24-971 Access Lower Drug Pricing Through the 340B Federal Discount Program
Date: 10/11/24
Use code 340B with UD08 modifier to get discount pricing
Health Net, on behalf of CalViva Health, wants to remind physicians and other providers that the 340B program requires drug manufacturers to offer drugs to certain hospitals and other health care physicians or providers (covered entities) at greatly reduced prices.
By selling drugs at lower prices, participating drug manufacturers are not required to pay Medicaid (known as Medi-Cal in California) drug rebates on drugs purchased through the 340B program and provided to a Medicaid beneficiary (better known as the provision against “duplicate discounts”).
Which physicians and other providers qualify for 340B pricing?
- Qualifying hospitals.
- Federal grantees from the Health Resources and Services Administration (HRSA)1.
- The Centers for Disease Control and Prevention (CDC).
- The Department of Health and Human Services’ Office of Population Affairs and Indian Health Services.
- Ryan White clinics and state AIDS drug assistance programs.
- Medicare/Medicaid disproportionate share hospitals, children’s hospitals.
- Other safety net physicians and other providers.
The 340B program requires manufacturers of drugs that are paid for by state Medicaid programs to enter into an agreement with HRSA to provide statutory discounts on drugs to “covered entities.” Covered entities are required to identify claims for which the Medicaid beneficiary received a 340B purchased drug.
Does a provider need to identify claims where Medi-Cal beneficiaries receive 340B purchased drugs?
Yes. To comply with federal law, claims must be filled out correctly to prevent duplicate discounts. Duplicates occur when the drug manufacturer gives the provider the discounted 340B price and pays a Medicaid rebate. To prevent the duplicate discount, physicians and other providers must include the appropriate code on the claim.
Physician Administered Drug claims require a “UD” modifier. Pharmacy claims need to have an “08” in the Basis of Cost Determination field. Both the “UD” modifier and the “08” inform the California Department of Health Care Services that a 340B purchased drug was used for the claim. Our rebate system removes the claims from the drug manufacturers’ rebate invoice ensuring that the drug manufacturer is not subject to the duplicate discount.
Additional information
For more information on Medi-Cal drug rebates please visit Drug Rebate FAQs.
FAQs regarding the pharmacy carve out, questions 44 to 49, have some background and helpful information regarding 340B. Physician Administered Drugs (PADs) are not part of the carve out if dispensed at the provider’s office.
Visit DHCS Medi-Cal Rx FAQs (PDF) for more information.
1Eligible covered entities are defined in statute and include HRSA-supported health centers and look-alikes.
This information applies to Physicians, Participating Physician Groups (PPGs), Hospitals, Ancillary Providers, Community Supports (CS) Providers, Enhanced Care Management (ECM) Providers, and Behavioral Health Providers.
This information applies to Medi-Cal in Fresno, Kings and Madera counties.