M-8. 340B Program

Section 340B of the Public Health Services Act (42 U.S.C-256b) requires drug manufacturers to provide outpatient drugs to eligible health care organizations or covered entities at significantly reduced prices. This program enables covered entities to purchase drugs at discounted prices and use the remaining funds to provide comprehensive services to eligible people. This policy also allows insurers, including Medicaid, to share in the savings generated by the 340B Program.

To prevent duplicate discounts and ensure manufacturers are not invoiced for claims submitted using 340B drugs:

  • Outpatient pharmacies submit a value of “20” (340B / Disproportionate Share Pricing/Public Health Service) in the “Submission Clarification Code” field (420-DK) for all pharmacy claims
  • Prescribers submit a Healthcare Common Procedure Coding System (HCPCS) code, 11-digit NDC, NDC unit of measure, NDC quantity, and modifier value of “U8” for medical claims including clinician-administered drugs

Only claims submitted with these values are excluded from the drug rebate system invoicing process. If claims are not submitted with these values and HHSC invoices for rebates, then contracted entities such as pharmacies or medical facilities must resolve the dispute with the manufacturer.

HHSC does not approve alternative arrangements for preventing duplicate discounts. The drug rebate system relies on the correct submitted values to identify claims excluded from the rebate invoicing process.

Refer to the VDP website 340B Providers page (txvendordrug.com/providers/340b-providers) for more information.