Z codes: Supercharge your Community Health Need Assessment (CHNA)

Z codes that document patients' non-medical needs are rarely used and often misunderstood. Yet they’re vital to address social determinants of health, which are responsible for 80% of a person's health outcomes.

New developments make it easier to incorporate Z codes into an organization’s health equity strategy. These include patient e-screening, leveraging an enhanced Community Health Needs Assessment, use of robust social risk intelligence data and new efficiencies that capture insights from these sources and make them actionable. By using a combination of "push and pull" strategies, health systems can start these efforts now.

But first, a brief introduction to Z codes and why they’re important.

What are Z codes and why are they important?

Z codes are a subset of ICD-10-CM diagnostic codes to document a person's SDOH, defined by Healthy People 2030 as "the conditions in the environments where people are born, live, learn, work, play, worship and age that affect a wide range of health, functioning and quality-of-life outcomes and risks."

The Z code subset includes 10 categories numbered Z55-Z65 that, per the American Hospital Association, capture "a patient’s socioeconomic situation, including education and literacy, employment, housing, lack of adequate food or water, or occupational exposure to risk factors like dust, radiation or toxic agents.”

In an Oct. 18 webinar, the AHA addressed Z codes and their growing importance to address SDOH. The webinar slide deck noted, "The Social Determinants of Health are an important component to demonstrate need for higher-level medical decision-making for evaluation and management service for physician billing."

Low familiarity, documentation and use

Cost constraints are one reason Z code adoption is so low. The cost of capturing Z codes is not reimbursable. Providers and health systems care about why their patients aren't well, but an added documentation requirement that is poorly understood and offers no financial incentive is one more burden in an industry plagued by workforce shortages, burnout and information overload.

Perhaps that's why two separate analyses show that only 2 to 3% of claims include Z codes. A 2021 CMS study showed that only 1.9% of 2019 Medicare fee-for-service claims included them. Medicare Advantage fared just as poorly. A study of 2020 MA claims by Inovalon found Z codes documented only 2.7% of the time.  

The value of even well-documented Z codes remains trapped if providers don’t have a way to connect patients to resources that can help them. In a recent HealthLeaders podcast, Inovalon's Vice President of Research Science and Advanced Analytics Christie Teigland said, "Clinicians are reluctant to document social risk factors because they might not have access to the right resources to address the needs. You may not want to ask if someone has adequate access to food if you can't do anything about it."

DataGen's Senior Healthcare Informatics Analyst, Colleen McVeigh, agrees. "Almost every organization — AHA, National Quality Forum, American Medical Association — is on board with Z codes. That last gap is to get providers on board."

Three push-pull strategies to maximize Z code use

Screening, CHNA and social needs data have emerged as three strategies to encourage use of Z codes and develop SDOH initiatives. Physicians, hospitals, health systems and their partners need as many turnkey methods as possible to address health equity. Both "push" and "pull" approaches can help.

Push strategies move products and services toward the customer, while pull strategies bring what you need toward you. In the case of Z codes and SDOH, health system patient portals or other electronic methods push screening tools toward patients while also pulling the data into larger health information technology systems so they can be analyzed and acted upon.

The AHA webinar identified back-end coding and templates to automate the pull of social needs data from electronic screening tools into the EHR. According to AHA, “If the patient self-reported information is signed-off and incorporated into the health record by either a clinician or provider, it would be appropriate to assign codes from categories Z55-Z65, describing social determinants of health” (2019 Coding Clinic).

One state health association's experience

Individual patients represent only one level of need. Broader need, captured by CHNA, helps health systems scale their medical and SDOH interventions to community, regional, state and population health levels.

Health systems, independently and in concert with their state health associations, are combining CHNA and Z code data to design better initiatives. The AHA webinar featured the Indiana Hospital Association and its role in the federal Small Rural Hospital Grant Improvement Program. IHA Quality & Patient Safety Advisor, Madeline Wilson, MSN, RN, CLSSBB, highlighted SHIP's four stages and how they are pulling social needs data into hospital workflows:

1. Using CHNA to define focus areas and begin SDOH screening and Z code training sessions.
2. Building a Z code database based on hospital claims data and training staff to capture more codes.
3. Pulling screening data into the EHR and improving data capture and workflows.
4. Using insights from the next CHNA to improve EHR and coding workflows, put social screening staffing in place and build community referrals.

Using an enhanced version of CHNA, with social risk data embedded

While CHNA has an important role to play, it's difficult to achieve efficiencies of scale on an assessment that only occurs every three years. Our blog, Community Health Needs Assessment: Best practices to follow, describes how DataGen CHNA Advantage™ solution makes the assessment more robust without adding staff or resource burden. 

DataGen CHNA Advantage™ offers turnkey tools and metrics that apply to all four assessment phases. It also includes 200 metrics across more than 20 domains and multiple sources, including social risk data that DataGen licenses through Socially Determined. These data include six SDOH domains: finance, food, housing, transportation, health literacy and digital.

Developing efforts to enhance Z code value

With Z code utilization so low and its importance so high, every new development can help health systems and state hospital associations achieve their goals.

While more Z codes may not be the fastest answer, 14 sub-codes were added in 2022, with five more to come in 2023. In addition, AHA coding executive Denene Harper, RHIA, advised health systems to be prepared for new CMS proposed rules involving SDOH. The agency's 2023 IPPS proposed rule requested comments on how improved Z code reporting could enhance understanding of illness severity, complexity and resource use.

"There are more solutions on the horizon," said Harper. "Nothing has been finalized, so health systems should start thinking now about what was proposed to take advantage of what CMS may require in the future."

Explore more CHNA resources

Conducting a Community Health Needs Assessment (CHNA) is a crucial step toward enhancing health outcomes and maintaining regulatory compliance. With insights from community-level data, healthcare providers and organizations can design initiatives that truly make a difference.

Looking for guidance? Explore our comprehensive library of CHNA resources:

• Your essential guide to a Community Health Needs Assessment (CHNA)

• Bridging the gap: Community Health Needs Assessment (CHNA) and health services 

• Community Health Needs Assessment examples: Q&A on CHNA data reporting

• What is a Community Health Needs Assessment? 4 Tips to Start

• How to conduct a Community Health Needs Assessment: 3 keys to simplify the process

• Community Health Needs Assessment: Best practices to follow 

Use these tools to help ensure your CHNA efforts are both effective and aligned with current standards.