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Upcoming Medicare Coding Changes

Wednesday, October 02, 2024

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New Medicare coding and payment policy changes will be implemented effective October 1, 2024,  which may have big implications on how hospitals are paid by Medicare when treating patients with inadequate housing or housing instability.

Inadequate housing is described as deficiencies in:

  • Plumbing

  • Heating

  • Electricity

  • Hallways

  • Upkeep

  • Inadequate heating/cooling

  • Vermin

  • Mold

  • Water leaks

Housing instability is described as challenges such as:

  • Having trouble paying rent

  • Overcrowding

  • Moving frequently

  • Spending the bulk of household income

In the Medicare Hospital Inpatient Final Rules for FY 2025 , Medicare reassigned the severity level of certain diagnosis Z-codes that describe inadequate housing and housing instability (see Table 1) from non-complication or comorbidity (NonCC) to complication/comorbidity (CC). CMS notes that there is an increased body of evidence correlating poor housing conditions with poor health, which often leads to increased costs in treating these patients. The severity level designation for diagnosis codes is important because a higher severity level designation generally results in a higher MS-DRG payment.

ICD-10-CM Codes for Inadequate Housing and Housing Instability that Have Been Designated as CC for Federal Fiscal Year 2025 (Begins October 1, 2025)

ICD-10-CM CODE Descriptor 2024 Final Severity Level Designation 2025 Final Severity Level Designation
Z59.10 Inadequate housing, unspecified Non-CC CC
Z59.11 Inadequate housing environmental temperature Non-CC  CC 
Z59.12 Inadequate housing utilities Non-CC CC
Z59.19 Other inadequate housing Non-CC CC 
Z59.811 Housing instability, housed, with risk of homelessness Non-CC CC
Z59.812 Housing instability, housed, homelessness in past 12 months Non-CC CC 
Z59.819 Housing instability, housed unspecified Non-CC CC

The increased hospital inpatient payment can be significant. However, it can only be received by the hospital if the patient’s medical record documents inadequate housing or housing instability, and the coder assigns the secondary ICD-10-CM diagnosis Z-codes. Hospitals should be aware of these changes that will be effective on October 1, 2025, and implement administrative processes to ensure proper documentation for patients with inadequate housing or housing instability to ensure the hospital is paid correctly.