Three questions with Sandeep Wadhwa, MD, MBA: Expanding Z codes to more accurately capture clinical information and support payment

August 20, 2021 / By Sandeep Wadhwa, MD, MBA, Kelli Christman

I sat down with 3M Health Information Systems Global Chief Medical Officer Sandeep Wadhwa, MD, MBA, to discuss CMS’ latest guidance on Z codes, SDoH and how that will impact providers, payers and patients.

In your last blog interview, we talked about social determinants of health (SDoH) and the important role they play in creating an individualized care plan. In February 2021, The Centers for Medicare & Medicaid Services (CMS) released an infographic on using Z Codes (ICD-10-CM encounter codes used to capture SDoH data) and Medicare contractors, as well, have updated coding guidelines that went into effect for Medicare in January 2021. What does this mean for providers, payers and patients, and how it can influence medical decision making?

These updated coding guidelines are a big step forward to supporting whole person care. The move formally recognizes how SDoH can contribute to moderate medical decision making complexity when a social need or social risk significantly limits diagnosis or treatment. It is now listed under risk for complications and/or morbidity or mortality of patient management, noting SDoH as one of the components for moderate level of medical decision making.

Providers have historically documented social history, and Z codes (Z55-Z65) capture these social needs and risks within the ICD-10 framework. Recognizing social needs have long been part of the visit and care plan, but now there is recognition that billing can be a factor in social needs limiting diagnosis or treatment as one of the components that would support a moderate visit (99214 or 99204).

With this new guidance, there is now financing support to identify and determine whether social risks or needs significantly impact diagnosis and treatment. The updated guidance signals to providers, patients and payers that CMS considers SDoH a relevant component in the financing and delivery of health care. Furthermore, I anticipate that this change will make the identification and capture of social needs more important for care teams knowing that it is not just for care planning, but for payment too.

Speaking of care teams, the new guidance encourages the inclusion of documentation from non-physician health care professionals. Why is this important?

CMS is validating team-based care, and that documentation from any clinician interacting with the patient matters and can contribute to correct coding when it comes to using the SDoH Z codes. This guidance encourages more robust documentation and broader consideration of documents from social workers, community health workers, case managers or patient navigator encounters as long as it is part of the official medical record.

Take social workers, for example. Their prime lens through which they view a person includes their living and social environment. They have tremendous up-close insight into how an individual’s health can be influenced by their lived-in environment. We have entire professions that are skilled at assessing and developing care plans that match people to interventions and resources that will work for their unique circumstances. CMS is recognizing that these care teams’ scope of practice can give doctors insights they may not have otherwise had about social risks that can be incorporated into the care planning.

A low income, underinsured patient may not be able to afford the out-of-pocket costs for her recommended diabetes treatment. Because of economic instability, the individual can’t comply with treatment recommendations because she doesn’t have the money to pay for the prescribed therapy. Recognition of the economic instability that limits the individual’s treatment is now recognized as contributing to a moderate risk visit. Whereas before, that social need, in this case economic instability, wouldn’t have been a factor in determining the complexity of the visit. Now we recognize the need and that it can impact a diagnosis or treatment. I would anticipate that treatment plans will also increasingly incorporate the interventions and care planning to address the issue.

Z codes have also been updated in this new guidance from CMS. Why is it important for ICD-10-CM to add more SDoH codes?

Every year, the CDC releases new ICD-10-CM codes and this year they’ve added 19 new Z codes within the Z55-Z65 to provide additional coding granularity. At 3M HIS, we are enriching our coding terminology to accurately reflect what care teams are capturing to allow for a more complete, codable picture of the patient.

Over the past decade we’ve made improvements in integrating physical and behavioral health. More recently we have incorporated the critical role that lifestyle plays in health promotion, disease prevention and disease management. Now we are making strides in recognizing that social risks and needs are another big component that we need to address to promote better health. Working these concepts into how we finance health care provides resources for data capture and care planning that were previously indirectly supported. This financing aspect of social needs assessment into decision making supports our ability to achieve our clinical objectives: improved patient care and outcomes.

These are important and big steps in evolving our health care system to treat every aspect of an individual. And there will be more changes over time. When you capture information, there is an expectation that you act upon that information. I think care plans that address social needs will be much more common, and financing support for this component will drive accelerated adoption.

It is important to acknowledge that addressing social needs is complex. Some needs are more easily addressable and others much less so. Having access to structured data on social needs will help us better understand prevalence and complexities. We’ll have a better understanding of what interventions can be addressed at an individual level and what interventions, like affordable housing and transportation, may need to be addressed at a system-level through population interventions, community investment, economic development or additional policy changes.

Sandeep Wadhwa, MD, MBA, is Global Chief Medical Officer at 3M Health Information Systems.

Kelli Christman is senior marketing communications and strategic communications specialist at 3M Health Information Systems.


Reimagining care delivery by looking beyond clinical data.