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Claims & Payment Policy: 340B Drug Payment Reduction Policy

March 12, 2021

‘Ohana is implementing the following policy for 340B Drug Payment Reduction Policy (HI) with an effective date as of June 16, 2021

Summary of Policy:

The 340B Drug Discount Program is a US federal government program that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices. The intent of the program is to allow covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.

Effective 1/1/2018, the Centers for Medicaid and Medicare (CMS) reduced the payment to participating providers paid under an Outpatient Prospective Payment System (OPPS) for certain drugs acquired through the 340B program. CMS established two Healthcare Common Procedure Coding System (HCPCs) Level II modifiers to identify 340B-acquired drugs. Providers are required to report either modifier "JG" or "TB" on OPPS claims. Modifier "JG" indicates the 340B as payable and modifier "TB" as informational.

What does this mean for providers?

Verified 340B providers who submit claims with 340B covered codes without required modifiers "JG" and "TB" in POS 22 (outpatient hospital) or 23 ( emergency room) and the drug has an assigned status indicator of "K", will have the "JG" and/or "TB" modifier added to the claim. This will ensure the claim is reimbursed at the appropriate rate. Claims may be eligible for recovery of overpayments.

While these changes require a period of adjustment, ‘Ohana is committed to assisting providers in adjusting to these changes. Additional information regarding the policy will be made available during the implementation process.

If a provider does not agree with ‘Ohana’s decision, they may dispute or appeal the denial. ‘Ohana will require medical records that substantiate provider billing.

Providers can review the complete policy at, select the state of Hawaii, select Claims, then Payment Policy.

We are here to help. Please contact your Network Representative for general inquiries regarding this policy.


'Ohana Health Plan, Inc.