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Elizabeth M. Whitehorn, Director

Provider Notice issued 05/30/12

Clarification Regarding Billing for 340B Purchased Drugs

To:​ Participating Advanced Practice Nurses, 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 Physician​
​Date: ​May 30, 2012
​Re: Clarification Regarding Billing for 340B Purchased Drugs​

The purpose of this notice is to advise providers of an extension on the reporting of 340B drugs and to provide clarification on 340B billing. This notice supersedes the Informational Notice issued on April 30, 2012.

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. Providers who are enrolled as 340B providers with the U.S. Department of Health and Human Services (DHHS), Health Resources and Services Administration (HRSA) are referred to as 340B providers.

HFS-enrolled pharmacy providers who are 340B providers must charge HFS no more than their actual acquisition cost for a drug product plus the department-established dispensing fee of $3.40 for brand name drugs and, effective February 1, 2012, $6.35 for generic drugs. 340B providers who are enrolled with the department as a provider type other than pharmacy shall charge HFS no more than their actual acquisition cost for the drug product.

Effective July 1, 2012, providers must report 340 B purchased drugs as outlined below.

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.

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