New Year Brings Medicare Part B Cuts for 340B Purchased Drugs

InsightsClient Alert

While many of us were preparing to ring in the New Year, U.S. District Judge Rudolph Contreras ruled that CMS’s nearly 30% payment reduction on certain 340B purchased drugs could take effect as planned.  Judge Contreras ruled that the lawsuit to block these cuts could not be justified until hospitals presented specific claims for reimbursement that have received the reduced payment rate.  This ruling opens the possibility of another lawsuit forthcoming once the Medicare claims are presented.

CMS’s 2018 OPPS Final Rule requires all hospitals paid under OPPS to bill with a modifier to determine if the drug was purchased under the 340B Program starting January 1, 2018.  One modifier, “JG” will distinguish that the hospital is subject to the payment reduction and the other modifier, “TB” will identify those hospitals not subject to the payment reduction but required to report this informational modifier.  Hospitals must follow the Medicare hospital type designation when determining applicability of the 340B drug payment adjustment. Hospitals paid as a Sole Community Hospital (SCH) under Medicare rules are exempt from the cuts, even if registered as a DSH 340B Covered Entity with HRSA.  In this situation the hospital would not be subject to the payment reduction but still bill the informational modifier.

The 340B payment adjustment applies to separately payable OPPS drugs that meet the definition of “covered outpatient drug” with status indicator “K”.  This does not apply to vaccines (status indicator “F”, “L” or “M”) and does not apply to drugs on pass-through payment status (status indicator “G”).

Link to FAQs regarding 340B Modifiers under OPPS.

Link to quarterly update of Addendum B (listing of drugs paid under the OPPS and their assigned status indicator):

If you need assistance evaluating the effect of the 2018 OPPS Final Rule, please contact our Albany office at (229) 883-7878 or our Atlanta office at (404) 220-8494.