When it is determined that any given area has a shortage of health professionals, a Health Professional Shortage Area (HPSA) incentive program is established. These areas can be defined in terms of entire counties, groups of adjacent counties, minor civil divisions, or census tracts, as designated by the Department or Secretary of Health and Human Services. On a quarterly basis, Medicare will pay providers practicing in these select areas an incentive. This incentive, a 10% increase in reimbursement of allowed services, is only applicable when and where a shortage is declared.
In addition to the HPSA incentive program, The Medicare Modernization Act of 2003 (MMA), Section 413a, requires that an additional 5% bonus payment be made to physicians in designated Physician Scarcity Areas (PSA). This bonus, in addition to the amount of payment that would be made for services rendered by physicians, will be based on the zip code of where the service was performed. Physician scarcity designations will be based on the lowest primary care and specialty care ratios of Medicare beneficiaries to active physicians in every county. In addition, PSAs will be identified based on the lowest primary care ratios of Medicare beneficiaries to active physicians in each identified rural census tract. Based on the amount actually paid (not the Medicare-approved payment amount for each service) Medicare will pay a 5% physician scarcity bonus on a quarterly basis. These PSA bonus designations will be updated every three years.
A single service may be eligible for both the PSA bonus as well as the current HPSA bonus payment. Current HPSA and PSA specialty lists and a more detailed explanation can be found in this section.
Health Professional Shortage Areas (HPSA)
Physicians providing services in Health Professional Shortage Areas (HPSAs) are eligible for a 10% incentive bonus payment. It is not enough for the physician merely to have his/her office or primary service location in a HPSA, nor must the beneficiary reside in a HPSA, although frequently this will be the case. The key to eligibility is where the service is actually provided (place of service). For example, a physician providing a service in his/her office, the patient’s home, or in a hospital qualifies for the incentive payment as long as the specific location of the service is within an area designated as a HPSA. A physician may have an office in a HPSA but go outside the office (and the designated HPSA area) to provide the service. In this case, the physician would not be eligible for the incentive payment
The incentive payment is paid for both assigned and non-assigned claims during the previous quarter. Claims submitted at the end of a quarter will receive the bonus payment the following quarter. All HPSA checks are mailed quarterly Medicare performs a quarterly review of claims submitted for incentive payment. The incentive payment will be recovered on claims for services not provided in a qualified HPSA.
- The HPSA incentive bonus is available to Medical Doctors (MD), Doctors of Osteopath (DO), Doctors of Dental Surgery (DDS), Doctors of Dental Medicine (DMD), Doctors of Chiropractic (DC), Doctors of Podiatric Medicine (DPM), and a Doctor of Optometry (OD). See Health Professional Shortage Area (HPSA) Eligible Specialties for a list of provider specialties.
- Incentive bonus payment applies only to those physician services payable under the Medicare Fee Schedule. This excludes clinical laboratory, injectable drugs, supplies, prosthetics (including eyewear), Certified Registered Nurse Anesthetist (CRNAs), other non-physician services, and separately billed technical components.
- HPSA payment is based on where the services are performed.
- Physicians must indicate that their services were provided in an incentive eligible HPSA area by using the following modifier: AQ-physicians providing a service in HPSA area.
- The Centers for Medicare & Medicaid Services (CMS) provides a list of all HPSA designation changes on a quarterly basis to the Carrier. Physicians should begin using, or discontinue using, a modifier when they are officially notified of a change by their Medicare carrier in a newsletter.
- Claims received on or after April 1, 1998, will have the Medicare Physician Fee Schedule Database (MPFSDB) PC/TC indicator applied for determining whether to pay the bonus on services rendered within a geographic HPSA.
Note: If an AQ modifier is billed indicating the service(s) was rendered in a HPSA, the name of the facility, the physical location/address, and the city and state where the service(s) was rendered must be entered on the claim. This information must appear Item 32 on paper claims and in the correct field for electronic claims.
Effective January 1, 2005, you no longer have to include the AQ modifier on claims to receive your HPSA bonus payment, which will be paid to you automatically, if you provide care in zip code areas that either:
- Fall entirely in a county designated as a full-county HPSA; or
- Fall entirely within the county, through a USPS determination of dominance; or
- Fall entirely within a partial county HPSA.
