Identifying Physician Scarcity Area Locations - Modifier AR

The CMS shall provide to the standard systems and carriers a file of zip codes for the automated payment of the primary care and specialty physician scarcity bonus. The file will be effective for claims with dates of service on or after January 1, 2005, through December 31, 2007. Carriers and shared systems will be notified by e-mail of the name of the file and when it will be available for downloading.


The Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007 amended §1833(u)(1) of the Social Security Act and has extended payment of the Physician Scarcity Area bonus through June 30, 2008, using the same file used for prior years.


MMA requires that a 5 percent bonus payment be established for physicians in designated physician scarcity areas for dates of service January 1, 2005, through December 31, 2007. The Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007 amended §1833(u)(1) of the Social Security Act and has extended payment of that bonus through June 30, 2008. Physician scarcity designations will be based on the lowest primary care and specialty care ratios of Medicare beneficiaries to active physicians in every county. In addition, based on rural census tracts of metropolitan statistical areas identified through the latest modification of the Goldsmith Modification (i.e., Rural-Urban Commuting Area Codes), additional physician scarcity areas will be identified based on the lowest primary care and specialty care ratios of Medicare beneficiaries to active physicians in each identified rural census area.


Medicare will automatically pay the physician scarcity bonus on a quarterly basis for services provided in zip code areas that fully fall within a county designated as a PSA, partially fall within a county designated as a PSA area and are considered to be dominant for that county based on a determination by the United States Postal Service (USPS), or fall within a rural census tract of a metropolitan statistical area identified through the latest modification of the Goldsmith Modification that is determined to be a PSA.

In some cases, a service may be provided in a county that is considered to be a PSA, but the zip code is not considered to be dominant for that area. The bonus payment cannot automatically be made. In order to receive the bonus for those areas, physicians must include the following modifier on the claim:

AR - Physician providing service in a Physician Scarcity Area.

In order to be considered for the bonus payment, the name, address, and zip code of where the service was rendered must be included on all electronic and paper claims submissions.