Drugs and Biologicals

Drugs and Biologicals – Coverage and Billing

Medicare Part B will provide coverage for drugs that are furnished “incident to” a physician’s service. Coverage applies to drugs are not usually self-administered by the patients who take them. In addition, the drug must be reasonable and necessary for the diagnosis or treatment of the illness/injury and the drug must be furnished and administered by a physician or other personnel employed by the physician and under the physician’s supervision.

The intent of this article is to provide details on coverage of, and billing for, drugs and biologicals.

Table of Contents

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Chemotherapy General Infusion Information

There are CPT codes for several different types of infusions and injections for drugs and biologicals. These include codes for chemotherapy infusions and injections, therapeutic, prophylactic and diagnostic infusions, injections and hydration.

The CPT manual published by the AMA describes chemotherapy drugs and biologicals, infusions, and injections (CPT codes 96401–96549) as requiring “physician work and/or clinical staff monitoring well beyond that of therapeutic drug agents (CPT codes 96360–96379) because the incidence of severe adverse patient reactions are typically greater” (CPT Coding Guidelines). These codes are paid at a higher rate to reflect the greater physician work and other resources required to safely administer these substances.

For the therapeutic, prophylactic and diagnostic infusions and injections codes, the CPT states that:

“...if performed to facilitate the infusion or injection, the following services are included and are not reported separately:

  • Use of local anesthesia
  • IV start
  • Access to indwelling IV, subcutaneous catheter or port
  • Flush at conclusion of infusion; and
  • Standard tubing, syringes, and supplies” (CPT Coding Guidelines).

The CPT defines hydration as “prepackaged fluid and electrolytes… not the infusion of drugs or other substances.” “Typically such infusions require little special handling to prepare or dispose of, and staff that administer these do not typically require advanced practice training. After initial set up, infusion typically entails little patient risk and thus little monitoring” (CPT Coding Guidelines).

Payment for hydration codes/fluids requires the documentation to support the medical necessity of the hydration services. Hydration codes should not be billed when the fluids are incidental or of a “keep open” nature.

Initial Codes

Under most circumstances, only one initial service is performed at each patient encounter. After the initial service, all drug administration services, including infusions, through the same vascular access site are reported using the additional, sequential or concurrent codes.

There may be occasions when more than one vascular access site is required during the same encounter. To report more than one initial service, the use of a second site must be medically necessary (such as drug incompatibilities). Under these circumstances, it is appropriate to report two initial codes. Modifier 59 is not necessary in this situation since the services are provided during the same encounter. All drug administration services and infusions after the initial codes would be reported using the additional, sequential or concurrent codes. Please be aware some codes have MUEs that may limit the units of service.

In the event there is more than one encounter per date of service (patient returns for additional infusion/injection services) modifier 59 would be appended to the services performed during the second encounter to differentiate the two encounters.

Documentation for Infusions

Start and stop times must be evident in the documentation in order to bill units for hours infused. If no start or stop time or total hours infused can be determined from the documentation, the best course is to query the clinician. Preferred documentation indicates clear start and stop times to accurately capture units/hours of infusion. Use of a doctor’s order or pharmacy directive/label to calculate times is not appropriate as correct coding is based on how incidents/services occur; not how services are planned.

Some acceptable documentation:

  • Medication record or nursing notes that indicate start and stop times
  • Record/notes indicating length of infusion after infusion completed
  • Record/notes indicating rate of infusion and quantity infused after infusion completed
  • Record/notes indicating pump times/settings and amounts infused after infusion complete
  • Record/notes that enable a reviewer to accurately determine the length of time an infusion ran after the completion of the infusion

Key concept-coding infusion units is always based on “past” events-how the infusion actually ran; not how it was supposed to run.

If, in the circumstance that no times are evident, an IV push code may be appropriate for billing since no infusion is supported beyond 15 minutes. Upon medical review, these services may be denied for insufficient documentation if billed as hours of infusion.

