Simple, Modric doesn’t get enough playing time because he isn’t a direct replacement for neither Alonso nor Khedira. He can’t control a match like Alonso or cover the defense, especially when we have Marcelo/Coentrao bombing forward. And he doesn’t have Khedira’s energy or workrate. You saw what happened in the match against Borussia, when Khedira went off injured in the opening 20 minutes, forcing Mou to play with a Modric – Alonso midfield. The problem was, even though Modric is much more creative than Khedira, he doesn’t have his physique or workrate. Khedira is much underrated in that regard. He’s essentially what connects the defense and offense, and his power helps against teams with superior midfielders like Barca. Dortmund was running rings around Alonso and Khedira.
That’s the reason why Modric isn’t playing as much as he’d like, and also why Sahin was out of favor, alongside his injuries. He can play in Ozil’s role as a #10, but then Ozil is much better than him when on form. He'd fit more in a 3 man midfield alongside Alonso and Khedira/Essien, which Jose did do a couple of times already. It should, theoretically, be perfect because he can play in midfield and as a trequartista when needed.