Chapter 15
Health Professional Shortage Area (HPSA)

15.1 Health Professional Shortage Area (HPSA)

The Medicare program provides incentive payments to physicians who render services in a Health Professional Shortage Area. The following chapter addresses concerns and questions related to HPSAs and the eligibility criteria associated with receiving health professional shortage area incentive payments.

a. What is a HPSA?

A Health Professional Shortage Area is an area, either urban or rural, designated as having a shortage of healthcare professionals.

Incentive Payments

Physicians who render services in a geographic area designated as an urban or rural HPSA may receive a 10 percent incentive payment. The 10 percent payment is based on the amount paid, not the approved amount. The determining factor for receiving the incentive payment is the location where the service was actually provided.

Example: The physician's office is located at the following address:

123 Main Street
Anytown, PA 12345

The office address is not located within a HPSA. Therefore, the physician is not entitled to any incentive payments for services provided at this address. However, several times a week, this same physician travels to a nursing facility located at the following address:

456 Market Street
Anytown, PA 12345

Although the nursing facility is in the same city as the physician's office, which was not located within a HPSA, the nursing facility is within a geographic HPSA. One street falls within an eligible HPSA while the other does not. The physician is now eligible to receive the 10 percent incentive payment for the services performed at the nursing facility.

b. Who is Eligible?

Only physician specialties listed below are considered eligible to receive the 10 percent incentive payment for services rendered in a HPSA:

These physician specialties are eligible to receive incentive payments only if the services are rendered within a HPSA.

The influenza virus vaccine, the pneumococcal pneumonia vaccine, and the hepatitis B vaccine and their administrations are excluded from the Health Professional Shortage Area incentive payment provisions.

15.2 How to Bill for HPSA Incentive Payments

The first step in billing for HPSA incentive payments should be verification of the eligibility of the location where the services were performed. To receive the incentive payment for services rendered within a designated HPSA, you must report one of the following modifiers with each procedure code that was rendered within the eligible HPSA:

QB - Rural Area

QU - Urban Area

Report modifiers on electronic claims as follows:

Format Record Positions (1st Modifier) Positions (2nd Modifier)


73 to 74

75 to 76

National Standard


65 to 66

67 to 68

If you must report more than two modifiers, report the QB or QU modifier first followed by a 99 modifier in the second modifier field and utilize the narrative description field to list all additional modifiers (National Standard Format, Record HA0, Positions 40-199 and ANSI version 30.32, 2-405, NTE segment, data element 02 and ANSI version 30.51, 2-485, NTE segment, data element 02).

Note: It is important to always report the appropriate HPSA modifier (QB or QU) in the first modifier field for both paper and electronic billing. For electronic claim submission, if you report the QB or QU modifier in the narrative field, we will not be able to extract the data necessary to issue the incentive payment.

For paper claims, report modifiers in Block 24D of the HCFA 1500 claim form.

15.3 Reporting Name and Address of Facility and Office Where Services Rendered

Physicians who perform services within an eligible HPSA are required to report the address where the service was actually performed in block 32 of the Medicare HCFA 1500 (12-90) claim form. Block 32 should include the street, city, state, and ZIP code. Please ignore the "if other than home or office" statement in block 32 when billing for the HPSA incentive payments. Failure to report the address where the service was actually performed will result in rejection of the service. Refer to Chapter 9, Completion of the HCFA 1500 (12-90) Claim Form, for claim filing requirements and incomplete claim rejection procedures.

Note: If the entire global surgery procedure is provided in a HPSA, providers should bill for the appropriate global surgical code with the applicable HPSA modifier.

If only a portion of the global surgery procedure is provided in a HPSA (and the rest is provided in a non-HPSA), providers should bill using the applicable HPSA modifier for the portion which is provided in the HPSA. No HPSA modifier should be used for the portion provided in a non-HPSA.

On electronic media claims, the point of service includes the full name of the facility and office where the service was performed and should be reported as follows:





(1st Modifier)



73 to 94 (Name andAddress)
National Standard


209 to 241 (Name)
53-82 (Street)
113-132 (City)
133-134 (State)
135-143 (ZIP Code)
23-37 (Facility Number)

ANSI Versions 30.32
and 30.51
Segment Data
  2-250.A NMI 03 Name
  2-250.A NMI 09 Facility Number
  2-265.A N3 01 Street Address
  2-270.A N4 01 City
  2-270.A N4 02 State
  2-270.A N4 03 ZIP Code

Note: The QB or QU modifier must be reported next to the procedure code in addition to reporting the address where the service was actually performed.

