Z Codes Reimbursement

by | Feb 21, 2023 | Blog, SDOH | 0 comments

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Z Codes Reimbursement

Z codes reimbursement is a popular topic. Are Z codes billable or reimbursable? What are the social determinants of health Z-codes?

Collecting social determinants of health (SDOH) data that includes z codes may be a priority to reduce beneficiary costs if you are a payer, hospital system, clinically integrated network, physician’s office, or other healthcare organization working under CMS guidelines.

Understanding what happens between community-based organizations, payers, and health systems is critical to bridge SDOH gaps. Creating healthier populations means focusing on preventative health care while treating illnesses.

Success in this area for payers means lowering the cost of care. Accountable care organizations (ACOs), clinically integrated networks (CINs), patient-centered medical homes, and physician practice staff document ICD-10-CM diagnosis and procedure codes daily.

What Are Z Codes?

CMS Z codes were created for billing social determinants of health; however, they are not tied to reimbursements. There are ten categories, z55-z65, with one-hundred sub-categories:

  • Education and literacy (Z55)
  • Problems related to employment and unemployment (Z56)
  • Occupational exposure to risk factors (Z57)
  • Problems related to the physical environment (Z58)
  • Problems related to housing and economic circumstances (Z59)
  • Problems related to the social environment (Z60)
  • Problems related to upbringing (Z62)
  • Other problems related to the primary support group, including family circumstances (Z63)
  • Problems related to certain psychosocial circumstances (Z64)
  • Problems related to other psychosocial circumstances (Z65)

Using Z-codes represents a challenge for organizations at varying stages of connecting patients with community health programs and gathering data. If z codes were created for billing but are not required, what function do they serve?

Addressing Z Code Issues Can Lower Costs of Care

Lowering clinical care costs means that payers hold providers accountable for data reporting on specific measures. Examples include reducing hospital readmissions, using healthcare technology, and improving preventative care.

A picture of a person diagnosed with diabetes released from the hospital who cannot afford to buy insulin illustrates a single gap between clinical and social care. Unfortunately, many similar stories remain unknown because many clinicians feel uncomfortable asking questions that social workers see as part of their daily job.

For example, a lack of transportation may result in patients not attending medical appointments. In addition, joblessness can lead to homelessness or becoming a victim of street violence. These examples mean that provider-patient contact is limited to hospital emergency room visits unless clinical and social care providers join to coordinate care.

Various assessments identify challenges specific to health-related social needs and open the door for cross-community referrals that include ICD-10 and Z codes.

Payer SDOH Goals Link to Z Codes Reimbursements

A policy brief by NORC confirms three main payer goals specific to social determinants of health efforts:

  • Identifying reliable sources for data on beneficiary SDOH and how to incorporate this information into clinical programs
  • Deliver services or connect beneficiaries to services that address social needs
  • Track health outcomes and ROI associated with interventions

The Centers for Medicare and Medicaid Services have increased focus on health-related social needs. It is well known that non-medical factors significantly impact chronic disease.

Taking an interest in an individual’s socioeconomic situation can provide support with education, literacy, employment, housing, abuse, dependency, or behavioral health concerns. In addition, the no-wrong-door approach to SDOH means that individual contact with a single provider can result in referrals to multiple helping organizations.

The Link Between Medicare, Medicaid, and Z Codes

A CMS study, Utilization of Z Codes for Social Determinants of Health Among Fee-for-Service Beneficiaries, confirms that family practice physicians, internal medicine, nurse practitioners, psychiatrists, and licensed clinical social workers most commonly initiated z code billing claims.

Most Z codes, 49.6%, were billed on Medicare Part B non-institutional claims. The five most utilized Z codes were:

  • Homelessness (Z 59.0)
  • Disappearance and death of a family member (Z63.4)
  • Problems related to living alone (Z60.2)
  • Problems related to living in a residential institution (Z59.3)
  • Problems in relationship with spouse or partner (Z63.0)

This data confirms the impact of non-medical factors on health. Entering Z codes in patient charts for reimbursements can work toward ensuring high-quality, value-based care.

The Z Code Bridge to Address Health-Related Social Needs

So, you see, the goal of reducing hospitalizations and improving preventative care bridges health and social care systems. These improvements occur through data exchange. Advances in care and beneficiary cost reductions happen when:

  • Community-based organizations learn the value of z-code documentation
  • Providers support bi-directional data sharing with community-based organizations through care coordination and referral platforms
  • Payers receive social determinants of health data from providers and verify outcomes
  • Reimbursement sharing occurs across payers, providers, and community-based organizations to support vulnerable populations

All health and social care stakeholders have an important role for identifying social determinants of health concerns and entering z-code data that can result in share reimbursements. Reducing costs and improving health outcomes is possible when health and social care organizations collaborate to advance health and social care.

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