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Claims & Payment Policy (#133): 340B Drug Payment Reduction Policy

Summary of policy:

The 340B Drug Discount Program is a US federal government program that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices. The intent of the program is to allow covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.

Effective January 1, 2018, the Centers for Medicaid and Medicare (CMS) reduced the payment to participating providers paid under an Outpatient Prospective Payment System (OPPS) for certain drugs acquired through the 340B program. CMS established two Healthcare Common Procedure Coding System (HCPCs) Level II modifiers to identify 340B-acquired drugs. Providers are required to report either modifier “JG” or “TB” on OPPS claims. Modifier “JG” indicates the 340B as payable and modifier “TB” as informational.

What does this mean for providers?

Verified 340B providers who submit claims with 340B covered codes without required modifiers “JG” and “TB” in POS 22 (outpatient hospital) or 23 ( emergency room) and have the drug assigned a status indicator of “K”, will have the “JG” and/or “TB” modifier added to the claim. This will ensure the claim is reimbursed at the appropriate rate. Claims may be eligible for recovery of overpayments.

For more information please review the complete policy found on the Claims page under Payment Policies.

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Last Updated On: 5/4/2020