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Labs, MDx Developers Brace for Requirement by United Healthcare for Z-Codes


NEW YORK – A new coding policy from United Healthcare has stakeholders wondering if laboratories and test developers could be facing an extra burden once it goes into effect on Aug. 1. 

The policy, announced in May, would require the submission of a Z-code obtained from Palmetto GBA's DEX registry for each individual test covered by United. The Z-code would be added to insurance claims alongside CPT codes, which are currently required, but would replace test IDs obtained through United's Genetic Test Registry. The new requirement is being implemented with the goal of "simplifying the claims submission process and reducing the frequency we request clinical information, resulting in more accurate and faster reimbursement," a United spokesperson said via email.

As of now, Z-codes are required for molecular tests covered under Medicare's MolDx program and for those under United's Medicare Advantage plans, but the new policy would expand the requirement to all of its plans. The first wave of the new requirement only applies to certain codes, including those for adult molecular diagnostic tests relevant to the Medicare age population, prenatal cell-free DNA screening assays, prenatal carrier screening tests, assays for genetic disease carrier status for procreative management, and pharmacogenomics tests, according to United's announcement of the policy change.

Stephanie Denham, associate VP of revenue cycle management systems and analytics at healthcare IT company XiFin, said that more codes are expected be added to the requirement in the future. 

For laboratories that operate in a region covered by a Medicare Administrative Contractor that already requires Z-codes, the new requirement will likely only mean they need to update their billing systems, Denham said. But for laboratories outside of those regions, there will be an additional burden as they apply for Z-codes and submit technical information — which can take months, she added.  

The American Clinical Laboratory Association also emphasized the potential difficulties for laboratories that have not previously needed Z-codes. Some labs have multiple tests that would fall under the policy, and the organization is worried that without additional lead time and resources, many medically necessary test claims could be inappropriately denied.

In the MolDx program, a unique Z-code is provided after a test developer registers itself and the test that it plans to perform with the DEX registry. This registration requires the submission of intended use data and a description of the makeup of their test. However, a technical assessment of the test is also performed by Palmetto, which requires additional documentation and validation data. 

According to United, the initial review after applying for a Z-code takes about two weeks, but the Z-code can only be submitted on claims once the test has been assigned a recommended Z-code and a comprehensive review of the test's intended use and supporting information has been completed, which can take an additional two months.

That turnaround time could cause issues related to timely filing policies — laboratories could hold back claims until they have Z-codes to avoid those claims getting denied, but may bump up against United's timely filing policies, which require laboratories to submit test claims within a certain time frame, Denham said.

A spokesperson for United noted that the payor is allowing providers until Oct. 1 to begin submitting Z-codes on their claims.

There is also some confusion about what exactly is required under the new policy. Right now, it's unclear if United will also adopt the technical assessment process in addition to the Z-code requirement, said Rebecca Schorr, Thermo Fisher Scientific's manager of health economics and outcomes for research and reimbursement. 

If United does adopt the entire technical assessment process, the question becomes whether it will adopt the current definitions for clinical utility and benchmarks, or if the process will be different, Schorr said. 

The technical assessment process can be difficult to navigate for laboratories that aren't used to it, Schorr said. For example, clinical utility requirements may fluctuate among different patient populations, and procuring samples for validation studies can be complicated and expensive. "It's a time investment as well as a financial investment," she said. 

Adopting the technical assessment process "drastically changes the amount of effort a laboratory puts into their dossier."

Schorr said there is confusion about the boundaries for the new policy, as well as a lack of clarity on the exact process to obtain coverage. The lack of a defined set of parameters or scoring criteria for certain types of tests has made the MolDx technical assessment process more complicated for many laboratories, she added. Depending on the data a laboratory submits, MolDx can also request more information or require a lab to resubmit its dossier, adding further time and potential financial burden to the process. 

ACLA also emphasized the lack of clarity, noting that many laboratories do not have a specific contact at MolDx to discuss individual technical assessments and ensure clear communication about what is required. 

The burden will not only be on the laboratories, however. XiFin's Denham noted that the new requirement "increases the administrative burden all the way around," including for United. Laboratories will have to integrate new codes into their laboratory information systems, but United will also be receiving more paperwork and will potentially need to adapt their IT systems to accept Z-codes from these claims, she said.

And while United is the first commercial payor to adopt a policy like this, Denham said she wouldn't be surprised if other insurers followed suit, affecting even more laboratories. 

The Z-code requirement, once it is clearly defined and standardized, could provide additional clarity into what tests laboratories are performing, Schorr said. Currently, many laboratories use nonspecific CPT codes in their claims and stack multiple codes in one claim. However, from the payor perspective, nonspecific codes don't provide enough information — for example, in an infectious disease test, a nonspecific code does not delineate what organism is being tested for, she said. With Z-codes, a payor "has full visibility." 

Laboratories may still use nonspecific CPT codes for certain claims, but the addition of the Z-code would let the payor know exactly what analytes are being tested, she noted. 

As laboratories adjust to the new requirements and United prepares for the influx of information, Denham said she expects to see some delays in reimbursement and an uptick in denied claims, at least for the time being. "We expect a few bumps along the way," but hopefully those bumps will be resolved quickly, she said.