Other Infusion/Injection Services

  • Accessing a central venous catheter for an infusion/injection service is part of the administration service.
  • Flushing a central venous access catheter after infusions/injection services is part of the administration service.
  • Evaluation and management services inherent to the infusion/injection service are not separately billable.

Chemotherapy (J9000‒J9999)

  • Chemotherapy agents (if drugs or biologics) have a HCPCS Level II between J9000–J9999.
  • Administration of a chemotherapy drug or biological (in the J9000‒J9999 range) are appropriate to report with chemotherapy administration codes in the code range from 96401 to 96549.
    • CPT codes 96401–96549 based solely on the specific drug or agent being administered. Claims for CPT codes 96401-96549 that involve administration of monoclonal, complex biological and rheumatological therapies shall be paid as complex administration so long as all elements of these codes that are required for appropriate billing are met using Medicare guidance/policy described in CMS IOM Publication 100-04, Medicare Claims Processing Manual, Chapter 12, Section 30.5.
  • Chemotherapy agents used to treat cancer but not yet assigned a specific code (generally reported with J3490 or J3590) may also be billed with a chemotherapy administration code.

Other Drugs and Biologics (non J9000‒J9999)

  • Administration of most (non J9000‒J9999 coded) drugs and biologicals should be reported with administration codes in the code range 96365‒96379 including, but not limited to:
    • White or red blood cell growth factors such as Neupogen, Neulasta, Darbepoetin, Aranesp, Epogen, etc.
    • Antiemetic drugs
    • Monoclonal Antibodies (MA) (generic drug names ending in “mab”) such as canakinumab (J0638), certolizumab pegol (J0717), denosumab (J0897), mepolizumab (J2182), omalizumab (J2357), etc.
    • Hormonal antineoplastic (HAN) drugs outside the J9000–J9999 HCPCS range
  • Administration of nonchemotherapy agents not yet assigned a specific code (generally reported with J3490 or J3590) should generally be billed with a code in the 96365‒96379 range.
  • Exceptions considered appropriate by Medicare for use with a chemotherapy administration code (96413/96415) include but are not limited to highly complex drugs or highly complex biologic agents such as:
    • HCPCS Code Description
      • J1745 ‒ Injection, infliximab, excludes biosimilar, 10 mg
      • J0202 ‒ Injection, alemtuzumab, 1 mg

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Unlisted Codes for Drugs and Biologicals (J3490, J3590 and J9999)

An unlisted code should only be used when no other code adequately describes the service. They are commonly used when the drug/biological does not have a specific HCPCS code, when it is administered by a route other than the route stated in the description of a specific HCPCS code, and/or the amount of the drug/biological is less than the amount of, or a different concentration of, what is specified in the HCPCS code description.

  • J3490 ‒ Unclassified drugs
  • J3590 ‒ Unclassified biologics
  • J9999 ‒ Not otherwise classified, antineoplastic drugs

Unlisted codes J3490, J3590 and J9999 billed to the Part B MAC are priced manually. When billing unlisted codes, the unit of service equals one (1), and the following details must be entered into in Item 19 of the CMS-1500 or electronic claim equivalent:

  • Name of the drug
  • Dose administered (mg, cc, etc.)
  • Route of administration (IV, IM, SC, PO, etc.)
  • The invoice price (for new drugs if the WAC is unavailable, or for compounded drugs)

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Compound Drugs

If there is not a HCPCS code for the compound drug you are billing, then it is appropriate to bill J7999 ‒ Compounded Drug, Not Otherwise Classified.

This applies to both pump and nonpump compound drugs.

The name, dose and the invoice amount is also required in Item 19 or electronic claim equivalent.

