Leading the Business of Healthcare
RCM Advisor

Quarter 1 2024 - Volume 29, ISSUE 1

The Cat Is On the Roof

Coding Corner

By Melody W. Mulaik, MSHS, CRA, RCC, RCC-IR, CPC, COC, FAHRA


We all deal with change differently. The speed with which we accept and embrace change varies significantly from person to person. Sometimes we become more accepting as we gain experience (aka, getting older), while other times we find that is not the case. Things are fine the way they are, so why do we need to keep making changes??

One of my favorite all-time jokes relates to change management. A man goes on vacation for a few weeks and leaves his cat with his brother. After a few days, he calls his brother and asks how his cat is doing. The brother tells him, “I’m sorry, but your cat died.”  The first man gets angry and says, “How could you just break it to me like that? You know I’m not coming home for another week; you should have said something like, ‘The cat is on the roof and we can’t get it down,’ then the next day I’d call back and you’d say, ‘We got the cat down, but the vet says she’s in bad shape, she may not make it,’ and then the third day I’d call and THEN you’d tell me the cat had died. That way it wouldn’t come as such a shock, and I’d have been able to build myself up to deal with it!” The brother apologized. Then the first man said, “I’m sorry for snapping at you like that, but you know how sudden tragedy is worse than gradual… Anyway, so how’s Mom?” And then the brother says, “Well, she’s up on the roof and we can’t get her down.”

Regardless of the time of year, we would like to assume that everything is humming along smoothly and that there are no major problems. New codes and compliance changes went into effect at the beginning of the year and that may have an impact on your staff and/or clients. Depending on the specialties that you bill for, the changes may be small or great. It is important that you review the new codes in detail and discuss them with your clients.

It is always a suitable time to do a quick inventory to ensure you are on track and in compliance so that you don’t get hit with sudden, unexpected, required changes. In other words, how do you ensure the cat is not on the roof?

In addition to reviewing the coding updates for 2024, following are two “new” items, in no particular order, which you should discuss with your clients to ensure they are being addressed properly:

Appropriate Use Criteria (AUC) Consultation

Congress passed the Protecting Access to Medicare Act (PAMA) in 2014 which included the requirement of the implementation of appropriate use criteria consultation when ordering advanced imaging studies (CT, MR, PET, Nuclear Medicine). After many delays, much time and effort by providers and healthcare facilities, the Centers for Medicare and Medicaid Services (CMS) has officially suspended the program with no anticipated date to resume. The official education and testing period ceased on December 31, 2023.

While this is generally welcomed as positive news, many organizations will need to make operational changes to modify their claims submission processes to no longer submit the designated G codes and modifiers.

Additionally, clients may need or want to make operational changes to their ordering processes since this program will no longer be in effect. Additionally, since the program has been suspended, CMS has removed the AUC/CDS Improvement Activity from MIPS, stating that this activity will be obsolete. This removal will require organizations that were using this activity to reevaluate their MIPS activities to minimize any potential financial impact.

Discarded Drugs, Contrast and Radiopharmaceuticals

In certain circumstances, Medicare will pay for leftover drugs, including contrast materials and radiopharmaceuticals, which must be discarded or “wasted.” This policy is found in the Medicare Claims Processing Manual, Chapter 17, Section 40. It only applies to single use vials (SUVs) which are containers intended to be used for a single patient. The policy states that when a provider administers part of a single-use vial or other single-use package to a Medicare patient and the rest of the container must be discarded, Medicare will pay both for the amount that was administered and the amount that was discarded. If part of a multi-use container is discarded, the provider may only bill for the amount that was administered to the patient.

When part of an SUV is administered to a Medicare patient, and the remainder cannot be used for another patient and must be discarded, the provider may bill Medicare for the entire SUV. The medical record must indicate the quantity that was administered to the patient and the fact that the remainder was discarded.

Billing for drug waste can be a compliance and reimbursement issue for providers, since identifying the wasted drug amount on claims for payment is required by Medicare contractors. When billing for drug waste, the provider must report the drug administered from a single-use vial on the claim as two separate charges: one claim line for the amount administered (with no modifier), and one claim line for the discarded drug amount, with modifier JW (Drug amount discarded/not administered to any patient) or JZ (Zero drug amount discarded/not administered to any patient).

Medicare also specifies that billing for drug waste must coincide with the smallest vial size available. Specifically, it is not appropriate to bill for a larger amount of waste due to the stocking or availability of larger vial sizes when smaller options are available.

While the JW modifier has been around for many years, the JZ modifier is new. The Infrastructure Investment and Jobs Act requires manufacturers to provide refunds for discarded amounts of refundable single-dose container or single-use package drugs applicable above a set threshold; however, CMS understands the JW modifier is not always reported or is omitted from claims. CMS stated the level of compliance regarding the JW modifier has varied among providers and approximately two-thirds of providers have never used the modifier. Due to incomplete data related to drug discarded amounts and the impact this could have in calculating refunds by manufacturers, CMS finalized, for dates of service on or after January 1, 2023, requiring modifier JW on claims for all single-dose container or single-use drugs when any amount is discarded as part of current policy and is part of this final ruling. CMS also finalized a different modifier, “JZ” to attest there were no discarded amounts of a particular drug. Modifier JZ will be appended to the drug code when there was no discarded amount from the single-dose vial or single-use package which are paid under Part B.

CMS understands that providers do not currently have the capability to accept or report the JZ modifier; therefore, they set forth a six-month delay in the requirement to use the JZ modifier to allow providers sufficient time to incorporate necessary updates to their claims systems. If a provider cannot report the JW or JZ modifiers as required by October 1, 2023, CMS instructions state that claims should be held until they are able to do so. Claims submitted without required modifier data will not be accepted and returned as non-processable.

While Medicare has published this policy regarding reimbursement for the discarded drug amounts in a single-use vial, commercial and managed care payors may have to be contacted to obtain coverage information. Insurers are not required to reimburse for the wasted drug amount in an SDV, so obtaining this information in writing will assist with coding and billing compliance.

It is important to note that if your client is providing and billing for designated single use vials that they are doing so compliantly.


There are many other items that I could discuss, but what is more important is identifying topics relevant to your individual organization and clients. Everyone is different so every list is different. There are always opportunities to improve processes within our organizations. As professionals, we pride ourselves on our willingness to adapt, change and improve in all areas of our realm of influence personally and professionally. And most important of all, remember there is always some cat on the roof!  

Melody W. Mulaik, MSHS, CRA, RCC, RCC-IR, CPC, COC, FAHRA, is the president of Revenue Cycle Coding Strategies. She is a frequent speaker and author for nationally recognized professional organizations and publications. Melody’s areas of expertise include coding and compliance, management engineering, and operations improvement, and she is nationally recognized for her extensive radiology expertise.