Reviewed May 23, 2026

TB modifier — 340B-acquired drug, informational reporting

Last reviewed: May 23, 2026 · Source: CY 2018 OPPS Final Rule (CMS-1678-FC) and CY 2023 OPPS Final Rule (CMS-1772-FC) · Methodology

Quick Answer

What is the TB modifier and when does it apply?

TB attests that a Medicare Part B drug was acquired under the 340B Drug Pricing Program by a 340B-eligible hospital that is statutorily exempt from the OPPS 340B payment policy. The TB carve-out covers three categories: Rural Sole Community Hospitals (Rural SCHs), PPS-exempt Cancer Hospitals, and Children's Hospitals. These entities were never subject to the 2018-2022 ASP-22.5 percent cut that JG drove. TB has always been purely informational — it preserves the 340B audit trail without changing the payment amount. Use JG if you are at a DSH or any other non-exempt 340B covered entity.

About the TB modifier

TB was introduced in the same Calendar Year 2018 OPPS Final Rule (CMS-1678-FC) that introduced JG. The CY 2018 policy paid separately payable 340B-acquired drugs at Average Sales Price (ASP) minus 22.5 percent under OPPS, but Congress and CMS carved out three categories of 340B-eligible hospitals from the cut: Rural Sole Community Hospitals, the eleven statutorily PPS-exempt Cancer Hospitals enumerated under Section 1886(d)(1)(B)(v) of the Social Security Act, and Children's Hospitals. JG was the data identifier for the cut; TB was the parallel identifier for the carve-out so that CMS could still track 340B utilization at the exempt facilities.

The Supreme Court's decision in American Hospital Association v. Becerra (June 2022) invalidated the JG-driven payment cut. The CY 2023 OPPS Final Rule (CMS-1772-FC) restored ASP plus 6 percent as the default rate for both JG-tagged and TB-tagged drugs, effectively erasing the payment-rate distinction between the two modifiers. The CY 2024 OPPS Remedy Rule (CMS-1793-F) directed the one-time lump-sum remedy to JG-affected hospitals; TB hospitals were not part of the remedy because they were never underpaid. However, TB hospitals do bear part of the budget-neutral offset that funds the remedy — a 0.5 percent OPPS conversion-factor reduction for non-drug items and services applied prospectively over roughly 16 years starting CY 2026.

TB survives the policy reversal for the same reason JG does: CMS continues to use the identifier for 340B-utilization monitoring, HRSA program integrity, and ongoing rate analysis. The TB carve-out is about payment policy, not about 340B program-compliance discipline; bucket-reconciliation and split-billing rigor are expected at TB entities just as at JG entities.

When to use TB

Decision tree — TB vs JG vs no modifier
  1. Is the billing entity a registered 340B covered entity? Confirm in the HRSA 340B Office of Pharmacy Affairs Information System (OPAIS) database. If not 340B-registered, neither TB nor JG applies — appending either is a False Claims Act risk.
  2. Is the billing site in the TB carve-out? Three categories qualify: (a) Rural Sole Community Hospitals; (b) one of the 11 statutorily PPS-exempt Cancer Hospitals (Section 1886(d)(1)(B)(v) of the Social Security Act); (c) Children's Hospitals. If yes, continue with TB. If no, stop — use JG.
  3. Watch for off-campus affiliated clinics. The TB carve-out attaches to the OPPS-payment status of the specific billing site, not to the parent organization's classification. An off-campus clinic affiliated with a PPS-exempt cancer hospital but reimbursed under standard OPPS is a JG site, not a TB site, even though the parent organization uses TB.
  4. Was the specific unit dispensed actually 340B-acquired? Check the dispensing system's bucket reconciliation. In a virtual-replenishment model, the unit billed must have been (or be planned to be) replaced from 340B-eligible inventory.
  5. Append TB to the drug HCPCS line. TB can coexist with JW (drug discarded), JZ (no drug discarded), JA/JB (route), and the anatomic eye modifiers as appropriate. TB and JG are mutually exclusive on a single line.

The most common scenario for TB is a PPS-exempt cancer hospital administering a separately payable oncology biologic at its main inpatient/outpatient campus — Keytruda (J9271), Opdivo (J9299), Herceptin (J9355), Avastin (J9035), Rituxan (J9312) and biosimilars. Rural SCHs use TB for the same drug families they administer, typically at lower volume. Children's hospitals use TB heavily for pediatric oncology, rare-disease biologics, and pediatric ophthalmology drugs. In all three sub-categories, the substance of the attestation is the same as JG: this drug was acquired via the 340B Drug Pricing Program.

