Hi @derbygun,
To elaborate on the point about correlation from @StatDave : do you have multiple (repeated) measurements on each person_id? If not, there's nothing correlated to model, so we'd omit person_id from the model.
Since observations within zip codes are presumably correlated, you could use model #1.
More details on Proc Genmod Repeated parameterization here. Reading this from your example, person_id would be equivalent to patient and zipcode would equate to physician.
I favor Proc GLIMMIX because it's intuitive to input natural hierarchies, for example:
random person_id / subject=zipcode residual ;
and it uses likelihood techniques which some practitioners hold to be preferable to moment specifications like those in Genmod.
Good luck!
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