Provider Notice issued 05/15/13

Institutional Billing for $12.00 Dispensing Fee for 340B Purchased Drugs

The purpose of this notice is to advise providers how to bill outpatient series claims for the $12.00 dispensing fee for generic and brand name drugs purchased under the federal 340B drug pricing program. Please note, drugs billed on Medicare crossover claims and drugs identified on the Expensive Drugs and Devices Listing will not be eligible for the dispensing fee.

These billing requirements pertain only to drugs on the Renal Dialysis Injectable Drugs listing, when billed in conjunction with Renal Dialysis Treatment (Category of Service 025). Claims for these drugs are billed on the UB-04 paper claim format or the HIPAA 837I electronic claim transaction.

Effective with dates of service February 1, 2013 and after, the department will pay the actual acquisition cost for the drug, or the Department's established 340B allowable reimbursement rate for the drug, plus a dispensing fee of $12.00 for brand and generic drugs.

To be eligible for the $12.00 dispensing fee, providers must submit claims containing 340B drugs identified on the department's website at Renal Dialysis Injectable Drugs. Providers must identify 340B purchased drugs by reporting modifier "UD" in Form Locator 44 of the UB-04 or Loop 2400 of the 837I. Modifier "UD" must be the first modifier listed after the procedure code.

Only one $12.00 dispensing fee is to be added to the actual acquisition cost per Revenue Code line. If the drug is administered on multiple treatment days, the provider must report the drug on separate Revenue Code lines in order to receive the $12.00 dispensing fee for each treatment day. Revenue Codes 0634, 0635 and 0636 cannot be systematically rolled up due to pricing calculations. If the claim contains more than 54 Revenue Code lines, the claim service dates must be split into two or more separate claims.

Even though 340B drugs identified on Medicare crossover claims and on the Expensive Drugs and Devices Listing are not eligible for a dispensing fee, providers still must identify 340B purchased drugs by reporting modifier "UD" in Form Locator 44 of the UB-04 or Loop 2400 of the 837I. Modifier "UD" must be the first modifier listed after the procedure code.

The department is currently developing the claims processing system changes to add the drug acquisition price and the $12.00 dispensing fee to the department's database. Until this has been completed, reimbursement will continue to be based on the current applicable fee schedule. The department will re-calculate and adjust any incorrectly paid claims. For dates of service February 1, 2013, and after, hospitals and renal dialysis providers should add the $12.00 dispensing fee to their actual acquisition cost.

The department has posted a 340B Drug Pricing Frequently Asked Questions to the Pharmacy webpage. Additional questions regarding this notice may be directed to the Bureau of Comprehensive Health Services at 1-877-782-5565.

Theresa A. Eagleson, Administrator

Division of Medical Programs