You Need Your Zs

By Monica E. Oss, Chief Executive Officer, OPEN MINDS

The hard line between health care spending and social service spending seems to be melting. But it remains to be seen if the health care system is ready to move to address the social determinants of health at any scale.

The developments have been striking. Earlier this year, the Centers for Medicare and Medicaid Services (CMS) changed the rules for Medicaid health plans, allowing them to spend health care premiums on social service programs. And Medicare Advantage plans can now include coverage for services related to “daily maintenance,” which may include devices and services that keep frail people healthy but which may not be a direct medical cost.

But whether this new benefit flexibility will result in widespread system change remains to be seen. There appears to be few big impediments. First in line, the on-going challenge of interoperability. There is the lack of “best practice” social service models that deliver a return-on-investment. And, according to new research, another issue is the lack of use of Z codes to capture social needs on consumers—the ICD-10-CM codes used to report social, economic, and environmental determinants. The proportion of consumer billing records across all payers with a Z code ranged from 0.13% in 2017 to 0.14% in 2022—not much year-over-year change.

The numbers were slightly better for Medicare fee-for-service (FFS)—in 2019, 1.59% had claims with Z codes, as compared to 1.31% in 2016. Of those claims, the most utilized Z codes were for homelessness and/or institution living and relationship issues. The top five clinician types representing the largest proportions of Z codes in Medicare claims were family practice physicians (15%), internal medicine physicians (14%), nurse practitioners (14%), psychiatric physicians (13%), and licensed clinical social workers (12%).

There are differences by geographic area. Philadelphia and Los Angeles were the major metropolitan areas with the largest provider adoption of Z codes. But even those numbers didn’t rise to one percent.

The lack of Z code adoption is attributed to the increased clinician administrative burden, a lack of coding standards, and provider organization systems that are not equipped to gather and act on the information. For executive teams of provider organizations planning to expand revenues by providing services related to social determinants of health (SDOH), these findings are troubling—but present an opportunity. The problematic issue is that despite benefit flexibility, there doesn’t appear to be a systematic adoption of the coding needed for health plans to move ahead with evaluating and expanding these new benefits. The opportunity is that there is little competition. To get ahead of the pack, it would be a competitive advantage to start to gather this data on the consumers you serve. The data would provide an opportunity to reach out to specific health plans—with data on their members and targeted solutions.

The ability to “flex” five percent of the Medicaid budget with new social service-focused services is significant (total Medicaid spending in 2021 was $748 billion). To prepare, executive teams need to make sure their organization has the data—and the processes and the technology—to be ready to seize opportunities when they arise.