What Is the JG Modifier in Medical Billing?

Healthcare Common Procedure Coding System (HCPCS) modifiers are essential in medical billing. These two-character codes, consisting of letters or numbers, append to a procedure or service code to provide additional information without altering the code’s inherent definition. Accurate application is crucial for healthcare providers to navigate claim submission and reimbursement.

Proper modifier usage ensures clean and precise claims, directly impacting a provider’s ability to receive appropriate payment for services rendered. This helps avoid common billing pitfalls, fostering compliance within the complex healthcare payment system. Modifiers are a tool for clear communication between providers and payers, facilitating efficient and correct financial transactions.

Defining the JG Modifier

The JG modifier is an alphanumeric code meaning “Drug or biological acquired with 340B drug pricing program discount, reported for informational purposes.” This modifier identifies medications that healthcare organizations purchased through the 340B Drug Pricing Program. The 340B program, established in 1992, requires pharmaceutical manufacturers to sell outpatient drugs at reduced prices to eligible healthcare entities.

The program’s primary purpose is to enable covered entities, such as hospitals and clinics, to extend federal resources. This allows them to reach more eligible patients and provide comprehensive services, particularly for uninsured and low-income populations. The JG modifier specifically applies when billing Medicare Part B for drugs administered in a hospital outpatient setting that were acquired under this program.

Situations Requiring the JG Modifier

The JG modifier is mandatory for hospitals participating in the 340B program when billing Medicare Part B for certain drugs. It applies to separately payable drugs and biologicals acquired at 340B discounted prices and administered in an outpatient hospital setting. This includes injectable medications and chemotherapy drugs, identified by a status indicator of “K” in Medicare’s Outpatient Prospective Payment System (OPPS).

As of January 1, 2024, all 340B covered entities, including hospital-based and non-hospital-based providers like Ryan White clinics, are required to report the JG modifier. However, the JG modifier will be discontinued after December 31, 2024. Starting January 1, 2025, all 340B covered entities must transition to using the “TB” modifier for these claims.

Billing and Reimbursement Implications

The accurate use of the JG modifier carries direct implications for billing and reimbursement under Medicare Part B. While historically the JG modifier could trigger a lower reimbursement rate for 340B-acquired drugs, recent guidance indicates a shift in its primary function. Currently, the JG modifier, along with the upcoming TB modifier, serves an informational purpose.

These modifiers are crucial for identifying 340B-acquired drugs because units of these drugs are excluded from the Part B inflation rebate established by the Inflation Reduction Act of 2022. Therefore, accurate modifier usage remains vital for compliance with Medicare regulations and to avoid payment denials, audits, or potential penalties. Incorrectly omitting the modifier for a 340B drug, or applying it inappropriately, can lead to claim rejections, delays in payment, and administrative burdens.