When NOT to use TB

Use TB when…

  • The billing entity is a registered 340B covered entity (HRSA OPAIS)
  • The billing site is a Rural Sole Community Hospital, PPS-exempt Cancer Hospital, or Children's Hospital
  • The specific unit dispensed was acquired through 340B (or is in a verified virtual-replenishment bucket)
  • The drug is a separately payable Medicare Part B drug
  • The claim is for a hospital outpatient encounter (TB does not apply to inpatient drug billing, which is bundled)

Do not use TB when…

  • The billing site is a DSH or any other non-exempt 340B entity — use JG instead
  • The site is an off-campus affiliated clinic of a TB-eligible parent organization that is itself reimbursed under standard OPPS (use JG)
  • The entity is not a registered 340B covered entity
  • The specific unit was billed from non-340B GPO/wholesale stock and will not be 340B-replenished
  • The drug is administered in an inpatient setting (bundled into the DRG)
  • The claim is a Part D retail-pharmacy claim, not a Part B medical claim
  • You are tempted to put TB and JG on the same line — they are mutually exclusive

The single most common TB misuse is the off-campus affiliated-clinic case: a hospital correctly maps its main PPS-exempt cancer campus to TB but misses that the off-campus outpatient clinic billed under the same CCN is reimbursed under standard OPPS and therefore should use JG. Mapping the site-to-modifier relationship at the OPPS-billing-site level (not at the parent-organization level) is the corrective control.

Per-payer requirements

TB is a Medicare claim-identification modifier. Traditional Medicare expects it on 340B-acquired separately payable drug claims from exempt 340B entities. Commercial payers generally do not require TB. Medicare Advantage plan policies vary by plan; the safest default at a TB-eligible hospital is to append TB on MA claims unless plan policy says otherwise.

Payer TB required on 340B drug? Notes
Medicare (Part B / OPPS) Yes — required identifier for exempt entities Source-of-truth payer. Expected on every 340B-acquired separately payable drug at Rural SCHs, PPS-exempt Cancer Hospitals, and Children's Hospitals. Does not change payment rate (always paid at default ASP+6 percent) but maintains the 340B utilization audit trail. Enforcement posture is softer than JG because TB never had payment consequences, but data-integrity expectations from HRSA and CMS program integrity are the same.
Medicare Advantage Conditional Plan-by-plan policy. Most major MA plans accept TB and many require it for parity with Traditional Medicare data. The TB carve-out applies regardless of payer because it is a Medicare program-integrity construct. Default to appending TB on MA claims at TB-eligible facilities unless the plan policy explicitly says otherwise.
UnitedHealthcare (commercial) Generally no Commercial UHC does not require TB. Some UHC contracts with 340B hospitals include separate transparency or 340B-identification provisions handled outside the HCPCS modifier set; those provisions usually do not distinguish between JG-eligible and TB-eligible entities.
Aetna (CVS Health), commercial Generally no Commercial Aetna does not require TB. Aetna Medicare Advantage follows CMS convention.
Cigna / Express Scripts (commercial) Generally no Commercial Cigna does not require TB on medical drug claims. Cigna's 340B-specific reimbursement renegotiations through contract have historically been applied uniformly to 340B hospitals without distinguishing JG vs TB sub-categories.
State Medicaid (varies) Varies State Medicaid 340B reporting typically uses the UD modifier (not TB) for the duplicate-discount carve-out under the Medicaid Drug Rebate Program. The exact modifier and the carve-in vs carve-out policy vary by state. Confirm with the state Medicaid drug-billing manual; do not assume TB satisfies the Medicaid 340B identification requirement.

