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25-1007m Maximize Savings with the Federal 340B Drug Pricing Program

Date: 09/25/25

Use code 340B with modifier UD08 to access discounted  rates.

Health Net reminds physicians and other providers of the benefits and requirements of the 340B Drug Pricing Program. This federal initiative mandates that drug manufacturers offer substantial discounts to eligible hospitals and health care providers (known as covered entities).

Why 340B matters

Participation in the 340B program exempts manufacturers from paying Medicaid (Medi-Cal in California) drug rebates on medications purchased through 340B and dispensed to Medicaid beneficiaries. This prevents duplicate discounts – when both a 340B discount and a Medicaid rebate are applied to the same drug.

Who qualifies for 340B pricing?

Covered entities include:

  • Qualifying hospitals.
  • Federal grantees from the Health Resources & Services Administration (HRSA)1.
  • The Centers for Disease Control & Prevention (CDC).
  • The Department of Health & 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 providers.

Claim requirements for Medi-Cal beneficiaries

To comply with federal law and avoid duplicate discounts, physicians and other providers must correctly identify claims involving 340B-purchased drugs:

  • Physician-administered drugs: Include the UD modifier.
  • Pharmacy claims: Use “08” in the Basis of Cost Determination field.

These indicators notify the California Department of Health Care Services that a 340B drug was used, ensuring the claim is excluded from the manufacturer’s rebate invoice.

Learn more

1Eligible covered entities are defined in statute and include HRSA-supported health centers and look-alikes.

Additional information

If you have questions regarding the information contained in this update, contact the Health Net Provider Services Center by email, by telephone at 800-675-6110 or through the Health Net provider portal. Behavioral health providers can call 844-966-0298.

 

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.

For Medi-Cal, this information applies to Amador, Calaveras, Inyo, Los Angeles, Mono, Sacramento, San Joaquin, Stanislaus, Tulare and Tuolumne counties.



Last Updated: 09/25/2025