#2 Case Mix Index Assignment

The MS-DRG system creates a hospitals case-mix index (types or categories of patients treated by the hospital) cased on the relative weights of the MS-DRG. The case-mix index can be figured by multiplying the relative weight of each MS-DRG by the number of discharges within that MS-DRG. This provides the total weight for each MS-DRG. The sum of all total weights divided by the sum of total patient discharges equals the case-mix index.

Calculate the total relative weight for each MS-DRG and the case-mix index for General Hospital: (each total weight worth 1 point; case mix index worth 3 points)

General Hospital Case Mix Index
MS-DRG	Description	Number of Discharges	Relative Weight	Total Relative Weight
280	Heart failure & shock	50	1.8503
193	Simple pneumonia & pleurisy w CC	42	1.4796
377	GI hemorrhage w MCC	23	1.7541
190	COPD	18	1.1924
483	Major joint & limb reattach upper extreme w CC/MCC	17	2.4019
Total		150
Case Mix Index (CMI) = Total Relative Weight (for all 5 MS-DRGs)/Total Discharges CMI for top 5 MS-DRGs at General Hospital =

Why is case mix index (CMI) important? The case-mix index (CMI) can be used to help administration make financial decisions and also to adjust the average cost per patient (or day) for a given hospital relative to the adjusted average cost for other hospitals by dividing the average cost per patient (or day) by the hospitals calculated CMI. The adjusted average cost per patient would reflect the charges reported for the types of cases treated in that year. For example, if hospital A has an average cost per patient of $1,000 and a CMI of 0.80 for a given year, their adjusted cost per patient is $1,000/0.80 = $1,250. Likewise, if Hospital B has an average cost per patient of $1,500 and a CMI of 1.25, their adjusted cost per patient is $1,500/1.25 = $1,200.

Therefore, if a hospital has a CMI greater than 1.00, their adjusted cost per patient or day will be lowered and conversely if a hospital has a CMI less than 1.00, their adjusted cost will be higher. Ideally, a hospital likes their CMI to be as high as possible.