UnitedHealthcare’s Z-Code Requirement for Genetic Testing Claims Impacts Laboratories and Payers

UnitedHealthcare’s (UHC) recent announcement that it will require the use of Palmetto GBA’s DEX Z-codes for molecular diagnostic test services on facility and professional claims starting August 1, 2023, has triggered responses from genetic testing laboratories across the US. The enforcement of this requirement has been postponed to October 1, allowing labs more time to request their codes. This move by UHC not only affects genetic testing companies but also has implications for other private health plans.

The adoption of Z-code requirements is now a consideration for other health plans, thus raising questions of whether additional payers may implement their own Z-code requirements for genetic test claims and the potential timeline for doing so. This decision-making process reflects the competitive landscape among health plans. UHC’s stated motive behind this mandate is to improve patient outcomes and enhance efficiency in reimbursement processes. Genetic testing providers are concerned how the evolution of Z-code usage may add further challenges to obtaining timely reimbursement for these procedures. 

The emergence of Z-code policies reflects the challenges posed by the rapid growth of genetic testing and the inadequacy of Current Procedural Terminology (CPT) codes to keep pace. Genetic testing is now often intricately tied to pharmaceutical treatment plans, leading to increased complexities in billing and payment policies. Genetic testing labs frequently introduce new molecular assays, which further strains the capabilities of CPT codes to accurately represent these tests. Consequently, UHC’s Z-code requirement is expected to guide other major payers in devising similar solutions after observing UHC’s implementation.

Z-codes aim to address issues such as determining the appropriateness of genetic tests for a patient’s diagnosis, accurately measuring biomarkers, and ensuring effective patient outcomes. By scrutinizing claims and utilizing analytics, payers aim to spot irregularities and potential cases of fraud.  The goal to manage expenses while ensuring accurate testing has resulted in the need for improvement, or establishment, of efficient coding systems, potentially facilitated by use of Z-codes.

Although UHC’s policy might face resistance and external challenges, it is likely that the company, which has billions to invest in ancillary healthcare ventures, will follow through with its Z-code requirement, albeit with potential provider discontent. The approach and response to UHC’s mandate will serve as a model for other payers contemplating similar strategies. At-risk employers, who bear the financial burden of genetic testing claims, also have an interest in managing the cost of new and emerging testing procedures as they seek clarity and cost management in their health coverage offerings.

In conclusion, the surge in genetic testing claims has led both government and private payers to seek solutions for more effective reimbursement management. UnitedHealthcare’s adoption of Z-codes appears to be a concerted response to these challenges, influencing the industry toward similar strategies.

**References:**

– UnitedHealthcare announcement on Z-code requirement. https://www.uhcprovider.com/en/resource-library/news/2023/expanded-dex-z-codes-molecular-tests.html

– UnitedHealth Group Q2 earnings report.

https://www.unitedhealthgroup.com/newsroom/2023/2023-07-14-unh-second-quarter-results.html

– Reuters report on UnitedHealthcare’s acquisition of Amedisys. 

https://www.reuters.com/markets/deals/amedisys-agrees-unitedhealth-buyout-offer-scraps-option-care-deal-2023-06-26/#:~:text=June%2026%20(Reuters)%20%2D%20Home,with%20Option%20Care%20Health%20(OPCH.