California Behavioral Health Panel Evaluates Inclusion of Z Codes for Social Determinants

The July 26, 2025, meeting of the OHCA Investment and Payment Workgroup, convened by the Department of Health Care Access and Information in California, focused on the potential inclusion of Z codes in behavioral health measurement. The discussion centered on the implications of these codes, which are designed to capture social determinants of health, such as education, employment, and housing.

The meeting began with an overview of Z codes and their intended purpose. It was noted that if the primary goal of the behavioral health definition is to measure spending, excluding Z codes might be appropriate since they cannot serve as primary diagnoses for billing. However, if the definition aims to support broader research and utilization efforts, including Z codes could be beneficial.

Participants discussed the importance of recognizing social determinants of health in understanding health outcomes, especially as the healthcare system shifts towards value-based payment models. The workgroup reviewed specific Z codes proposed for inclusion, which relate to behaviors and personal history.

Key considerations were raised regarding the impact of including Z codes on behavioral health spending measurements. It was clarified that while Z codes cannot be used as primary diagnoses, their inclusion might affect capitation spending measurements if they are used in that context.

The workgroup posed several questions for discussion: whether to exclude certain diagnoses from behavioral health measurement, whether to include only specific F codes related to dementia, and whether to include Z codes in the code set.

During the discussion, a member expressed concerns about the complexity that including Z codes might introduce, suggesting that they may not significantly enhance the fidelity of the data collected. The sentiment was that while Z codes provide context, they do not define conditions and could complicate the measurement process without substantial benefit.

The meeting concluded with a call for further input on the discussed topics, emphasizing the need for careful consideration of the implications of including Z codes in behavioral health measurement. The workgroup plans to continue evaluating these issues in future sessions.