Just went to my DD9 (4th grade) conference today and had a similar conversation. I am not sure if they use Fountas because they call it a GRL (Guided Reading Level)but my DD is currently at W, which is as far as they "plan" to go for a student in 4th grade, but the teacher said she will research X,Y, and Z and take her as far as Z. Her STAR (AR level) test scores match her Lexile Score from the NWEA MAP Testing so I am confident she is reading and comprehending. But like you, I am also wondering what comes after Z.