Worked examples

Keytruda at a PPS-exempt cancer hospital (main campus) J9271 · 1 mg unit TB required
Site
PPS-exempt cancer hospital, main outpatient infusion suite
Encounter
Hospital outpatient infusion (reimbursed under cancer-hospital payment authority, not standard OPPS)
Dose
200 mg flat dose, drawn from 2 × 100 mg single-dose vials
340B bucket
Drug pulled from 340B-eligible inventory
Discarded
0 mg
Line 1: J9271 × 200 units — TB, JZ
TB plus JZ. TB identifies the drug as 340B-acquired at an exempt entity; JZ attests no single-dose-vial waste. TB and JZ are not mutually exclusive — only TB and JG are. Payment is at the default rate, unchanged by TB. The 340B status is preserved for both HRSA program-integrity tracking and the hospital's own 340B reconciliation.
Avastin at a Rural Sole Community Hospital J9035 · 10 mg unit TB required
Site
Rural Sole Community Hospital, registered 340B covered entity
Encounter
Hospital outpatient infusion
Dose
425 mg (5 mg/kg, 85 kg patient), drawn from 1 × 400 mg + 1 × 100 mg single-dose vials
340B bucket
Drug pulled from 340B-eligible inventory
Discarded
75 mg (7.5 units, rounded to 7)
Line 1: J9035 × 43 units — TB — (no waste modifier)
Line 2: J9035 × 7 units — TB, JW — drug discarded
TB on both lines, JW on the discarded line. Rural SCHs are in the TB carve-out, so TB applies regardless of drug. JW reporting is independent of the 340B-identification modifier — both lines carry TB; only the discarded line also carries JW. Administered + JW = 43 + 7 = 50, matching the 500 mg total drawn (50 units of J9035).
Pediatric chemotherapy at a children's hospital J9035 · 10 mg unit TB required
Site
Children's Hospital, registered 340B covered entity
Encounter
Pediatric oncology outpatient infusion
Dose
Weight-based, 90 mg from a 100 mg single-dose vial
340B bucket
Drug pulled from 340B-eligible inventory
Discarded
10 mg (1 unit of J9035)
Line 1: J9035 × 9 units — TB — (no waste modifier)
Line 2: J9035 × 1 unit — TB, JW — drug discarded
TB on both lines. The TB carve-out for children's hospitals operates the same way as for the other two exempt categories. Pediatric dose math more often yields meaningful waste because doses are smaller and vial sizes are designed for adult administration; the JW reporting expectation is identical to adult 340B billing.

Common denials and how to fix them

Issue patternWhat it meansFix / corrective action
TB used by a non-exempt entity (should have been JG) TB appended at a DSH or other non-exempt 340B covered entity. During 2018-2022 this would have caused the hospital to receive the higher (ASP+6 percent) default rate when the lower (ASP-22.5 percent) cut should have applied — an audit finding even though the hospital was paid more. Post-CY 2023 there is no payment-rate effect, but the modifier still misrepresents the entity sub-category. Submit a corrected claim with JG instead of TB. Update the site-to-modifier mapping in the billing system; this is almost always a configuration error affecting an entire claim stream until fixed. Audit historical claims for the affected period.
JG used by an exempt entity (should have been TB) JG appended at a Rural SCH, PPS-exempt Cancer Hospital, or Children's Hospital that is in the TB carve-out. No payment-rate effect today; pre-2023, this would have wrongly subjected the exempt hospital to the ASP-22.5 percent cut and triggered MAC review. Submit a corrected claim with TB instead of JG. Verify the site's classification against HRSA OPAIS and against the OPPS payment methodology applicable to the specific billing site. Update the billing-system mapping; investigate whether the error pattern reflects a broader misunderstanding of which sites are in the carve-out.
TB omitted on 340B-acquired drug at an exempt entity No 340B identifier appended on a claim for a separately payable drug at a TB-eligible site. Not a strict claim-level denial (payment is the same with or without TB) but a transparency lapse and audit-trail gap. Surfaces in HRSA 340B program audits and in the hospital's own reconciliation between 340B purchases and billed encounters. Submit a corrected claim with TB appended. Implement a billing-system edit that flags any line for a 340B-eligible drug at a TB-eligible site that drops without TB. Run quarterly reconciliation between 340B purchase records (from the wholesaler) and TB-tagged claims; investigate variance.
TB used at off-campus affiliated clinic that is standard-OPPS TB appended at an off-campus outpatient department that bills under a TB-eligible parent organization's CCN but is itself reimbursed under standard OPPS (and therefore should use JG). The TB carve-out attaches to the site-level OPPS payment status, not to the parent-organization classification. Submit a corrected claim with JG. Build a site-by-site classification table that maps each billing location (not just the parent CCN) to the correct 340B modifier based on actual OPPS payment status. This is one of the highest-yield audit findings for hospital systems with mixed campus types.
TB attested but drug not actually 340B-acquired TB appended on a line where the dispensing system pulled the unit from non-340B GPO/wholesale stock without a planned 340B replenishment. A virtual-replenishment bucket-reconciliation failure — the attestation is false even though the entity is 340B-registered and TB-eligible. Submit a corrected claim removing TB. Investigate and fix the dispensing-system bucket configuration. Run quarterly reconciliation between 340B purchase records and TB-tagged claims; persistent bucket errors are the highest-yield HRSA 340B audit finding.

Frequently asked questions

Which entities use TB instead of JG?

