Health Professional Shortage Area (HPSA) - Improper Use of the AQ HCPCS Modifier May Reduce Cash Flow

Published 12/02/2020

Providers are encouraged to review the service location before appending the AQ modifier to receive the HPSA incentive bonus. By adding the HPSA AQ HCPCS modifier to a claim, you are attesting that you have researched for Medicare HPSA eligibility and determined that the physical address was a designated HPSA area where and when the services were rendered. If Palmetto GBA determines evidence to the contrary, you may begin to receive rejections on future claims submitted with the HPSA AQ HCPCS modifier in error. Additionally, identified overpayments will be collected on previously paid claims. This situation can drastically impact the cash flow for your office.


  • When a provider travels to a nursing home, hospital or second office which is outside an HPSA, those services are not eligible for the HPSA bonus even if the provider’s primary office is within a HPSA-designated area
  • To determine if you qualify (based on the rendered service ZIP Code location) to automatically receive the bonus payment because the service location ZIP Code falls within a HPSA-designated area, review the HPSA ZIP Code file for the correct year
    • If the ZIP Code of the location where the services were rendered is not present, 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 Health Resources Services Administration (HRSA) website: 
  • If you have a question about an 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
  • The AQ HCPCS modifier for mental health HPSA locations may only be used by psychiatrists (includes specialty 26 — psychiatry; specialty 27 — geriatric psychiatry; and specialty 86 — neuropsychiatry). No other specialty may add the AQ HCPCS modifier for services rendered in a mental health HPSA.
  • Only a geographic HPSA is eligible for the Medicare HPSA bonus. Low income, population, Native American, inmate, or any other type of HPSA does not qualify for the Medicare HPSA bonus. The AQ HCPCS modifier should never be submitted to Medicare for these types of non-eligible HPSAs.
  • Submitting HPSA modifiers for services that do not qualify for the incentive payment could result in incentive payments being sent to you in error

Please note: Incentive payments paid in error are subject to overpayment collection following the standard recoupment process. Providers that continue to incorrectly bill using the HPSA AQ HCPCS modifier are at risk of being referred to Benefit Integrity for fraudulent billing.

Date of Service (DOS)
Dates of service are also extremely important in determining HPSA eligibility. HPSA locations for Medicare payments purposes (may) change each January 1. Therefore, even if you determine that your location became eligible during a year, you cannot begin using the AQ HCPCS modifier until January 1 of the following year.

For example, an address becomes a HPSA designated area on July 1, 2020. Any services rendered at that address are not eligible for the HPSA 10 percent bonus until January 1, 2021.

Similarly, if the HPSA location is removed at any point during a year, Medicare will continue to pay the HPSA bonus until December 31 of that year. Refer to MLN CR 6106 (PDF) at for complete details regarding dates of eligibility.

Helpful Tips

  • Physicians/practitioners should ensure their billing service/clearinghouse is familiar with the proper use of the HPSA AQ HCPCS modifier
  • Providers with office locations in HPSA areas should have procedures in place to identify services rendered outside of the HPSA area to assure the HPSA AQ HCPCS modifier is not appended on those services
  • Check the HRSA website frequently for updated locations
  • HRSA submits designated bonus locations to the Federal Register on or by September of each year
  • The annual ZIP Code bonus file is posted to CMS’ website on or around December 1


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