Ophthalmology and Optometry Coding Alert

Reader Questions:

Look Beyond Reimbursement When Reporting Z Codes

Published on Thu Aug 22, 2024

Question: Do the ICD-10-CM Z codes affect reimbursement, or are they strictly for statistical purposes?

Washington Subscriber

Answer: The Z-code category (Chapter 21) of ICD-10-CM is titled “Factors influencing health status and contact with health services (Z00-Z99).” Providers should use Z codes to help provide a comprehensive description of a patient encounter and their current condition — which has the upshot of supplying documentation to meet medical necessity and supporting reimbursement.

“Z codes are for use in any healthcare setting. Z codes may be used as either a first-listed (principal diagnosis code in the inpatient setting) or secondary code, depending on the circumstances of the encounter. Certain Z codes may only be used as first-listed or principal diagnosis,” say the Centers for Medicare & Medicaid Services (CMS) in their guidelines sheet “ICD-10-CM Official Guidelines for Coding and Reporting FY 2024.”

“These codes can provide medical necessity needed for different procedures and treatment provided,” says Terry Fletcher, BS, CPC, CCC, CEMC, CCS, CCS-P, CMC, CMCSC, CMCS, ACS-CA, SCP-CA, owner of Terry Fletcher Consulting Inc. and consultant, auditor, educator, author, and podcaster at Code Cast, in Laguna Niguel, California.

When you’re dealing with any patient encounter, gathering and incorporating information such as personal medical history, family history, and health-related social needs is important for the completeness of a patient’s medical record, because that information can get lost when it’s not prioritized.

“A lot of providers aren’t embracing the history fact when looking at medical necessity. It’s not just about meeting certain documentation textbook items to get to that [evaluation and management service] level, it’s also about giving a total health picture on a patient so an auditor or payer or anybody looking at the record can see your thought process and understand why you’re ordering a test, why you think this is necessary, and what about this particular patient today gave you the idea that this is something you need to do,” she said.

To the extent payers risk-adjust prospective payments such as capitation based on acuity and other patient factors, Z codes, like other ICD-10-CM codes, may impact physician payment under value-based payment arrangements. As such, Z codes are not strictly for statistical purposes, and they may play an increasingly important role in physician payment.