The interdisciplinary team collaboration between financial/revenue cycle team members and operations is increasingly important. The implementation of the Medicare billing modifiers and payment implications on 340B purchased drugs highlighted this need for many organizations.
Beginning January 1, 2018 CMS Outpatient Prospective Payment (OPPS) finalized payment reductions and billing modifier requirements for select entities who purchase drugs under the federal 340B pricing program and furnish to Medicare beneficiaries by a hospital who are paid under the OPPS. The organization is required to bill each drug line with the appropriate modifier to ensure proper payment.
Modifier “JG” Drug or biological acquired with 340B drug pricing program discount
Modifier “TB” Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes
While the TB modifier is informational; it is required on OPPS claims (bill type 13X) for all applicable providers. JG modifier is considered a payment modifier and signals a reduction in payment to ASP-22%. Understanding some key elements (explained in the table below) may help simplify the ruling to determine how an organization should apply the modifiers and when payment reduction occurs (JG). The table below excludes vaccines as they are not eligible for 340B discounts and application of a JG or TB modifier does not apply. Additionally, CMS does not pay for packaged drugs separately; thus, the application of the JG or TB modifier is optional and excluded from the table.
Table is adopted from CMS FAQ and updated based on 2021 HOPPS Final Rule
JG and TB modifiers should be applied in addition to other required modifiers. Highlighted are some scenarios in which JG or TB modifiers may be billed in addition on a single drug line.
Waste requires the application of a “JW” modifier
“PN” or “PO” modifiers are required for off campus provider based departments
“EA”, “EB” or “EC” modifiers are required for billing erythropoiesis stimulating drugs (ESA)
Dual-eligible beneficiaries based on the state Medicaid program may require “UD” modifier when billing 340B purchased drugs
SHOUT-OUTS! Revenue integrity and pharmacy teams should review their process for applying the appropriate JG or TB modifier. New drugs routinely enter the market, while other drug’s pass-through status may expire on a quarterly basis. It is important to continually update the application of the JG or TB modifier to prevent potential over- or underpayments.
Pharmacy teams should take into consideration payment reduction on applicable 340B purchased drugs when performing financial analysis or formulary consideration. Review along with previous newsletter addressing pass-through status.