Are you paying attention to your case mix index?
What is Case Mix Index (CMI) and why, as a case manager, do I care what that is? According to the Financial management for nurse managers and executives (3rd ed.), CMI is the measurement of the average severity of illness of patients treated by a healthcare institution. Basically, CMI helps determine the dollar amount assigned to a diagnosis related group (DRG) for the Medicare population. Medicare assigns a dollar amount for every facility, which is partially determined by the CMI.
Hospitals use the CMI to determine the budget, and if the actual CMI is lower than the budgeted CMI, the incoming money for those DRGs will be less. This causes an imbalance in the hospital revenue. If the money isn’t coming in as planned, a financial fiasco can occur. Think of CMI as the yellow light that warns the hospital of any impending decrease in hospital income. The financial wizards and senior management monitor the CMI on a monthly basis.
Appropriate DRG assignment for each inpatient case impacts the CMI. This is another reason why complete and accurate documentation is important. Coders need thorough documentation to assign the appropriate DRG. Appropriate coding determines the DRG, and the average DRG weight determines the CMI. Case management and clinical documentation improvement specialists can help the coding team by ensuring documentation supports the appropriate diagnoses, which will lead to appropriate assignment of a DRG.
CMI is complex, but essential to the revenue survival of hospitals. CMI is used to adjust the hospital’s average cost per patient. CMS uses the annual CMI to determine the DRG amounts for the next year. CMI is a very complicated concept to grasp, but it is important to remember that CMI is a tool that is used to predict income, outlines patient types, and helps explain the cost of treating a hospital’s population. In the end it goes back to complete, accurate and timely documentation and appropriate coding practices.
Do you know what your institution’s budgeted CMI is and what your actual CMI is?
About the Author: Loretta Olsen, RN, has over twenty-eight years of experience in healthcare, from hospital staff positions to director level positions in various nursing practices, to experience the health insurance arena. She has worked as a product manager in group health insurance overseeing prescription drug plan designs, including implementing Medicare Part D. She also was the contract specialist in implementing disease management programs. She is currently the director of case management at Jennie Edmundson Hospital in Council Bluffs, Iowa. Olsen is pursuing her Masters of Science in Nursing.
EP | Oct 28, 2009 | Reply
My CFO often refers to Medicare A Length of Stay by CMI which brings down the Medicare A average LOS significantly. Can you expand on this?