Health Professional Shortage Area (HPSA) and HPSA Surgical Incentive Payment (HSIP)

On this page, view the below related information.

Health Professional Shortage Area (HPSA)

HPSAs are geographic areas, or populations within geographic areas, that lack sufficient health care providers to meet the health care needs of the area or population. HPSAs identify areas of greater need throughout the United States (U.S.) so that limited resources can go to those areas. The Health Resources and Services Administration (HRSA) designates areas as HPSAs based on census tracts, townships, or counties. Designations are made for primary care, dental, and mental health.

There are three different types of HPSA designations, each with its own designation requirements.

  1. Geographic Area
  2. Population Groups
  3. Facilities

HPSA designations are a function of the Bureau of Primary Health Care, Division of Shortage Designations (BPHC DSD) in conjunction with the US Census Bureau. Noridian does not determine zip code or county designations. For more information about primary medical care, dental, and mental health HPSA designation criteria and guidelines, visit HRSA Data Warehouse - HPSA Find.

Incentive payments are issued quarterly, are taxable, and reported on the IRS 1099 form. Incentive payments shall be distributed to the rendering provider for providing services within a designated shortage. Never apply an incentive payment to a patient account.

  • Medicare contractors will base bonus on amount paid (not the Medicare approved payment amount for each service) and the ten-percent bonus will be paid on a quarterly basis
  • HPSA bonus pertains only to physician's professional services. Should a service be billed that has both a professional and technical component, only professional component will receive bonus payment
  • Key to eligibility is not that the beneficiary lives in a HPSA nor that the physician's office or primary location is in a HPSA, but rather that services are rendered in a HPSA designated area
  • To be considered for bonus payment, name, address, and ZIP code of location where service was rendered must be included on all electronic (loop 2310C) and paper claim (Item 32) submissions. Noridian does not determine zip code or county designations
  • Physicians should verify eligibility of their area for a bonus, per HRSA Data Warehouse - Medicare Physician Bonus Payment Eligibility Analyzer, before submitting services with a HPSA modifier for areas they think may still require submission of a modifier to receive bonus payment
  • Services submitted with modifier AQ will be subject to validation by Medicare. If services were not furnished in a HPSA designated area an overpayment request will be sent
  • If a provider continues to incorrectly bill with modifier AQ on services furnished in non-eligible HPSA designated areas for four or more quarters, they will no longer receive a quarterly HPSA bonus
    • If designation of address changes and becomes Geographically designated, claims billed with modifier AQ (starting the following year) will receive a check for the quarters HPSA bonus continuing each quarter

Providers who want an additional copy of their HPSA report and have access to the Noridian Medicare Portal (NMP) can retrieve a copy through the Full Remittance Advice function.

HPSA Eligibility and Effective Date

Only ‘Geographic' HPSA designations are eligible for a Medicare HPSA bonus. Low income, population, Native American, or any other type of HPSA does not qualify for a Medicare HPSA bonus. The AQ modifier should never be submitted to Medicare for these types of non-eligible HPSA designations.

HPSA designations may change throughout the calendar year; however, per CMS Internet Only Manual (IOM), Publication 100-04, Chapter 12 Section 90.4.1, only services provided in areas that are designated as of December 31 of the prior year are eligible for the HPSA bonus payment.

If it is determined that a provider's location became eligible during a year, modifier AQ cannot be used until January 1 of the following year.

  • For example: An address that becomes HPSA designated on April 1, 2017. Services rendered at that address will NOT be eligible for a HPSA bonus until January 2018.

Similarly, if the HPSA location is no longer geographically designated at any point during a year, Medicare will continue to pay the HPSA bonus until December 31 of that year.

HPSA Surgical Incentive Payment (HSIP)

HSIP was developed to improve Medicare beneficiary access to major surgical procedures. Incentives are for physicians enrolled as general surgeons when providing surgical procedures defined by a 10-day or 90-day global period. The time period for this incentive is for services furnished on or after January 1, 2011 and before January 1, 2016 and equals 10% of the Medicare Physician Fee Schedule (MPFS) payment for surgical services. Payment(s) are made quarterly to a general surgeon when services are performed in a zip code located in a HPSA area. With this incentive, general surgeons may receive an additional 10% for surgery for the HPSA incentive. For more information about this program, providers are encouraged to review CMS Change Request (CR)7063 or check out the CMS IOM, Publication 100-04, Medicare Claims Processing Manual, Chapter Format, Section



Last Updated Jul 08 , 2020