Physician Bonuses

Physician Bonuses

Physician Health Professional Shortage Area Bonuses

Health Professional Shortage Area (HPSA) Designations

Section 413(b) of the Medicare Modernization Act (MMA) required CMS to revise some of the policies for the HPSA bonus payments. Section 1833(m) of the Social Security Act provides bonus payments for physicians who furnish medical services in geographic areas that are designated by the Health Resources & Services Administration (HRSA) as primary medical care HPSAs under section 332 (a)(1)(A) of the Public Health Service (PHS) Act. In addition, for claims with dates of service on or after July 1, 2004, psychiatrists furnishing services in mental health HPSAs are also eligible to receive bonus payments. If a ZIP code falls within both a geographic primary care and geographic mental health HPSA, only one bonus will be paid on the service.

MMA Changes

Effective January 1, 2005, a modifier no longer has to be included on claims to receive the HPSA bonus payment, which will be paid automatically, if services are provided 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 United States Postal Service (USPS) determination of dominance; or
  • Fall entirely within a partial county HPSA.

However, if services are provided in ZIP code areas that do not fall entirely within a full county HPSA or partial county HPSA, the AQ modifier must be entered on the claim to receive the bonus.

The following are the specific instances in which a modifier must be entered:

  • When services are provided in ZIP code areas that do not fall entirely within a designated full county HPSA bonus area;
  • When services are provided 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 services are provided in a ZIP code area that falls partially within a non-full county HPSA;
  • When services are provided 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.

The HRSA is the Agency that creates the shortage designations which are used for a number of different programs. CMS then uses those designations for the HPSA bonus program. To determine if a service will automatically qualify to receive the bonus payment, physicians should review the information provided on the CMS Web site at the links below for the list of ZIP codes that will automatically receive the HPSA bonus payment. There are separate links for the Geographic Primary Care HPSAs and the Geographic Mental Health HPSAs.

If the ZIP code of where a physician provides services is not included, the physician can check the street address on the HRSA Web site to determine whether it is still considered to be in a geographic primary care or mental health HPSA, the only two types of shortage areas eligible for a Medicare bonus payment.

HRSA has included the Medicare Physician Bonus Payment Eligibility Analyzer tool on their website at . Physicians can enter an address in order to determine whether it is in a geographic primary care or mental health HPSA. If the HRSA Analyzer tool indicates that the address is in a geographic primary care HPSA, but the ZIP code of the address does not appear on the CMS Web site as eligible for an automatic payment, the physician should enter the AQ modifier on the claim in order to receive the bonus.

Some points to remember include the following:

  • Medicare Administrative Contractors (MACs) will base the bonus on the amount actually paid (not the Medicare approved payment amount for each service) and the ten-percent bonus will be paid on a quarterly basis.
  • The HPSA bonus pertains only to physician's professional services. Should a service be billed that has both a professional and technical component, only the professional component will receive the bonus payment.
  • The 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 the services are actually rendered in a HPSA.
  • To be considered for the bonus payment, the name, address, and ZIP code of the location where the service was rendered must be included on all electronic and paper claim submissions.
  • Physicians should verify the eligibility of their area for a bonus before submitting services with a HPSA modifier for areas they think may still require the submission of a modifier to receive the bonus payment.
  • Services submitted with the AQ modifier will be subject to validation by Medicare.
  • In order for an area to be eligible for the Medicare HPSA bonus, it must be designated by HRSA as a primary care or mental health geographic HPSA as of December 31 of the prior year.


Physicians should direct questions as to why a particular location is designated as a shortage area to the HRSA at The full address of the site in question should be included. CMS is not involved in designating shortage areas.

Physicians should direct all other inquiries, including general questions about the Medicare HPSA bonus program, questions on why or why not a bonus has been paid, or questions on particular Medicare claims to the MAC that processes their claims. To determine the appropriate MAC to contact, please review the information found at the link below. 

For additional questions regarding the HPSA bonus program, physicians should direct questions to their Medicare Administrative Contractor.

Page Last Modified:
11/14/2023 02:15 PM