Home Perspectives & Insights Z Codes Can Help to Predict Health and Financial Risk for Value-Based Care

Z Codes Can Help to Predict Health and Financial Risk for Value-Based Care

Perspectives & Insights · October 18, 2022 · Comments off

November 15, 2022
© 2022 – Don Gerdts. All rights reserved.

What are Social Determinants of Health?

Social determinants of health are conditions in the environments in which people are born, grow, live, work and age. These social factors can impose significant barriers to a person’s health and wellness.  To decrease health inequity and improve health outcomes, healthcare stakeholders need to understand a person’s adverse social determinants and take action with the individual by collaborating with healthcare, government and community partners to access resources to address non-medical health risks.

What are Z Codes?

ICD-10-CM (International Classification of Diseases, Tenth Revision, Clinical Modification) contains over 70 Z codes (Diagnosis codes that start with Z) that capture SDoH.  These Z codes identify problems related to education and literacy, employment, occupational hazards, housing and economic circumstances, and health care access. There are also Z codes related to the patient’s social environment and problems related to upbringing, one’s primary support group, and many psycho-social circumstances such as imprisonment and exposure to disasters.

SDOH data can be collected by any member of a patient’s health care team during any encounter. This includes providers, nurses, community health workers, and self-reporting individuals. This SDoH data are documented in the patient’s encounter record in the list of presented diagnoses. Providers and staff are then able to submit the appropriate SDoH Z code(s) into the claims billing and encounter reporting system, which begins the institutionalization of SDoH data for future use.

While some population-level SDoH data is available from census or community data, SDoH Z codes capture a patient’s specific, individual data.

Z codes are not currently used much. Among the 33.1 million continuously enrolled Medicare FFS beneficiaries in 2019, only 1.59% had claims with Z codes.1 In support, CMS issued guidance in 2021 to state health officials designed to drive the adoption of strategies that address the SDoH in Medicaid and the Children’s Health Insurance Program.2

Z Codes Can Also Impact Healthcare Reimbursement

In addition to having data available to coordinate care and support of individuals, Z codes can impact the risk adjustment models used by CMS to calculate risk scores, and, therefore, premium adjustments for Medicare and ACA populations. Stay tuned for a future treatment of how Z Codes can impact the risk adjustment models used by CMS for Medicare and ACA populations.

Next Steps

We’d love to hear your thoughts on this topic!  Are Z Codes the the best way to identify, track and address social determinants of health?

TripleAim Strategy Advisors can help stakeholders in the healthcare ecosystem by providing insights and develop and implement strategies to advance equitable, value-based care.

Contact us to discuss this important topic or see additional ways we can help!

References

1. cms.gov. Centers for Medicare and Medicaid Services. Utilization of Z Codes for Social Determinants of Health among Medicare Fee-for-Service Beneficiaries, 2019. Washington, DC, 2021. https://www.cms.gov/files/document/z-codes-data-highlight.pdf

2. cms.gov. Centers for Medicare and Medicaid Services. Opportunities in Medicaid and CHIP to Address Social Determinants of Health (SDOH). Washington, DC, 2021. https://www.medicaid.gov/federal-policy-guidance/downloads/sho21001.pdf

Don

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