J-Codes & Drug Billing Risk: What Ophthalmic Practices Need to Understand

Drug billing continues to be a high-risk area for ophthalmology practices. In this episode, Mary Pat Johnson and Rebecca Greenlaw discuss key considerations related to ophthalmology J-codes, including modifier use, dosing accuracy, Medicare reimbursement, and how drug billing decisions can affect performance under MIPS. This practical conversation is designed to help practices reduce audit risk and strengthen compliance.

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Transcript

Welcome to Ophthalmology Reimbursed, the podcast that discusses all things coding, reimbursement, auditing, and education for the ophthalmic community. 

Hi everyone, this is Mary Pat Johnson. Welcome back to our podcast series. I'm here with my co-worker. We've kind of flipped the script here a minute. We're not talking about physician services.

We're going to focus our time together on billing for injectable medications, so a practice administration using those J codes. So this does pose a bit of a risk to practices. It's got a high impact.

Some of those drugs are quite costly. Claims have to be pretty pristine to stay on top of this, and we hear from clients that sometimes that's not the case. So Rebecca, what do you think is top of mind right now when you think about J code or drug billing? Yeah, so two things immediately.

First, making sure practices are billing the J code correctly through the description. The codes define drug route and drug administration. Second, understanding how dosing units work.

A surprising number of denials and audits come from something as basic as unit mismatches, and practices frequently under billing these codes by reporting the wrong number of units on a claim. Exactly, and that happens especially when drugs are used in a retina setting, and some medications even used with cataract surgery. We're seeing continued scrutiny around medications.

They're high cost. They're high volume, so payers are watching these very closely. And it's not just Medicare.

Commercial payers are mirroring Medicare's behavior. If a drug is miscoded or units don't align with the HCPCS descriptor, it's an easy target for recoupment. I agree.

And there's more of these claims than getting the right J code. I keep wanting to say CPT code, but these are in the HCPCS unit. So you need the right HCPCS code, but that leads me into modifiers.

Modifier JZ and JW, they've been around for a while, but for some reason they still cause some confusion. Yeah, and Medicare is very clear on this. These modifiers are applied only when the medication comes from a single-use file, and they help explain any overage.

Which is important, right? Because Medicare requires that you're going to use one or the other. We can't leave just the J code blank by itself. Exactly. 

If there's no waste after drawing out the dose to be administered, you append JZ. If there is billable waste of at least one unit, list the J code on two separate lines with modifier JW on the line for the discarded amount. Missing or incorrect use of these modifiers is how denials and audits are triggered.

I agree. And we tend to get a lot of questions on this. Practices sometimes assume that if there is no waste, they just don't do anything, just build a J code.

That's no longer the case. Correct. Medicare wants visibility into waste patterns, and they're using that data downstream for cost and utilization analysis. 

Right, right. Hey, one final comment before we move on. I want to talk dosing, but let me just make one comment here about documentation.

So if there is a discarded waste, that should be part of your injection note, how much was drawn up, how much was discarded. If there is no discarded amount, the payers still want you to document what happened to any manufacture overfill, if there was some. So just a basic comment that says, manufacture overfill was appropriately discarded, is appropriate in your note.

And we've seen some payer audits where they focus specifically on that comment, wanting to know what you did with that. So with that out of the way, now let's switch gears and talk dosing. This is another area where this sometimes breaks down.

It does. Every J code has a defined billing unit, and the administered dose must convert correctly into those units. The HCPCS definition for many opt-comic medications do not describe how the medications are packaged and dosed.

We still see practices billing one unit because that's how their EHR defaults to, even when the drug descriptor says something like 0.1 milligram or one milligram. Exactly. Yeah, and that could be a big problem.

The auditor really cares mostly about the HCPCS descriptor, and then making sure that the billed units match that documented number and convert over to the units. In the clinic, we oftentimes see units of drug provided and the dose provided as terms that are used interchangeably. Please don't do that.

Exactly. Practices should train staff to calculate how much drug was drawn up, how much was administered, how much was wasted, and how that translates into billable units. All of that must be supported in the medical record.

Right, and the documentation does need to be clear. The dose administered, the route of administration, intraocular injection in this case, 67028, the vial size, if it's a multi-use vial, you can get rid of all the discussion of modifiers or the discussion of discarded medication. If there is a waste, of course, document that.

