Currentpriority healthPolicy 340B Drug Payment Policy

340B Drug Payment Policy

Defines Priority Health's billing, coding, documentation, and reimbursement expectations for drugs purchased under the federal 340B Drug Pricing Program for outpatient services and who may bill such claims.

Policy Summary

Payerpriority health

Policy340B Drug Payment Policy

Policy CodePolicy 340B Drug Payment Policy

Change TypeMaterial change — modifier TB language added

Effective DateDec 1, 2025

Next Review DateMay 28, 2026

Key ActionSubmit correct HCPCS/CPT, NDC and report actual acquisition cost with U6 and TB modifiers for provider-administered 340B drugs.

SourceLink

POLICY UPDATE CHANGES

Added modifier TB verbiage.

Policy created.

OutpatientPlace of service restricted to

SCC 20Retail 340B claim flag

U6, TBRequired modifiers

Audit/ReviewProvider verification

340B Billing and Reimbursement Criteria

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340B billing and reimbursement criteria

Claims for drugs purchased under 340B must meet specific provider, place-of-service, coding, and reporting requirements to be reimbursed per Priority Health policy.

ALL of the following

Who may bill
- Only Covered Entities listed on the HRSA Medicaid Exclusion File that have chosen to dispense 340B medications to Medicaid members may bill 340B claims.
- Contract pharmacies within the pharmacy network that are authorized to bill for drugs purchased under the 340B program may bill 340B claims.
Place of service
- Service is rendered in an outpatient place of service only.
Retail/Point-of-Sale claims (NCPDP) requirements
- Include NDC and other standard fields required by the PBM.
- Flag 340B claims by entering Submission Clarification Code (SCC) 20 in NCPDP field 420-DK.
- If using Basis of Cost Determination Code 08, report 340B acquisition cost in Submitted Ingredient Cost field (409-D9); use of Code 08 is optional.
- If medication was not acquired at 340B pricing, exclude all 340B-related identifiers.
Provider-administered drug claims
- Submit HCPCS/CPT code, NDC, and other standard claim/payment fields on CMS-1500 or appropriate electronic fields.
- Include Michigan modifiers U6 and TB (the CMS modifiers for OPPS drugs acquired under 340B) or appropriate electronic equivalent.
- Report the actual acquisition cost (price paid) for any 340B-purchased stock.
Coding and documentation accuracy
- Submit correct and applicable drug-related codes (HCPCS, CPT, NDC) along with appropriate 340B claim fields when applicable.
- Complete documentation and accurate coding are the provider's responsibility and are required for reimbursement; claims may be validated via pre- or post-claim reviews.
Audit and remediation
- Priority Health will review claims to identify potential 340B billing; providers will be notified of potential errors and asked to verify and correct claims.
- Failure to follow these guidelines may result in claim rejection, denial, or recoupment.

Required Codes and Cost Reporting

Required code setsmixedCovered

HCPCS	Provider/admin drug coding required
CPT	Procedure and drug administration coding
NDC	Drug product identifier and required field on claims

Submitted Ingredient Cost reporting — retail (point-of-sale) 340B claims

Basis of Cost Determination Code used08 (optional to use); if used, 340B acquisition cost must be reported

Submitted Ingredient Cost fieldNCPDP field 409-D9 — report 340B acquisition cost when Code 08 is used

Retail 340B claim flagSCC 20 must be entered in NCPDP field 420-DK for all 340B covered entity retail claims

Exclude identifiers when not 340BDo not include 340B identifiers if medication was not acquired at 340B pricing

Pre-Service Determination and Authorization

Prior Authorization

Prior Authorization Required (PSOD)

For Medicare: For indications that don't meet criteria of an NCD, local LCD, or a specific medical policy, a Pre-Service Organization Determination (PSOD) must be completed. See the Priority Health Provider Manual for details on submitting a PSOD. Authorization requirements and medical necessity determinations appropriate to the procedure, diagnosis, and frequency are still required. An authorization is not a guarantee of payment — proper billing, coding, and documentation consistent with CPT, HCPCS, revenue code guidance, CMS and MDHHS rules, and Priority Health billing policies must be followed. Failure to document services rendered or to follow government program regulations and contractual requirements may result in claim rejection, denial, or recovery of payment.

PSOD required when Medicare indications lack an applicable NCD/LCD or Priority Health medical policy
Follow Provider Manual for PSOD submission process
Authorization does not guarantee payment; billing/coding/documentation must be compliant
Noncompliance may lead to claim denial, recoupment, or rejection

Key Definitions

340B Drug Pricing Program

Program definitionFederal program (Section 340B PHS Act) that reduces outpatient prescription drug costs for eligible healthcare organizations and covered entities

PurposeEnables eligible covered entities to purchase drugs at reduced prices via manufacturer Pricing Agreements to stretch resources for outpatient care

Administering agencyHealth Resources and Services Administration (HRSA)

340B Covered Entity (CE)

DefinitionA facility listed in the HRSA Office of Pharmacy Affairs Information System (OPAIS) that qualifies to purchase drugs through the 340B Program

Verification sourceHRSA OPAIS listing

RoleEligible to purchase outpatient prescription drugs at 340B discounted prices

Contract Pharmacy

DefinitionA pharmacy contracted by a Covered Entity to dispense 340B medications purchased by that entity

RelationshipOperates under contract with a Covered Entity to dispense 340B-acquired drugs

Use caseMay submit retail 340B claims on behalf of the Covered Entity when authorized

Actual Acquisition Cost

DefinitionActual Acquisition Cost — the actual purchase price paid for drug products from a specific manufacturer

Reporting requirement (retail)If Basis of Cost Determination Code 08 is used, report 340B acquisition cost in Submitted Ingredient Cost (409-D9)

Reporting requirement (provider-administered)Providers must report actual acquisition cost for any 340B‑purchased stock on CMS-1500 or appropriate electronic field (use modifiers U6 and TB as applicable)