Changes in Health Professional Shortage Areas

Health Professional Shortage AreasSignificant changes have been made in the areas categorized as  Health Professional Shortage Areas (HPSA’s). The Health Resources and Services  Administration (HRSA) published an updated Federal Register Notice on November  3, 2011, that contains important information about new and withdrawn HPSA  designations. These changes will take effect for services provided on or after  January 1, 2012.  Although you have  qualified for HPSA bonus payments in the past, this may not be the case in  2012.

For many years provisions have been in place to provide a 10  percent bonus payment to physicians who treat patients in these designated  HPSA’s.

The  10 percent incentive amount is paid on a quarterly basis and is calculated based  on the amount the Medicare program has paid for services furnished by the  physician.  Non-covered services and  amounts applied to the deductible are not considered eligible for incentive  payment since no payment was made by Medicare.  It applies only to the professional component of those services.  Eligibility for the incentive payment is decided by the  location where the service is performed. If a physician provides services in an office, patient’s home, nursing home or hospital that is located in a HPSA  area, these services are eligible for incentive payment.

A geographic HPSA may cover an entire county or only part of a  county or city, depending on the health professional shortage in a designated  area.  This is an important distinction  because the billing requirements will vary depending on this information.


The submission of the AQ modifier will be required for  the following:

  • When services are provided in ZIP code areas
    that do not fully fall within a designated full-county HPSA bonus area.
  • When services are provided in a ZIP code area
    that partially falls within a full-county HPSA but is not considered to be in
    that county based on the dominance decision made by USPS.
  • When services are provided in a ZIP code area
    that partially falls within a partial-county HPSA.
  • When services are provided in a ZIP code area
    that was not included in the automated file based on the date of the data run
    used to create the file.

The bonus will automatically be paid without the  submission of a modifier when services are provided in ZIP code areas that  either:

  • Fall fully within a designated full-county HPSA.
  • Fall fully within a full-county HPSA and have
    been determined to be dominant for the county by the U.S. Postal Service
    (USPS).  OR
  • Fall fully within a partial-county HPSA

Use the following link(s) to verify HPSA eligibility:

If you have  additional questions, your Medicare Administrative Contractor should be able to  assist you.