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Elizabeth M. Whitehorn, Director

Provider Notice issued 04/30/12

340B Providers

To:​  Participating Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs), Encounter Rate Clinics (ERCs), Hospitals, Local Education Agencies (LEAs), Local Health Departments, School Based/Linked Health Centers, Pharmacies and Physicians​
​Date: ​April 30, 2012
​Re: ​340B Providers

This is an important reminder that  all providers who are enrolled as 340B providers with the U.S. Department of Health and Human Services (DHHS), Health Resources and Services Administration (HRSA), must charge HFS no more than their actual acquisition cost plus a reasonable dispensing fee for drugs dispensed or administered to HFS clients.

Section 340B of the Public Health Service Act limits the cost of covered outpatient drugs to certain federal grantees, federally-qualified health center look-alikes, and qualified hospitals. These providers purchase pharmaceuticals at significantly discounted prices. These providers are referred to as 340B providers.

In addition to reimbursement for ingredient, HFS allows providers a dispensing fee of $3.40 for brand name drugs, and effective February 1, 2012, $6.35 for generic drugs. HFS-enrolled providers who are enrolled with HRSA as 340B providers shall charge HFS no more than their actual acquisition cost for the product, plus the appropriate dispensing fee, based on the brand/generic status of the drug.

In addition, effective May 1, 2012, pharmacy providers submitting claims through the point-of-sale system for drugs purchased through the 340B program must identify the drug as a 340B purchased drug by populating the Submission Clarification Code (42Ø-DK) field with a value of 20.

Providers submitting fee-for-service claims using the HFS 2360 or HIPAA 837 Professional Claim Form must identify 340B purchased drugs by reporting modifier "UD" in conjunction with the appropriate procedure code.

Providers submitting outpatient institutional claims for renal dialysis injectable drugs or expensive drugs must identify 340B purchased drugs by reporting modifier "UD" in Form Locator 44 of the UB-04 or its electronic claim format. Modifier "UD" must be the first modifier listed after the procedure code.

Provider types other than pharmacies shall in no instance bill HFS more than their usual and customary charges for the drug; any amount billed above their usual and customary charges shall be repaid to the department in accordance with state and federal law.

Questions regarding this notice may be directed to the Bureau of Pharmacy Services at 1-877-782-5565, Option 7.

Theresa A. Eagleson, Administrator

Division of Medical Programs