The Centers for Medicare & Medicaid Services yesterday released Frequently Asked Questions, at the request of the AHA, to clarify CMS’s new modifier policy for billing 340B-acquired drugs under the outpatient prospective payment system. CMS requires that all 340B hospitals use one of two new payment modifiers, beginning Jan. 1, 2018, as part of its final rule that will reduce Medicare Part B payments to certain 340B hospitals. Specifically, 340B hospitals subject to the drug payment reductions are required to use modifier “JG” for nonpass-through separately payable drugs (i.e., those drugs assigned status indicator “K”) acquired under the 340B program. 340B hospitals that are exempt from the OPPS policy changes, such as rural sole community hospitals, children’s hospitals and PPS-exempt cancer hospitals, are required to use the informational modifier “TB” to identify OPPS separately payable drugs purchased with a 340B discount. The FAQs address a wide range of implementation issues, such as identifying drugs that must be billed with modifier “JG,” how hospital-owned retail pharmacies and non-excepted off-campus provider-based departments are to be treated, and the definition of rural SCHs.

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