Health Professional Shortage Areas

Published 01/17/2018

Health Professional Shortage Areas (HPSAs)
A HPSA is an area of a state that has been designated as a medically underserved area. Geographic HPSAs may cover an entire county or only a portion of a county or city, and are defined as either rural or urban HPSAs.

Physicians who render covered services in any rural or urban geographic HPSA are eligible for a 10 percent incentive payment. Only geographic HPSAs are eligible to receive the 10 percent bonus from Medicare.

Key factors in determining HPSA incentive payments:

  • Physicians who render covered Medicare services in any rural or urban geographic HPSA are entitled to a 10 percent incentive payment
  • The key to eligibility for the incentive payment is where the service is actually rendered. For example, if a physician provides services in his/her office, the patient’s home or in a hospital which is located in a designated rural or urban geographic HPSA, those services are eligible for the 10 percent incentive payment.
  • The incentive payment is 10 percent of the amount actually paid (not the approved or billed amount)
  • The incentive is paid on a quarterly basis for services submitted on both assigned and non-assigned claims
  • Some services automatically qualify for the HPSA bonus payment. For other services, you must submit HCPCS modifier AQ in order to qualify for the HPSA bonus payment.
  • To determine if you qualify to automatically receive the bonus payment, review the information provided on the CMS website
    • If the ZIP Code of the location where you render services does not appear there, check the Palmetto GBA website for HPSA designations to determine if the location where you render services is within a HPSA bonus area, but still requires the submission of HCPCS modifier AQ
    • The most current source of HPSA designations is the HRSA website. Physicians may use the HRSA website designations when making the decision on whether or not to include HCPCS modifier AQ on their claims.
  • It is the physician’s responsibility to identify on the claims the services that were rendered in an HPSA area. If you have a question about a HPSA payment, you must submit a written inquiry to Palmetto GBA within 60 days of the date of the original HPSA payment, and include a copy of the Medicare remittance advice.


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