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Primary Service Areas (PSA)

What is a Primary Service Area (PSA)?

A primary service area (PSA) refers to the geographical region from which a healthcare provider or facility, such as a hospital or clinic, draws most of its patients. The PSA is typically defined based on patient residence data, analyzing where most of the patients live who use the facility’s services.

In the context of an accountable care organization (ACO), a PSA is similarly defined but with specific criteria related to patient distribution. It is the smallest number of zip codes from which an ACO receives at least 75% of its patients. This area is not restricted to Medicare patients.

To determine PSA shares, the following steps are completed:

  1. Identify the common services provided by at least two ACO participants.
  2. Identify a PSA for every ACO participant that provides common services.
  3. Calculate, separately from each common service, the ACO’s PSA share for each PSA.

An ACO may calculate its own PSA shares to evaluate their competitive significance.

Why is it important for ACOs to know their PSAs?

ACOs participating in the Medicare Shared Savings Program (MSSP) may calculate their PSA shares to determine if they fall within an antitrust safety zone. This zone is for ACOs that are highly unlikely to raise significant concerns concerning competition. Conversely, if an ACO has a high number of PSA shares (or other indicators of market power), the ACO Policy Statement describes conduct that the ACO may want to avoid. Ultimately, PSA shares are a useful screening device to determine the competitive significance of an ACO.