Billing & Coding: The Expanding Role of Z-Codes

Most laboratory professionals are aware of the Molecular Diagnostic Services Program (MolDX) requirements as they relate to molecular diagnostic testing and molecular pathology services reported to Medicare contractors. According to the MolDX Manual, services within the scope of this program require a test identifier (DEX Z-Code™) that must be submitted as additional information at the time of claim submission.¹ These unique “Z-Codes” are reported in conjunction with appropriate Current Procedural Terminology (CPT) and other procedural codes. Unfortunately, many of these latter codes are aligned to descriptions that do not identify the specific test performed. Therefore, the MolDX Program, which was implemented in 2013, requires laboratories to apply a test-specific identifier that is unique for a laboratory test. When reported in conjunction with the appropriate CPT/ Healthcare Common Procedure Coding System (HCPCS) code, the identifier allows payers to determine which test was performed, facilitating pricing and coverage determinations for reimbursement.

Since starting as a beta site in California administered by Medicare contractor Palmetto GBA, MolDx has expanded to another 30 states and territories with the intent to eventually encompass all Medicare contractors.

UnitedHealthcare Announcement

It was only a matter of time until commercial payers adopted Z-Codes—and now, that time has come. One such entity, UnitedHealthcare Services (UHC), recently remodeled its reimbursement policy on molecular pathology testing, with the changes effective August 1, 2023.² The updated policy requires providers to submit a DEX Z-Code with every molecular pathology testing code to be considered for reimbursement. The new policy applies to all healthcare services billed on CMS 1500 or UB-04 forms, meaning that it covers both technical and professional components of molecular pathology analyses. Labs can find the list of CPT and PLA codes covered by this policy here. ³     

The Reimbursement Guidelines Section of the new United Healthcare policy states that:²

• Providers must report the appropriate unique test identifier (DEX Z-Code) and CPT code for molecular diagnostic tests and other molecular pathology services for claims to be considered for reimbursement.
• Reporting the additional identifier helps UHC identify the exact test that has been performed and determine reimbursement.
• Providers must acquire applicable coding through the Palmetto DEX Z-Code registry.
• Additional information about the Palmetto registry service can be found at https://app.dexzcodes.com

Labs can find the specific instructions for reporting a molecular diagnostic test in the Claim Submission Requirements section on page 2 of the policy (emphasis added):²  

• Select appropriate molecular pathology CPT code
• Enter 1 unit of service (UOS)
• Enter the appropriate DEX Z-Code identifier adjacent to the CPT code in the comment/narrative field for the following professional claim field/types:

  • Loop 2400 or SV-101-7 for the 5010A1 837P
  • Box 19 for paper claim

• Enter the appropriate DEX Z-Code identifier adjacent to the CPT code in the comment/narrative field for the following facility claim field/types:

  • Line SV-202-7 for 837I electronic claim
  • Block 80 for the UB04 claim form

UHC’s new policy also addresses the temptation to report multiple molecular procedures with multiple codes, asking providers to instead submit one CPT code and one DEX Z-Code for tests that may involve multiple genes, but produce a single result. This would likely include panel tests. Following these rules is important because the policy states that UHC “will deny duplicate or multiple molecular pathology CPT codes reported with the same DEX Z-Code for the same patient on the same date of service.”²

Useful Answers from the Policy

UHC’s policy also includes an FAQ section to offer labs clarity and transparency for billing purposes. From how to register with Palmetto to queries about specific reporting situations, the policy aims to anticipate tricky situations labs might encounter. Here are a few of the most useful questions and answers from this section:

How do labs register for a Z-Code if using a reference lab?

According to the policy, both providers, referring and providing, would register as an organization in DEX, but, “the performing lab submits the test details to receive the Z-Code.” When testing is referred to a reference lab, the referring laboratory “will need to request ‘sharing’ in DEX to obtain access to the Z-Code. The billing provider uses the Z-Code of the performing provider.” The policy clarifies that “providers will only request Z-Codes for tests that are performed in house.”²

How do labs register a test performed in more than one location?

If the test is identical (including standardized processes and methods), only one application and Z-Code are needed. If the methods differ, each location requires its own Z-Code.

Should labs submit multiple codes with the -59 modifier?

Labs should not submit multiple codes with the -59 modifier when performing different types of tests on a single specimen. Instead, labs should report a single code: Tier 1, Tier 2, GSP, PLA, or CPT 81479 if no other code applies.

Rarely, a lab may test separate specimens from the same patient on the same date, but for “distinctly separate indications.”² In this case, the initial specimen carries no modifier, but an appropriate modifier should be applied to the additional specimen; supporting documentation for separate indications must be available.

“Per the CMS National Correct Coding policy if the single procedure is performed, only one unit of service may be reported. Modifiers should not be used to report multiple codes when a single specimen is tested,” the policy states.

Codes Facing Reimbursement Scrutiny

According to a UHC representative reached by G2 Intelligence via email on July 27, the company will allow until October 1 for providers to begin submitting Z-Codes on their claims “in order to ensure labs have sufficient time to register the tests they perform.”

Not all molecular pathology codes will require Z-Codes at first, with the changes being rolled out in stages. The current policy identifies about 250 such codes that fall under reimbursement scrutiny for Wave/Phase 1. More molecular pathology codes will be added to the scope of this policy with future waves. Complying with the new policy will be easier for labs that already have Z-Codes under the MolDX program as there is a reported backlog in the application process for acquiring Z-Codes. The good news is that currently held Z-Codes can be repurposed for UHC billing as well. For those not yet participating in the MolDX program, complying with the UHC policy may be challenging at first and time-consuming—but will leave them well prepared for the program’s eventual expansion.

References:

1. https://www.palmettogba.com/MolDx
2. https://www.uhcprovider.com/content/dam/provider/docs/public/policies/comm-reimbursement/COMM-Molecular-Pathology-Policy-Professional-Facility.pdf
3. https://www.dexzcodes.com/palmetto/dex.nsf/DID/5PQ2G7SR9K

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Diana W. Voorhees, MA, CLS, MT, SH, CLCP, CPCO, is the principal of DV & Associates, Inc., Salt Lake City, UT. DV & Associates makes no representation, guarantee, or warranty, expressed or implied, that the information provided is free of error, and bears no responsibility or liability for results or consequences of its use.