How Z Codes Can Help Codify Social Needs

New categories have been added for a little-used tool that provides insights into patient outcomes

There is critical mass for healthcare providers to consider social hardships among the factors that influence health. Earlier this year, the Centers for Medicare and Medicaid Services (CMS) issued guidance to state officials that was intended to help improve outcomes and reduce overall costs in the Medicaid and Children’s Health Insurance Program (CHIP) programs by addressing the social determinants of health (SDOH).

SDOH describes the range of social, environmental and economic factors that can influence health, well-being and quality of life. The CMS’s emphasis on social needs as a driver of health outcomes is key to the agency’s transition from fee-for-service to a value-based approach in reimbursing health providers.

What are Z Codes?
Introduced in 2017, Z codes are ICD-10-CM codes used to identify non-medical factors that may affect a person’s health status. Z codes are a helpful – but woefully underutilized – tool for tracking patients’ social needs.

According to a 2020 CMS report, the most-used Z codes among Medicare beneficiaries are: Homelessness (Z590); Problems related to living alone (Z602); Disappearance and death of a family member (Z634); Other specified problem related to psychosocial circumstances (Z658); and Problems in relationship with a spouse or partner (Z630).

Unfortunately, despite their great promise in helping healthcare providers gather data related to social needs, Z codes were only reported by 1.59% of Medicare beneficiaries, but that might change with the move toward value-based care and CMS’s guidance.

Unrealized potential
An article in Becker’s Hospital Review says hospitals are reluctant to document Z codes because they are not currently used for payment purposes, so there is no financial incentive to collect the data. The article also notes because the codes are limited in scope, Z codes may not cover the full range of social and environmental health determinants.

Because screening and tracking social needs is important, Z codes can increase knowledge of how these hardships affect health outcomes – aiding care coordination, future research and eventually solutions. A 2014 report from the  National Academies of Medicine suggested that the collection of SDOH data in an electronic health record is necessary to empower providers to address health disparities and to further support research into the health effects of SDOH. Ultimately, Z codes could help inform health professionals by more robust data to improve care coordination and referrals while supporting quality measures.

As social needs drive more of the decisions around healthcare and reimbursements, administrators, providers and coding professionals may realize great benefits by embracing a standard approach for using Z codes and by identifying workflows that minimize staff burden.   

Contact CORHIO for more information on using Z codes and other ways to track and report social needs. Our health information exchange offerings have recently expanded to include Social Needs Referral Notifications. Learn more.