billing through the hospital's Meditech EHR system by Medical Information Technology, Inc., Westwood, Massachusetts.

He said one unresolved issue is that the system lacks an automatic way to account for the pooling of vial contents to prepare doses for multiple patients.

For example, he said, if three 100-mg vials of a medication are used to prepare doses of 80, 70, and 150 mg for three patients, there is no waste. But the EHR system automatically produces charges for 20 and 30 mg of waste from two of the vials.

"I can't change it," Downs said. "So I have no option other than to manually contact the [billing] people and say, 'Can you edit this claim?'"

The combining of medications from single-dose vials of sterile medications is permissible only when each new dose is prepared under the United States Pharmacopeial Convention's standards for sterile compounding, CMS confirmed in 2012. The failure to follow those requirements puts patients at risk for infection, according to CMS.

Ellen F. Secaras, corporate director of pharmacy systems integration for RWJBarnabas Health, based in West Orange, New Jersey, said allowing hospitals to bill for the unused portions of single-dose vials is "absolutely" a boost for infection-control efforts.

And it can make good sense financially. Robert Adamson, chief pharmacy officer for RWJBarnabas Health, said the organization captures $60,000–$70,000 in revenue each month by billing for wasted medications.

Secaras said some of the RWJBarnabas Health hospitals have used the JW modifier for nearly a decade, and plans are underway for all eligible hospitals in the system to do so.

"It started out as a manual process, where we would identify the amount wasted and bill it separately with the JW modifier" on the same claim, Secaras recalled. "We had to document it and make sure it got into the paper charts so it would be scanned into our medical record repository."

She said that system worked for years but was greatly improved after the hospitals adopted electronic prescribing and order-entry systems that allowed direct recording of drug waste information.

"Implementation is not really that huge of an issue as long as you understand the billing process," Secaras said.

She said that involves creating a separate order for unused medication that includes the amount wasted and all other required information, which is then incorporated into the medical record. At the same time, she said, the system creates a claim that includes the information required by CMS.

Secaras said the process still has manual elements and requires "extensive" regular monitoring and internal auditing to ensure that claims are coded correctly.

And although RWJBarnabas Health won't need to change its processes to comply with CMS's requirements for the billing of unused drug waste next year, Secaras said the implementation delay is still useful.

She said she plans to use the remaining time to verify that hospitals that are new to this process understand the requirements and follow any best practices identified by the organization.

[This news story appears in the Aug. 15, 2016, issue of AJHP.]

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