How reporting social determinants of health improves health outcomes

July 19, 2023 / By Aimee Wilcox

In 2010, the Affordable Care Act (ACA) was signed into law, which requires the provision of health care coverage to the most vulnerable population, including those who never had coverage due to age, financial status or pre-existing conditions. Since then, spending has increased exponentially, for Medicare from $502.3 billion in 2009 to an estimated more than $1 trillion in 2023; and for Medicaid, from $373.9 billion to an estimated more than $1 trillion by 2028 

The Centers for Medicare & Medicaid (CMS) Innovation Center is responsible for the development of value-based care models to promote the three-part CMS goal of:  

  1. Better care for individuals 
  2. Better health for populations 
  3. Lower costs  

The CMS Innovation Center developed and implemented the risk adjustment (RA) value-based care model to meet these goals. Risk adjustment is a method used to calculate the overall health risk score of health plan beneficiaries to estimate future health care costs. This requires a health care provider to evaluate the patient, document acute and chronic diagnoses evaluated, translate the diagnoses into reportable ICD-10-CM codes and submit them to the health plan for data collection and reimbursement of health care services.  

Individual ICD-10 codes are assigned to a hierarchical condition category (HCC), which are then assigned a specific risk value and added up with the patient’s demographics to determine the patient’s total health risk score. After some additional actuarial calculations, payment based on the individual risk score is made to the health plan. 

Some HCC values are set to zero, meaning those diagnoses do not risk adjust. Social determinants of health (SDoH) codes (Z55-Z65) fall into this category. SDoH codes describe the conditions in which people are born, live, and work that continuously shape their specific health outcomes in three categories:   

  1. Physical  
  2. Psychological 
  3. Social/demographics 

These categories are organized into the following subcategories:  

  • Z55 Problems related to education and literacy 
  • Z56 Problems related to employment and unemployment 
  • Z57 Occupational exposure to risk factors 
  • Z58 Problems related to physical environment 
  • Z59 Problems related to housing and economic circumstances 
  • Z60 Problems related to social environment 
  • Z62 Problems related to upbringing 
  • Z63 Other problems related to primary support group, including family circumstances 
  • Z64 Problems related to certain psychosocial circumstances 
  • Z65 Problems related to other psychosocial circumstances 

While these codes do not risk adjust, they can significantly impact health outcomes, as described in the following examples:  

  1. The patient’s physician orders an MRI to confirm the patient’s diagnosis and treatment plan. The imaging center is across town and the patient has transportation insecurity issues. Due to this issue, the patient fails to get the MRI and embarrassed by this, also fails to return for the follow-up visit. Eventually the patient ends up in the emergency department. 
  2. An insulin-dependent diabetic has become homeless, occasionally residing in a local shelter. The shelter does not include access to refrigeration for storing his insulin. This situation places the patient at greater risk of noncompliance, higher glucose levels and at risk for ketoacidosis or diabetic coma that could result in an earlier death.  

Improving patient outcomes requires health care providers have knowledge of their specific patient circumstances, especially those that impede diagnosis and treatment. Thoughtful use of patient questionnaires and educating staff on identifying and documenting key information is vital. However, while having knowledge of a patient issue that could impede diagnosis and treatment is important, it is more important to have pre-identified resources to address those needs.  

Due to the 2023 Medicare Hospital Inpatient Prospective Payment System (IPPS) rule, released on Aug. 1, 2022, hospitals must report what portion of its population has been screened for health-related social needs, such as:  

  • food insecurity 
  • housing instability 
  • transportation insecurity 
  • utility difficulties 
  • interpersonal safety  

Several states have successfully added non-clinical Medicaid benefits to assist with certain SDoH issues through application of Section 1115 demonstration waivers. Want to know more? Check out this infographic: Using Z-Codes: The Social Determinants of Health (SDOH) Data Journey to Better Outcomes. 

Aimee L. Wilcox, CPMA, CCS-P, CST, MA, MT, coding analyst at 3M Health Information Systems.