JZ Modifier Requirement Becomes Effective July 1: Who needs to comply and what drugs are impacted?

By Baker Newman Noyes June 26, 2023

Effective July 1, The Centers for Medicare & Medicaid Services (CMS) will now require Modifier JZ appended to HCPCS that are single-use vials that have ZERO waste.

CMS began allowing the use of the modifier on January 1, 2023. On October 2, 2023, claim edits will be implemented and returned to the provider when the JW or JZ modifiers are not used correctly.

The new modifier JZ will show Medicare if providers are using pharmaceuticals efficiently by identifying the amount of unused and discarded drugs from single-dose containers or single-use packages. One way to remember the correct use of these drugs is waste vs zero-waste. Modifier JW is used to report wasted drug vs modifier JZ is used to report when there is zero waste.

JW= Waste (Drug amount discarded/not administered to any patient)

JZ= Zero Waste (Zero drug amount discarded/not administered to any patient)

 

A recently published CMS FAQ indicated that this new modifier was introduced due to the “observed low compliance with JW modifier use … JZ modifier, will be required on claims for single-dose container drugs to attest when there are no discarded amounts.”

Critical Access Hospitals (CAHs) are required to comply with this new billing requirement.

CMS clarified that modifiers JW and JZ do not apply for drugs that are not separately payable. CMS defines drugs as not separately payable as those that are packaged Outpatient Prospective Payment System (OPPS) or drugs administered in a rural health clinic (RHC) or federally qualified health center (FQHC).

Specifically, Question 19 in the FAQ states that both modifiers JW and JZ apply to any drug that has an HCPCS with an OPPS status indicator “G” (Pass-Through Drugs and Biologicals) or “K” (NonPass-through Drugs and Nonimplantable Biological, Including Radiopharmaceuticals). If the drug is considered “packaged” and has an OPPS Status indicator “N” then modifier JW or JZ are not required to be reported.

For example:

Organizations need to make sure their formularies are set up correctly now to avoid potential denials or delay in payment. All pharmaceuticals with a status indicator of either G or K will need to be submitted as indicated in the example above and have a JZ or JW modifier on the claim.

References:

CMS JW Modifier FAQs

Billing and Coding: JW and JZ Modifier Billing Guidelines, Centers for Medicare & Medicaid Services, 2023

New JZ Claims Modifier for Certain Medicare Part B Drugs, Centers for Medicare & Medicaid Services, 2023