15.4 When Will Incentive Payments be Issued?

The incentive payment is issued on a quarterly basis to physicians for assigned as well as non-assigned claims. The following schedule indicates when to expect HPSA incentive payments:

Claims Processed Incentive Payment(s) Issued

January - March

April - May

April - June

July - August

July - September

October - November

October - December

January - February

15.5 Questions & Answers

Listed within this section are frequently asked questions regarding HPSAs.

Q. What should I do if I submit a claim for a physician service, and then determine that the facility where the service was performed is in a HPSA?

A. If you determine that the service was performed in a HPSA, you may request a review in order to receive the incentive payment. The review request should be received within twelve months of the date the claim finalized and should contain the appropriate QB/QU modifier for each procedure performed in an eligible HPSA.

Q. In the event I identify that an incentive payment has been made in error, what should I do?

A. Should you realize an incentive payment has been issued incorrectly, request a review using the address referenced in the note above. Indicate the beneficiary's Medicare health insurance claim number and the claim number (s) involved.

Q. My office is located in a HPSA. Will it always be considered eligible to receive the incentive payment?

A. No. HPSAs are subject to change throughout the year. Physicians must verify the eligibility by reviewing any Medicare updates for additions or deletions. The HPSA listing will also reference an effective date.

Q. My office is located in an inner-city locale. Does this mean I automatically qualify for HPSA incentive payments?

A. No. Being located in an inner-city locale does not automatically qualify you for HPSA incentive payments. You must verify the locale in relation to a HPSA. All inner-city locales are not HPSAs.

Q. My office is located in a low-income population group area. Does this qualify as a HPSA?

A. No. Under the Medicare program, population groups are not considered HPSAs. Incentive payments are allowable only for geographic HPSA areas.

Q. Letters have been received from the Public Health Service/Public Health Designation Division advising that the census tract where my office is located is now a geographic HPSA. However, HGSAdministrators representatives are still advising that my office is not eligible to receive HPSA incentive payments. Why?

A. Additions or deletions to HPSAs are not effective until the Health Care Financing Administration notifies HGSAdministrators. The effective date and census tract information are then published in a Medicare newsletter.

Q. My office has a HPSA map of the different locales. Are additional maps available for distribution?

A. No. The HPSA maps are no longer applicable. Please discard them and utilize the census tracts listed in section 15.7.

Q. How do I bill if the surgical portion of a global service is performed in a non-HPSA but the post-operative portion is provided in a HPSA?

A. The surgical portion should be billed with the 54 modifier and no HPSA modifier. The post-operative portion should be billed with the 55 modifier and the appropriate HPSA modifier. The address where the post-operative service was actually provided should be reported in Block 32 of the HCFA 1500 (12-90) claim form.

15.6 How to Determine HPSA Eligibility

a. Reading the HPSA Charts

The HPSA charts on the following pages are comprised of a county, a service area name, and the specific part(s) which is an eligible geographic HPSA. The `part' is the key factor in eligibility. The `part' is easily identified as a borough, township, or census tract.

If a service is performed within an eligible borough, township, or census tract, then the service is eligible for the HPSA incentive payment. For example, in Pennsylvania under Venango County, in the Tionesta service area, only President Township is an eligible geographic HPSA--not the entire service area or county.

b. Determine your Census Tract Location

In order to determine your census tract location, you must contact the Regional Bureau of the Census Office. When contacting the Bureau of the Census, identify yourself as an office assistant, physician, or hospital, etc., and the reason for calling. 

For Example: Physician: This is Dr. X., my office is located at 123 Anytown, PA. I am calling to verify census tract information. Can you please advise me of the census tract my office is located in?

Census Bureau: Your office is located in census tract 1234.

c. Verify the Eligibility as a Geographic HPSA Census Tract

Once you determine the census tract for the location where you rendered the service, please refer to Section 15.7 to determine whether or not the census tract provided to you by the Bureau of Census (Step 1) is a geographic HPSA.

For Example: Physician: Refers to Section 15.7 to determine if census tract 1234 is listed as a geographic HPSA. If the place of service has been verified as a geographic HPSA, the claim should be submitted with the appropriate billing procedures.

Note: A HPSA modifier should not be reported if the geographic area does not appear on the eligibility list.

15.7 Eligible and Ineligible HPSAs

Eligible and ineligible HPSAs are listed on the following pages. This listing includes effective and deletion dates of the various HPSAs. This list of designated geographic HPSAs is the most current information received from the Health Care Financing Administration.