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340B Drug Program - JE Part A

340B Drug Program

This program extends front-end discounts on covered outpatient drugs to eligible facilities/covered entities. Drug manufacturers enter into a Pharmaceutical Pricing Agreement (PPA) with the Department of Health and Human Services (DHHS) Secretary. A "ceiling" price is calculated by the Health Resources and Services Administration (HRSA), which is done by subtracting the Unit Rebate Amount from the Average Manufacturer Price. This is the maximum statutory price that may be charged by a manufacturer. Manufactures and/or distributors may extend a price lower than the "ceiling" to 340B-enrolled providers. As of January 1, 2018, Medicare reimburses drugs purchased through the 340B Drug Program at a rate of the Average Sales Price (ASP) - 22.5%.

Appeal Rights

Drugs purchased through the 340B Program do not have appeal rights; requests for an appeal will be dismissed.

Eligible Organizations/Covered Entities

The below facility types are eligible for participation in the 340B Drug Program, as outlined by the Office of Pharmacy Affairs (OPA). These entities must register/enroll with the 340B program and comply with all its requirements. Upon enrollment, entities are assigned a 340B identification number. This number must be verified by the vendor before purchasing 340B discounted drugs.

Other qualifying criteria is applicable during the online registration process, which is subject to OPA approval.

  • Health Centers
    • Federally Qualified Health Centers (FQHCs)
    • FHQC Look-Alikes
    • Native Hawaiian Health Centers
    • Tribal / Urban Indian Health Centers
  • Ryan HIV/AIDS Program Grantees
    • Ryan White HIV/AIDS Program Grantees
  • Hospitals
    • Children's Hospitals (exempt from Medicare Prospective Payment System [PPS])
      • Department
    • Critical Access Hospitals (CAHs)
    • Disproportionate Share Hospitals (DSHs)
    • Free Standing Cancer Hospitals (exempt from Medicare PPS)
    • Rural Referral Centers
    • Sole Community Hospitals
  • Specialized Clinics
    • Black Lung Clinics
    • Comprehensive Hemophilia Diagnostic Treatment Centers
    • Title X Family Planning Clinics
    • Sexually Transmitted Disease Clinics
    • Tuberculosis Clinics

Registration Periods and Effective Dates

The registration period for newly covered entities and outpatient facilities are limited to the below registration periods with applicable effective dates.

Registration Period Effective Start Date
January 1 - January 15 April 1
April 1 - April 15 July 1
July 1 - July 15 October 1
October 1 - October 15 January 1


"In situations where the 15th falls on a Saturday, Sunday, or Federal holiday, the deadline will be the next business day. Covered entities will not be able to submit registrations outside of these date parameters listed above except when the Secretary has declared a Public Health Emergency. In addition to the complete on-line registration, any required supporting documentation must be submitted on the same day as on-line registration is completed. Incomplete packages will not be considered. For more information on what constitutes a complete package, visit the OPA Web site at" - 77 Federal Register (FR) 43342, (July 24, 2012).

Program Requirements

  • Keep 340B OPA Information System (OPAIS) up to date and accurate
    • Register new outpatient facilities and contract pharmacies as necessary
  • Recertify eligibility every year
    • If there is a change in a covered entity's eligibility status, the covered entity is responsible for immediately notifying OPA and should stop purchasing drugs through 340B Program
  • Prevent diversion to ineligible patients
    • Covered entities must not resell or otherwise transfer 340B drugs to ineligible patients
  • Duplicate discount prohibition
    • Manufacturers are prohibited from providing a discounted 340B price and a Medicaid drug rebate for same drug
    • DSH, children's hospitals and freestanding cancer hospitals may not obtain covered outpatient drugs through a group purchasing organization, or other group purchasing arrangement, in addition to participating in 340B Program
  • Prepare for program audits
    • Maintain auditable records documenting compliance with 340B Program requirements
    • Covered entities are subject to audit by manufacturers or federal government
    • Any covered entity that fails to comply with 340B Program requirements may be liable to manufacturers for refunds of discounts obtained
    • Disproportionate Share Hospitals (DSH), freestanding cancer hospitals, and children's hospitals must also refrain from participating in a group purchasing organization for covered outpatient drugs
    • Covered entity is responsible for notifying drug manufacturers and wholesalers that it will now purchase outpatient drugs at 340B prices
    • Wholesalers and manufacturers verify covered entity's enrollment on 340B database and must sell its drugs at or below maximum price determined under 340B statute

Billing Guidance

Effective January 1, 2018, applicable facilities must append the appropriate modifier to furnished outpatient drugs acquired under the 340B Program.

  • Modifier JG indicates drug or biological was acquired with 340B drug pricing program discount
  • Modifier TB indicates drug or biological was acquired with 340B drug pricing program discount and is reported for informational purposes

View the below for the appropriate modifier a hospital should report depending upon its hospital type (as determined by CMS) and the pertinent Outpatient PPS (OPPS) drug status indicator (SI) for the 340B-acquired drug being furnished.

Not Paid Under OPPS

Hospital Type Pass-through Drug
(SI "G")
Separately Payable Drug
(SI "K")
Packaged Drug
(SI "N")
CAH TB, Optional TB, Optional TB or JG, Optional
Maryland Waiver Hospital TB, Optional TB, Optional TB or JG, Optional
Non-Excepted Off-Campus Provider-Based Department TB TB TB or JG, Optional


Paid Under OPPS, Excepted from 340B Payment Adjustment for 2018

Hospital Type Pass-through Drug
(SI "G")
Separately Payable Drug
(SI "K")
Packaged Drug
(SI "N")
Children's Hospital TB TB TB or JG, Optional
PPS-Exempt Cancer Hospital TB TB TB or JG, Optional
Rural Sole Community Hospital TB TB TB or JG, Optional


Paid Under OPPS, Subject to 340B Payment Adjustment

Hospital Type Pass-through Drug
(SI "G")
Separately Payable Drug
(SI "K")
Packaged Drug
(SI "N")
DSH TB JG TB or JG, Optional
Medicare Dependent Hospital TB JG TB or JG, Optional
Rural Referral Center TB JG TB or JG, Optional
Non-Rural Sole Community Hospital TB JG TB or JG, Optional


  • Vaccines with SI "F," "L," or "M" and drugs on pass-through payment, SI "G," do not require appendage of a 340B Program modifier
  • Only append modifier TB or JG if drug is purchased through 340B Program
  • If appending more than one modifier to line item, list pricing modifier(s) first, followed by any descriptive modifiers
  • When billing for waste, discarded drug amount should be billed on a separate claim line
    • Append applicable TB/JG modifier (if appropriate) first, followed by JW modifier

Access a listing of drugs paid under the OPPS and their assigned SI via the CMS Addendum B Updates link below.

340B Drug Program Inquiries

Submit 340B program related inquiries to its government contractor Apexus at 1-888-340-2787 or

For claims processing questions, including the use of modifiers, call Noridian Provider Contact Center.



Last Updated Fri, 30 Dec 2022 18:44:22 +0000