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Social Determinants Provide a Deeper Understanding of Medicaid Member Needs

Medicaid Payment Perspectives helps Medicaid programs and other payers improve the methods used to purchase care and services for their beneficiaries. It’s published by the Payment Method Development team at Conduent.


Can your ZIP code predict more about your health than your genetic code? The answer is yes.

Conditions where people live, learn, work and play affect a wide range of health risks and outcomes. These conditions are known as social determinants of health (SDOHs), a trending topic in healthcare. Some people have better opportunities to achieve better health than others. We know that poverty limits the access to healthy foods and safe neighborhoods, and that higher education levels are a predictor of better health.

For Medicaid programs, addressing SDOHs is essential to improving health outcomes, including complications, readmissions, mortality, and other quality measures. This is because SDOHs disproportionately affect low-income populations, which comprise the bulk of Medicaid beneficiaries.

According to the Kaiser Family Foundation, “There is growing recognition that social and economic factors shape individuals’ ability to engage in healthy behaviors…Addressing social determinants of health is not only important for improving overall health, but also for reducing health disparities that are often rooted in social and economic disadvantages.”

Until recently, CMS had not allowed Medicare or Medicaid dollars to be used to address adverse SDOHs. CMS changed course on April 4, 2018, with the Medicare Advantage final ruleallowing payment for activities to improve certain SDOH as supplemental benefits, including coverage of non-skilled in-home supports and other assistive devices. These supplemental benefits must aid physical impairments, reduce the impact or risk of injuries and/or reduce emergency room use.

CMS has also approved several 1115 Medicaid Demonstration waivers to address some of these social determinants. States can use 1115 waivers to offer services not usually covered by Medicaid and test delivery system changes that have the potential to improve care and reduce costs. For example, under an 1115 waiver, a state can receive Medicaid funding at the standard federal matching rate for services delivered by non‐traditional health providers (such as community health workers) or in non‐traditional health settings (such as the home or pharmacies).

A 2016 Issue Brief from The Center for Health Care Strategies identifies Medicaid programs as essential in measuring SDOHs and taking action to improve outcomes. “Given Medicaid’s role in serving people with complex clinical, behavioral health, and social needs, state Medicaid agencies are uniquely positioned to identify and help address these diverse social challenges.”

Indeed, many states are implementing initiatives to address SDOHs through a variety of vehicles. These include managed care organizations (MCOs), accountable care organizations (ACOs), delivery system and payment reform (DSRP) and home and community based services, among others. For example, New York’s Supportive Housing Initiative provides rental subsidies, support services and capital projects to high-cost Medicaid beneficiaries. According to the New York Medicaid Resign Team, the program has served 12,000 high-acuity Medicaid members since 2012, reducing their inpatient days by 40 percent, ER visits by 26 percent, and overall Medicaid expenditures by 15 percent. The state also requires ACOs in value-based purchasing agreements with the state to implement at least one SDOH intervention and for MCOs to share in the costs of the intervention.

This is just one state’s efforts, and not even the full extent of available approaches. Numerous methods for addressing SDOHs can be found in other states, including but not limited to:

  • Identifying problems during in-home visits by community health workers
  • Connecting low-income seniors and adults with disabilities with community-based services
  • Requiring MCOs to have healthcare professionals conduct a comprehensive needs assessment to identify new enrollees with care management and social needs
  • Incorporating SDOH measures into pay-for-performance programs
  • Adjusting for SDOH risks when developing payment methodologies and setting payment rates
  • Consolidating online Medicaid and CHIP applications with applications for programs that administer SNAP, school lunches, child care assistance and other programs

In terms of healthcare data, SDOHs can be translated into an ICD-10 code on a healthcare claim. They are defined by the ICD-10 code range Z55-Z65 and include societal and environmental problems related to education/literacy, employment, housing, access to food and clean water, family and social supports, transportation, criminal justice involvement, and domestic violence. Consequently, SDOHs offer Medicaid programs a wealth of information on their beneficiary populations that can be used to improve health outcomes, tailor payment methods and implement cost-reduction initiatives. However, collecting these factors through electronic health records and claims data is challenging and a growing industry for population health management.


