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CMS Ups Reimbursement for Certain SDOH Codes

Analysis  |  By Amanda Norris  
   August 07, 2023

Hospitals will be seeing a payment bump for cases that report homelessness.

CMS recently released the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) final rule. Along with its yearly payment rate changes, the final rule placed a focus on promoting high-quality care and rewarding hospitals that deliver such care to underserved populations.

Notably, CMS finalized a higher severity level designation for three different social determinants of health (SDOH) codes describing homelessness.

More than 80% of hospitals are collecting data on SDOH—many right through their EHR platform and health information exchanges—yet only half of those hospitals are collecting data regularly. As revenue cycle leaders continue placing a heavier focus on capturing SDOH codes, having CMS continue to increase reimbursement rates will continue to promote their use. 

CMS has changed the following codes from the severity designation of "non-complication or comorbidity" to "complication or comorbidity," thus increasing their reimbursement rate:

  • Z59.00, Homelessness unspecified
  • Z59.01, Sheltered homelessness
  • Z59.02, Unsheltered homelessness

According to CMS, after a data analysis of claims data tracking the impact on resource use generated for hospitals, CMS finalized the changes based on the higher average resource costs of cases with those ICD-10-CM diagnosis codes in comparison to similar cases without these codes.

In a news release, CMS stated, “This action is consistent with the Administration’s goal of advancing health equity for all, including members of historically underserved and under-resourced communities … As SDOH diagnosis codes are increasingly added to billed claims, CMS plans to continue to analyze the effects of SDOH on severity of illness, complexity of services, and consumption of resources.”

CMS also finalized changes to The Hospital IQR program, with an increase in operating payment rates of 3.1%. “As part of CMS’ health equity goals, we are rewarding hospitals that deliver high-quality care to underserved populations and, for the first time, also recognizing the higher costs that hospitals incur when treating people experiencing homelessness,” said CMS Administrator Chiquita Brooks-LaSure in the release.

“With these changes, CMS is laying the foundation for a health system that delivers higher quality, more equitable, and safer care for everyone,” Brooks-LaSure said.

Amanda Norris is the Director of Content for HealthLeaders.


CMS has changed certain SDOH codes from the severity designation of "non-complication or comorbidity" to "complication or comorbidity," thus increasing their reimbursement rate.

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