Medical Schemes: Beware of the Z-codes

Medical scheme members are very often prejudiced when their claims for diagnostic testing related to certain conditions are either rejected or paid for from their savings accounts instead of the risk pool, says Angela Drescher, who has made it her mission to inform members of their rights.

Drescher was the first person to testify before the Competition Commission Health Market Enquiry in February last year. The enquiry is investigating the state, nature and form of competition in the market, is headed by retired Chief Justice Sandile Ngcobo and has not yet concluded its work.

Drescher explains the issue: “The patient is referred to the pathologist or radiologist by their doctor for specific tests required to correctly diagnose the existence and severity of a specific condition.”

If such a condition is among the Prescribed Minimum Benefits (PMBs), an emergency or on the list of chronic conditions, the cost should be covered from the risk pool. It would be a contravention of the Medical Schemes Act to have it paid from the members savings pool or reject and not pay it at all, should there be no funds in the savings account.

She says the doctor uses a specific printed form from the pathology or radiology lab and ticks next to the tests required.

Diagnostic codes

Medical scheme claims are assessed according to so-called ICD10 codes. It is done routinely without human intervention. If the ICD10 code therefore does not indicate a PMB, emergency or chronic condition, the claim would not be treated as such and would therefore be paid from the savings account or not at all.

“As no diagnosis has yet been made by the doctor, a PMB ICD10 code cannot be noted on the form by the doctor requesting the tests,” Drescher continues.

Once the tests are done, the pathologist can only write a report, not diagnose the condition. Only the treating doctor can do that, Drescher says.

“The lab sends a report to the doctor; but it submits the account directly to the medical scheme, with a generic or “Z” ICD10 code.

The Medical Scheme’s system does not recognise the ICD10 code as referring to a PMB, emergency or chronic condition and therefore doesn’t pay for it from the risk pool.

Drescher says: “Most members do not even notice that these accounts are being paid from their medical savings accounts in contravention of Regulation 10(6) of The Medical Schemes Act.” This might be one of the reasons why such savings accounts are depleted early in the year.

Code of Conduct

Drescher says the 2010 PMB Code of Conduct specifically addresses the issue of Z–codes: “The practise whereby “non-diagnosing” providers (including radiologists, pathologists, pharmacists and allied health professionals) submit non-specific Z-codes, is not condoned. The diagnosis provided from the requesting provider must be submitted to the scheme,” it states.

She says it is “particularly shocking” that nothing has since been done by either the medical profession, the Council for Medical Schemes (CMS) or the scheme administrators to change the way these diagnostic tests are being handled and paid.

She asked the panel at the Health Market Enquiry to carry out an audit pertaining to the non-payment for PMBs by medical schemes and for “special attention to be given to the payment of PMB diagnostic pathology and radiology accounts paid from members’ medical savings accounts – those with generic Z-ICD10 codes, submitted directly to the scheme by the laboratories.

Correct benefit pool

The CMS told Moneyweb a medical scheme must be able to link the pathology account and report for a specific event to the accounts and reports from the treating healthcare practitioner. “This will enable the medical scheme to ensure that accounts are funded from the correct benefit pool (pocket of money).”

The treating doctor should include a referral ICD10 code for confirmed or suspected diagnoses on the laboratory request form if clinically possible, the CMS says. “Such referral code should also be provided on the account the pathologist submits to the medical scheme. Provision of a referral code is however not a legal requirement yet.”

The CMS says it is always the treating doctor who is responsible to provide the final diagnostic code and it may not be provided or changed by the scheme. “In doing so the patient is then actually diagnosed by a person (not necessarily a clinically trained person) who did not consult with the patient. Such action is not permissible and may lead to legal action.”

But the buck stops with the member.

“The member should ensure that a diagnostic code is added on the account and remind the treating healthcare practitioner to provide such codes. Although healthcare practitioners submit accounts to medical schemes, the members are ultimately responsible to ensure submission of their accounts within 120 days after day of service,” the CMS says.


Resolution Health Medical Scheme director of product development professor Jacques Snyman says in the case of a follow-up of a previously diagnosed condition, the correct IDC codes are available. Doctors often supply them on the pathology request forms, “however these may not be captured by pathologists’ practices, who for convenience often revert to z-codes”.

He advises scheme members to confirm that the doctor enters the code on the pathology request form.

Snyman says Resolution however provides its members with a care-path for their specific disease, and their claims are adjudicated based on the care-path rather than the ICD code provided. “The care-path describes the frequency, type and numbers of clinical encounters and tests usually associated with a specific diagnosis.” It also allows for the care-path to be updated should the patient need additional care or tests,” he says.

He advises members to ask their doctors to provide them with a list of their diagnoses and codes, as these are very useful when engaging with call centers from the schemes as well. “In terms of the rules of the scheme, it is a member’s responsibility to ensure claims are correctly submitted, which includes the use of the correct ICD code,” he says.


Source: MoneyWeb