Drug Discount Programs - Acquired and Biologicals - Medicare Advantage

Policy No: 114
Originally Created: 01/01/2021
Section: Facility
Last Reviewed: 04/01/2023
Last Revised: 12/01/2022
Approved: 04/13/2023
Effective: 05/01/2023
Policy applies to: Medicare Advantage

This policy applies to Hospitals.

340B Drug Pricing Program – Is a US federal government program that requires drug manufacturers to provide outpatient drugs to health plans and other covered entities at discounted prices. The providers participating in the 340B program save on average 25-50% on the purchase of the drugs outlined in the program.

Average Sales Price (ASP) – The average sales price of a drug as determined by the Center for Medicare & Medicaid Services (CMS).

Current Procedure Terminology (CPT®) modifier TB – Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes.

CPT modifier JG – Drug or biological acquired with 340B drug pricing program discount.

CPT modifier JW – Indicates drug amount discarded or not administered to a patient.

Eligible Providers (Covered Entity) – Hospitals, Disproportionate Share Hospitals (DSHs), Free Standing Cancer Hospitals (exempt from Medicare Prospective Payment System (PPS), Rural Referral Centers, Sole Community Hospitals). Specialized clinics (Black Lung Clinics, Comprehensive Hemophilia Diagnostic Treatment Centers, Title X Family Planning Clinics, Sexually Transmitted Disease Clinics, Tuberculosis Clinics) are also eligible.

Our health plan aligns reimbursement of claims for drugs and biologicals purchased through the 340B Program to match the requirements of Centers for Medicare & Medicaid Services (CMS). This alignment requires 340B covered entities to utilize HCPCS Modifiers JG or TB on all claims as required by CMS.

Reimbursement of claims for acquired drugs and biologicals will follow Section 340B of the Public Health Service Act (Section 340B) which allows participating hospitals and other providers to purchase certain covered outpatient drugs at discounted prices from manufacturers.

Any discarded drug amount should be billed on a separate claim line with modifier JW and the appropriate 340B modifier.

If services are provided in an off-campus outpatient provider-based facility modifiers PO or PN are also required.

Centers for Medicare & Medicaid Services (CMS)-1695-FC

Federal Statute - 42 CFR Part 10 – 340B Drug Pricing Program

Reimbursement Methodology for Non-Participating Providers