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Updated Guidance on OPPS Modifiers for 340B Drugs

The Centers for Medicare & Medicaid Services (CMS) updated a frequently asked questions (FAQ) document that details the use of two Medicare outpatient, claims-based modifiers hospitals must use to report for drugs purchased through the 340B Drug Pricing Program.

The FAQ now provides details on how Medicare Advantage (MA) plans might be affected by the Medicare reimbursement reductions in CMS’ calendar year (CY) 2018 Outpatient Prospective Payment System (OPPS) final rule. CMS clarifies that while its payment reduction in fee-for-service Medicare does not directly affect MA plans, MA plans are free to negotiate payment rates through their contracts with providers. The rest of the guidance remains unchanged.

The final CY 2018 OPPS rule reduced Medicare payment for 340B drugs by 27 percent, from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent. This reduced payment amount applies only to separately payable, nonpass through drugs, and it excludes vaccines.

In the final rule, CMS finalized two mandatory Healthcare Common Procedure Coding System Level II modifiers:

  • modifier JG – Drug or biological acquired with 340B drug pricing program discount; and
  • modifier TB – Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes.

America’s Essential Hospitals released an Action Update with more information on the modifiers in December 2017.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Rachel Schwartz is a former policy associate at America's Essential Hospitals.

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