Alberta Health Z-Code Billing Rate Changes: “Out-of-office” codes

UPDATE: This post was original published in October 2020. On December 2, 2021 Alberta Health announced implementation of lower value z-codes would be further delayed until October 1, 2022 (MED 251). The implementation of z-codes has now been delayed several times since this post was written. This post has been updated to reflect the latest announcements.  

Earlier this year, the Alberta Government announced that new lower billing code rates would be implemented for physicians providing services in publicly funded facilities. Some of the rate reductions were substantial – up to 50% less for the same work. These “z-codes,” for services provided in “out-of-office locations, were implemented on March 31, 2020 and physicians currently need to bill them where appropriate. But the government did not yet implement the rate changes which were delayed until October 1, 2020. These changes were delayed again, until January 1, 2021. As of December 22, 2020, the changes have been delayed a 3rd time with implementation currently scheduled for April 1, 2021. The most current AHCIP bulletin MED 238 can be found here.

We understand these iterative changes are difficult to keep track of, so in this post, we’ll breakdown these changes and implementation. Although many physicians now have to bill z-codes, the impact of rate changes coming will differ based on specialty, and some specialties won’t have any reductions at all. We’ll review what the z-code rates are, which physicians will be impacted, and how much the rates will be lowered.

In March 2020, Alberta Health issued a bulletin that would change the rates for new Facility Based Health Service Codes for certain services provided in publicly funded facilities or “out-of-office” locations (MED223).  The use of z-codes was implemented, but the new fee code rates, to be effective March 31, 2020, were delayed until October 1, 2020 (MED227-Amended). During this time, physicians were still required to use the newly created out-of-office (z-codes) but the out-of-office rate would stay equals to the in-office rate for all physicians. On October 1, 2020 Alberta Health has again issued a delay in the implementation of the new rates (MED236).

The rationale that the Alberta Government presented is the following:

“Fees paid to physicians include both funding for the cost of their services and funding for overhead such as equipment, supplies, leases and technical staff – essentially the overhead costs a doctor has in their own practice. We know this is an important cost – that is why we pay for it through the fees. We want to ensure physicians are not billing overhead costs for work they deliver in an AHS facility – because those overhead costs are already provided by the public health facility.“

Publicly funded facilities include:

The new rates for out-of office facilities do not include compensation for facility costs such as rent, utilities, equipment, supplies, staff wages etc.

Self-funded facilities include:

The rates for out-of-office facilities does include compensation for facility costs such as rent, utilities, equipment, supplies, staff wages etc.

All physicians need to be aware of the z-codes as it impacts how they bill. But even if you bill z-codes, you may not experience any rate changes.

Here’s a list of physicians who will be impacted:

Here’s a list of physicians who will not be impacted:

Below is a list of all z-codes and their corresponding “in-office” codes.

Facility based HSCs are changing for publicly funded facilities. Physicians will receive lower compensation for overhead when a service is provided in a registered publicly funded facility. These new codes will likely be of lower value. For example, code 03.03A ($25.09) will be replaced by new lower value code 03.03AZ ($18.50).

Physician have been required to use the new “z-codes” for services provided in a publicly funded facility since March 31, 2020. But these “z-codes” still pay at the higher in-office rate for all physicians until implementation of the lower rates on January 1, 2021. Below is a table of new out-of-office HSCs and the corresponding in-office HSCs. Relevant bulletins: MED 215, MED 223, MED 227.

Examples of Impacted Physicians

Examples of Non-impacted Physicians

The introduction on new z-codes will have significant compensation impacts on some physicians. That said, the Alberta Government has now delayed implementation of these new rates twice and the may yet alter their implementation again. We’ll continue to monitor the updates and keep you posted. As always, if you have any questions or comments, please let us know. We’re always happy to hear from you.