However, if you provide care in zip code areas that do not fall entirely within a full county HPSA or partial county HPSA, you must continue to enter the AQ modifier on your claim to receive the bonus.
The following are the specific instances in which you will need to enter a modifier:
- When you provide services in zip code areas that do not fall entirely within a designated full county HPSA bonus area;
- When you provide services in a zip code area that falls partially within a full county HPSA but is not considered to be in that county based on the USPS dominance decision;
- When you provide services in a zip code area that falls partially within a non-full county HPSA;
- When you provide services in a zip code area that was not included in the automated file of HPSA areas based on the date of the data run used to create the file.
HPSA payment determinations are not issues that would be subject to the formal appeals process under subpart H of the regulations. However, if you have rendered services in a HPSA but have not received the incentive payment on eligible claims, you have up to one year from the date on your Provider Remittance Advice to request a reopening. Requests received later than one year following the issuance of the Provider Remittance Advice will not be honored.
The Census Track (CT) identifies urban HPSAs, particularly in large metropolitan areas. To help you identify specific street addresses within a census track, secure a copy of the Census Track Street Address Index (CTSAI) from:
Data User Services Division
Customer Service Branch
Bureau of the Census
Washington, DC 20233
For shortage designation inquiries, please call 1-888-275-4772. Press option 1, then option 2 or contact the Shortage Designation Branch:
5600 Fishers Lane
Rockville, MD 20857
If you have questions regarding these areas or the HPSA/PSA program, please contact the Provider Contact Center toll-free at 877-567-7271.
Eligible HPSA Areas
Please check the CMS website at https://www.cms.hhs.gov/HPSAPSAPhysicianBonuses/01_overview.asp to determine whether the HPSA bonus payment will automatically be paid for services rendered in your area and/or to determine eligible HPSA areas.
Physician Scarcity Area (PSA)
Medicare will automatically pay this new bonus on a quarterly basis without the need for a modifier on the claim for services provided in zip code areas that:
- Fall fully within a county designated as a PSA; or Fall partially within a county designated as a PSA and are considered to be dominant for that county, based on a determination of the United States Postal Service; or
- Fall within a rural area of a metropolitan statistical area identified through the latest modification of the Goldsmith modification that is determined to be a PSA.
In some cases, a service may be provided in a county that is considered to be a PSA, but the zip code is not considered to be dominant for that area. In these cases, the bonus payment cannot be made automatically. To receive the bonus for such services, physicians will need to include the AR modifier to reflect a physician service provided in a PSA.
Some key points to remember regarding the PSA bonus are the following:
- Medicare will pay a 5% percent PSA bonus on a quarterly basis, and the bonus will be based on what Medicare actually paid not on the Medicare-approved payment amount.
- A single service may be eligible for the PSA bonus and the HPSA bonus, which is discussed later.
- Payment will be based on where the service is performed and not on the address of the beneficiary.
- The PSA bonus will be paid on services rendered on or after January 1, 2005 through December 31, 2007.
- Only the provider designations of General Practice (01), Family Practice (08), Internal Medicine (11), and Obstetrics/Gynecology (16) will be paid the bonus for the zip codes designated as primary care PSAs. All other physician provider specialties will be eligible for the specialty physician scarcity bonus for the zip codes designated as specialty PSAs. See Physician Scarcity Area (PSA) Eligible Specialties for a list of provider specialties.
- Dentists, chiropractors, podiatrists, and optometrists are not eligible for the physician scarcity bonus as either primary care or specialty physicians.
- Services submitted with the AR modifier will be subject to validation by Medicare.
If you have questions regarding these areas or the HPSA/PSA program, please contact the Provider Contact Center toll-free at 1-877-567-7271.
Eligible PSA Areas
Please check the CMS website at https://www.cms.hhs.gov/HPSAPSAPhysicianBonuses/01_overview.asp to determine whether the HPSA/PSA bonus payment will automatically be paid for services rendered in your area and/or to determine eligible HPSA/PSA areas.