Medicare, Medicaid, covered entities, and more

The 340B Drug Pricing Program is an effective way for sure suppliers to get reductions on particular medication. However the intricacies of the 340B program could be complicated for anybody: How does it have an effect on reimbursements by way of Medicare? Which modifiers are used for which claims? Which coated entities get what low cost fee? Right here’s a small overview of some incessantly requested questions associated to 340B:

What’s 340B?

Part 340B of the Public Well being Service Act was created in 1992, beneath Part 602 of the Veterans Well being Care Act of 1992. Part 340B states that pharmaceutical producers should conform to a pharmaceutical pricing settlement (PPA) with the Dept. of Well being and Human Service (HHS) Secretary with a purpose to have their medication coated by Medicaid and Medicare Half B. It requires pharmaceutical producers to promote outpatient medication at discounted costs to sure healthcare organizations that take care of uninsured and low-income sufferers. The driving precept behind 340B is that these reductions would assist stretch federal assets, permitting these particular healthcare organizations to make use of the financial savings to take care of extra underserved sufferers with none further price to the federal authorities.

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Who’s eligible to take part in 340B?

The suppliers which are eligible to take part and buy medication utilizing the low cost are known as “coated entities,” which embody the next classes of amenities: disproportionate share hospitals (DSH), kids’s hospitals (PEDS), most cancers hospitals (CAN), sole group hospitals (SCH), rural referral facilities (RRC), crucial entry hospitals (CAH), and off-campus Supplier-Primarily based Departments (PBD). Eligible coated entities should first register with HRSA and should recertify their eligibility yearly.

Does 340B contain Medicaid or Medicare?

The brief reply is: sure to each. Once more, Part 340B requires drug producers to have a PPA with the HHS Secretary for his or her medication to be coated by Medicaid and Medicare Half B. However Medicare comes extra prominently into the image when particular coated entities which are paid by way of the CMS-administered outpatient potential cost system (OPPS) invoice Medicare for one of many medication. In that case, CMS reimburses the coated entities taking part within the 340B program. Nevertheless, since 2018, CMS has decreased the reimbursement for sure medication when billed by some, however not all, coated entities.

When is Medicare reimbursement to the supplier diminished?

Specs for a cost reimbursement discount embody:

  • Efficient January 1, 2018, Medicare pays a diminished quantity equaling the typical gross sales worth (ASP) minus 22.5% for standing indicator Okay medication which are acquired by way of the 340B Program by a coated entity paid beneath the OPPS that isn’t excepted from the cost adjustment coverage. (Previous to this replace, standing Okay medication have been paid ASP plus 6%.)
  • Coated entities which are topic to this reimbursement discount and that are paid beneath OPPS embody disproportionate share hospitals (DSH), non-rural sole group hospitals (SCH) and rural referral facilities (RRC). Though non-excepted off campus provider-based departments (PBD) will not be paid beneath the OPPS, CMS has decreased the reimbursement quantity to them for standing indicator Okay medication as properly.
  • Modifier JG, or modifier PN (for non-excepted off campus provider-based departments), is required on strains which are topic to a cost discount.
  • Modifier JG or PN is simply required on codes designated as standing indicator Okay.
  • It’s the accountability of the coated entity to offer the right modifier on 340B claims.

When is cost to the coated entity not diminished?

Reimbursement to suppliers will not be diminished for the next coated entities, or within the following situations:

  • Coated entities that aren’t paid beneath OPPS will not be topic to the cost discount. These embody crucial entry hospitals (CAH) and Maryland Waiver Hospitals and excepted off campus PBDs.
  • Coated entities which are paid beneath OPPS however have been excepted from the low cost, together with kids’s hospitals (PEDS), most cancers hospitals (CAN), and rural sole group hospitals (SCH).
  • These coated entities ought to report informational modifier TB for 340B-acquired medication and will probably be paid on the ASP + 6% fee.
  • Medication not designated standing indicator Okay.

Part 340B faces doable adjustments sooner or later as a number of coated entities and hospital associations proceed to problem the particulars of the reimbursement discount by way of litigation in court docket. Within the meantime, 340B continues to perform with out interruption, and payers ought to keep vigilant to its complexities—incorrect submitting can result in unintentional overpayments that may result in supplier abrasion and extra administrative work.


For individuals who are topic to a reimbursement discount beneath Part 340B, submitting claims appropriately could be difficult. Utilizing a JG or PN modifier will not be at all times executed correctly and is commonly under-reported, which might result in tens of millions of {dollars} in overpayments for Medicare Benefit (MA) plans.

For assist with overview of claims involving sophisticated insurance policies, get tailor-made help and important financial savings with a mixture of Cotiviti’s Cost Coverage Administration and Coding Validation options. Cost Coverage Administration and Coding Validation collectively assist payers tailor, take a look at, and execute best-practice medical and cost insurance policies, and forestall and proper coding errors shortly and successfully.


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