The ten percent (HPSA) or five percent (PSA) bonus payment is based on the amount actually paid by Medicare, not the approved amount. Payment is made for services identified on either assigned or unassigned claims.

Some HPSA/PSA areas are designated as auto-pay areas based on the zip code. For these auto-pay areas, a modifier is not required to receive the HPSA/PSA payment. To determine if your area is designated as an auto-pay HPSA/PSA area, please visit the Centers for Medicare & Medicaid Services (CMS) Web site.

Physicians whose zip codes are not on the auto-pay list must indicate that their services were provided in a bonus-eligible rural or urban HPSA/PSA by using the following modifiers:

AQ Service was provided in a HPSA for dates of service on or after January 1, 2006

AR Service was provided in a PSA

The AQ or AR modifier must be reported next to the procedure code. The provider must report the address where the service was actually performed.

The bonus payments are not included with each claim payment. Rather, a quarterly schedule is established for issuing bonus payments. A remittance notice will accompany each quarterly payment.

These payments are taxable and must be reported to the IRS.