Z-Code Identifiers Give Providers Objective Information About Molecular Tests

Douglas Moeller, MD
Published: Thursday, Oct 23, 2014
Doug Moeller, MD, a medical director at McKesson Health Solutions

Doug Moeller, MD

Virtually everyone in the clinical laboratory business is now acquainted with Z-code identifiers. Each unique laboratory test should have a unique tracking code, even if more than one Z-code identifier is reported with a corresponding American Medical Association’s Current Procedural Terminology (CPT) billing code. The uniqueness of each test is determined primarily by the methodology of performing the test, although other factors, such as specimen type, may also be considered.

Z-code identifiers were created and are maintained by McKesson Corporation as the initial step in creating a single national catalog for all commercially available tests that are molecular in nature. This catalog, which is part of the McKesson Diagnostics Exchange, can be viewed by anyone who creates a free user profile at McKessonDEX.com.

Much like NDC codes for drugs, Z-code identifiers enable the consistent identification of that unique test across systems by labs, providers, payers, and policy makers. It allows healthcare stakeholders to make decisions on genetic tests based on their clinical and financial impact, which ultimately reduces disease burden and improves health outcomes.

Approximately 4,500 Z-code identifiers have now been assigned, with a steady stream of applications for new codes in the pipeline. It’s important to understand that, as a tracking code, the Z-code identifier is not validating or credentialing the test accuracy or value. It is simply a unique identifier for each unique test, as documented by the clinical laboratory requesting a code.

The significance of this tracking function can be highlighted by several examples. More than 20 different versions of KRAS testing have been documented with unique Z-code identifier assignments, based on subtle differences in test methodology. A process for confirming the equivalence of each of these test methodologies has not been established. In contrast, if a different clinical laboratory performs the same test in multiple geographical locations, following the same stringent protocol, only a single Z-code identifier is assigned.

The process for initial registration of a test can yield a Z-code identifier assignment within weeks of completing the application. However, this does not mean that a test is ready for “prime time” and immediately available for use. The clinical laboratory applying for a Z-code identifier retains some control over the submitted data and determines whether this data will be made available through the Diagnostics Exchange to other entities (eg, health plans and the AMA/CPT workgroup) for further coding, clinical coverage, and pricing considerations.

How many unique tests will we need to catalog? No one really knows. We do know that the National Institutes of Health has registered more than 16,000 assays, including experimental and investigational purposes, in its Genetic Testing Registry. This registry is limited to human gene tests only, whereas Z-code identifiers may be assigned to any test that is molecular in nature.

Are Z-code identifiers competing with CPT or HCPCS codes? The simple answer is, “No.” Think of Z-code identifiers as tracking codes only for the unique identification of each test. The appropriate CPT or Healthcare Common Procedure Coding System (HCPCS) code is still required on a medical claim for reimbursement purposes. On an 837 electronic claim, the Z-code is reported in the free text claim line comment field and the CPT or HCPCS charge code is reported in the usual procedure code location.

The CPT code set is also evolving to meet the challenge of molecular diagnostic coding. The CPT Editorial Panel recently added “Tier 1” codes, where each CPT code specifies the gene and methodology for commonly ordered tests. They also created “Tier 2” codes for less commonly ordered tests, where nine levels (or families) of codes are defined, based on the testing methodology and similar work effort. Approximately 500 tests are now identified as Tier 1 or Tier 2 tests. But this is just a fraction of the 4,500 Z-code identifiers that have already been assigned.

A crucial component of the process for assigning a CPT code is to establish a clear, evidence- based justification for any code in the CPT set. This is a slower, more methodical process than assigning a Z-code identifier. For emerging technology, it can take some time to develop the objective evidence needed for a CPT code justification. For the special challenges of the new frontier in molecular diagnosis, using Z-code identifiers provides a new pathway for code development. By using incremental steps, a test inventor can now obtain a unique identifier during the clinical evidence justification process. This permits specific communication and publication of data and documentation regarding the new technology during the evidence development phase.

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