The Centers for Medicare & Medicaid Services (CMS) launched Z codes in 2015. They are a set of ICD-10-CM codes that identify non-medical factors that may affect a patient's health status or ability to fully benefit from treatment. They were released for billing and research purposes, yet no reimbursement is associated with their use.
While the intention for Z codes to capture health-related risk factors like social determinants of health (SDOH) is a valid step toward improved health outcomes and health equity, research has shown increasing but scant use. Only 0.11% of all fee-for-service Medicare claims indicated a Z code, representing more than 1.2 million claims.
However, Z codes promise to benefit value-based care, care management, and population health initiatives.
What are Z Codes, and how are they used?
Chapter 21 of the ICD-10-CM coding manual, titled “Factors Influencing Health Status and Contact with Health Services,” reviews categories Z00 through Z99. This can be used as either a first-listed, or principal diagnosis code, in the inpatient setting or as a secondary code. It depends on the circumstances of the encounter.
As shown in Figure 1, Z codes related to SDOH are in categories Z55 through Z65.
Figure 1: SDOH-related Z codes as published by CMS.
They support the collection, use, and exchange of data to address SDOH barriers across four areas:
- Screening
- Diagnosis
- Goal-setting
- Interventions
While Z codes can document many SDOH issues, including education and literacy, employment, housing, food insecurity, and occupational exposure to hazardous materials, CMS research reveals the five most documented Z codes and the percentage of each, as shown in Figure 2.
Figure 2: Five Z codes represent the largest share of claims in 2019. Source: CMS.
Z codes can be used across any healthcare setting—hospitals, physician offices, and skilled nursing facilities—and can be documented by any professional provider, including physicians and nurse practitioners.
Figure 3 highlights which provider roles document the most Z code claims.
Figure 3: Proportion of Z codes submitted by Medicare provider role. Source: CMS.
The challenge and opportunity of using Z codes
Beyond time constraints and a lack of mandate, providers express three main barriers to documenting Z codes:
- Z codes are not reimbursable
- Having SDOH conversations requires skill
- Providers are concerned about screening for something they feel ill-equipped to solve
However, Z codes also provide a formalized way to capture important information that can be valuable to providers and payors who are engaged in one of the following:
- Medicare care management programs like Chronic Care Management and Annual Wellness Visits
- Value-based care contracting
- Risk-adjusted payment models
- Population health management
Providers can use Z codes as output from conducting an SDOH screening, which Medicare covers as part of the Annual Wellness Visit. They can also help document and report on population needs when negotiating value-based care contracts or arrangements that incorporate risk adjustment for SDOH as part of performance-based payments for quality outcomes.
Physicians see value in screening for issues germane to the patient’s current health issues. A survey of 621 physicians revealed areas where they felt SDOH support could most help their patients:
- 74% see value in arranging transportation
- 54% see value in helping to increase income
- 48% see value in helping with food sufficiency
- 45% see value in helping with finding affordable housing
- 32% see value in helping with information about water quality
Software identifies SDOH for care management
ThoroughCare, a care coordination software platform, addresses health-related needs like social determinants of health by providing standardized screenings such as the Health-related Social Needs Screen Tool. Clinicians and staff can easily implement this tool in their workflows and use the results to adjust patient treatment plans and make referrals to community services as needed.
This streamlines SDOH data capture, analytics, reporting, and supports reimbursable service delivery like SDOH screening and care management.
Through the following capabilities, ThoroughCare enables a holistic approach to high-cost, high- and rising-risk individuals, particularly those living with chronic illness:
- Data collection and integration
- Risk identification
- Care planning
- Patient engagement
- Care coordination
- Monitoring and follow-up
- Reporting and analytics
Additionally, our solution automatically assigns Z codes between Z55-Z65 from an integrated, evidence-based health-related social needs screening using the standalone code G0136.
This feature optimizes accurate and efficient claims management, as well as provides a more comprehensive picture of the patient’s social risk and needs.
Key questions answered
What are Z codes?
Z codes are a set of codes found in the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM). They describe factors influencing health status and contact with health services that are not due to a disease or injury. These codes range from Z00 to Z99, with codes Z55-Z65 focusing on socioeconomic and workplace barriers in areas such as housing, food insecurity, toxic environmental hazards, and psychosocial factors.
What are the benefits of using Z codes?
CMS identified the following benefits to capturing, documenting, and analyzing Z codes:
- Identify social needs that impact patients and connect with community resources
- Aggregate data across patients to determine a social determinants strategy
- Track trends or risks in the community
- Guide community partnerships
- Connect social needs to claims for future financial incentives from private and government payors
For payors and providers, benefits are found through value-based care contract negotiations and risk-adjustment payment models, and when paired with SDOH screening, which CMS now reimburses as part of a Medicare Annual Wellness Visit.