Yeah, and if an auditor can't reconcile the math from the chart to the claim, they're going to assume it's wrong. Yeah, they like to assume we're wrong. Let's move into reimbursement.

We know Medicare Part B has a schedule, so they're going to pay for injectable medications at 106 percent of average sales price. Why does this matter so much to ophthalmology? Because the average sales price changes quarterly. If practices aren't keeping track of the ASP updates, they may not realize when reimbursement drops below acquisition costs, especially for those high-cost injectables.

If a change is made from one quarter to the next, it usually is very modest. But we've seen in cases where drugs become financially unfavorable, the practices don't realize it until months later. Right, yeah, and remember that ASP is based on national sales data.

It's not based on what you're paying for the drug. So if you're getting a great screening deal, national sales data might be coming higher than what you're paying. Now, we do know if a drug loses its pass-through status or sees market shifts, reimbursement can change kind of quickly.

Yeah, before we move on to pass-through, may I interject a reminder? Sure. The medication, when medically necessary, is a covered benefit. Injectables used for your office should be purchased by the practice and billed to the patient's insurance along with the claim to administer the drug.

I recently spoke to a client who asked their patient to pick up vancomycin and dexamethasone for an urgent visit. They typically do not keep these on hand. You know, I've seen that before.

And what happens is the pharmacy will then bill the patient for the medication, which should have been billed to insurance. It's a covered benefit. Can't be billed to the patient's drug benefit because it's not self-administered.

So I agree with you. This is a practice expense and the practice is obligated to get it handled through the patient's medical insurance, not drug benefit. So with that, let's go back to the pass-through status.

I have more questions for you. This is another area, I think, that affects a lot of things. Reimbursement, for one, and MIPS cost reporting scores.

So can you walk us through why the pass-through status matters on some of these meds? Yeah, so pass-through drugs are paid separately under OPPS and, importantly, they are excluded from certain bundled payment calculations in the ASC. But pass-through status is temporary? Yes, typically two to three years. Once a drug loses pass-through status, it may become packaged or its costs may be ruled into broader payment methodologies.

Practices need to know when that transition happens. So what ophthalmic drugs have pass-through status at this point? That's a great question. Omidria, Dexacode, Dextenza, Ihezo, and Triessence currently have pass-through status.

But I've heard some of that might be changing, particularly Ihezo and Triessence. Is that the case? Yeah, so Ihezo pass-through status is set to expire April 1st of 2026. Triessence pass-through status was granted April of 2025.

Okay, so Triessence has a little bit longer. And the pass-through status, of course, influences cost measures. Exactly, and that's where MIPS comes into play.

All right, so this is one of my least favorite topics, but let's close with MIPS, particularly the cataract surgery cost measure, which has caused some confusion. How do the J codes and the drug choices factor in to the cataract cost measure? This is critical. The cataract cost measure looks at the total cost of care around cataract surgery, including certain drugs.

If a drug is included in the episode cost and it's expensive, it can negatively impact a provider's score. So of those drugs we talked about, which of them are part of the cataract cost measure? The five pass-through drugs? Yeah, so three of those mentioned previously were Omidria, Dextenza, and Ihezo. Medicare considers these drugs as clinically relevant to the cataract procedure episode and considered part of the total cost attributed to the clinician.

So drug selection matters, pass-through status matters, and of course, correct billing is important. Yeah, they all matter. If a drug is pass-through, it typically, it's typically excluded from the cost calculation, with the three exception of those mentioned above.

Okay, all right. And then incorrect billing, we talked about wrong units and missing modifiers, that can artificially inflate costs and hurt performance. Which is why alignment between the clinical decisions, billing, and compliance is so important.

You can't treat drug billing as just revenue issue anymore, it's quality and performance issue. Agreed. So a couple of big takeaways here, the J codes are not just about payment, they certainly affect audits, compliance, and performance.

Exactly. Get those codes right, get the dose right, use JZ and JW correctly, monitor ASP and pass-through status, and understand how drugs impact cost measures. Well, it's probably not as easy as it sounds, but worth the effort.

I think if practices do this consistently, they could really reduce the risk of the improper billing, and maybe even improve financial predictability. And in the end, really, that's the goal. That is the goal, yeah.

Well, thanks again, Rebecca, I learn a lot every time we do one of these. Yeah, I have a lot of fun. 

If you have any questions, feel free to reach out to us at 800-399-6565. We're always here to help. Until next time, thanks for listening to Ophthalmology Reimbursed.