CurrentHealth NetPolicy CC.PP.070

340B Payment Reduction / Drug Coding Implications

Defines how Health Net adjusts outpatient drug reimbursement when drugs are acquired under the 340B program and which providers and claims are subject to the ASP minus 22.5% payment reduction. Applies to providers submitting outpatient (OPPS) claims and Health Plan adjudication processes.

Policy Summary

PayerHealth Net

Policy340B Payment Reduction / Drug Coding Implications

Policy CodePolicy CC.PP.070

Change TypeNo material changes

Effective Date

Next Review Date

Key ActionSubmit OPPS outpatient claims (bill type 13X) with HCPCS modifier JG when a drug was acquired under 340B; submit modifier TB for informational reporting when excluded from the payment reduction.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

ASP - 22.5%reimbursement rate applied to 340B-acquired drugs when modifier JG is present

OPPSclaim type to which modifiers JG/TB are applicable

JG / TBHCPCS modifiers used to identify 340B-acquired drugs

Excludedentities not subject to the ASP minus 22.5% reduction

Edit reviewpre-payment validation

340B Payment and Adjudication Rules

340B payment and billing criteria

Payment and adjudication rules for outpatient drugs acquired under 340B:

Providers must report HCPCS modifier JG on separately payable, non-pass-through OPPS drug line items acquired under the 340B program to trigger reimbursement at ASP minus 22.5%.

Health Plan pre-payment review will validate appropriate use of modifiers JG or TB, confirm HRSA 340B participation of the entity, and verify that each HCPCS code billed is a 340B-covered drug; the edit does not apply to vaccines or pass-through drugs.

Modifier TB (informational)

Providers may report HCPCS modifier TB on OPPS (bill type 13X) line items for informational reporting when an entity has acquired a drug under 340B but is excluded from the CMS OPPS rate reduction policy.
Modifier TB is informational only and is not subject to the ASP minus 22.5% payment reduction.

Policy Summary

PayerHealth Net

Policy340B Payment Reduction / Drug Coding Implications

Policy CodePolicy CC.PP.070

Change TypeNo material changes

Effective Date

Next Review Date

SourceLink

On This Page

Trek Health ingests and normalizes Transparency in Coverage data and payer policy updates to give provider organizations a clear view of how commercial reimbursement behaves across markets, payers, and services. Our platform transforms raw payer disclosures into structured intelligence that supports contract evaluation, payer negotiations, and service line strategy. By combining market benchmarks with ongoing policy visibility, Trek helps teams identify variability, risk, and opportunity in commercial reimbursement. The result is faster insight, stronger negotiating positions, and more informed financial decisions.

HCPCS Modifiers and Exclusions

340B HCPCS modifiersHCPCS

JG	Drug or biological acquired with 340B pricing program discount; indicates payment reduction to ASP minus 22.5%
TB	Drug or biological acquired with 340B pricing program discount; informational only (no payment reduction)

Excluded status indicator

Excluded itemsThis pre-payment edit does not apply to vaccines or pass-through drugs.

Entities excluded from CMS rate reductionEntities excluded (e.g., certain Children's Hospitals, Rural SCH, and PPS‑exempt cancer hospitals) are not subject to the ASP minus 22.5% payment reduction.

Effect on adjudication when excludedIf the provider is excluded or the drug is not a 340B‑covered drug, the claim adjudicates per the provider fee schedule and modifier TB remains informational.

Billing, Modifier Reporting, and Claim Validation

Billing Rule

Report JG on OPPS (13X) claims; use TB for informational reporting — Health Plan will validate pre-payment

Submit OPPS (bill type 13X) outpatient drug claim lines with HCPCS modifier JG when the drug was acquired under the 340B Pricing Program to trigger reimbursement at ASP minus 22.5%; if the entity is excluded from the CMS rate reduction policy, report modifier TB for informational purposes only. Health Plan pre-payment edits will validate modifier use, confirm HRSA 340B participation, and verify the drug is a 340B-covered drug — missing JG may cause the system to replace the original service line with one appended with modifier JG and price the line at ASP minus 22.5%; vaccines and pass-through drugs are excluded from this edit.

Applicable providers must report modifier JG on separately payable, non-pass-through OPPS drug line items acquired under 340B to receive ASP - 22.5% pricing (Health Plan will auto-apply when validated).
Report modifier TB on OPPS (13X) claims only for informational reporting when the entity is excluded from the CMS payment reduction; TB does not trigger payment reduction.
Health Plan pre-payment review will validate modifier presence, confirm facility participation on the HRSA website, and verify the drug is a 340B-covered drug; vaccines and pass-through drugs are excluded from this edit.

Key Terms and Modifier Definitions

340B Pricing Program

Program purposeSection 340B requires manufacturers to provide discounted outpatient drug pricing to qualifying covered entities so they can expand services for underserved populations.

AdministrationThe program is administered by the Office of Pharmacy Affairs within HRSA (Health Resources and Services Administration).

Participant actionQualifying covered entities purchase drugs at discounted prices and must correctly report 340B‑acquired drugs per CMS guidance.

Legislative originEstablished by Section 340B of the Public Health Service Act (1992).

Modifier JG / TB

Modifier JGIndicates a drug or biological was acquired with 340B pricing; when reported on OPPS claims it triggers reimbursement at ASP minus 22.5%.

Modifier TBIndicates a drug or biological was acquired with 340B pricing but is reported for informational purposes only (no payment reduction).

Usage contextBoth modifiers are HCPCS modifiers used to identify 340B‑acquired drugs on OPPS claims and are validated during pre‑payment review.

Outpatient Prospective Payment System (OPPS)

DefinitionThe Outpatient Prospective Payment System (OPPS) is CMS's payment system that determines hospital outpatient reimbursement rates.

Relevance to policyThis policy applies to outpatient drugs billed on OPPS claims (bill type 13X) where CMS established a payment reduction for 340B‑acquired drugs effective Jan 1, 2018.

Claim validationHealth Plan pre‑payment review evaluates OPPS outpatient claims for appropriate use of modifiers JG or TB and validates HRSA participation and covered drug status.