Three categories of 340B-eligible hospitals use TB rather than JG: Rural Sole Community Hospitals (Rural SCHs), the 11 statutorily PPS-exempt Cancer Hospitals listed in Section 1886(d)(1)(B)(v) of the Social Security Act, and Children's Hospitals. CMS carved these categories out of the 2018-2022 OPPS 340B payment cut, so JG (which was the cut's data identifier) did not apply. TB was assigned as the parallel informational identifier so CMS could still track 340B utilization across the carved-out entities.

Does TB affect Medicare payment?

No. TB has always been purely informational — it identifies the drug as 340B-acquired but never drove a different payment rate. During 2018-2022 when JG-tagged drugs at non-exempt hospitals were paid ASP minus 22.5 percent, TB-tagged drugs at exempt hospitals continued to be paid at the default ASP plus 6 percent. After CMS reverted JG to the same default rate in CY 2023 (CMS-1772-FC), JG and TB now have the same payment effect — both leave the rate unchanged but preserve the 340B audit trail.

Is TB required or optional?

CMS positions TB as required for transparency at exempt 340B entities, although the enforcement posture is softer than for JG because TB never had payment consequences. In practice, TB is required for HRSA 340B program-integrity reporting and is expected by MAC auditors on Medicare claims for 340B-acquired drugs at the carved-out entities. Omitting TB does not generate a claim-level denial but creates a data-integrity gap that surfaces in audits and undermines the hospital's own ability to reconcile 340B purchases against billed encounters.

Does TB apply to Medicare Advantage claims?

Medicare Advantage policy on TB mirrors MA policy on JG: plan-by-plan. Most major MA plans accept TB; some require it for parity with Traditional Medicare data. The TB carve-out (Rural SCH, PPS-exempt cancer, children's) applies regardless of payer because the categorization is a Medicare program-integrity construct. Confirm the TB requirement plan-by-plan; the safest default for an exempt 340B hospital is to append TB on MA claims unless the plan policy explicitly says otherwise.

What is the relationship between TB and the 340B lump-sum remedy?

TB-tagged hospitals were not part of the lump-sum remedy because they were never underpaid — the 2018-2022 cut applied only to JG-tagged drugs at non-exempt hospitals. The CY 2024 OPPS Remedy Rule (CMS-1793-F) directed the lump-sum payment specifically to the JG-affected facilities. However, TB-tagged hospitals are still affected by the budget-neutral offset that funds the remedy: a 0.5 percent reduction to OPPS payments for non-drug items and services applied prospectively over approximately 16 years starting CY 2026. The carve-out exempted them from the cut, but not from the offset.

How does TB interact with split-billing and the 340B replenishment model?

Split-billing and bucket reconciliation requirements apply identically whether the entity uses TB or JG. TB attests that the specific dispensed unit was 340B-acquired (or in a verified virtual-replenishment bucket) by the time the claim was submitted. The exempt-entity carve-out is about payment policy, not about 340B program-compliance discipline — Apexus and HRSA expect the same reconciliation rigor from a PPS-exempt cancer hospital as from a DSH facility. A TB-tagged claim where the unit was not actually 340B-acquired is the same kind of False Claims Act exposure as a misattested JG claim.

Can TB and JG appear on the same claim?

Not on the same claim line — TB and JG are mutually exclusive at the line-level because both attest to 340B acquisition and the entity uses one or the other based on its sub-category. They can theoretically appear on different lines within a single claim if the claim spans multiple billing sites with different categorizations, but that pattern is rare and usually indicates a billing-system configuration question that should be resolved before submission. The cleaner pattern is one claim per site with a consistent 340B modifier throughout.

Do biosimilars change anything for TB reporting?

No. TB applies to biosimilar HCPCS codes (Q-codes) the same way it applies to reference-product J-codes when the entity is in the TB carve-out and the unit was 340B-acquired. The CY 2024 OPPS rule continued to pay biosimilars at ASP plus 8 percent during the initial five-year qualifying period; TB does not change that rate. Biosimilar replenishment-bucket reconciliation is the same kind of split-billing exercise as for the reference product.

Sources

All sources are publicly available federal publications or paraphrased from trade-association educational materials. The methodology by which we resolve source disagreements is described in the Methodology.

Editorial review & sourcing
Reviewed by
CareCost Estimate editorial team (Pending SME review)
Last reviewed
May 23, 2026
Update triggers
Annual OPPS Final Rule, CMS-1793-F remedy implementation milestones, HRSA 340B program guidance updates, payer-policy alignment shift, reader-reported correction.
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