340B Modifiers Return for Medicare Part B Claims

Just when you thought you were free of them, the JG and TB 340B modifiers are back.

Starting Jan. 1, 2024, the Centers for Medicare & Medicaid Services (CMS) will require all covered entities — hospitals and grantees alike — to begin using the modifiers on Medicare Part B claims to designate drugs and biologicals purchased under the 340B drug pricing program. They’re meant to comply with the Inflation Reduction Act of 2022, which requires drug manufacturers to issue rebates when the prices of their products rise faster than that year’s rate of inflation, but excludes 340B purchases.

If you find this news confusing, you’re probably not alone.

CMS’ initial guidance, released in late 2022, limited the requirement to hospitals paid under the Outpatient Prospective Payment System (OPPS) — meaning it didn’t apply to critical access hospitals, off-campus provider-based departments of hospitals, or hospitals in Maryland that are paid under the All-Payer or Total Cost of Care Models. Earlier this year, CMS updated its guidance to broaden the requirement to hospitals not paid under the OPPS and grantees, including Ryan White Clinics and hemophilia clinics.

CMS says the policy will have no effect on OPPS payment rates. In addition to being used to exclude 340B drugs from the rebates, the modifiers will be used to track utilization of 340B-acquired drugs for informational purposes.

The agency encourages covered entities to start using the modifiers during the 2023 calendar year. They’re the same modifiers CMS required starting in 2018 until late 2022 as part of its policy reducing Part B reimbursements to some 340B hospitals, which the U.S. Supreme Court struck down last year as unlawful, and which are the subject of remedial payments that have yet to be finalized to affected hospitals.

To make things more confusing, there are rules governing which modifier — JG or TB — to use, depending on the OPPS drug status indicator or type of non-OPPS covered entity. CMS published an FAQ that explains the rules.

If you aren’t already in the habit of using the 340B modifiers on Medicare claims, you should start now. Using them will be entirely new to grantees and other hospital types that weren’t affected by the now-discontinued Part B reimbursement reduction.

RxTrail can help your organization understand the operational ramifications of the requirement and help update your workflows or billing practices. Contact us to learn more.

Interested in learning more?

Reach out to us today to start a conversation.