No More JZ and JW Modifiers for Cellular Tissue Products / Skin Substitutes – Guest Blog by Michael Crouch

Dr. Fife –

It has recently come to my attention that several hospitals, physicians, and qualified healthcare professionals continue to report modifiers JZ and JW for the application of non‑BLA (Biologics License Application) skin substitute grafts, also referred to as Cellular and/or Tissue‑based Products (CTPs). Although this may come as a surprise to many, it is not uncommon for hospitals and practitioners to experience significant delays in updating their charging, coding, and billing systems, even when ample notice of regulatory or reimbursement changes has been provided. In fact, during a recent revenue cycle audit for a hospital‑based wound management program, I conducted a detailed review of their chargemaster (CDM) and discovered that it had not been updated in more than three years. This type of oversight can lead to systemic billing inaccuracies, compliance risk, and potential financial exposure, especially in high‑scrutiny service lines such as wound care and skin substitute (CTP) applications.

However, when evaluating the continued use of JZ and JW modifiers for non‑BLA skin substitutes (CTPs), it is important to look beyond financial implications and focus on the substantial compliance risks involved. Beginning January 1, 2026, CMS reclassified all non‑BLA skin substitutes as incident‑to supplies, meaning:

1. They are no longer considered drugs or biologicals under Medicare Part B
2. Discarded amounts are not payable under any circumstance
3. JZ/JW modifiers must not be used, because these modifiers apply only to separately payable drugs and biologicals, not incident‑to supplies

CMS reaffirmed this position in the CY 2026 PFS and OPPS/ASC final rules, stating that only the administered portion of a non‑BLA skin substitute may be billed. Although not all seven Medicare Administrative Contractors (MACs) have updated their policies and/or websites to reflect these changes, they have provided this guidance:

1. CGS Administrators: CGS has instructed stakeholders not to use JZ or JW modifiers with skin substitutes, noting these modifiers will not be accepted for these products
2. First Coast Service Options FCSO): First Coast’s 2026 update aligns precisely with CMS: JZ/JW modifiers only apply to separately payable drugs/biologicals, not incident‑to supplies such as non‑BLA skin substitutes.
3. National Government Services (NGS): NGS states that skin substitutes should not be billed with a JZ modifier, as doing so will cause claim rejection. JW is used only when reporting drug wastage for covered biologicals, not non‑BLA skin substitutes.
4. Noridian Healthcare Solutions: Noridian confirms that JZ/JW modifiers must not be used for non‑BLA skin substitutes. Claims including discarded units will be denied, as only the administered amount is payable.
5. Novitas Solutions: Novitas explicitly states that JZ and JW modifiers are not appropriate for any incident‑to supplies, including non‑BLA skin substitutes, even when separately payable.
6. Palmetto GBA: While Palmetto’s posted materials do not contain a 2026 modifier‑specific statement for skin substitutes, they do adhere to national CMS policy. Therefore, the CMS rule applies: JZ/JW modifiers must not be used for non‑BLA incident‑to supplies
7. WPS Government Health Administrators: WPS follows the national CMS 2026 policy, which prohibits JZ/JW modifier use for non‑BLA skin substitutes, allowing billing only for administered units.

Consequences of using JZ/JW modifiers for non‑BLA skin substitutes (CTPs):

1. Claim denials
2. Overpayment determinations and recoupment
3. Audit vulnerability
4. Operational delays (reprocessing/corrected claims)

As payers continue to enforce correct reporting of skin substitute (CTP) utilization, waste, and reimbursement methodology, it is critical that all providers ensure their CDM, coding workflows, and clinical documentation processes accurately reflect current CMS and MAC guidance. Failure to do so may not only result in incorrect modifier reporting but also denials, recoupments, or unfavorable findings in audits such as TPE, UPIC, or RAC reviews.

Key References

• CMS Manual System, Pub 100-04
• HMP Global
• Breaking News! Medicare Will Not Pay for CTP / Skin Substitute Wastage “Under Any Circumstances| Caroline Fife, MD
• Professional association briefing reinforcing “no wastage payment” and removal of JW/JZ for non‑BLA CTPs

Michael J. Crouch, CPC, CPMA, CHT-ADMIN
210-602-2602 (cell)
michaelcrouch@cplushealthcareconsulting.com
www.cplushealthcareconsulting.com

Caroline Fife, M.D.

Dr. Fife is a world renowned wound care physician dedicated to improving patient outcomes through quality driven care. Please visit my blog at CarolineFifeMD.com and my Youtube channel at https://www.youtube.com/c/carolinefifemd/videos

The opinions, comments, and content expressed or implied in my statements are solely my own and do not necessarily reflect the position or views of Intellicure or any of the boards on which I serve.