340B Modifier
On April 14th, ADVI and Aery Policy and Access Partners released an “Analysis of 340B modifier usage in Medicare Part D claims for IPAY 2026 and IPAY 2027 selected drugs.” The analysis showed that while roughly 9-12% of estimated Part D claims are eligible for 340B pricing, that “just 0.5% and 0.4% of 2026 and 2027 selected drug claims, respectively, carried a 340B modifier.” While not surprising, the results are further confirmation that the current voluntary system of covered entity reporting of 340B claims via a modifier is ineffective at identifying and preventing 340B-Medicaid duplicate discounting. The American Hospital Association has opposed mandatory reporting of 340B claim modifiers and has taken legal action to block Health and Human Services from enacting rules that would require hospitals to participate in 340B rebate models.
The results of this 340B modifier compliance analysis are particularly timely given the fact that, CMS intents to utilize the 340B modifier as its means for mitigating manufacturer duplicate discounting risk associated with covered entity submission of 340B claims and mandatory MFN rebates under the CMMI MFN demonstration projects. However, it has repeatedly been shown that covered entities have consistently failed to include the 340B modifier on their claims. IQVIA has estimated that covered entity submission of undetected upfront 340B discounts for products that also received a Medicaid rebate currently costs the pharmaceutical industry between $4-20 billion annually. The future concept that manufacturers would have no way to identify and prevent having to pay a mandatory 340B discount, a mandatory Medicaid rebate, a mandatory IRA MFP rebate and a mandatory MFN rebate for a single duel eligible claim is a potential nightmare that could cripple the pharmaceutical industry.
Unlike Globe and Guard which are proposed rulemaking, Generous is guidance. Hence, everything under the proposed Generous program is potentially negotiable. Given the potential financial impact to pharmaceutical manufacturers of significantly expanded and undetected duplicate and mandatory government discounts and rebates, it is not surprising that one of the primary negotiation points under Generous has been that CMS must ensure and enforce the timely provision of 340B claims level detail.
The industry is at a very interesting crossroads. It can continue to accept the financial burden of continually expanding and undetectable duplicate mandatory government discounts and rebates and a clearly failed and unregulated 340B modifier system, or it can push back politically and legally, if necessary, to require CMS to ensure and enforce a viable system of preventing 340B duplicate discounts before initiating the CMMI MFN demonstration projects.