Discarded Drugs/Wastage and JW, JZ Modifier

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Medicare may pay for discarded drugs or wasted drugs and biologicals when:

  • The provider/supplier must discard the remainder of a single-dose container after administering a dose or quantity to a Medicare patient.
    • Payment for waste from multiple-dose containers is not payable under Medicare. Providers/suppliers should have the most appropriate sized drug container on hand to minimize the amount of discarded drugs.
  • The amount of discard/waste is documented in the medical record
  • Radiopharmaceuticals and imaging agents are excluded from the requirement to use JW/JZ modifiers
  • Skin substitutes are excluded from the requirement to use the JZ modifier and will cause rejections when appended.
    • Only the JW modifier should be used to report drug wastage for skin substitutes.

JW Modifier

Effective 1/1/2017, providers and suppliers are required to report the JW modifier as a way to identify, and be paid for, unused drugs and biologicals. The basic guidelines for the modifier are:

  • The JW modifier is applicable for claims with unused drugs or biologicals from single-dose containers that are appropriately discarded (except for provided dosages that are under the CAP for Part B drugs and biologicals);
  • The JW modifier is applied to the amount of drug or biological that is discarded, and it is billed on a separate line item; and
  • The discarded drug/biological must be documented in the patient’s medical record.

When billing for waste, ensure the following details are present on the claim:

  • A line item identifying the amount administered of the drug HCPCS code.
  • A separate line identifying the amount of waste for that same drug HCPCS code with the JW modifier appended.
    • Do not bill on a separate line if the actual dose of the drug is less than the billing unit, since payment for the discard is included in the billing unit.
    • When using a NOC code (J3490, J3590, or J9999) to identify a drug that does not have its own HCPCS code, bill the appropriate NOC code with one (1) unit.
    • The name of the drug, does administered and invoice price, must be entered into the comments section (Item 19) of the claim or the electronic claim equivalent.

JZ Modifier

The 2023 MPFS Final Rule introduced the JZ modifier for Medicare Part B drug claims.

For claims submitted 7/1/2023 and forward, providers shall use modifier JZ to identify zero drug waste from a single-dose container.

Beginning with claims received on 10/1/2023, claims for drugs from single-dose containers that do not use the modifiers in the correct manner may be RTP.

Reference CMSDiscarded Drugs and Biologicals – JW Modifier and JZ Modifier Policy Frequently Asked Questions for answers to common questions.

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Patient Supplied or Free-of-Charge Drugs

When a patient purchases a drug and the physician administers it, the cost of the drug is not covered because it does not represent a cost to the physician. However, the administration of the drug is a service that represents an expense to the physician. Therefore, administration of the drug is payable if the drug is covered under Medicare Part B.

Submit the drug code and administration code on the same claim, and use the following instructions to ensure the claim is submitted correctly on the first attempt.

Note: Per the "incident to" guidelines explained above, and in the CMS IOM Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Sections 50 and 50.3, providers are not allowed to instruct their patients to purchase the drug themselves and then bring the drug to the provider's office for administration. If the drug is not supplied as a donation or free of charge, then the provider must provide the drug under incident to guidelines.

CMS-1500 Claim Form ANSI 837 v5010 Loop, Segment Description
19 2300 or 2400 NTE 02 Narrative “Patient supplied,” or “Provided free of charge.”
24D (line 1) 2400, SV101 Covered drug HCPCS code: established or NOC drug code
24D (line 2) 2400, SV101 Administration code
28 (line 1) 2300, CLM02 Total charge = $0.01
28 (line 2) 2300, CLM02 Total charge for administration code

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Prolonged Drug and Biological Infusions Using an External Pump

In some situations, a hospital outpatient department or physician office may purchase a drug for a medically reasonable and necessary prolonged drug infusion, begin the drug infusion in the care setting using an external pump, send the patient home for a portion of the infusion, and have the patient return at the end of the infusion period. In this case, bill your A/B MAC for the drug or biological and the administration.

Note: Because prolonged drug and biological infusions started incident to a physician's service using an external pump should be treated as an incident to service, it cannot be billed on suppliers’ claims to DME MACs.

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Revised 1/30/2024