Social Determinants of Health
ICD-10-CM Code Category Stays
Z55 – Problems related to education and literacy Illiteracy, schooling unavailable, underachievement in a school, educational maladjustment and discord with teachers and classmates.
Z56 – Problems related to employment and unemployment Unemployment, change of job, threat of job loss, stressful work schedule, discord with boss and workmates, uncongenial work environment, sexual harassment on the job, and military deployment status.
Z57 – Occupational exposure to risk factors Occupational exposure to noise, radiation, dust, environmental tobacco smoke, toxic agents in agriculture, toxic agents in other industries, extreme temperature, and vibration.
Z59 – Problems related to housing and economic circumstances Homelessness, inadequate housing, discord with neighbors, lodgers and landlord, problems related to living in residential institutions, lack of adequate food and safe drinking water, extreme poverty, low income, insufficient social insurance and welfare support.
Z60 – Problems related to social environment Adjustment to life-cycle transitions, living alone, acculturation difficulty, social exclusion and rejection, target of adverse discrimination and persecution.
Z62 – Problems related to upbringing Inadequate parental supervision and control, parental overprotection, upbringing away from parents, child in welfare custody, institutional upbringing, hostility towards and scapegoating of child, inappropriate excessive parental pressure, personal history of abuse in childhood, personal history of neglect in childhood, Z62.819 Personal history of unspecified abuse in childhood, Parent-child conflict, and sibling rivalry.
Z63 – Other problems related to primary support group, including family circumstances Absence of family member, disappearance and death of family member, disruption of family by separation and divorce, dependent relative needing care at home, stressful life events affecting family and household, stress on family due to return of family member from military deployment, alcoholism and drug addiction in family
Z64 – Problems related to certain psychosocial circumstances Unwanted pregnancy, multiparity, and discord with counselors.
Z65 – Problems related to other psychosocial circumstances Conviction in civil and criminal proceedings without imprisonment, imprisonment and other incarceration, release from prison, other legal circumstances, victim of crime and terrorism, and exposure to disaster, war and other hostilities.
1. Source: American Hospital Association,


To improve the capture of SDOH codes, the American Hospital Association (AHA) published advice earlier this year that allows professional healthcare coders to also use non-physician documentation (notes from nurses, social workers, and others) in coding SDOH1. Previously, ICD-10 guidelines required only physician documentation (physician, physician assistant, or nurse practitioner) to code SDOHs effective February 18, 2018.

“Recent studies show that [SDOHs] have been infrequently utilized in inpatient settings for discharges other than those related to mental health and alcohol/substance use,” AHA said in a guidance document. “As a result [of limits on what notes may be considered], most hospitals and health systems are unable to report these codes because societal and environmental conditions are routinely documented and addressed by non-physician providers, such as case managers, discharge planners, social workers and nurses.”

This change in coding rules aims to address underreporting of key influencers of health outcomes and provide payers and providers with more data on the populations they serve. Healthcare providers and payers must find a way to incorporate socioeconomic indicators into care management risk reduction for those individuals identified. Obtaining this data is a challenge, because patients are not always forthcoming about some of these circumstances when interviewed, due to embarrassment or fear of social services interference. Discharged patients are often provided adequate discharge teaching on how to manage their illness. But when a home or a support network of people does not exist, circumstances may lead to worsening of health and readmission.

All of the previously mentioned efforts by states are based on the idea that payers and providers can’t expect to meet their goals and the goals of their patients if basic human needs aren’t met as well. SDOHs are playing a larger and larger role in the national healthcare conversation. In fact, the expansion of using documentation from a multitude of different caregivers to code these problems underscores the importance of SDOHs. And Medicaid programs are at the forefront of this issue.

This is a big shift in payer and healthcare providers to be able to collect this data in some sort of standardized way that can be used to assist patients. There is no standardized set of questions to address social determinants of health, but these need to be developed and assessed upon admission to the hospital and in clinics. For example, when admitted to the hospital, you may be asked if there are stairs in your house; but you are not asked if you have stable housing. As healthcare continues to move toward value-based care, SDOHs become more important. The need to address them and improve the health of the patient and reduce healthcare costs is imperative.



[1] This advice from the American Hospital Association (AHA) was approved by the ICD-10-CM Cooperating Parties, which include AHA, the Centers for Medicare and Medicaid Services, the National Center for Health Statistics, and the American Health Information Management Association. It went into effect February 18, 2018, and will be included in the next revision of the Official Coding Guidelines starting October 1, 2018.